Isuzu Motors Ltd. (7202.TO) posted Wednesday a sixfold increase in net profit for the fiscal year ended March, and said it hopes to conclude talks with Volkswagen AG (VOW.XE) on a possible tie-up over the next several months.

The Japanese truck and bus manufacturer didn't provide an earnings forecast for this fiscal year due to an uncertain outlook after the March 11 earthquake and tsunami.

Isuzu posted a full-year net profit of Y51.60 billion, up from Y8.40 billion in the previous year, as solid truck sales in Asia and cost-cutting efforts offset a strong yen.

Sales rose 31% to Y1.415 trillion from Y1.081 trillion.

Isuzu President Susumu Hosoi said at a news conference his company will run its domestic factories at 90% of capacity in May, up from 30%-40% in April. The company suspended its domestic output after the disaster in March caused a parts shortage.

The truck maker expects to return to normal production in July, the firm's president said.

The business environment for the Japanese auto industry will become tougher, Hosoi said. The domestic truck market is shrinking and competition is intensifying with rivals from Asia competing on cost, while low-cost trucks need to be developed for emerging markets, the president said.

"We know that we can't compete on our own in the markets and product segments that we have entered," Hosoi said. That is why the firm is in talks with Volkswagen on a potential tie-up, he said.

The Japanese truck maker said late last month it was considering a possible tie-up with the German firm to expand its global reach, especially in emerging markets.

Volkswagen Chief Financial Officer Hans Dieter Poetsch confirmed earlier this month that the car maker was looking into a possible cooperation on components with Isuzu, but reiterated the German company had no plan to take a stake in the Japanese truck maker.

Hosoi said Isuzu is looking to join hands with the car maker in a broad range of operations including the engine, pickup and large truck segments.

But the president added his company is reluctant to extend the potential alliance to include a capital tie-up, as the Japanese truck maker wants to remain independent. Recent media reports said Volkswagen was planning to acquire a stake and might aim for a takeover of Isuzu.

Hosoi said he hopes to conclude the talks by the summer.

Isuzu reports its earnings based on Japanese accounting standards.

-By Yoshio Takahashi, Dow Jones Newswires; 813-6269-2791; yoshio.takahashi@dowjones.com

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