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Honda Motor Co. (NYSE:HMC) has posted a profit of ¥134.6 billion ($1.5 billion) for the third quarter of its fiscal ended December 31, 2009, a huge increase of 565.1% from the same period in 2008. This was equivalent to earnings per share of ¥74.19 (81 cents), an increase of ¥63.03 (68 cents) from ¥11.16 (12 cents) for the corresponding period last year.

Consolidated net sales and other operating revenue in the quarter rose 11.5% to ¥2.2 trillion ($24.3 billion). This was attributable to unfavorable currency translation effects and decreased sales in the automobile business.

Segment Performance

Honda Automobile segment sales slipped 2.8% to 914,000 units. In Japan, sales increased 31.1% to 177,000 units due to favorable sales of Insight, Fit and Step WGN models, along with tax breaks and subsidies for fuel-efficient vehicles. Outside of Japan, sales dipped 8.4% to 737,000 units due to decreased unit sales in North America and Europe, more than offsetting increased unit sales in Asia, especially in China and India.

Revenue from sales to external customers decreased 11.4% to ¥1.75 trillion ($19 billion) due to decreased unit sales and unfavorable currency translation effects. Operating income increased 56.5% to ¥110.4 billion ($1.2 billion) from the same period last year.

The Honda Motorcycle segment sales fell 5% to 2.4 million units. In Japan, sales decreased 22.7% to 34,000 units, while outside Japan it dropped 4.7% to 2.3 million units. Revenue from sales to external customers decreased 20.2% to ¥273.4 billion ($3 billion) from due to decreased unit sales and unfavorable currency translation effects. Operating income decreased 37.2% to ¥15.8 billion ($172 million) from the same period last year.

Revenue from sales to external customers in the Financial Services segment increased 5.8% to ¥151 billion ($1.6 billion) from the same period in 2008. Operating income increased 465.1% to ¥53.6 billion ($583 million) from the same period in 2008, due to decreased allowance for losses on credit and lease residual values and a decrease in funding costs.

Honda Power Product and Other segment sales declined 11.4% to 988,000 units. In Japan, sales fell 32.7% to 74,000 units. Outside Japan, sales dipped 9.1% to 914,000 units due to decreased unit sales in North America and Europe, more than offsetting increased unit sales in Asia. Revenue from sales to external customers in the segment decreased 9.1% to ¥66.7 billion ($724 million) from the same period last year due to lower unit sales of power products. The segment witnessed an operating loss of ¥2.9 billion ($32 million) in the quarter.

Financial Position

Consolidated cash and cash equivalents at December 31, 2009, increased ¥375 billion ($4.1 billion) from March 31, 2009 to ¥1.1 trillion ($11.6 billion). Long-term debt amounted to ¥3.1 trillion ($34 billion) as of that date. The long-term debt-to-capitalization ratio reduced drastically to 43% from 80% in the second quarter of the fiscal year.

In the first nine months of fiscal 2010 ended December 31, 2009, net cash flow from operating activities amounted to ¥1.2 trillion ($13.1 billion). Meanwhile, capital expenditures totaled ¥296 billion ($3.2 billion) during the same period.

Guidance Raised

For fiscal 2010 ending March 31, 2010, Honda projected a 14.8% decline (previously 15.6%) in net sales and other operating revenue to ¥8.53 trillion (previously ¥8.45 trillion) or $93 billion. Unit sales are expected to fall 117,000 vehicles to 3.4 million vehicles in the Automobile segment; 599,000 motorcycles to 9.5 million motorcycles in the Motorcycle segment; and 637,000 components to 4.5 million components in the Power Product and Other segment.

However, profit is expected to rise 93.4% (previously 13%) to ¥265 billion (previously ¥155 billion) or $3 billion. This is equivalent to earnings per share of ¥146.04 (previously ¥85.42) or $1.59.

Source: Honda Profit Jump to $1.5 Billion