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Honda's profit doubles on solid sales despite yen

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Honda's profit doubles on solid sales despite yen

Yuri Kageyama / Associated Press

Tokyo— Honda's second quarter profit more than doubled, brushing off damage from a strengthening yen as car and motorcycle sales grew in the U.S. and Japan.

Honda Motor Co., the manufacturer of the Insight hybrid, Accord sedan and Asimo human-shaped robot, reported today a net profit of 135.93 billion yen ($1.68 billion) for July-September compared with 54 billion yen earned the same period in 2009.

Tokyo-based Honda raised its profit forecast for the full year through March 2011 to 500 billion yen ($6.2 billion) from its earlier projection of 455 billion yen ($5.6 billion). That would mark an 86 percent jump from the previous year.

The results show the resilience of the Japanese automaker amid a battering from a plunging dollar, which erodes the value of overseas earnings of Japan's exporters.

Quarterly sales rose 9.5 percent to 2.252 trillion yen ($27.9 billion) on solid global demand for Honda vehicles.

Honda sold 898,000 vehicles during the quarter globally, up 7.2 percent from the previous year.

Japan vehicle sales surged 12 percent, helped by tax breaks and incentives for fuel-efficient green cars while U.S. sales edged up 6 percent. The only major region to see a sales decline was Europe.

Motorcycle sales for the quarter jumped 13.4 percent year-on-year to 2.73 million.

Honda is in a neck-and-neck race against Nissan Motor Co. for the spot of Japan's No. 2 automaker in global vehicle sales after Toyota Motor Corp., the world's biggest.

Honda, which acknowledged it was hurt by the rising yen, said the dollar averaged 86 yen during the quarter compared with 94 yen for the same period last year. The dollar has been trading lately at 80 yen levels, casting a shadow over the prospects for all Japanese automakers.

Honda is expecting to sell 3.615 million vehicles for the year through March 2011, up nearly 7 percent from the previous year.

But the latest forecast is more pessimistic than the 3.64 million vehicles it had initially hoped to sell, mainly because of stagnation in the European auto market, Honda said.

Competition among automakers is increasingly moving toward green vehicles as concerns grow about pollution and global warming.

Honda's hybrids such as the Insight and the CR-Z have not scored the success of the Prius from Japanese rival Toyota, the world's top-selling gas-electric hybrid.

Honda recently introduced a hybrid version of the Fit subcompact along with the remodeled gasoline-engine Fit.

The demand for the hybrid Fit, now sold only in Japan, has been healthy, totaling 15,000 in two weeks — with hybrids making up more than 70 percent of Fit orders.

But speculation is rife Toyota may be also adding a small hybrid to its lineup in coming months.

Honda is showing a prototype electric car at the Los Angeles Auto Show next month, set to go on sale in the U.S. and Japan in 2012.

But Nissan, which has focused on electric vehicles, will start delivering its Leaf EV to showrooms in December. Earlier this week, Nissan showed its own hybrid system in a luxury model, set to arrive in Japan next month.

Honda shares inched down 0.3 percent to 2,937 yen in Tokyo. Earnings were announced after trading ended.

From The Detroit News: http://detnews.com/article/20101029/AUTO01/10290404/1148/auto01/Honda-s-profit-doubles-on-solid-sales-despite-yen#ixzz13khOnsjq

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By Drew Johnson

While cross-country rival Toyota may be slashing its production forecast, Honda has announced that it has raised its full-year financial outlook. Honda’s fiscal year ends March 31st.

Honda announced on Friday that it has upped its annual profit forecast to $6.2 billion, a significant increase over its previous goal of $5.65 billion. Honda says its year end sales may total as much as $111 billion.

Although the strong value of the yen has hurt Honda’s earnings, better than expected sales in the Asia region have helped alleviate losses associated with the poor exchange rate. Honda’s motorcycle division has also been performing well.

“Honda is solidly increasing its profitability, and the motorcycle unit is also supporting the business,” said Tadashi Usui, an analyst at Moody’s Investors Service in Tokyo. “Compared with Toyota, Honda is more economical with its capital investments, so we can be confident about its finances from a fixed-cost perspective.”

Despite the positive news, Honda expects a weaker second half to its fiscal year. Honda is calling for a $1.14 billion profit during the final six months of the year, compared to profits of $5.05 billion during the first half.



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