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Investing.com -- Subaru (OTC:FUJHY) stock surged 5% after the Japanese automaker reported first-quarter operating profit that significantly exceeded market expectations and announced a ¥50 billion share buyback program.
The company posted operating profit of ¥76.4 billion for the April-June quarter, far surpassing the consensus estimate of around ¥24 billion. Sales rose 11% YoY to ¥1.2141 trillion, driven by consolidated sales volumes that were approximately 30,000 units higher than anticipated. The company noted, however, that the first-quarter profit was "unusually high."
Subaru announced the share repurchase program after gaining more clarity on US-Japan tariff negotiations. Morgan Stanley (NYSE:MS) commenting on buyback: "We expect the news to be received somewhat positively by the market, given that there was not much anticipation for buybacks."
For fiscal year 2026, Subaru maintained its operating profit target of ¥200 billion, assuming an exchange rate of ¥145 to the dollar. The company expects a gross tariff burden of ¥210 billion, based on the assumption that additional tariffs on imports from Japan to the US will decrease from 25% to 12.5% starting in September.
The automaker also raised its global consolidated sales volume forecast from 900,000 units to 920,000 units, representing a 2% YoY decline rather than the previously projected 4% decrease. Subaru plans to implement recovery measures including price revisions and incentive reductions, which it expects will contribute ¥125.7 billion to offset tariff impacts.
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