TOKYO -- Aisin Seiki Co., the second-biggest supplier to Toyota Motor Corp., targets raising the ratio of overseas sales to 50 percent from 30 percent by adding factory capacity abroad as deflation and depopulation slow Japan demand.
Aisin expects to meet the target over the nine years ending 2020 as it more than doubles operating profit to 330 billion yen ($4.1 billion), President Fumio Fujimori said this week in an interview at the company's headquarters in Kariya, near Nagoya.
Sales are forecast to increase 50 percent to 3.3 trillion yen in the period, he said.
"We want to do whatever we can to take advantage from the expanding markets in developing countries," and Indonesia is the most probable place to next increase output, Fujimori said. "It's an important country for us because the population and economy are growing steadily."
Aisin, Japan's biggest maker of auto transmissions, last year announced it would build new plants in India, Brazil and China as it tries to keep pace with Toyota's plan to get half its sales from emerging markets by 2015.
Fujimori, 63, said he plans to achieve the long-term targets without cutting output in the shrinking Japanese market, where the population is expected to fall 9 percent to 117 million by 2030.
Operating profit, or sales minus the cost of goods and administrative expenses, is forecast to fall 20 percent to 110 billion yen in the year ending March 31, while revenue may increase a more than expected 0.6 percent to 2.27 trillion yen, Aisin said on Feb. 3.
The company cut its net income forecast by 10 percent to 45 billion yen and now expects a 35 percent drop from a year earlier.
While Fujimori foresees a "modest" recovery in the year starting April as Toyota, which expects global sales to rise 21 percent to 8.58 million units this year, and other Japanese carmakers unveil bullish forecasts, he said concern about a resurgent yen keeps him cautious.
The yen has weakened since Feb. 14, when the Bank of Japan announced it added 10 trillion yen to an asset-purchase program and said it will "for the time being" target inflation at 1 percent.
"It scares me that everyone seems to think the yen has weakened enough already," Fujimori said. "It's still too strong for the long run."
The yen last year gained more than 5 percent against the dollar, eroding the earnings of Japanese exporters by reducing the value of their overseas profits when converted into the home currency.
"As a manager I need to be conservative on exchange rates," Fujimori said. "I still assume the yen will be 77 or 78 against the dollar throughout next year."