Honda posts record Q1, Renault returns to H1 profit

Honda posts record Q1, Renault returns to H1 profit
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First Published: Fri, Jul 30 2010. 02 46 PM IST
Updated: Fri, Jul 30 2010. 02 46 PM IST
Tokyo/Boulogne-Billancourt, France: Honda Motor Co raised its full-year forecasts after posting a record quarterly net profit on Friday, while brisk sales returned France’s Renault to profit in the first half.
Honda, Japan’s No.2 automaker, joined rivals in reporting strong results for April-June, but like the rest of the industry, faces concerns over slowing demand in the United States and China, the world’s two largest auto markets, and in Europe.
Car makers are fearful that austerity measures in Europe including tax hikes in some markets will slow the recovery there, leading Renault to stick to its goal for the year.
“In an uncertain environment in the second half of 2010, the group will continue to focus on its key target of generating positive free cash flow for the full year,” Renault said.
Renault’s half-year sales rose 23.1% like-for-like to €19.67 billion ($25.7 billion), while recurring operating profit reached €780 million, or 4% of sales. In the year-earlier period the group had posted a recurring operating loss of €620 million.
Renualt partner Nissan Motor Co, Japan’s No.3 automaker, had on Thursday reported its strongest quarterly operating profit in more than two years as sales surged, but it retained its cautious guidance.
Honda lifts forecasts
Honda, the maker of the Accord and Civic cars reported a nine-fold jump in quarterly operating profit to ¥234.4 billion ($2.7 billion), easily beating the average 138.3 billion estimated by six analysts surveyed by Reuters.
First-quarter net profit, which includes earnings made in China, was ¥272.5 billion, its best quarter ever and up from ¥7.6 billion last year.
Honda lifted its net profit forecast to ¥455 billion from ¥340 billion but undershooting a consensus of ¥484 billion from a survey of 19 analysts by Thomson Reuters.
“The new forecasts may look conservative when you look at the first-quarter performance, but there are many concerns and risks to take into account for the rest of the year,” executive vice president Koichi Kondo told a news conference.
One issue clouding the outlook for Japanese automakers is a further strengthening in the yen, with the dollar hitting an eight-month low below ¥86.27 on Friday.
Tomomi Yamashita, fund manager, Shinkin Asset Management said that analysts’ forecasts might be too optimistic.
“I do think there’s a scenario where earnings momentum could go down quarter by quarter, which would explain this quarter and then the full year forecasts,,” he said. “This does seem to suggest a gradually worsening momentum, but even so the numbers still aren’t that bad.”
Honda’s operating profit margin improved to 9.9% from 4.2% in the previous quarter, thanks largely to its motorcycle business.
Michelin margins at record
Also reporting strong margins was French tyre maker Michelin, which said it was aiming for an operating margin close to 9% in 2010 as the rebound in tyre markets helped it post a record first-half operating margin.
In South Korea, Kia Motors posted a 61% rose quarterly net profit, beating estimates as it enjoyed brisk sales of newly launched models.
Renault shares fell 0.3% in early trade, while Honda ended down 0.3% ahead of its results. Kia gained 2.8%, while Michelin added about 0.7%.
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First Published: Fri, Jul 30 2010. 02 46 PM IST