Japanese supplier eyes double China sales on VW to GM orders image

Tsubakimoto Chain Co., a Toyota supplier, forecasts China auto parts sales to more than double in four years as carmakers including Volkswagen and General Motors raise orders to diversify supply chains.

Toru Fujiwara, managing executive officer, said the maker of transmission chains and gears expects sales to jump to more than 12 billion yen ($116 million) by March 2018. The board has approved plans for a new plant in China as early as this year, he said.

Tsubakimoto Chain plans to expand in China, where its auto parts sales are projected to reach 6 billion yen this fiscal year, fueled by GM and VW racing to become the No. 1 carmaker in the world’s biggest auto market. As the Germany and US-based carmakers compete in China, they are diversifying orders to reduce the risk of having just one supplier for each part, Fujiwara said.

“That would be a tailwind for us,” Fujiwara said in Osaka, Japan, where the company is based.

Tsubakimoto Chain, which also makes conveyor belts, rose 3.8 %, its biggest gain in more than a month, to 853 yen at the 3 p.m. close of Tokyo trading. The stock climbed 66 % last year, compared with a 57 % gain for the Nikkei 225 Stock Average.

Net income will probably jump 25 percent to 9.3 billion yen for the year ending in March, according to the average of seven analyst estimates. Sales may climb 15 % to 173 billion yen, the estimates show.

Via Bloomberg