Subaru maker Fuji Heavy in the red

Agence France-Presse

Posted at Feb 04 2009 02:30 PM | Updated as of Feb 04 2009 10:34 PM

TOKYO - Fuji Heavy Industries, which makes the Subaru brand vehicles, said Wednesday it lost $165 million in the nine months to December, hit by sluggish sales and a strong yen.

The company, which is part owned by Toyota Motor Corp., logged a net loss of 14.8 billion yen for the first three quarters of the fiscal year, against a profit of 17.9 billion yen a year earlier.

Operating profit fell 73 percent to 9.9 billion yen as revenue held steady at 1.1 trillion yen, Fuji Heavy Industries Ltd. said.

The company maintained its outlook to end the financial year to March in the red for the first time since 1994. It expects a net loss of 19 billion yen and an operating loss of nine billion yen.

"Despite increased sales in overseas markets, the strong yen and rises in other costs affected our earnings," said the company, which also makes aerospace-related products.

Sales in Japan fell 9.3 percent by volume, while overseas sales rose 7.2 percent due to robust demand for the new model Forester sports utility vehicle, it said.

Special costs related to bad debts and Subaru's withdrawal from the world rally championship were also behind the nine-month loss, it said.

Fuji Heavy said in December it was pulling its Subaru team out of the world rally championship because of the rapidly worsening business climate.

Toyota, which expects its first ever loss this year, last year said it would almost double its stake in Fuji Heavy to 16.5 percent and deepen ties in research and product development.

Japanese manufacturers have expanded rapidly in recent years to meet brisk demand for their smaller, fuel-efficient cars, but they have not been immune to the financial crisis, even if they are in better shape than their US rivals.