Amid the gloom, Honda at least stays profitable

Today was another grim day in Tokyo as the Japanese government revealed some horrific economic numbers. In December, industrial production dropped 9.6%, the biggest fall ever. The same month, unemployment jumped at its fastest rate for 42 years, rising to 4.4% from 3.9% in November. “The fallout from the worldwide recession has rippled through”, Economic and Fiscal Policy Minister Kaoru Yosano told reporters. “Employment conditions are getting worse in an unprecedented manner”. Elsewhere, the Nikkei newspaper, without giving sources, reported that Toyota’s projected $1.7 billion operating loss for the 12 months ending in March, may balloon to $4.5 billion. Toyota will provide details of its Oct-Dec business performance on Feb. 6.

Having digested all that misery—not to mention Ford’s bad results yesterday—to some extent Honda’s numbers don’t look too bad. This afternoon, Honda said it made a net profit of $222 million during the Oct-Dec quarter, a drop of 90% on last year. While not quite a reason to be cheerful, it also reiterated that it expects to make a profit this financial year. After cutting its forecast for a third time, Honda says it will make $889 million for the full-year—a remarkable achievement given collapsing auto sales and a surging yen.

Still, even Honda will see some red ink during the current quarter. Honda’s numbers, which came in below analyst forecasts, imply a loss of $2.7 billion for the three months through March. If that happens, as seems inevitable, it will mark Honda’s first quarterly loss for 15 years.

For all that, the Japanese automaker to watch this reporting cycle has to be Nissan. Unlike Honda and Toyota, which made big downward revisions to earnings forecasts in December, Nissan hasn’t updated its numbers since the global collapse in auto sales really picked up steam in November and December. Tellingly, CEO Carlos Ghosn is expected to be in Tokyo to give out the bad news on Feb. 9—in more normal times other executives handle quarterly results.

Before it's here, it's on the Bloomberg Terminal.