Auto suppliers report strong earnings - but concerns over Japan's manufacturing linger

on Friday, April 29, 2011

Auto suppliers report strong earnings - but concerns over Japan's manufacturing linger  Despite suffering supply chain disruptions in the wake of a slowdown to Japan's infrastructure, automobile suppliers issued their quarterly earnings this week, handily topping Wall Street expectations.

Reuters reports that the rebound in profits at carmakers and automobile suppliers could suggest that the recovery in the global automobile market remains robust, even as energy prices continue their steady climb and Japanese factories work to resume production. This week, Goodyear Tire & Rubber, American Axle and Manufacturing Holding all topped analysts' expectations on burgeoning global demand.

Despite the fact that Japan's production plummeted 32 percent during the first three months of 2011, global automobile production rose by five percent in the time period compared to the first quarter in 2010. Though a number of automobile suppliers touted their strong earnings, they warned that continued supplier disruptions emanating from Japan could hurt future production.

"Obviously, it's all about volume," affirmed Morningstar analyst David Whiston. "With a lower fixed cost and a better top line, it's not a surprise to see earnings doing so well." On the other hand, Wall Street Strategies analyst David Silver said that ongoing difficulties in Japan could affect manufacturing capacity going forward.

"I wouldn't call it a party right now. It's more of a get-together," Silver told the news service. "The profitability of the North American automakers is much improved from 2007 and 2008, but the Japan disaster is an overhang."

 

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