Q2 earnings: Honda, Nissan see brighter days ahead

The yen’s fall against the dollar boosts the value of earnings repatriated to Japan, stoking huge revenue gains for the country’s carmakers. The currency has lost 28 percent of its value against the dollar since Jan. 1, plunging to a three-decade low against the greenback.

Because of the weakening yen, Honda now anticipates higher operating profit and net income than it had earlier forecast. Full fiscal year operating profit is now expected to essentially equal the previous year’s haul at ¥870 billion ($6.02 billion). Net income is predicted to increase 2.5 percent to ¥725 billion ($5.01 billion) over the previous year.

Meanwhile, Nissan saw operating profit soar 45 percent to ¥91.7 billion ($634.6 million) in the July-September period. The result delivered a 3.6 percent profit margin, up from 3.3 percent a year earlier, bringing Japan’s No. 3 carmaker closer to its midterm goal of 5 percent.

Even amid sliding vehicle sales, Nissan said higher revenue per vehicle and better pricing power have helped bolster profitability as the company continues on its recovery track.

In announcing the results Wednesday, Nov. 9, COO Ashwani Gupta said Nissan has captured a higher tier of customer in North America, partly through renewed product and lower incentives. Spiffs have moved down to around industry average, and Nissan’s cars are packed with pricier technology.

“The customer is paying for it,” Gupta said. “Our brand power is increasing.”

Products such as the Ariya electric crossover, Z sports car and Rogue crossover helped lift the brand’s image and command better customers and pricing. “The mix has improved a lot,” CFO Stephen Ma said. “Customers have reacted very well to all our new products.”

Nissan also upgraded its profit outlook for the fiscal year on the better model mix and a foreign exchange tail wind that added about half a billion dollars to quarterly operating profit.

It now sees operating profit zooming ahead 46 percent to ¥360 billion ($2.49 billion), compared with the previous fiscal year. The revised net income outlook is also better than previously outlined, but it still represents a 28 percent decline from the previous fiscal year.

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