Archive for January, 2011

German retail sales slip as forecasts missed

Monday, January 31st, 2011 | Finance News

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FRANKFURT (AFP) – German retail sales slipped by 0.3 percent in December from the previous month, figures released on Monday by the national statistics service showed, but gained by 1.2 percent for 2010 as a whole.

The provisional monthly drop at the end of the year was much better than a slump of 1.9 percent recorded in November, the Destatis office figures showed, but completely missed a forecast increase of 2.0 percent compiled by Dow Jones Newswires.

Germany, which has the biggest European economy, has traditionally relied on exports for growth, but lower unemployment and stronger wages have helped boost consumption and economists forecast it will help underpin activity this year.

"After today's numbers it might sound like a whistling in the dark, but with increasing wages, dropping unemployment and pent-up demand, private consumption should become an important growth driver this year," ING senior economist Carsten Brzeski said.

Inflation has picked up meanwhile, reaching a two-year high of 1.9 percent in January according to Destatis data, but the government still expects growth of 2.3 percent this year, following a record post-reunification rate of 3.6 percent in 2010.

Consumption is forecast to increase by 1.6 percent this year at constant prices, which would be much better than the annual average of 0.4 percent over the past decade.

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Honda’s quarterly profit falls on strong yen

Monday, January 31st, 2011 | Finance News

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TOKYO – Honda reported a nearly 40 percent drop in quarterly profit, hit by a strong yen and fading sales in Japan but raised its full-year earnings forecast, crediting cost cuts.

Honda's October-December profit totaled 81.1 billion yen ($989 million), down from 134.6 billion yen the year before, it said Monday. Quarterly sales slipped nearly 6 percent to 2.11 trillion yen ($25.7 billion).

A strong yen hurt Tokyo-based Honda's overseas earnings and the end of green car incentives crimped vehicle sales in Japan, offsetting the perk from strong motorcycle sales in Asia.

Honda Motor Co. was upbeat about the full fiscal year through March 2011, raising its profit forecast to 530 billion yen ($6.5 billion) from its October forecast of 500 billion yen ($6.1 billion).

The revision was mostly from cost cuts and improved model offerings.

The maker of the Civic sedan, Odyssey minivan and Asimo robot lowered its full-year sales projection to 8.9 trillion yen ($108.5 billion) from 9 trillion yen ($109 billion), mainly because the yen is expected to remain strong.

But the lowered projection still leaves Honda ahead of the previous fiscal year when it posted 268 billion yen ($3.3 billion) profit on 8.58 trillion yen ($105 billion) sales.

Honda said vehicle sales fell in Japan, because of the end of government incentives for green models last year, but improved in North America. Honda's vehicle sales also fell in Europe.

Among Honda's green car offerings are the Insight and CR-Z hybrid models, which are popular but trail the world's top-selling hybrid, the Prius from Japanese rival Toyota Motor Corp.

Honda sold 855,000 vehicles around the world in October through December, down 6.5 percent from 914,000 sold a year earlier. Japan sales slid to 118,000 from 177,000 while North American sales jumped to 364,000 from 344,000.

Honda said there were some signs of a gradual recovery in the key U.S. market but acknowledged lingering worries about tighter credit and high unemployment. It was more optimistic about China and India, where it hopes to expand not only in autos but also in motorcycles.

The surging yen remains a risk for all Japanese exporters, including Honda. It said the dollar traded at about 83 yen during the three months, down from 89 yen a year earlier.

The negatives from currency rates erased 45 billion yen ($549 million) from Honda's quarterly operating profit, it said.

Honda expects the dollar, now at about 82 yen, to trade at 80 yen in the January-March quarter.

For the first nine months of the fiscal year, Honda's profit soared to 489.5 billion yen ($5.97 billion), more than doubling from 196 billion yen the same period the previous fiscal year.

Nine-month sales gained about 7 percent to 6.72 trillion yen ($82 billion).

Toyota, the world's top automaker in annual vehicle sales, reports earnings Feb. 8. Nissan Motor Co., which outsold Honda globally last year to become Japan's No. 2 automaker, reports earnings Feb. 9.

Honda shares lost 1.4 percent to close at 3,475 yen ($42) in Tokyo.

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Mizuho Q3 profit slows on smaller bond gains

Monday, January 31st, 2011 | Finance News

TOKYO (Reuters) – Mizuho Financial Group's October-December profit shrunk to less than half the previous quarter on smaller bond trading gains, underscoring the bleak outlook for growth at Japanese banks due to slack loan demand.

After riding the upswing in bond markets to strong profit growth in the preceding two quarters, Mizuho's earnings slumped in the absence of those gains, and it stuck by its forecast for the full year to March that falls short of market expectations.

"We are not likely to see large growth this year and the next. We are not in an environment where a sharp increase in interest margin and loan balance can be expected," Chikako Horiuchi, analyst at Fitch Ratings in Tokyo.

"They have few choices but to look to overseas for growth driver," she said.

Net profit of Mizuho, Japan's second-largest bank, doubled to 80.3 billion yen ($978.1 million) in the third quarter from a year earlier, according to Reuters' calculations from nine-month results, thanks to smaller credit costs on strength of fewer bankruptcies among borrowers.

That compared with forecasts of 100 billion yen by Citigroup Global Markets and 87 billion yen by Credit Suisse.

Mizuho's year-on-year comparison was also boosted by bigger fee revenues as the bank sold more mutual funds and other financial products to retail customers.

But the latest quarter's net profit was less than half of that of the preceding quarter.

For the first six months of the current financial year, Mizuho and its rivals saw their earnings boosted by a sharp rise in prices of U.S. Treasury and Japanese government bonds, although bond prices showed a sharp reverse late last year.

For the year ending in March, the bank retained its net profit forecast of 500 billion yen, up from 239.4 billion yen a year earlier and in line with an average estimate of 507.3 billion yen in a poll of 14 analysts by Thomson Reuters I/B/E/S.

Last week, No. 3 Japanese bank Sumitomo Mitsui Financial Group posted a 21 percent fall in net profit on poor demand for loans and bond trading losses.

Shares of Mizuho lost 8 percent last year, underperforming a 3 percent fall in the benchmark Nikkei average. ($1=82.10 Yen) (Reporting by Taiga Uranaka; Editing by Muralikumar Anantharaman and Edmund Klamann)

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