Honda Q3 Net Up 9%, Helped by Weak Yen, Raises FY Guidance

Honda reported Q3 (ended Dec. 31) net income increased 8.8% to ¥144.83 billion ($1.19b), but fell short of analysts' average estimate of ¥153.6b ($1.26b) according to a survey by Reuters Estimates and ¥150.6 ($1.24b) by Bloomberg. Sales increased 12% on the quarter to ¥2.77t ($22.7b). Honda gained ¥10.6b ($87m) from the weaker yen, but said it was offset by higher materials costs and other spending. It raised its net income guidance for the fiscal year ending in March to ¥560b ($4.6b), from ¥555b ($4.55b) previously, and sales are now forecast at ¥11.1t ($91.1b) versus ¥11t ($90.3b) previously. Honda grew its U.S. market share 0.5% in '06 to 9.1% and expects sales to rise 3% in '07 to 1.56m units. Separately, Honda and XM Satellite Radio have agreed to extend their factory-installation of XM's radios in Honda's vehicles until 2016. Honda's ordinary shares closed down 1.25% to ¥4,750 ($39.09 ADR equiv. at ¥121.5/$1) ahead of its earnings release. Nissan reports on Friday and Toyota reports next Tues. Ford reported a quarterly loss of $5.8b last week. GM has delayed its earnings release due to the sale of its financing arm GMAC. It said it expects greatly improved profit and revenue. DaimlerChrylser reports Feb. 14.

• Sources: Earnings release and presentation [pdf], Bloomberg, Reuters, TheStreet.com
• Commentary: Investing In Japanese Automakers: Eye On Honda

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• Stocks and ETFs to watch: Honda (HMC). Competitors: Toyota (TM), Nissan (NSANY), General Motors (GM), Ford (F), DaimlerChrysler (DCX). ETFs: iShares MSCI Japan Index (EWJ), iShares S&P/TOPIX 150 (ITF), BLDRS Asia 50 ADR Index (ADRA)

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