Denso Cuts FY2026 Profit Forecast to ¥535 Billion Amid Tariffs and Rising Costs

Hit by U.S. import tariffs and rising raw material and fixed costs, Japanese auto parts giant Denso has cut its operating profit forecast for fiscal year 2026 (ending March 2026) by 17.8%, from ¥651 billion to ¥535 billion (approximately $3.44 billion). Despite the lowered profit outlook, the company still expects record-high annual revenue of ¥7,420 billion, driven by increased vehicle sales in North America, Japan, and Asia, as well as product price adjustments. Denso CFO Yasushi Matsui noted that higher costs, quality-related provisions, and increased R&D spending weighed on profitability. In the fourth quarter of fiscal 2025, the company reported a 9.4% year-over-year increase in operating profit, reaching ¥164.5 billion, in line with market expectations. Notably, Denso saw sales growth to the Toyota Group but a decline in sales to other automakers such as Honda and Nissan. Following the announcement, the company's shares fell 1.5% in early trading.