Honda stays in black, North America remains a sore spot

TOKYO -- Plunging sales hammered North American profits at Honda Motor Co. in the carmaker's fiscal first quarter but weren't bad enough to scuttle the company's earnings outlook.

Honda, one of the few automakers still expecting to be in the black this year, lifted its net and operating profit forecasts on the back of cost cuts and slowly improving demand.

But in the quarter ended June 30, North America was the trouble spot, as rising unemployment and tight credit markets discouraged people from visiting dealer showrooms.

Operating profit in North America tumbled 92.5 percent to 7.18 billion yen, or $74.3 million at current exchange rates, from a year earlier.

Regional sales fell 34.6 percent to $10.21 billion (975.7 billion yen).

"The North American market is still a weaker than we expected," Executive Vice President Koichi Kondo said today while announcing financial results.

Local earnings were hurt partly by production cuts that boosted fixed costs, he added. Honda has slashed output in the United States to bring production in line with sagging demand.

Nissan sales tumble in North America as it clings to profit

TOKYO -- Sliding sales in North America helped send operating profit at Nissan Motor Co. tumbling 86 percent, but the Japanese automaker avoided a loss through heavy cost cutting.

North American revenue fell 37.1 percent to 570.9 billion yen, or $5.97 billion at current exchange rates, in fiscal first quarter ended June 30, compared with a year earlier.

On a unit basis, North America posted the worst decline of any region. Nissan sold 225,000 vehicles in the period, or 31.6 percent fewer than the year before.

Despite the meltdown in demand, Nissan saw operating profit in North America climb to $368.6 million , from $105.7 million a year earlier.

But that increase was relative to a massive one-time charge.

Last year's results were depressed by a $1 billion provision for residual losses on used car prices, about a quarter of which was logged in the first quarter. Nissan didn't need to book such a loss this year because prices stabilized, CFO Alain Dassas said.

Cost cutting also contributed to the North American profit, he said.

Honda's $79.8 million profit raises forecasts

Tokyo -- Honda bucked expectations of losses in the first quarter, Wednesday posting a 7.5 billion yen ($79.8 million) profit and raising forecasts for the full year on optimism auto sales will improve.

The results for the April-June period were better than the flood of red ink some analysts had forecast, though profit was still down 96 percent, battered by slumping car sales and a strong yen, which offset cost cuts. Honda made a net profit of 173.3 billion yen in the same period of 2008.

The numbers show that Japan's No. 2 automaker, reputed for ecological small cars, including the Insight hybrid and the Accord sedan, is holding up better than its rivals during the global economic slump.

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Governments around the world have introduced measures that aim to boost hybrid and other green-car sales as part of broader economic stimulus packages.

Tokyo-based Honda raised its forecast for the full year through March 2010 to a 55 billion yen ($585.1 million) profit from 40 billion yen ($425.5 million).
Other Japanese automakers, including Toyota Motor Corp., the world's biggest, are forecasting deep losses for the full fiscal year. Toyota reports earnings Aug. 4.

Even with the raised forecast, Honda will be posting a 59.9 percent decrease in profit for the fiscal year, for the second consecutive year of slipping profits.

The previous fiscal year, Honda had posted a 137 billion yen profit -- a result that's dismal for once-booming Honda, reflecting the fallout from the global financial crisis, which hit last year.

Honda's quarterly sales tumbled 30.2 percent to 2.002 trillion yen ($21.3 billion) from 2.867 trillion yen a year earlier.

It sold 766,000 vehicles around the world during the quarter, down 20.4 percent, mainly because of crashing sales in the key North American market.

For the full fiscal year, Honda expects to sell 3.295 million vehicles globally, better than its April projection for selling 3.2 million vehicles. For the fiscal year ended March 31, Honda's global vehicle sales totaled a stronger 3.52 million vehicles.

With mature markets like the U.S., Europe and Japan stagnant, Honda is looking to new markets for growth. Honda said earlier this week that it posted record production in China for the first half of this year.

Also Wednesday, Nissan reported a smaller-than-expected 16.5 billion yen ($175.5 million) loss for the fiscal first quarter Wednesday and unveiled plans to build more cars in China.

Besides making popular cars, like the Odyssey minivan and Fit subcompact, Honda also makes motorcycles, small jets and the Asimo walking human-shaped robot.

Honda shares rose 1 percent to close at 2,770 yen ($29) in Tokyo. Earnings were announced after trading ended.

Daimler posts $1.51 billion loss

Berlin -- Germany's Daimler AG said Wednesday that it lost euro1.06 billion ($1.51 billion) in the second quarter as the recession hurt car and truck sales and the company took charges related to its stake in Chrysler. But the company saw signs of a turnaround and its shares rose.

The loss in the April-June period compared with a profit of nearly euro1.3 billion a year earlier. Analysts surveyed by Thomson Reuters had expected a net loss of euro1.5 billion.

Despite the third quarterly loss in a row, the company predicted a "gradual improvement" in its operating profit in the coming months. The news helped push Daimler shares up 5.3 percent to euro31.67 in Frankfurt trading.

Sales fell 25 percent to euro19.6 billion in the quarter compared with euro26 billion last year, below the euro20 billion that analysts had forecast, a stark reminder of the bleak landscape that car makers worldwide face amid the economic crisis. The company's truck business, the world's largest by sales, saw unit sales fall 60 percent.

Stuttgart-based Daimler, whose brands include Mercedes-Benz, Maybach and Smart, said sales across all of its units, including luxury cars, vans, trucks and buses slid 31 percent in second quarter compared to last year with just 391,500 sold worldwide.

Looking ahead to the end of 2009, the automaker said that total sales were likely to "decrease significantly" from last year when it sold 2.1 million vehicles.

Despite that, Chief Executive Dieter Zetsche told a conference call of analysts and reporters that "sales are stabilizing on the low level and there are signs of a ... turnaround."

Bernstein Research analyst Max Warburton, in a research note, said Daimler's results suggest it could be profitable again by the fourth quarter, which, "should reassure investors that we are past the trough for Daimler and the sector."

Other factors that weighed on profits included its relinquishing a 19.9 percent equity stake in Chrysler Group LLC effective June 3.

Daimler will take euro387 million in expenses related to the stake during the second quarter. Chrysler restructured in bankruptcy court and emerged in an alliance with Italy's Fiat SpA.

However, Daimler said the effects were partially offset by a transfer of charges in stock in aerospace concern EADS NV which saw it gain euro35 million.

Daimler's trucks unit saw its second-quarter revenue fell to euro4.2 billion from euro7.4 billion a year ago. The truck business pretax loss was euro508 million compared with a profit of euro608 million last year, with factors including the restructuring of the North American truck business.

The truck division's unit sales decreased by almost 60 percent to 54,100 units for the quarter, but Daimler said its market share increased in nearly all its major markets.

Daimler is the world's biggest truckmaker by sales with brands including Mercedes, Freightliner and Fuso.

The Mercedes-Benz Cars division saw unit sales fall 19 percent to 287,200 cars for the quarter compared with 354,000 last year. However, Daimler said the second quarter's deliveries improved by 24 percent over the first quarter, indicating the sales skid may have bottomed out.

That put second quarter revenues for the cars division at euro10.6 billion compared with near euro13 billion in the year-ago quarter, an 18 percent decline.

The company said the cars division's pretax loss was euro340 million compared with a profit of euro1.2 billion a year earlier.

From January to June, the company lost euro2.3 billion compared with a profit of euro2.7 billion last year while sales slipped 23 percent to euro38.3 billion compared with euro50 billion in the first six months of 2008.

Daimler said however, that its efforts to cut costs and optimize operations showed positive effects during the April-June period and first six months.

Daimler enacted shorter work schedules for some of its production to respond to the lower demand during the first half of the year, for example. Some of those programs have been scaled back, while some remain in place.