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Honda to Build New Acura in Ohio

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Honda Motor Co. (HMC - Free Report) plans to manufacture the new version of its Acura NSX sports car at a new plant in Ohio. The company will invest $70 million for building the plant known as Performance Manufacturing Center, located inside the former North American Logistics facility and adjacent to Honda’s existing facility in Marysville.

The new plant will recruit about 100 skilled workers from existing operations in Ohio, with mass production expected to begin in 2015. It will be the company’s third plant in Ohio, located few miles from the Honda R&D Americas Inc. Ohio Center, which is engineering the Acura NSX for production. The company will assemble the car’s powertrain at its engine plant in Anna.

Acura NSX is the high performance sports car that was produced in Japan since 1990 until 2005. Honda revealed that the new version of the model will feature a lightweight chassis, a mid-mounted V-6 engine, a dual-clutch transmission and an all-wheel drive hybrid powertrain. It will be produced entirely at the Ohio facility for both the North American and export markets.
Currently, Honda operates 14 major manufacturing facilities in North America, which manufacture Honda and Acura vehicles, automobile engines and transmissions, Honda all-terrain vehicles, lawnmowers and general purpose engines.

In the fourth quarter of the fiscal year ended Mar 31, 2013, the company posted a 5.8% rise in earnings to ¥75.8 billion ($805 million) or ¥42.03 (45 cents) per share from ¥71.6 billion or ¥39.72 in the same quarter of prior fiscal year. However, earnings lagged the Zacks Consensus Estimate by 18 cents during the quarter.

Consolidated net sales and other operating revenues grew 14.1% to ¥2.7 trillion ($29.2 billion). The increase was attributable to improved revenues in automobile business operations as production recovered from the impact of Thai flood as well as favorable foreign currency translation effects.

Consolidated operating profit rose 21.4% to ¥136.0 billion ($1.4 billion) from ¥112.0 billion in the fourth quarter of fiscal 2012, driven by positive impact from cost reduction measures and favorable foreign currency effects, partially offset by higher R&D and SG&A expenses.

For fiscal 2014, Honda has projected revenues to increase 22.5% to ¥12.1 trillion. Operating profit is expected to surge 43.2% to ¥780 billion and profits are anticipated to jump 58.0% to ¥580 billion or ¥321.81 per share. The company expects higher revenues, favorable model mix and effective cost reduction measures to contribute to the increase in profits during the year.

Honda is a leading manufacturer of automobiles and the largest manufacturer of motorcycles in the world. It is the second largest automaker in Japan following Toyota Motor Corp. (TM - Free Report) and operates globally like another Japanese automaker Nissan Motor Co. (NSANY - Free Report) . Currently, shares of Honda retain a Zacks Rank #4 (Sell).

While we avoid Honda from investment perspective, Peugeot S.A. is worth to look for in the broader industry with a Zacks Rank #2 (Buy).

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