Japanese auto-supplier to invest 10 Billion Yen in U.S. due to demand gains image

Akebono Brake Industry Co, a Japanese auto-parts maker that counts General Motors Co. as its biggest customer, is increasing its bet that U.S. auto industry expansion will fuel a revival of earnings growth.

According to Akebono President Hisataka Nobumoto, the brake supplier to GM, Ford Motor Co. and Nissan Motor Co. will spend about 7 billion yen ($71 million) this year and 3 billion yen next year to expand in North America, as compared to 6 billion yen last year.

“We can expect demand in the U.S. to continue to stay strong for the next year or two,” Nobumoto, 64, said last week at the company’s Tokyo headquarters office.

Akebono, which paid $19 million for Robert Bosch GmbH’s North American brake unit in 2009, is expanding output of rotors at its Clarksville, Tennessee, factory as the U.S. auto industry heads for its best sales year since 2007. Nobumoto said he expects a revival in earnings growth after rising demand allowed the company to boost parts prices in the U.S.

Net income will probably increase almost fivefold to 2.5 billion yen in the year ending March 2014, the company forecasts. Profit dropped 48 percent from a year earlier to 478 million yen in the three months ended June 30, as prices for some parts in the U.S. were below cost.

Via Bloomberg