Honda posts record Q1 and Renault returns to H1 profit

TOKYO/BOULOGNE-BILLANCOURT, France (Reuters) - Honda Motor Co <7267.T> raised its full-year forecasts after posting a record quarterly net profit on Friday, while brisk sales returned France's RENAULT (RNO.PA) to profit in the first half.

Honda, Japan's No.2 automaker, joined rivals in reporting strong results for April-June, but like the rest of the industry, faces concerns over slowing demand in the United States and China, the world's two largest auto markets, and in Europe.

Car makers are fearful that austerity measures in Europe including tax hikes in some markets will slow the recovery there, leading Renault to stick to its goal for the year.

"In an uncertain environment in the second half of 2010, the group will continue to focus on its key target of generating positive free cash flow for the full year," Renault said.

Renault's half-year sales rose 23.1 percent like-for-like to 19.67 billion euros ($25.7 billion), while recurring operating profit reached 780 million euros, or 4 percent of sales. In the year-earlier period the group had posted a recurring operating loss of 620 million euros.

Renualt partner Nissan Motor Co <7201.T>, Japan's No.3 automaker, had on Thursday reported its strongest quarterly operating profit in more than two years as sales surged, but it retained its cautious guidance.

HONDA LIFTS FORECASTS

Honda, the maker of the Accord and Civic cars reported a nine-fold jump in quarterly operating profit to 234.4 billion yen ($2.7 billion), easily beating the average 138.3 billion estimated by six analysts surveyed by Reuters.

First-quarter net profit, which includes earnings made in China, was 272.5 billion yen, its best quarter ever and up from 7.6 billion yen last year.

Honda lifted its net profit forecast to 455 billion yen from 340 billion yen but undershooting a consensus of 484 billion yen from a survey of 19 analysts by Thomson Reuters I/B/E/S.

"The new forecasts may look conservative when you look at the first-quarter performance, but there are many concerns and risks to take into account for the rest of the year," Executive Vice President Koichi Kondo told a news conference.

One issue clouding the outlook for Japanese automakers is a further strengthening in the yen, with the dollar hitting an eight-month low below 86.27 yen on Friday.

Tomomi Yamashita, fund manager, Shinkin Asset Management said that analysts' forecasts might be too optimistic.

"I do think there's a scenario where earnings momentum could go down quarter by quarter, which would explain this quarter and then the full year forecasts,," he said. "This does seem to suggest a gradually worsening momentum, but even so the numbers still aren't that bad."

Honda's operating profit margin improved to 9.9 percent from 4.2 percent in the previous quarter, thanks largely to its motorcycle business.

MICHELIN MARGINS AT RECORD

Also reporting strong margins was French tire maker Michelin , which said it was aiming for an operating margin close to 9 percent in 2010 as the rebound in tire markets helped it post a record first-half operating margin.

In South Korea, Kia Motors <000270.KS> posted a 61 percent rose quarterly net profit, beating estimates as it enjoyed brisk sales of newly launched models.

Renault shares fell 0.3 percent in early trade, while Honda ended down 0.3 percent ahead of its results. Kia gained 2.8 percent, while Michelin added about 0.7 percent.

(Additional reporting Edwina Gibbs in Tokyo, Cheon Jong-woo in Seoul and Gilles Guillaume in Paris; Writing by Lincoln Feast; Editing by Mathew Veedon)

WhatsAppFacebookTwitterLinkedinBeloudBluesky