Honda Cuts Earnings Outlook

Darlington Musarurwa
17 Dec, 2008
New York City

Japan stocks rose 0.5% after the U.S. Federal Reserve cut its rates from 1% to record low range. Investors speculated that the Bank of Japan will also lower its base rate at its next monetary policy meeting. Automakers however trimmed gains after Honda lowered its outlook.

[R]5:00AM New York, 7:00PM Tokyo - Honda cuts full-year profit forecast by 62%. Yen rises to 88 against the dollar.[/R]

Japan stocks rose 0.5% after the U.S. Federal Reserve cut its rates from 1% to record low range between 0% and 0.25%.

Investors speculated that the Bank of Japan will also lower its base rate at its next monetary policy meeting.

Automakers however trimmed gains after Honda lowered its full year profit estimate by 62% from the October.

In Tokyo trading Nikkei 225 index rose 0.5% or 44.5 to 8,612.52, and the broader Topix Index soared 1.2% or 9.84 to 838.46.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 681 billion yen were traded and in the second section 209 million shares valued at 1.6 billion yen changed hands.

Of the Nikkei 225 index stocks, 107 rose, 108 declined, and 10 were unchanged. Mitsubishi Estate Co. led gainers in the index shares.

U.S. Fed Reserve Cuts Rates to 0.25%

The U.S. Federal Open Market Committee yesterday decided to set a target range of federal funds between zero and 0.25%. The Fed also indicated that it will start buying mortgage securities and look beyond providing liquidity to the financial markets.

The Fed noted in an accompanying statement that financial markets “remain quite strained and credit conditions tight” and it is prepared to keep rates low as long as necessary.

Yen Rises Against Dollar

The yen soared to 88 against the dollar today after the U.S. Federal Reserve cut its federal funds rate to between 0% and 0.25% yesterday.

Gainers & Losers

Mitsubishi Estate Co. led gainers in the Nikkei 225 index shares with a rise of 10% followed by increases in Shizuoka Bank of 7.3%, in Tokio Marine HD of 7.1%, in Tokyu Land Corp. of 6.9%, and Bank of Yokohama of 6.2%.

Realty stocks increased on expectations that the country''s central bank will cut its key rate.

Isuzu Motors led decliners in the Nikkei 225 index shares with drop of 8.6% followed by losses in Tosoh Corp. of 6.6%, in Pioneer Corp. of 6.3%, in Asahi Glass of 6%, and Fuji Electric House of 5.8%.

Isuzu Motors fell after Honda slashed its full year profit forecast by 62%. Honda dropped 5.5% and Hino Motors fell 5.4%.

Honda Revises Profit Forecast by 62%

Honda Motor Corp today revised its profit forecast for the fiscal year ending March 2009 by 62% to 185 billion yen from 485 billion yen.

Net sales and operating revenue was also revised downward by 10.3% to 10.4 trillion yen from 11.6 trillion yen earlier forecasted.

Operating revenue was slashed 67.3% to 180 billion yen from 550 billion. The carmaker said global demand for cars in shrinking on deteriorating global economic environment.

Honda lowered estimate for the average exchange rates for the fiscal year ending March 31, 2009 to 101 yen from 103 yen against the dollar.

Separately, Nissan Motor Corp said it will deepen domestic production cuts for the quarter to March by 78,000 vehicles.