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Honda Motor, Goodyear Tire & Rubber Company, BorgWarner, General Motors and Toyota Motors

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  Published in House and Home on Tuesday, August 3rd 2010 at 10:55 GMT by Market Wire
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CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Honda Motor Co. (NYSE: [ HMC ]), Goodyear Tire & Rubber Company (NYSE: [ GT ]), BorgWarner Inc. (NYSE: [ BWA ]), General Motors (Nasdaq: [ MTLQQ ]) and Toyota Motors (NYSE: [ TM ]).

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Here are highlights from Fridaya™s Analyst Blog:

Honda Profits Rise by $3 Billion

Honda Motor Co. (NYSE: [ HMC ]) posted a profit of 272.5 billion ($3.1 billion) for the first quarter of its fiscal year 2011 that rose remarkably by 264.9 billion ($3 billion) from 7.6 billion ($85 million) in the same quarter of the previous fiscal year. This was equivalent to earnings per share of 150.27 ($1.70), an increase of 146.10 ($1.65) from 4.17 (5 cents) for the corresponding period last year.

Consolidated net sales and other operating revenues in the quarter appreciated 18% to 2.4 trillion ($26.7 billion) due to higher revenues in the Automobile segment, partially offset by unfavorable currency translation effects. At constant exchange rates, Hondaa™s revenues increased 19.5%.

Consolidated operating income increased more than ninefold to 234.4 billion ($2.65 billion) from 25.2 billion ($284 million). This was attributable to higher revenues, favorable product mix and benefit from cost reduction measures, partially offset by increased research and development expenses and unfavorable currency translation effects.

Goodyear Far Exceeds Expectations

Goodyear Tire & Rubber Company (NYSE: [ GT ]) saw a profit of $31 million or 12 cents per share (excluding special items) in the second quarter of the year in sharp contrast to a loss of $240 million or $1.00 per share (excluding special items) in the same quarter a year ago.

The company has also significantly exceeded the Zacks Consensus Estimate of a profit of 4 cents per share. The higher profit was led by an impressive rise in tire unit volume, particularly in the companya™s North American Tire segment during the quarter.

Sales during the quarter grew 15% to $4.5 billion, higher than the Zacks Consensus Estimate by $120 million. This reflected a positive impact of $304 million led by a 10% increase in tire unit volume due to a strong global demand.

Sales were also boosted by $161 million from higher sales in other tire-related businesses, mainly third-party chemical sales in North America, and by a better price and product mix. These were partially offset by an unfavorable foreign currency translation effect of $37 million.

The segment operating income jumped to $219 million from $24 million in the year-ago quarter. This was positively affected by an improved price and product mix of $121 million and negatively affected by $54 million in net higher raw material costs and by an unfavorable foreign currency translation effect of $14 million.

BorgWarner Beats, Ups Outlook

BorgWarner Inc. (NYSE: [ BWA ]) showed a profit of 78 cents per share (before special items) in the second quarter of the year, ahead of the Zacks Consensus Estimate of 67 cents per share. This was a significant improvement from a loss of 5 cents per share (before special items) in the prior-year quarter, driven by strong demand for the companya™s powertrain products and increased content in Europe.

Revenues increased a robust 55% to $1.42 billion, up from the Zacks Consensus Estimate of $1.32 billion. Operating profit improved to $117.3 million or 8.3% of sales from an operating loss of $49.5 million. Excluding special items, operating profit was $137.3 million or 9.7% of sales during the quarter.

Revenues in the Engine segment soared 52% to $1.02 billion, driven by strong demand for turbocharger products in Asia and Europe. Excluding the impact of currency, revenues were up 55%.

Revenues in the Drivetrain segment shot up 64% to $408.7 million, driven by higher sales of its four-wheel drive system in Asia, and of dual clutch transmission modules and other automatic transmission components in Europe. Excluding the impact of currency, revenues increased by 66%.

BorgWarner had cash amounting to $187.5 million as of June 30, 2010 a decline from $357.4 million as of December 31, 2009. Long-term debt was $781 million as of the above date. Long-term debt to capitalization ratio stood at 28%, up by 2 percentage points from the period ended December 31, 2009.

GM Shutters Plant in Canada

The Canadian arm of General Motors (Nasdaq: [ MTLQQ ]) has decided to shut down its last remaining transmission plant in Windsor, Ontario. The closure of the plant will cease the production of transmissions for the Pontiac G5 and Chevy Cobalt, leaving nearly 500 workers unemployed.

General Motors (or GM), one of the worlda™s largest automakers operating in around 157 countries, has been hit hard by the economic slowdown. To this is added the growing competition from the Chinese automakers and from Toyota Motors (NYSE: [ TM ]) in Japan.

GM reeled under huge losses last year before declaring bankruptcy. Consequently, each of its subsidiaries including GM Canada has felt the backlash. GM Canada received investments worth $10.1 billion from the federal and Ontario governments, but these failed to improve its condition.

In order to rally round, GM Canada took to cost reduction through job cuts and closing of plants. Since May 2008, the subsidiary has eliminated as many as 1,400 jobs in the country. In addition, it closed down two factories a" General Motors Diesel and Oshawa Truck Assembly in Ontario.

The cost minimizing programs have apparently paid off in face of challenging economic and industry conditions. GM recorded revenues of $31.44 billion in first quarter 2010, a rise of 40% from the last year. GM North America saw an over 55% increase in revenues to $19.2 billion in the quarter compared with its year-ago level. Earnings per share for the company stood at $1.66.

The increase in GM's revenue as a whole is the consequence of a 15.6% improvement in vehicle sales in the domestic market in the same quarter as compared with that of 2009. GM Canada saw a 5% reduction in vehicle sales, though it managed to grab a 15% market share in the North American region. GM North America as a whole performed well, with 12.5% increase in vehicle sales in this quarter over the same period last year.

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