Japan Isuzu H1 oper profit -16%, outlook cautious

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TOKYO, Nov 12 (Reuters) Japanese truck maker Isuzu Motors Ltd posted a 16 percent fall in first-half operating profit on Monday as a sharp drop in truck sales in Japan, North America and Thailand overshadowed a rise in oil-rich markets.

Operating profit at Isuzu, one of Japan's four truck makers and known for its expertise in diesel engine technology, was 48.32 billion yen (7.6 million) for April-September, short of an average estimate of 50.66 billion yen in a survey of five brokerages by Reuters Estimates.

Net profit tumbled 33 percent to 37.01 billion yen, while revenue rose 6.0 percent to 874.48 billion yen.

While the half-year results overshot Isuzu's own projections by a big margin, the company kept its operating and net profit forecasts at 100 and 80 billion yen for the full year to next March, citing uncertainty over truck demand and risks from higher oil prices.

Isuzu tweaked its recurring profit forecast to 107 billion yen from 105 billion yen, and revenue forecast to 1.75 trillion yen from 1.65 trillion yen.

''It's unclear what kind of impact the subprime loan issue will have on demand, not just in North America but any spillover effect it might have on Central and South America,'' President Susumu Hosoi told a news conference.

The consensus forecast from 11 brokerages puts the operating profit at 110.5 billion yen.

Japanese truck makers are looking to make up for sliding domestic demand with growth overseas.

Isuzu's domestic sales fell 30 percent to 38,000 vehicles in the first half, hit by a severe downturn in overall demand.

Overseas sales grew 9.3 percent to 184,000 vehicles on brisk demand in the Middle East, Russia, Africa and other emerging markets.

Isuzu outlined in August a medium-term business plan targeting a 40 percent growth in operating profit to 150 billion yen by the year ending in March 2011 by expanding sales overseas and stepping up cooperation with other automakers.

In August, Isuzu agreed with Toyota Motor Corp, which has a 5.9 percent stake in the truck maker, to co-develop and produce 1.6-litre diesel engines for use in Toyota cars for the European market starting around 2012.

Isuzu also signed a pact with Toyota truck unit Hino Motors Ltd to develop emissions-cleaning systems for diesel engines and a truck cab for large commercial vehicles.

Isuzu's shares are down 2.3 percent so far this year, faring better than Tokyo's transport sub-index ITEQP, which has lost 18 percent.

Before the results on Monday, Isuzu ended down 4 percent at 546 yen, while the transport sector fell 3.1 percent.

REUTERS SLD KP1322

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