Quarterly earnings at Asian automakers will show Japanese automakers at their worst after the March 11 earthquake disrupted parts supplies, while South Korean rivals charged ahead with sales gains in major markets.
Production at Japan's top three car makers suffered the biggest impact in their April-June first financial quarter, with falls of about 80 per cent for domestic output at Toyota Motor Corp and Honda Motor Co in April, and 49 per cent at Nissan Motor Co.
But with parts supply recovery faster than expected, the market's focus has shifted to what the coming months will look like, especially with many car makers flagging a production ramp-up to make up for the post-quake losses.
Financial markets will be looking at earnings reports starting this week for the timing of any revisions to Japanese automakers' full-year earnings forecasts, which appear conservative against consensus projections.
Attention will also be focused on how Asian automakers are performing in China, the world's largest car market, but one where growth is slowing sharply. Major Chinese automakers report later in the earnings season.
'The markets are already focused on production levels from July-September,' Tokyo-based Barclays Capital analyst Kei Nihonyanagi said. 'As the focus is shifting to earnings recovery levels from next business year (starting April 2012), it is hard for us to expect negative surprises on April-June earnings.'
Toyota and Honda are both expected to swing to an operating loss in the latest quarter, while Nissan is seen shining with a profit of 70 billion yen ($893 million), though that is down 58 per cent from the previous year.
While a complete recovery in the broken supply chain is now expected before October, Japanese brands face widening currency losses as the dollar sinks to a near four-month low of 78.13 yen. Nissan and Honda have assumed a dollar of 80 yen in the year to March 2012, while Toyota expects 82 yen.
Currency woes could also deepen for South Korea's Hyundai Motor Co and affiliate Kia Motors Corp with many investors saying the advancing South Korean won has more room to gain in the coming months.
Hyundai and Kia, which together ranked fifth in global sales last year, are set to post strong quarterly results thanks to brisk sales in the United States. The challenge from here is managing investors' expectations as the won firms and Japanese rivals raise production levels, analysts said.
Source : New Age
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