Strong yen, sluggish sales of car bearings took a toll

TOKYO -- Japanese machine tool maker Nachi-Fujikoshi is expected to report a 40% decline in operating profit for the year ended in November amid a strong yen and sluggish domestic demand for car bearings.

The figure is seen north of 11 billion yen ($94.4 million), about 2 billion yen short of company guidance. Brisk sales in the robotics business were unable to offset slumps in other segments. The company plans to continue developing the business as a new core earnings source.

Overall sales likely fell 3% to around 211 billion yen. Domestic sales of bearings for automakers fell short of expectations, hit by factors such as earthquakes in southern Japan.

Overseas sales were solid, thanks to growing Chinese demand for bearings used in cars with automatic transmissions and rising sales of hydraulic equipment for vehicles. The value of orders for industrial robots surged 30% on the year.

The average yen exchange rate came to around 109 to the dollar, roughly 11 yen stronger than a year earlier. The Japanese currency's appreciation apparently worked to push down operating profit by about 5 billion yen. The yen also strengthened against currencies of emerging economies such as the yuan.

Additionally, Nachi-Fujikoshi increased personnel as well as capital investments in fields such as robotics, in line with its plan to pour more resources into areas of focus.

The company forecasts revenue and profit growth for the year ending November 2017 on expectations that demand for industrial robots will remain solid and sales will recover for hydraulic equipment used in construction machinery.

Fiscal 2016 results are scheduled for release Wednesday.