Tuesday, Japanese automaker Honda Motor Co. Ltd. (HMC) reported a 40.9% decline in its second-quarter profit, hurt by negative currency translation effects and weak sales in its automobile and power product businesses. On a geographical basis, all regions except Asia and Other regions posted lower revenues in the quarter. In addition, the company lowered its outlook for fiscal 2009.
The company reported second-quarter net income of 123.32 billion yen, or US$1.19 billion, compared with 208.48 billion yen a year ago. Basic earnings per share declined to 67.96 yen, or US$0.66, from 114.94 yen in the prior-year quarter. Honda's first-quarter net income was 179.61 billion yen, or US$1.69 billion.
Quarterly net sales and other operating revenues totaled 2.83 trillion yen, or US$27.29 billion, down 4.9% from 2.97 trillion yen in the previous year. The company attributed the decline in sales and operating revenues to currency translation effects. In constant currency terms, revenue for the quarter would have increased about 1.7%, the company said. For the sequentially preceding quarter, the company posted net sales and other operating revenues of 2.87 trillion yen, or US$26.94 billion.
Business segment wise, the company's motorcycle unit sales rose 24% to 2.89 million units. While Japan sales fell 26.2%, overseas sales were up 26.4%, driven by higher sales in Asia and Other regions, including Brazil. The segment's second-quarter revenue reached 401 billion yen, or US$3.88 billion, up 5.1% from the same quarter last year.
Automobile unit sales reached 935 thousand in the quarter, almost in line with the level achieved in the previous year. Japanese unit sales rose 6.3%, whereas international unit sales dropped 1.4%, hurt mainly by the weak demand for light trucks in North America and lower sales in Europe. Automobile revenues declined 7.9% year-over-year to 2.17 trillion yen.
Honda's power product unit sales declined 4.5% to 1.21 million units, despite a 3.5% rise in domestic unit sales, as overseas unit sales declined 5.5%. Revenue in the power product and other businesses reached 96.6 billion yen, or US$933 million, down 2.8% from the year-ago quarter. The decline in revenue was attributable to lower unit sales of power products.
Further, Honda's financial services business generated quarterly revenues of 158.5 billion yen, or US$1.53 billion, an 18.5% increase from the same quarter last year on the back of strong operating lease revenues.
Geographically, Japan reported revenues of 1.19 trillion yen, or US$11.52 billion, a decline of 1.8% from the previous year as export sales in the automobile business were lower.
North American revenue fell 12% to 1.37 trillion yen, or US$13.23 billion yen, reflecting negative currency translation effects, lower revenue from the automobile business and poor unit sales in other business segments. In Europe, second-quarter revenue was down 10.3% to 350.7 billion yen, or US$3.39 billion.
Meanwhile, Asia and other regions such as Latin America, Middle East, Africa and Oceania posted revenue increases of 8.7% and 30.5%, respectively.
The company said its Board of Directors on October 28 decided to pay a quarterly dividend of 22 yen per share of common stock to shareholders on the record as of September 30. Total annual dividend is expected to be 88 yen per share.
For six months ended September 30, Honda earned 302.93 billion yen, or US$2.93 billion, compared with 374.6 billion yen last year. Basic net income per share declined to 166.94 yen, or US$1.61, from 206.26 yen in the prior-year period. Net sales and other operating revenues for the period were 5.69 trillion yen, or US$54.98 billion, lower than 5.90 trillion yen recorded a year ago.
Among others in the sector, Toyota Motor Corp. (TM) is slated to report its second-quarter results on November 6.
Another peer, Dearborn, Michigan-based Ford Motor Co. (F) is scheduled to announce its third-quarter results on November 7. Analysts are of the view that the company will report a loss of $0.91 per share in the quarter on sales of $28.20 billion.
For the fiscal year ending March 31, 2009, Honda Motor expects net income of 485 billion yen, or 267.29 yen per basic common share. The company also forecasts net sales and other operating revenues of 11.6 trillion yen for the full-year. These estimates represent a year-over-year decline of 19.2% and 3.4%, respectively. Earlier, the company had projected fiscal 2009 net income of 490 billion yen and net sales and other operating revenues of 12.13 trillion yen.
Honda also said it anticipates fiscal 2009 motorcycle business unit sales to grow by 1.52 million to 10.84 million units. As per the company's prior forecast, full-year motorcycle unit sales were projected to be 10.46 million, up by 1.14 million units from fiscal 2008.
Automobile unit sales for the year are currently estimated to be 4.02 million units, up by 90 thousand units from fiscal 2008. Previously, the company was expecting automobile unit sales of 4.08 million, an increase of 155 thousands from fiscal 2008.
The power product business's full-year unit sales are now expected to be 5.63 million, down by 427 thousands from a year ago. This compares with the company's prior estimate of 6.12 million units for the power product business.
HMC closed Monday's trading at $19.02, down $1.6, on a volume of 978,000 shares.
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