Honda Motor Co.
) posted a 5.8% rise in earnings to ¥75.8 billion ($805 million)
or ¥42.03 (45 cents) per share in the fourth quarter of the
fiscal year ended Mar 31, 2013 from ¥71.6 billion or ¥39.72 in
the same quarter of prior fiscal year. However, earnings lagged
the Zacks Consensus Estimate by 18 cents during the quarter.
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Consolidated net sales and other operating revenues grew 14.1% to
¥2.7 trillion ($29.2 billion). The increase was attributable to
improved revenues in automobile business operations as production
recovered from the impact of Thai flood as well as favorable
foreign currency translation effects.
Consolidated operating profit rose 21.4% to ¥136.0 billion ($1.4
billion) from ¥112.0 billion in the fourth quarter of fiscal
2012, driven by a positive impact from cost reduction measures
and favorable foreign currency effects, partially offset by
higher R&D and SG&A expenses.
Revenues in the Automobile segment rose 15.8% to ¥2.1 trillion
($22.7 billion) on an 8.5% rise in unit sales to 902 thousand
vehicles and favorable foreign currency translation effects.
Operating profit surged 71.1% to ¥77.2 billion ($822.0 million),
due to positive impact from cost reduction measures and favorable
foreign currency effects, partially offset by increased SG&A
Revenues in the Motorcycle segment scaled up 4.7% to ¥375.4
billion ($4.0 billion), mainly due to favorable foreign currency
translation effects. Unit sales rose marginally by 0.3% rise to
2.5 million motorcycles. Operating profit dipped 23.2% to ¥25.2
billion ($268 million) due to lower sales volume and model mix
and increase in R&D expenses.
Revenues in the Financial Services segment increased 17.4% to
¥151.5 billion ($1.6 billion) due to an increase in revenues from
operating leases and favorable foreign currency translation
effects. Operating income rose 13.8%to ¥40.9 billion ($435.0
million) due to a fall in SG&A expenses and favorable
Revenues in the Power Product and Other segment escalated 11.9%
to ¥81.1 billion ($863.0 million) driven by favorable foreign
currency translation effects, despite lower revenues in other
businesses. However, unit sales in the segment slid 2.3% to 2.0
million. The segment had a broader operating loss of ¥7.4 billion
($79.0 million) compared with ¥2.0 billion in the prior year,
driven by higher R&D expenses.
In fiscal 2013, Honda reported an impressive 73.6% rise in
earnings to ¥367.1 billion ($3.9 billion) or ¥203.71 ($2.17) per
share from ¥211.5 billion or ¥117.34 per share in the prior year.
Consolidated revenues in the year improved 24.3% to ¥9.9 trillion
($96.7 billion), driven by higher revenues from the automobile
business with the recovery in production from the impact of the
Great East Japan Earthquake and Thai flood as well as favorable
foreign currency translation effects..
Consolidated operating profit for the year more than doubled to
¥544.8 billion ($5.8 billion) from ¥231.4 billion in the prior
year, driven by an increase in sales volume and model mix as well
as positive impact from cost reduction measures, partially offset
by increased SG&A and R&D expenses.
Consolidated cash and cash equivalents declined to ¥1.2 trillion
($12.9 billion) as of Mar 31, 2013 from ¥1.25 trillion as of Mar
31, 2012. Total debt amounted to ¥4.9 trillion ($52.4 billion) as
of Mar 31, 2013, translating into a long-term
debt-to-capitalization ratio of 49.3%, compared with ¥4.1
trillion or 48.3% as of Mar 31, 2012.
In the fiscal year, cash flow from operations improved to ¥800.7
billion ($8.6 billion) from ¥761.5 billion in fiscal 2012,
primarily due to higher profits. Meanwhile, capital expenditures
increased to ¥626.9 billion ($6.7 billion) from ¥397.2 billion in
For fiscal 2014, Honda has projected revenues to increase 22.5%
to ¥12.1 trillion. Operating profit is expected to surge 43.2% to
¥780 billion and profits are anticipated to jump 58.0% to ¥580
billion or ¥321.81 per share. The company expects higher
revenues, favorable model mix and effective cost reduction
measures to contribute to the increase in profits during the
Honda is a leading manufacturer of automobiles and the largest
manufacturer of motorcycles in the world. It is the second
largest automaker in Japan following
Toyota Motor Corp.
) and operates globally like another Japanese automaker
Nissan Motor Co.
). Currently, shares of Honda retain a Zacks Rank #4 (Sell).
While we avoid Honda from investment perspective,
) is worth to look for in the same industry with a Zacks Rank #2