Suzuki Motor (7269) 1Q results: Lowers guidance, but we see no need for concern

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

06 August 2026

Suzuki Motor (7269)

1Q results: Lowers guidance, but we see no need for

concern

Neutral: 1Q operating profit of ¥158 billion was in line with our estimate, but we

view 1Q results as solid considering the previously announced decline in Maruti

Suzuki (MSIL, covered by Amyn Pirani) earnings. Raw material cost impact

increased, but this was offset through volumes and improved COGS. Suzuki cut

full-year operating profit guidance from ¥570 billion to ¥540 billion, which we

believe reflects the maximum extent of changes in MSIL’s parts procurement

settlement terms and higher raw material cost impact, but this looks overly

conservative to us. Questions remain, such as the need for a downward revision at

this juncture, but we see no need to be downbeat.

Solid results considering MSIL’s earnings deterioration: Suzuki’s 1Q

operating profit of ¥158 billion (+11.2% YoY) was in line with our estimate

(¥160.1 billion). However, we view consolidated earnings as solid considering

that 1Q results at MSIL worsened to EBIT of INR25.3 billion (around ¥43

billion) and an EBIT margin of 4.8% on steep raw material cost inflation

associated with changing trade terms on supplier procurement (from quarterly

settlement to monthly). 1Q consolidated shipments grew sharply to 953,000

units (+19.4% YoY), mainly on strong Indian sales, contributing ¥43.8 billion

to profit growth, while raw material costs had a ¥62.4 billion negative impact,

mainly in India.

Lowers guidance, but we see no need for concern: Suzuki Motor revised

down full-year operating profit guidance by ¥30 billion from ¥570 billion to

¥540 billion. It factored in a further ¥110 billion hit from higher raw material

costs caused by the Middle East conflict, mainly at MSIL, but expects this to

be partially offset by a 25,000-unit upward revision to sales volume (+¥20

billion) supported by strong demand in India and by additional reductions in

COGS. We believe management has factored in the full-year impact of MSIL’s

changed procurement terms mentioned above (from quarterly settlement to

monthly), but MSIL indicates that its policy is to return to quarterly settlement

…