Honda Raises Yearly Outlook

While cross-country rival Toyota may be slashing its production forecast, Honda has announced that it has raised its full-year financial outlook. Honda’s fiscal year ends March 31st.

Honda announced on Friday that it has upped its annual profit forecast to $6.2 billion, a significant increase over its previous goal of $5.65 billion. Honda says its year end sales may total as much as $111 billion.

Although the strong value of the yen has hurt Honda’s earnings, better than expected sales in the Asia region have helped alleviate losses associated with the poor exchange rate. Honda’s motorcycle division has also been performing well.

“Honda is solidly increasing its profitability, and the motorcycle unit is also supporting the business,” said Tadashi Usui, an analyst at Moody’s Investors Service in Tokyo. “Compared with Toyota, Honda is more economical with its capital investments, so we can be confident about its finances from a fixed-cost perspective.”

Despite the positive news, Honda expects a weaker second half to its fiscal year. Honda is calling for a $1.14 billion profit during the final six months of the year, compared to profits of $5.05 billion during the first half.

References1.’Honda raises annual…’ view

Source;
http://www.leftlanenews.com/honda-raises-yearly-outlook.html

Credit Rating Initiation: Honda Motor Company

Morningstar is initiating credit coverage of Honda HMC with an issuer rating of A+. Our credit rating focuses on the industrial operations but also considers the relative health of the firm's finance subsidiary. Honda's ratings benefit from its strong liquidity and somewhat more diversified product portfolio relative to some of its peers. The firm's good Business Risk score also encompasses Honda's impressive size and focus on producing vehicles in its end markets rather than relying on exports as some of its rivals do, which allowed it to manage through the recent downturn while generating operating profits. Further, the firm's total debt/earnings before interest, taxes, depreciation, and amortization was a modest 0.8 times at the end of the most recent fiscal year, when EBITDA hit trough levels. We forecast leverage falling to less than 0.5 times beginning in the current fiscal year based on a strong recovery in the auto market. The good Solvency Score captures the strong balance sheet along with excellent interest coverage, although returns on invested capital remain fairly weak. Honda currently has cash and short-term investments that exceed total industrial company debt outstanding. In part due to this and our forecast for healthy free cash flow generation over our forecast period, Honda generates a good Cash Flow Cushion score. While the company has historically used free cash flow for both dividends and share repurchases, these were significantly curtailed during the past two fiscal years and the firm used its substantial free cash flow in the most recent fiscal year to rebuild its cash coffers. We expect the firm to continue maintaining its conservative financial posture, including modest dividend payments relative to free cash flow, as well as its strategy of slow and steady growth. This should allow the firm to continue to manage through the cyclical and competitive risks facing the auto industry.

Source;
http://torontostar.morningstar.ca/globalhome/industry/news.asp?articleid=351553