Archive for April, 2009

Honda Forecasts 71% Profit Drop on Car Sales Plunge

April 28 (Bloomberg) — Honda Motor Co., Japan’s second- largest carmaker, forecast profit will drop 71 percent this fiscal year as the global recession and tighter credit cripples demand for cars.

Net income will drop to 40 billion yen ($417 million) in the year ending in March, compared with net income of 137 billion yen a year earlier, the company said in a statement today. Sales will fall 16 percent to 8.37 trillion yen.

Rising unemployment has hammered sales of Honda’s Civics and Accords in the U.S., Japan and Europe. Still, the Tokyo- based company’s earnings will likely be better than those of Toyota Motor Corp. and Nissan Motor Co. because of its motorcycle unit, the world’s largest.

“Things will start to look better from the second half of the year, but don’t expect consumer spending to be very strong in the U.S.,” said Edwin Merner, president of Tokyo-based Atlantis Investment Research Corp., which manages $3.1 billion. “Motorcycles are a bit of a plus for Honda.”

Toyota will forecast a net loss of 284 billion yen for the current year, according to the median of 19 analyst estimates compiled by Bloomberg. Nissan will forecast a net loss of 314 billion yen, according to the median of 18 analyst estimates.

Fourth-Quarter Loss

Honda posted a 186 billion yen net loss for the three months ended March, compared with net income of 25.4 billion yen a year earlier, it said.

The carmaker dropped 2.4 percent to 2,600 yen at the close of trading in Tokyo. The shares have increased 36 percent this year compared with a 26 percent gain for Toyota and a 46 percent rise for Nissan.

Honda’s U.S. sales plunged 36 percent in March to 88,379 units, as industrywide sales of cars and light trucks in the U.S. plunged 37 percent. The country’s jobless rate rose to a 25-year high of 8.5 percent last month.

The stronger yen, which gained about 10 percent on average against the dollar last quarter from a year ago, has also hurt Honda’s earnings, as the carmaker traditionally gets more than half its operating profit from North America. The stronger currency cut the company’s fourth-quarter operating profit by 26.8 billion yen.

Dividend Cut

Honda will cut its quarterly dividend to 8 yen a share. For this fiscal year, it will pay a total of 32 yen a share compared with 63 yen last year.

In addition to motorcycle demand, the company is also benefitting from growth in China. Honda’s sales in the country may rise 10 percent in 2009, twice the pace of the overall market, after it introduced revamped City and Fit compacts and Accord sedans, according to Senior Managing Director Atsuyoshi Hyogo.

Honda started selling the new Wave 110i small motorcycle in Thailand in January and will also introduce the model in Indonesia and Vietnam later this year.

Toyota, the world’s largest carmaker, will report earnings on May 8. Nissan, Japan’s third-largest automaker, will report earnings on May 12.

Sourced via bloomberg.com

2nd UPDATE: Audi 1Q Oper Pft -29%; Weak Demand For Luxury Cars

FRANKFURT (Dow Jones)–Audi AG (NSU.XE) said Monday that its first-quarter operating profit fell 29% amid waning demand for luxury cars, but it reiterated that, despite an anticipated fall in 2009 car sales, it still expects to fare better in the current industry gloom than its rivals.

“We remain confident to achieve a clearly positive result in the year 2009,” Chief Financial Officer Axel Strotbek said in a statement.

The premium brand and key earnings contributor of Volkswagen AG (VOW.XE), Europe’s largest automaker by sales, said first-quarter revenue was down 19% on the year to EUR6.7 billion from EUR8.3 billion amid lower car sales and unfavorable currency movements. Operating profit fell to EUR363 million from EUR514 million.

Audi said in recent years it had created “a sound basis on which to compete successfully even in economically difficult times,” but it couldn’t escape the effects of the global economic downturn.

“Additional measures have been taken in order to cushion the impact which the … downturn in demand is anticipated to have on profits (in) 2009,” Audi said.

Audi’s first-quarter car sales fell 16% year-on-year to 210,027 vehicles, a fall that was less severe than at its rivals due to solid demand for revamped and new models such as the Q5 sports-utility vehicle.

The world’s best-selling premium automaker BMW AG (BMW.XE) posted a 21% sales fall at its core brand to 233,498 vehicles in the first three months of the year as the downturn in the U.S., BMW’s biggest single market, took its toll. The world’s second best-selling luxury car maker, Daimler AG’s (DAI) Mercedes-Benz unit, saw sales contract 25% compared with the first quarter of 2008 to 216,000 cars.

Last week, Audi parent Volkswagen said it couldn’t give a reliable forecast for this year due to market volatility after it reported a 74% drop in first-quarter net profit to EUR243 million.

Executives had previously indicated that VW might make a loss in the first quarter, but the sale of its Brazilian truck operations kept it profitable. The Wolfsburg-based automaker’s first-quarter operating profit dropped 76% on the year to EUR312 million. Revenue fell 11% to EUR24 billion. Volkswagen is scheduled to post detailed earnings April 29.

Volkswagen doesn’t provide net profit on a quarterly basis for individual brands.

Sourced via online.wsj.com

Tata Motors Will Announce Orders for Cheapest Car: Week Ahead

Tata Motors Ltd., India’s biggest maker of trucks, will announce the number of bookings it has received for the Nano, the world’s cheapest car.

Tata, based in Mumbai, may have got 1 million orders for the Nano, the Business Standard reported yesterday, without saying where it got the information. The automaker will unveil the final figure on April 28, the newspaper said.

Tata Motors is guaranteeing the cheapest price for only the first 100,000 cars, betting the economic slowdown will lure customers even though orders won’t be completed for more than a year. Bookings for the Nano opened April 9 and closed April 25.

Bharti Airtel Ltd., India’s biggest mobile-phone operator, and second-ranked Reliance Communications Ltd. will report earnings this week.

Bharti may on April 29 report fourth-quarter profit rose to 21.9 billion rupees ($437 million) from 18.5 billion rupees, according to a survey of 17 analysts. Reliance Communications may on April 30 say net income climbed to 13.4 billion rupees from 15 billion rupees.

Other companies reporting this week include Tech Mahindra Ltd. today, Sterlite Industries (India) Ltd. on April 28 and Biocon Ltd. on April 29.

The third round of India’s elections will take place on April 30, with voting in 107 constituencies including Mumbai. Counting of all votes will take place on May 16.

Bonds, Stocks

India’s 10-year bonds completed a fourth weekly gain, the longest winning streak this year, on speculation rising cash at banks and debt purchases by the central bank will boost demand for the securities.

The yield on the 6.05 percent note due February 2019 fell 29 basis points last week to 6.12 percent in Mumbai, according to the central bank’s trading system. The price climbed 2.05 per 100-rupee face amount to 99.48.

India’s benchmark Sensitive index climbed to a six-month high, ending the week at 11,329.05. Wipro Ltd. gained 14 percent last week, the best performer on the benchmark index, after the nation’s third-largest software developer reported a profit of 9.07 billion rupees in the quarter ended March 31, beating analyst estimates.

ACC Ltd., India’s biggest cement maker, climbed 9.8 percent after posting a profit of 4.05 billion rupees, beating the 3.36 billion rupee median estimate in a Bloomberg survey.

The rupee completed a seventh weekly gain, the longest winning streak since October 2007, on speculation a rally in local stocks will attract foreign funds.

The rupee strengthened 0.1 percent last week to 49.8125 per dollar in Mumbai, according to data compiled by Bloomberg. The currency has added 1.9 percent this month, paring five quarters of losses.

Electric cars in the limelight at Shanghai expo

With concern of a green future and in answer to the Chinese government’s appeal for energy-efficiency, global and domestic automobile manufacturers are showcasing their electric car models at the ongoing Shanghai auto show.

Troubled carmaker General Motors is displaying the production version of its Chevrolet Volt – a vehicle that delivers up to 64 km of gasoline and emission-free electric driving.

The Volt, expected to be introduced in China by 2011, uses electricity stored in its 16-kWh, lithium-ion battery to move the wheels at all times and speeds.

“Bringing the Volt to China shortly after its debut in the United States in 2010 is part of GM’s commitment to sharing our latest achievements in energy diversity with our second-largest market,” said Kevin Wale, president and managing director of GM China. “It will take China one step closer to its goals of clean transportation and energy freedom.”

Battery and car supplier BYD Auto, backed by US billionaire investor Warren Buffett, has three electric models – F3DM, F6DM and e6 on display at the show.

The company has sold more than 80 F3DM electric cars, the first mass-produced model in the world, priced at around $22,000 each, to the Shenzhen government for tests before public use.

“We have cooperated with local government to set up around twenty 220V-charger pillars in parking lots around offices and residential areas,” said Yang.

“The next step is to establish a charging station with 380V input. This will provide quick charging in 10 minutes and make the battery 70 percent full, enabling driving the car up to 70 km.”

Hebei-based Great Wall Motor unveiled its GWKulla all-electric car, with plans to enter the market next year, while Chery debuted its concept battery car – the Riichi M1.

China relies on imports for nearly half of its oil. “If China continues current growth rates it will almost double oil imports by 2030,” said a McKinsey report released at the end of last year. “But greater use of electric cars would cut this growth by around a quarter.”

Considering the huge green potential in China, German luxury carmaker Mercedes-Benz is showcasing its electric concept car BlueZERO, which can run on batteries or fuel cells.

“The flexible BlueZERO concept allows electro-mobility for every requirement, and highlights the fact that Mercedes-Benz is the world’s only car manufacturer to already have in place all the key technologies for electric cars offering full everyday practicality,” said Dieter Zetsche, chairman of Daimler AG and head of Mercedes-Benz.

Another German carmaker BMW is exhibiting its near-zero emission electric car Mini Cooper E at the show, slated for mass-production in 2010.

Japanese automaker Nissan and Toyota are also displaying their electric concept cars at the Shanghai auto show.

Sourced via chinadaily.com