Honda Q4 Earnings Beat Ests, Up Y/Y - Analyst Blog
29 April 2014 - 1:00AM
Zacks
Honda Motor Co. Ltd. (HMC) posted a 125.1% rise
in earnings to ¥170.5 billion ($1.66 billion) or ¥94.61 (92 cents)
per share in the fourth quarter (ended Mar 31, 2014) of fiscal 2014
from ¥75.8 billion or ¥42.03 per share in the same quarter of the
prior fiscal year. Earnings per share surpassed the Zacks Consensus
Estimate of 88 cents.
Consolidated net sales and other operating revenues grew 12.8% to
¥3.1 trillion ($30.1 billion) but fell short of the Zacks Consensus
Estimate of $30.8 billion. The year-over-year increase was
attributable to higher revenues from the automobile and motorcycle
business operations as well as favorable foreign currency
translation effects.
Consolidated operating income surged 21.5% to ¥165.3 billion ($1.6
billion) from ¥136 billion in the fourth quarter of fiscal 2013,
driven by higher sales volume and model mix along with favorable
foreign currency effects and cost reduction initiatives. The
increase was, however, partially offset by higher selling, general
and administrative (SG&A) expenses and Research &
Development (R&D) expenses.
Fiscal 2014 Performance
Honda’s consolidated earnings per share rose 56.4% year over year
to ¥318.54 ($3.10) per share from ¥203.71 year ago. Revenues for
fiscal 2014 increased 19.9% to roughly ¥11.8 trillion ($115.1
billion) from ¥9.9 trillion in fiscal 2013. The year-over-year
upside was supported by increased revenues from the automobile and
motorcycle business operations as well as favorable foreign
currency translation effects.
Segment Performance
Revenues in the Automobile segment rose 11.3% to ¥2.38 trillion
($23.1 billion) on a 3.4% rise in consolidated unit sales to
933,000 vehicles and favorable foreign currency translation
effects. Operating profit decreased 5.6% to ¥72.9 billion ($709
million) due to increased SG&A and R&D expenses, which
negated the effects of favorable foreign currency translations and
cost reduction initiatives.
Revenues at the Motorcycle segment scaled up 19.5% to ¥448.5
billion ($4.4 billion), owing to higher consolidated unit sales and
favorable foreign currency translation effects. Consolidated unit
sales rose 9.6% to 2.7 million motorcycles. Operating income surged
70.3% to ¥42.9 billion ($417 million) on improved sales volume and
model mix along with cost reduction initiatives and favorable
foreign currency translation effects, partially offset by higher
SG&A expenses.
Revenues in the Financial Services segment increased 23.9% to
¥187.7 billion ($1.8 billion) on the back of higher revenues from
operating leases and favorable foreign currency translation
effects. Operating income improved 19.3% to ¥48.8 billion ($474
million), attributable to favorable foreign currency
effects.
Revenues in the Power Product and Other segment escalated 1.9% to
¥82.6 billion ($804 million) driven by favorable foreign currency
translation effects and increased unit sales. Unit sales in the
segment went up 1.4% to 1.99 million. The segment recorded
operating income of ¥0.5 billion ($6 million), owing to improved
sales and model mix in the power product business.
Financial Position
Consolidated cash and cash equivalents decreased to ¥1.17 trillion
as of Mar 31, 2014, from ¥1.2 trillion as of Mar 31, 2013. Total
debt amounted to ¥5.85 trillion as of Mar 31, 2014, translating
into a debt-to-capitalization ratio of 49.7%, compared with total
debt of ¥4.9 trillion and a debt-to-capitalization ratio of 49.2%
as of Mar 31, 2013.
In fiscal 2014, cash flow from operations improved to ¥1.2 trillion
from ¥800.7 billion in fiscal 2013, primarily on higher cash
receipts due to better automobile sales, which offset the increase
in payments for parts and raw materials. Meanwhile, capital
expenditures increased to ¥29.9 billion from ¥4.3 billion in fiscal
2013.
Guidance
For fiscal 2015, Honda has projected revenues to increase 7.7% to
¥12.8 trillion. Operating income is expected to rise 1.3% to ¥760
billion and net income is projected to increase 3.6% to ¥595
billion or ¥330.14 per share.
Currently, shares of Honda retain a Zacks Rank #3 (Hold).
Better-ranked automobile stocks worth considering include
CNH Industrial N.V. (CNHI), Volkswagen
AG (VLKAY) and Fuji Heavy Industries Ltd.
(FUJHY). CNH and Volkswagen carry a Zacks Rank #1 (Strong Buy),
while Fuji carries a Zacks Rank #2 (Buy).
CNH INDUSTRIAL (CNHI): Free Stock Analysis Report
FUJI HEAVY ADR (FUJHY): Get Free Report
HONDA MOTOR (HMC): Free Stock Analysis Report
VOLKSWAGEN-ADR (VLKAY): Get Free Report
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