Japan's Subaru Corp slashes group earnings forecast amid vehicle check scandal

TOKYO — Subaru Corp on Monday slashed its full-year group earnings forecast for the current business year owing to costs associated with the automaker's lengthy practice of uncertified vehicle inspections.

Subaru is gearing up to issue a recall this month on around 255,000 vehicles after it was revealed in late October that final vehicle inspections had been carried out by uncertified staff.

The recall will be applicable to the firm's whole range of 12 models that have been sold over the past three years, Subaru said.

The Tokyo-based automaker reported that from its 410 billion yen ($3.57 billion) group operating profit projected in August, it now expects its group operating profit to come in at 380 billion yen, with 10 billion yen allocated to deal with its inspection scandal.

The maker of the popular Impreza, Legacy and Crosstrek models also cut its group net profit outlook from 228.5 billion yen to 207 billion yen on sales of 3.38 trillion yen. Subaru's previous estimate was for sales of 3.42 trillion yen.

For the fiscal first half of 2017, Subaru logged a consolidated net profit that was more than 48 percent less than in the same period a year earlier at 85.01 billion yen, the automaker said.

Subaru also reported that its group operating profit came in at 212.13 billion yen in the fiscal first-half, a rise of 1.7 percent, with sales seeing an uptick of 6.9 percent to 1.69 trillion yen.

The results of an internal probe at Subaru were reported to the transport ministry here after it was revealed that uncertified staff had been carrying out inspections at two of Subaru's plants in Gunma Prefecture, north of Tokyo.

The probe disclosed that the malpractice had been going on for around 30 years at the automaker.