U.S. sales of Subaru's Outback were up more than 34% last year. Booming U.S. sales and favorable exchange rates have meant record profits for Subaru's parent company. Source: Subaru.

Subaru's parent company on Wednesday reported a big jump in earnings. It boosted its full-year profit forecast on brisk U.S. sales and favorable exchange-rate moves.

Fuji Heavy Industries (OTC:FUJHY), which owns Subaru, posted an operating profit of 124.49 billion yen ($1.06 billion) for the quarter ended Dec. 31, blowing away the 109.7-billion-yen Wall Street estimate. 

It also said that it now expects an operating profit of 410 billion yen ($3.48 billion) for the fiscal year ending March 31. That's a boost of more than 7% from its earlier forecast of 382 billion yen. 

Subaru sales are booming in the U.S....
There are two good stories unfolding for Subaru right now. First, its U.S. sales are booming thanks to a surge in sales of small SUVs and crossovers, Subaru's speciality. Sales were up more than 24% in the quarter, setting a record for the automaker.

In fact, Subaru, which is much smaller than most of its rivals, has been struggling to keep up with strong U.S. demand. That's a nice problem to have -- among other things, it allows Subaru to keep its incentives very low, ensuring nice profit margins; but it's still a problem that the company is working to solve.

...while a weak yen means each dollar is worth more at home
Second, Subaru, like its much larger Japanese rival, Toyota, is benefiting immensely from the ongoing weakness of the Japanese yen versus the U.S. dollar. Three years ago, one U.S. dollar was worth 76 yen. Now, a dollar buys about 117 yen, meaning that each dollar Subaru earns in the U.S. -- its largest market -- is worth more at home.

That strength led Fuji Heavy to revise its full-year profit guidance upward. It now expects operating income of 410 billion yen ($3.48 billion) on net sales of 2.85 trillion yen ($24.3 billion). But even that guidance is conservative: Fuji managers are assuming 104 yen to the dollar. As noted above, it's currently trading at a little more than 117.

The upshot: Record profits and a surging stock
Not all of the guidance was upward, though. Subaru, again like Toyota, is facing weak sales in other parts of the world. Industrywide sales are down in Japan, and Subaru hasn't managed to get much traction in the huge Chinese market.

That led the company to lower its full-year sales projections slightly, to 903,000 vehicles. While its overall sales for the first nine months of its fiscal year were up 11.8% over year-ago totals, a 14.5% decline in sales in Japan during the same period led the company to temper its forecasts.

But the upshot is this: For the first nine months of its fiscal year -- April 1 through Dec. 31 -- Subaru set all-time records for global sales and profits. That has boosted Fuji Heavy's stock almost 55% in the last year. Given the optimistic guidance from this conservative management team on Wednesday, that run may be far from over.