Honda and Canon Say Earnings Are Slowly Improving
HONG KONG — Two of Japan’s export heavyweights, Honda and Canon, on Tuesday reported quarterly earnings that indicated business is rebounding from the depressed levels of earlier this year. But the results also highlighted how tough and uncertain conditions remain as the global economy struggles to pick up speed.
Both companies said net profits were down more than 50 percent compared to the same quarter a year ago. Yet Honda, Japan’s second-largest car maker after Toyota, struck a more confident note than in previous quarters, raising its forecast for full-year net earnings to ¥155 billion, or $1.68 billion, up from the ¥55 billion it had projected in July.
Honda’s earnings for the quarter that ended Sept. 30 came in at ¥54 billion, substantially better than the ¥7.5 billion during the previous three months and the ¥186.1 billion loss in the quarter that ended March 31.
The results reflected the combined effect of cost cuts, government incentives to boost car purchases in the United States and elsewhere, and renewed economic growth in many of the world’s leading economies. But the numbers also illustrated the difficulties still facing manufacturers as consumers, worried about their job prospects, hold off on purchases.
Honda sold 2.4 million motorbikes and 838,000 cars in the quarter — down 17 percent and 10 percent, respectively, from a year earlier, but more than during the previous three-month period.
In addition to weak demand, the strong yen has been a growing problem for Japanese exporters. On Tuesday, $1 bought 92 yen, compared to about 111 a year ago. That means Japanese producers’ goods have become more expensive for consumers in the United States.
As for Canon, the company said it is continuing to see robust sales for its cameras, but demand for items such as photocopiers is still low as businesses continue to rein in costs.
Overall net profits at Canon came in at ¥36.7 billion during the quarter. The company expects a net profit of ¥110 billion for the year that ends in March 2010, 64 percent less than during the previous fiscal year.
Stimulus measures by governments around the world have “led to signs of a turnaround,” such as higher consumer spending and exports, Canon said in a statement. But it added that these efforts “have not proven enough to remove the sense of uncertainty about the future,” and that a full-fledged turnaround in the global economy would not materialize for some time.
Honda, although benefiting from the popularity of its fuel-efficient cars, warned that “a persistent decline in the European economy” remained a concern, and that the situation in Japan continued to be “severe, with a record high unemployment rate.”
In contrast to Asia’s more buoyant emerging economies, Japan’s is struggling to pick up speed despite ultra-low interest rates and a variety of government measures aimed at propping up growth.
The country’s central bank is due to consider whether to extend or to end some of its corporate funding support measures when its policy board meets on Friday. Like its counterparts elsewhere, it is facing a careful balancing act between the need to start considering withdrawing some of measures and fears that too speedy a withdrawal of support could kill off the nascent turnaround.
Japan’s new finance minister, Hirohisa Fujii, on Tuesday complained that the Bank of Japan appeared too optimistic about the economy, saying it was looking at things “in its own way,” Reuters reported.
HONG KONG — Two of Japan’s export heavyweights, Honda and Canon, on Tuesday reported quarterly earnings that indicated business is rebounding from the depressed levels of earlier this year. But the results also highlighted how tough and uncertain conditions remain as the global economy struggles to pick up speed.
Both companies said net profits were down more than 50 percent compared to the same quarter a year ago. Yet Honda, Japan’s second-largest car maker after Toyota, struck a more confident note than in previous quarters, raising its forecast for full-year net earnings to ¥155 billion, or $1.68 billion, up from the ¥55 billion it had projected in July.
Honda’s earnings for the quarter that ended Sept. 30 came in at ¥54 billion, substantially better than the ¥7.5 billion during the previous three months and the ¥186.1 billion loss in the quarter that ended March 31.
The results reflected the combined effect of cost cuts, government incentives to boost car purchases in the United States and elsewhere, and renewed economic growth in many of the world’s leading economies. But the numbers also illustrated the difficulties still facing manufacturers as consumers, worried about their job prospects, hold off on purchases.
Honda sold 2.4 million motorbikes and 838,000 cars in the quarter — down 17 percent and 10 percent, respectively, from a year earlier, but more than during the previous three-month period.
In addition to weak demand, the strong yen has been a growing problem for Japanese exporters. On Tuesday, $1 bought 92 yen, compared to about 111 a year ago. That means Japanese producers’ goods have become more expensive for consumers in the United States.
As for Canon, the company said it is continuing to see robust sales for its cameras, but demand for items such as photocopiers is still low as businesses continue to rein in costs.
Overall net profits at Canon came in at ¥36.7 billion during the quarter. The company expects a net profit of ¥110 billion for the year that ends in March 2010, 64 percent less than during the previous fiscal year.
Stimulus measures by governments around the world have “led to signs of a turnaround,” such as higher consumer spending and exports, Canon said in a statement. But it added that these efforts “have not proven enough to remove the sense of uncertainty about the future,” and that a full-fledged turnaround in the global economy would not materialize for some time.
Honda, although benefiting from the popularity of its fuel-efficient cars, warned that “a persistent decline in the European economy” remained a concern, and that the situation in Japan continued to be “severe, with a record high unemployment rate.”
In contrast to Asia’s more buoyant emerging economies, Japan’s is struggling to pick up speed despite ultra-low interest rates and a variety of government measures aimed at propping up growth.
The country’s central bank is due to consider whether to extend or to end some of its corporate funding support measures when its policy board meets on Friday. Like its counterparts elsewhere, it is facing a careful balancing act between the need to start considering withdrawing some of measures and fears that too speedy a withdrawal of support could kill off the nascent turnaround.
Japan’s new finance minister, Hirohisa Fujii, on Tuesday complained that the Bank of Japan appeared too optimistic about the economy, saying it was looking at things “in its own way,” Reuters reported.
Source: New York Times
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