Japanese carmakers Honda Motor and Nissan Motor sharply increased their half-year profits and improved their full-year outlook. Both companies’ profits and sales are supported by a weaker domestic currency, which, when translated, boosts the value of foreign earnings. However, the automakers are struggling in the Chinese market, where they face stiff competition, Kyodo News Agency reported.
Honda’s Impressive Results and Forecasts
Honda said today it increased net profit 82 percent to a record 616.3 billion yen in the first fiscal half ended Sept. 30. Its sales rose 19 percent to a record 9.6 trillion yen. The company now expects to report a net profit of 930 billion yen for the full financial year. In its previous forecast, it had estimated full-year profit of only 800 billion yen.
Profit is expected to increase by nearly 43 percent year-on-year, according to the new forecast. The company also improved its full-year outlook for sales, which are expected to reach a record 1.2 trillion yen instead of the previously forecast 1 trillion yen, according to the new forecast.
Honda pointed out that the improved forecasts for sales and profit were driven by a decline in the cost of raw materials, particularly precious metals, in addition to a weaker local currency. However, it lowered its full-year car sales estimate by a quarter of a million vehicles to 4.1 million, mainly due to the downturn in the Chinese market.
Nissan’s Profit Surge and Market Challenges
Nissan said today it more than quadrupled its half-year net profit to 292.2 billion yen (over 44 billion kronor). It improved its full-year profit estimate to 390 billion yen from the 340 billion yen previously forecast. Compared to last year, full-year profit is expected to increase by almost 76 percent.
Nissan’s half-year sales rose 30 percent to a record 6.1 trillion yen. The carmaker confirmed that it plans to sell about 3.7 million vehicles in the full year. However, it warned that it faces an “immediate challenge” to improve its business in China.
Nissan increased global sales by around three per cent to 1.62 million vehicles in the half-year. But in China alone, its sales fell by more than a third due to fierce competition and a shift of customers to electric and hybrid cars. The company plans to reverse the sales decline in China with new models, which it plans to start selling in the Chinese market in the second half of next year.