Honda Trims Prodcution, Fuji Estimates Loss

Darlington Musarurwa
16 Jan, 2009
New York City

More companies in Japan lower estimates of earnings or forecast losses and cut production. Honda trimmed its production schedule for the third time in a year and Fuji Heavy Industries estimated a higher fiscal loss in the current year. Stocks in trading rallied after yen weakened.

[R]5:00AM New York, 7:00PM Tokyo - Fuji Heavy Industries forecasts an annual loss of 9 billion yen. Honda cuts Japan production by 56,000 units.[/R]

Japan stocks rallied 2.6% on a weaker yen and bargain hunting following recent stock declines.

The yen weakened to 90.42 against the dollar today from 88.97 yesterday.

Market sentiment was however weighed by news that Honda has slashed its production target for the third time in the past twelve months and a profit downgrade from Fuji Heavy Industries.

In Tokyo trading Nikkei 225 index rose 2.6% or 206.84 to 8,230.15, falling 6.9% for the week and the broader Topix Index gained 2.8% or 21.90 to 817.89, shedding 4.3% for the week.

In the first section of the Tokyo Stock Exchange 19 billion yen worth 1.3 trillion yen were traded and in the second section 201 million shares valued at 2.1 billion yen changed hands.

Of the Nikkei 225 index stocks, 203 increased, 17 dropped, and 15 were unchanged. NGK Insulators led gainers in the index shares with a rise of 9.5% followed by Ricoh Ltd. increasing 8.8%.

Honda Cuts Japan Production by 56,000

Honda reported today that it will slash production in Japan by a further 56,000 vehicles as demand drops on deteriorating global economic conditions and a rising yen.

Production will be lowered at all of the plants and will include all models.

The carmaker is planning to produce 1.168 million vehicles on the domestic market in the fiscal year to March 312, 2009.

Honda has reviewed its production plans three times in the last twelve months as the global economic recession deepens.

Fuji Heavy Industries Downgrades Profit Forecast

Fuji Heavy Industries reported today that it expects a loss of 29 billion yen for the fiscal year ending March 31, 2009 from an earlier projection of 10 billion yen on sharp declines in automobile demand, a rising yen and weak sales.

Net sales in the review period are projected to drop 90% to 1.4 trillion yen from the earlier estimate of 1.6 trillion yen, while operating income is expected to fall to 9 billion yen from 23 billion yen.

Fuji Heavy lowered its exchange rate estimate for the yen to a dollar to 101 yen against from 103 yen.

Yen Weakens

Then yen declined to 90.42 against the dollar from 88.97 yesterday.

Gainers & Losers

NGK Insulators led gainers in the Nikkei 225 index shares with a rise of 9.5% followed by increases in Ricoh Co. Ltd. of 8.8%, in Sumco Corp. of 8.7%, in Meidensha Corp. of 8.7%, and Tokyo Electron of 8.5%.

NTT Data Corp. led decliners in the Nikkei 225 index shares with a fall of 3.7% followed by losses in Nippon Yusen of 2.5%, in Sky Perfect JSAT HD of 2%, in Sumitomo Heavy Industries of 1.8%, and Komatsu Heavy Industries of 1.5%.

Hino to Build New Truck Plant

Nikkei News reported today that it will buy land in the Ibaraki Prefecture to build a truck assembly factory as part of its plan to expand sales in emerging markets.

The report noted that if successful, it will be the first new commercial vehicle assembly facility in Japan since 1963.