Honda Motor Co.
(
HMC
) reported a 36.1% rise in profits to ¥82.23 billion ($1.06
billion) or ¥45.63 (59 cents) per share in the second quarter of
its fiscal 2013 from ¥60.43 billion or ¥33.53 per share in the
year-ago quarter. However, earning per share in the quarter
lagged the Zacks Consensus Estimate by 33 cents.
Consolidated net sales and other operating revenues in the
quarter appreciated 20.4% to ¥2.27 trillion ($29.27 billion)
driven by higher revenues from the company's Automobile segment
with the recovery from the impact of twin disaster in Japan in
2011, offset partially by unfavorable foreign currency
translation effects.
Consolidated operating profit jumped 92.1% to ¥100.87 billion
($1.30 billion) from ¥52.51 billion a year ago. The increase was
attributable to higher sales volume, favorable model mix and
positive impact from cost reduction measures, offset partially by
increased selling, general and administrative (SG&A) and
research and development (R&D) expenses, and unfavorable
foreign currency effects.
Segment Results
Revenues in the
Automobile
segment rose 32.5% to ¥1.77 trillion ($22.76 billion) on a 42.9%
increase in unit sales to 816 thousand, despite unfavorable
currency effects. Operating income was ¥37.14 billion ($478.57
million) in sharp contrast to an operating loss of ¥29.14 billion
a year ago due to higher sales volume, favorable model mix and
positive impact from cost reduction measures, offset partially by
increased SG&A expenses and R&D expenses, and unfavorable
foreign currency effects.
Revenues in the
Motorcycle
segment dipped 13.3% to ¥309.71 billion ($3.99 billion) due to
unfavorable currency despite higher unit sales. Operating income
fell 34.8% to ¥25.40 billion ($327.32 million) from ¥38.93
billion in the same period last year due to lower sales of
exported parts for production from Japan and unfavorable foreign
currency effects, offset partially by lower SG&A expenses.
Revenues in the
Financial Services
segment edged up 3.1% to ¥130.40 billion ($1.68 billion) in the
quarter. However, operating income went down 10.6% to ¥38.28
billion ($493.26 million) from ¥42.83 billion a year ago due to
gross residual losses on leased vehicles.
Revenues in the
Power Product and Other
slipped 5.9% to ¥64.96 billion ($837.10 million) due to lower
revenues in other businesses and unfavorable foreign currency
translation effects, despite an increase in unit sales. The
segment had a meager operating profit of ¥53.00 million ($683
thousand) compared with an operating loss of ¥114.00 million a
year ago due to an increase in sales volume and favorable model
mix, despite increased SG&A expenses and unfavorable foreign
currency translation effects.
Financial Position
Honda had consolidated cash and cash equivalents of ¥981.31
billion ($12.65 billion) as of September 30, 2012, compared with
¥1.25 trillion as of March 31, 2012. Total debt amounted to ¥4.01
trillion ($51.71 billion) as of September 30, 2012, translating
into a debt-to-capitalization ratio of 47.7%, compared with ¥4.11
trillion and a debt-to-capitalization ratio of 48.3% as of March
31, 2012.
In the six months of fiscal 2013, Honda's cash flow from
operations fell to ¥309.81 billion ($3.99 billion) from ¥493.64
billion in the year-ago period, despite a rise in profits. The
decline was attributable to increases in trade accounts and notes
receivable and inventories as well as a decrease in trade
accounts and notes payable. Meanwhile, capital expenditures
increased to ¥282.33 billion ($3.64 billion) from ¥148.10 billion
in the first half of fiscal 2011.
Lower Guidance
Honda downgraded its revenue and earnings guidance for fiscal
2013 due to a negative impact from increased SG&A expenses
and R&D expenses, and unfavorable currency translation
effect.
The company has projected revenues to improve 23.3% ¥9.80
trillion, operating profits to rise 124.8% to ¥520 billion, net
profit to go up 77.3% to ¥375 billion and earnings per share of
¥208.07 for the year. This compared with the prior outlook of a
29.6% increase in revenues to ¥10.30 trillion, 168% rise in
operating profits to ¥620 billion, 122.2% increase in net profit
to ¥470 billion and earnings per share of ¥260.78 for the year.
Our Take
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.
(
TM
).
The company is recognized internationally for its expertise and
leadership in developing and manufacturing a wide variety of
products that incorporate its efficient internal combustion
engine technologies ranging from small general-purpose engines to
specialty sports cars. Currently, it retains a Zacks #3 Rank,
which translates to a short-term (1 to 3 months) rating of Hold
and we have reiterated our long-term (more than 6 months)
recommendation of Neutral on the stock.
(Exchange Rate: $1= ¥77.60)
HONDA MOTOR (HMC): Free Stock Analysis Report
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