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Honda (HMC) Q3 Earnings Beat Estimates, Increase 3% Y/Y

Honda HMC reported earnings of $1.02 per share for third-quarter fiscal 2023, beating the Zacks Consensus Estimate of 95 cents. The bottom line also grew from the year-ago profit of 99 cents per share. Quarterly revenues totaled $31,467 million, lagging the Zacks Consensus Estimate of $33,016 million. The top line also inched down from $32,469 million recorded in the year-ago period.

Segmental Highlights

For the three-month period, which ended on Dec 31, 2022, revenues from the Automobile segment increased 20% year over year to ¥2.86 trillion ($20.25 billion). The segment registered an operating profit of ¥49.36 billion ($349.5 million), plummeting 35% on a year-over-year basis.

Revenues from the Motorcycle segment came in at ¥789.7 billion ($5.59 billion), up 36.5% year over year. The unit’s operating profit came in at ¥151.7 billion ($1074.3 million), jumping 80.1% year over year.

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Revenues from the Financial Services segment totaled ¥733.6 billion ($5.19 billion), up 9% year on year. The unit’s operating profit, however, decreased 17.2% year over year to ¥67.3 billion ($476.7 million).

Revenues from the Power Product and Other Businesses came in at ¥120.8 billion ($855.5 million), up 8.5% year over year. The segment incurred an operating income of ¥12 billion ($85.28 million), reversing the loss of ¥7.5 billion generated in the year-ago period.

Financials & FY23 View

Consolidated cash and cash equivalents were ¥3.59 trillion ($27.4 billion) as of Dec 31, 2022. Long-term debt was ¥4.37 trillion ($33.35 billion).

Honda projects fiscal 2023 sales volumes from Motorcycle, Automobile and Power Products segments to be 18.73 million units, 3.85 million units and 5.58 million units in fiscal 2023, compared with the prior estimates of 18.43 million units, 4.1 million units and 5.66 million units, respectively.

For fiscal 2023, Honda forecasts revenues of ¥17.25 trillion, indicating an uptick of 18.5% year over year. Operating profit is envisioned at ¥870 billion, almost flat with fiscal 2022. Pretax profit is forecast at ¥1,080 billion.

The company’s R&D expenses for fiscal 2023 are likely to be ¥860 billion, suggesting a rise from ¥804 billion spent in fiscal 2022. Capex is envisioned at ¥550 billion, indicating a jump from ¥278.4 billion recorded in fiscal 2022.

For fiscal 2023, Honda expects a total annual dividend of ¥120 per share, including an interim and year-end dividend of ¥60 each. In a bid to enhance its capital structure, the company has decided to buy back shares up to 70 billion yen during the Feb 13, 2023-Apr 30, 2023 period.

Honda currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quarterly Releases of Other Legacy Automakers

General Motors GM reported fourth-quarter 2022 adjusted earnings of $2.12 per share, surpassing the Zacks Consensus Estimate of $1.68. Higher-than-expected revenues and profit from the North America segment led to the outperformance. The bottom line also surged from the year-ago quarter’s earnings of $1.35 per share. Revenues of $43,108 million beat the Zacks Consensus Estimate of $41,313 million. The top line soared 28.3% from the year-ago figure of $33,584 million. The company recorded adjusted earnings before interest and taxes of $3,799 million, higher than $2,839 million in the prior-year quarter.

General Motors had cash and cash equivalents of $19,153 million as of Dec 31, 2022, compared with $20,067 million as of Dec 31, 2021. The long-term automotive debt at the end of the quarter was $15,885 million compared with $16,355 million as of Dec 31, 2021. General Motors’ automotive cash provided by operating activities amounted to $7,488 million during the quarter under review, down 20.2% year over year.  The company recorded an adjusted automotive free cash flow of $4,460 million in fourth-quarter 2022, down 30.3% year over year. (General Motors Q4 Earnings Beat on GMNA Unit Strength)

Ford F reported adjusted earnings of 51 cents per share in fourth-quarter 2022, missing the Zacks Consensus Estimate of 60 cents. Lower-than-expected profits from all but the International Markets Group unit led to this downslide. The bottom line improved 96.2% from the year-ago quarter’s earnings of 26 cents. The company’s consolidated fourth-quarter revenues came in at $44 billion, rising 17% year over year. Revenues from the Ford Automotive segment increased 18% to $41.8 billion and surpassed the Zacks Consensus Estimate of $39.4 billion.

Ford reported an adjusted FCF of $2.4 billion during the quarter. It had cash and cash equivalents of $25,134 million as of Dec 31, 2022, compared with $20,540 million on Dec 31, 2021. Long-term debt excluding Ford Credit totaled $19.2 billion at the end of 2022, up from $17.2 billion as of Dec 31, 2021. Adjusted EBIT for 2023 is estimated to be in the range of $9 billion - $11 billion. Adjusted FCF is envisioned to be $6 billion. Along with the regular first-quarter dividend of 15 cents per, Ford declared a supplemental dividend of 65 cents per share, aided by robust FCF. (Ford Q4 Earnings Miss Estimates, Sales Grow 17% Y/Y)

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