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Honda Motor Co., Ltd. (HMC - Free Report) reported consolidated income of ¥174.6 billion ($1.7 billion) or ¥96.93 per share (94 cents per ADR) in the first quarter (ended Jun 30, 2016) of fiscal 2017, down 6.1% from the year-ago quarter. Earnings per share surpassed the Zacks Consensus Estimate of 71 cents.
Consolidated net sales and other operating revenues went down 6.3% year over year to ¥3.47 trillion ($33.74 billion). The figure surpassed the Zacks Consensus Estimate of $32.6 billion. The year-over-year decline can be attributed to unfavorable foreign currency translation effects which offset increased consolidated unit sales in automobile and motorcycle business operations.
Consolidated operating profit amounted to ¥266.8 billion ($2.56 billion), up 11.5% from the prior-year quarter. The improvement was due to cost-reduction efforts, an increase in profit from improved sales volume and model mix, and a decrease in selling, general and administrative (SG&A) expenses that include quality-related expenses. These factors offset the unfavorable currency effects and the impact of the 2016 Kumamoto earthquake.
Segment Performance
Revenues in the Automobile segment fell 6.6% to ¥2.5 trillion ($24.3 billion) on unfavorable foreign currency translation effects, which offset higher unit sales. Unit sales rose 2.3% to 908,000 vehicles. Meanwhile, operating profit amounted to ¥184.5 billion ($1.79 billion), up 41.1% on increased sales volume and model mix, lower SG&A expenses, and cost-reduction efforts, partially offset by unfavorable foreign currency effects.
Revenues in the Motorcycle segment decreased 8.5% to ¥432.4 billion ($4.2 billion) due to unfavorable foreign currency translation effects, which offset the 11.2% increase in consolidated unit sales to 2.83 million motorcycles. Operating income fell 43.9% to ¥31.1 billion ($303 million) owing to lower sales volume and model mix as well as unfavorable foreign currency effects, which offset the impact of cost-reduction efforts.
Revenues in the Financial Services segment fell 1.9% to ¥464.6 billion ($4.52 billion) due to unfavorable foreign currency translation effects, which offset higher revenues from operating leases. Also, operating income declined 3.6% to ¥50.5 billion ($491 million), attributable to unfavorable foreign currency effects.
Revenues in the Power Product and Other segment fell 8.3% to ¥75.6 billion ($735 million) in the reported quarter. The decline was due to lower consolidated unit sales in power product business. Unit sales in the segment dropped 4.5% to 1.49 million. The segment's operating profit improved 2.9% to ¥0.5 billion ($5 million) due to lower operating costs and expenses in other businesses, which offset the decrease in profit attributable to lower sales volume and model mix.
Financial Position
Consolidated cash and cash equivalents amounted to ¥1.67 trillion ($16.2 billion) as of Jun 30, 2016, down from ¥1.76 trillion ($17.1 billion) as of Mar 31, 2016.
In first-quarter fiscal 2017, cash flow from operations fell 58.8% to ¥171.3 billion ($1.66 billion). This decline was due to a decrease in cash received from customers, including unfavorable foreign currency translation effects.
Guidance
For fiscal 2017, Honda expects revenues to decline 5.8% to ¥13.75 trillion ($130.95 billion). Operating income is likely to rise 19.2% to ¥600 billion ($5.71 billion). Net income is projected to improve 13.2% to ¥390 billion ($3.71 billion) or ¥216.39 ($2.06) per share.
Currently, Honda has a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include American Axle & Manufacturing Holdings Inc. (AXL - Free Report) , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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Honda's (HMC) Q1 Earnings Beat Estimates, Decline Y/Y
Honda Motor Co., Ltd. (HMC - Free Report) reported consolidated income of ¥174.6 billion ($1.7 billion) or ¥96.93 per share (94 cents per ADR) in the first quarter (ended Jun 30, 2016) of fiscal 2017, down 6.1% from the year-ago quarter. Earnings per share surpassed the Zacks Consensus Estimate of 71 cents.
Consolidated net sales and other operating revenues went down 6.3% year over year to ¥3.47 trillion ($33.74 billion). The figure surpassed the Zacks Consensus Estimate of $32.6 billion. The year-over-year decline can be attributed to unfavorable foreign currency translation effects which offset increased consolidated unit sales in automobile and motorcycle business operations.
Consolidated operating profit amounted to ¥266.8 billion ($2.56 billion), up 11.5% from the prior-year quarter. The improvement was due to cost-reduction efforts, an increase in profit from improved sales volume and model mix, and a decrease in selling, general and administrative (SG&A) expenses that include quality-related expenses. These factors offset the unfavorable currency effects and the impact of the 2016 Kumamoto earthquake.
Segment Performance
Revenues in the Automobile segment fell 6.6% to ¥2.5 trillion ($24.3 billion) on unfavorable foreign currency translation effects, which offset higher unit sales. Unit sales rose 2.3% to 908,000 vehicles. Meanwhile, operating profit amounted to ¥184.5 billion ($1.79 billion), up 41.1% on increased sales volume and model mix, lower SG&A expenses, and cost-reduction efforts, partially offset by unfavorable foreign currency effects.
Revenues in the Motorcycle segment decreased 8.5% to ¥432.4 billion ($4.2 billion) due to unfavorable foreign currency translation effects, which offset the 11.2% increase in consolidated unit sales to 2.83 million motorcycles. Operating income fell 43.9% to ¥31.1 billion ($303 million) owing to lower sales volume and model mix as well as unfavorable foreign currency effects, which offset the impact of cost-reduction efforts.
Revenues in the Financial Services segment fell 1.9% to ¥464.6 billion ($4.52 billion) due to unfavorable foreign currency translation effects, which offset higher revenues from operating leases. Also, operating income declined 3.6% to ¥50.5 billion ($491 million), attributable to unfavorable foreign currency effects.
Revenues in the Power Product and Other segment fell 8.3% to ¥75.6 billion ($735 million) in the reported quarter. The decline was due to lower consolidated unit sales in power product business. Unit sales in the segment dropped 4.5% to 1.49 million. The segment's operating profit improved 2.9% to ¥0.5 billion ($5 million) due to lower operating costs and expenses in other businesses, which offset the decrease in profit attributable to lower sales volume and model mix.
Financial Position
Consolidated cash and cash equivalents amounted to ¥1.67 trillion ($16.2 billion) as of Jun 30, 2016, down from ¥1.76 trillion ($17.1 billion) as of Mar 31, 2016.
In first-quarter fiscal 2017, cash flow from operations fell 58.8% to ¥171.3 billion ($1.66 billion). This decline was due to a decrease in cash received from customers, including unfavorable foreign currency translation effects.
Guidance
For fiscal 2017, Honda expects revenues to decline 5.8% to ¥13.75 trillion ($130.95 billion). Operating income is likely to rise 19.2% to ¥600 billion ($5.71 billion). Net income is projected to improve 13.2% to ¥390 billion ($3.71 billion) or ¥216.39 ($2.06) per share.
HONDA MOTOR Price, Consensus and EPS Surprise
HONDA MOTOR Price, Consensus and EPS Surprise | HONDA MOTOR Quote
Zacks Rank
Currently, Honda has a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include American Axle & Manufacturing Holdings Inc. (AXL - Free Report) , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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