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Asian carmakers begin to recover, but still struggle

  • Source: Global Times
  • [08:38 October 22 2009]
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Top Japanese and Korean carmakers are seen reporting improved quarterly earnings as government incentives fueled unforeseen demand, but sharp currency swings remain a risk for the big exporters.

For Toyota, Honda and Nissan, July-September earnings, although far weaker than a year ago, will mark a big improvement from the prior quarter when demand was weak and production was being cut.

"With automakers aggressively cutting costs and demand in industrialized markets rebounding sharply thanks to incentives, we look for the recovery in automakers' profits to accelerate in the second quarter," JP Morgan Securities analyst Kohei Takahashi wrote in a report.

Takahashi said that inventory shortages in some markets would likely continue to drive production higher through the financial year to March.

Japan's top three carmakers have also already factored in a full-year dollar-yen rate in the low 90s, leaving room for upward revisions in their annual forecasts.

For the latest quarter, consensus estimates put Toyota's operating loss at 63 billion yen ($694 million), a far cry from the profit of 169.5 billion yen a year ago but a vast improvement from the 195 billion yen loss in the first quarter.

"We regard yen appreciation as a risk, but expect Toyota's results announcement to be accompanied by an upward revision to guidance, and to confirm the groundwork is being laid for profits in the second half and earnings expansion next year," Nomura Securities analyst Shotaro Noguchi said.

Honda and Nissan are seen as faring better, with both expected to report second-quarter operating profits of more than 30 billion yen ($330 million).

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