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Honda Fiscal Q2 Income Drops 56%

The Great Recession and stronger Yen hurt financial results.

by on Oct.27, 2009

Honda remains in better financial shape than its Rivals Toyota or Nissan.

Honda Motor remains in relatively better financial shape than its rivals, Toyota or Nissan.

Honda Motor Co., Ltd. announced results for the fiscal second quarter that showed net sales and other operating revenue amounted to ¥2,056.6 billion, a decrease of 27% compared to the same period last year.

The sharp drop was primarily due to decreased sales in its automobile business and the unfavorable impact of currency translation of a weakening U.S. dollar back to Japanese Yen.

As a result, Honda’s consolidated operating income amounted to ¥65.5 billion, a significant decrease of 56.0% when compared to the same period last year.

Nonetheless, Japan’s second largest automaker predicts net income of ¥155 billion (about $1.7 billion) in the year ending next March, compared with its earlier forecast of ¥55 billion.

Second-quarter profit totaled ¥54 billion yen, surpassing some analyst estimates. And clearly puts Honda ahead of number one but loss making Toyota and number three and loss making Nissan in the Japanese industry.

All  will face ongoing challenges if the U.S. dollar continues its collapse.

We have a "yen" for News!

We have a "yen" for News!

Honda raised its full-year forecast for global vehicle sales 3.2% to 3.4 million units in a statement issued this morning.

All the usual suspects were involved in the drastic quarterly decline — decreased profit from lower revenue; the unfavorable currency effects caused by the ongoing appreciation of the Japanese yen; and increased fixed costs per unit because of reduced production. These were only partially offset by decreased selling, administrative expenses, R&D expenses, and other ongoing cost reduction efforts.

Consolidated income before income taxes amounted to ¥66.1 billion, a decrease of 55.7% from the same period last year, and net income attributable to Honda Motor Co., Ltd. amounted to ¥54.0 billion, a decrease of 56.2% compared to the same period last year.

Honda Results, Fiscal Q2 2009

Yen (billions) 2nd quarter ended

Sep. 30, 2008

2nd quarter ended Sep. 30, 2009

Difference

(%)

Net sales and other operating revenue 2,826.8 2,056.6 -770.2

(-27.2)

Operating income 148.8 65.5 -83.3

(-56.0)

Income before income taxes 149.4 66.1 -83.3

(-55.7)

Equity in income of affiliates 27.2 22.3 -4.9

(-18.1)

Net income Honda Motor 123.3 54.0 -69.2

(-56.2)

Honda’s average rates for this fiscal 2nd quarter: JPY 94=USD 1 / JPY 134=Euro 1

Honda’s biggest sales problem remains in North America, where big decreases led to an overall global decline of 10%, even though sales increased in Asia and Japan because of effective government stimulus programs. Vehicle sales in the U.S. dropped 25% to 300,000 in the three- month period. Sales dropped 16% in Europe.

Results for the first two quarters followed the dismal Q2 trend — and for the same related currency and North American sales problems. Consolidated net sales and other operating revenue for the fiscal six months amounted to ¥4,058.8 billion, a decrease of 29% compared to the same period last year.

Consolidated operating income amounted to ¥90.7 billion, a decrease of 75% compared to the same period last year.

Consolidated income before income taxes amounted to ¥71.5 billion, a decrease of 81% from the same period last year, and net income attributable to Honda Motor Co., Ltd. amounted to ¥61.5 billion, a decrease of 79% compared to the same period last year.

Honda Results 6 month period from April 1, 2009 through September 30

Yen (billions ) Previous 6 months Current 6 months Difference (% change)
Net sales and other operating revenue 5,694.0 4,058.8 -1,635.2 (-28.7)
Operating income 359.3 90.7 -268.6 (-74.8)
Income before income taxes 373.6 71.5 -302.0 (-80.8)
Equity in income of affiliates 65.4 36.5 -28.8 (-44.1)
Net income Honda Motor Co. 296.7 61.5 -235.1 (-79.2)
Honda’s average rates for the current fiscal 6 months: JPY95=USD1 / JPY133=Euro1. Honda’s average rates for the previous fiscal 6 months: JPY106=USD1 / JPY163=Euro1

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