Honda and Nissan, Japan's no. 2 and no. 3 automakers respectively, recorded profits in the first quarter, shocking analysts who have predicted losses for both. For the April-June quarter, Honda posted an operating profit of 25.2 billion yen ($265 million), an 88% drop to compared to last year's profit of 210.5 billion yen ($2.2 billion).
Analysts polled by Thomson Reuters had projected a 106 billion yen ($1.1 billion) loss for the quarter. Honda's net profit for the first quarter was 7.6 billion yen ($80 million), compared to 173.4 billion yen ($1.8 billion).
Honda lifted its forecasts for the year on the news, projecting an operating profit of 70 billion yen ($737 million) and a net profit of 55 billion yen ($579 million) for the fiscal year ending March 2010.
It's a sign that Honda may be experiencing a modest recovery in the second half of the year. Honda's improvement most likely came about due to the success of the 2010 Insight, which was the best-selling vehicle in Japan last April.
Shipments bound for the US were retained since the vehicle is more profitable in its home market. Japan's incentives for those who would buy small cars (its expertise) also became a factor in its success.
Nissan posted a profit of 11.6 billion yen ($122 million) in the first quarter, an 86% drop in quarterly operating profit. Nissan lost a net 16.5 billion ($174 million), against a 52.8 billion yen ($556 million) profit last year.
Nissan did not change its forecast for the year, projecting that it will realize an operating loss of 100 billion yen ($1.05 billion) and a net loss of 170 billion yen ($1.8 billion) for the 2010 fiscal year. Nissan COO Toshiyuki Shiga said that it would be premature to lift forecasts at this juncture. Shiga cited a further rise in the yen and continued drops in global car sales when the government ends incentives as causes for concern this year.