Honda profit hit by falling sales

Honda's profits for the July to September period more than halved after car sales continued to fall during the global economic downturn.

Net profit came in at 54bn yen ($587m; £359m) for the quarter, down 56% on the 123.3bn yen recorded a year earlier.

Japan's second-largest carmaker said the strong yen had contributed to a fall in sales in overseas markets.

But the fall in profits was less than had been expected, and the carmaker tripled its full-year profit forecast.

Honda says it will now make a net profit of 155bn yen for the year to the end of March, up from its previous forecast of 55bn yen.

It also raised its full-year sales forecast, to 3.4 million cars from 3.29 million cars.

Despite the increase in projected future sales, revenue in the third quarter fell by 27% from a year ago.

This was largely due to falling car sales in overseas markets.

Sales in Japan have been less affected, largely due to government tax breaks and incentives on hybrids such as the new Honda Insight.

"Honda's numbers came in a bit better than forecast and the biggest factor seems to be the year-on-year reduction in production costs," said Andrew Phillips at KBC Securities.

Toyota increases hiring in Japan

Toyota is hiring 800 contract workers in Japan, its first increase in jobs in more than a year.

The Japanese carmaker said this was due to higher demand for its Prius petrol-electric hybrid in Japan.

Toyota now employs 1,300 contract workers in Japan, who are distinct from the 70,000 full-time workers that have guaranteed lifetime employment.

Toyota, struggling with the global downturn in auto sales, had stopped employing contractors last June.

The majority start work next month at its Tsutsumi plant in central Japan, which makes the Prius and other models for the Japanese market.

The Prius, launched in 1997, is now in its third generation. By the end of April, Toyota had sold 1,028,000 of the cars worldwide, more than half of them in North America.

At its peak in 2005, Toyota employed over 11,600 contract workers - who are hired for fixed periods of employment.

Recession ends but markets fall

Japan may be officially out of recession, but regional investors are still cautious, with East Asian markets closing lower in Monday trading.

Economists believe the falls are linked to the latest consumer data from the US, which showed that shoppers there are not yet ready to start spending.

Japan's export-oriented industry relies heavily on US demand.

China's main Shanghai index fell 5.8% to 2,870.63, while Japan's Nikkei 225 fell 328.72 points (3.1%) to 10,268.61.

However, the Nikkei is still up by almost 900 points since mid-July.

Hong Kong's Hang Seng and South Korea's Kospi also fell and the price of US light, sweet crude fell below $66 a barrel - its lowest level this month. It fell $1.73 to $65.78.

"Production [in Japan] is still at a low level, and worries remain that employment conditions will worsen. So we must watch the downside risks," said Japan's economy and fiscal policy minister Yoshimasa Hayashi.

Japan's economy leaves recession

Japan has come out of recession after its economy grew by 0.9% in the April-to-June quarter.

The growth comes after four consecutive quarters of contraction.

Correspondents say the rise is due to a huge government stimulus package and it is unclear whether the momentum will be sustained when this is concluded.

Recent figures show other economies coming out of recession, including Germany, France and Hong Kong, a sign the global slowdown is easing.

Despite Japan exiting recession, the country's main share index, the Nikkei, fell back as the rate of growth was not as large as analysts had hoped.

If Japan's latest quarterly rate were maintained for a full year, the economy would grow 3.7%, but this was less than market expectations of 3.9%.

The Nikkei ended down 329 points or 3.1% to 10,269.

More optimism from Japan

The Bank of Japan (BOJ) has said the Japanese economy has begun to stop deteriorating, but it has still kept interest rates unchanged at 0.1%.

The assessment was more optimistic than at last month's meeting, when it said the economy was continuing to worsen.

It made no change to policies such as buying corporate bonds, the current programme of which ends in September.

The improved view of the economy had been expected given the recent rises in factory output.

Conditions 'still terrible'

"We may be seeing a return to growth in Japan later this year so it is reasonable for the BOJ to upgrade its assessment now," said Shane Oliver, chief economist at AMP Capital Investors in Sydney.

"However, conditions are still terrible. Japan and other economies are still in the midst of a severe recession."

The key question is what will happen to the central bank's programme of buying bonds later in the year.

In common with many other central banks, the BOJ has been buying corporate bonds as part of a programme of quantitative easing, to get more money flowing through the economy.

"As for measures on credit markets, the issuance of corporate bonds is rising and the bank may start scaling back those steps if conditions allows after September," said Junko Nishioka, chief economist at RBS Securities in Tokyo.

But he warned that "although there has been some optimism on the economy after strong industrial output data, the BOJ is maintaining a very pessimistic view".

"It said the economy has begun to stop worsening, but it didn't say it has stopped worsening."

Japanese stocks on a rise

The Nikkei index of leading Japanese shares has closed above 10,000 points for the first time in eight months.

The Nikkei-225 stock average closed up 154.49 points at 10,135.82 points, as global recovery hopes grew.

Investors were encouraged by a revised 5.9% rise in industrial output in April, the biggest gain in half a century.

Better-than-expected US sales and jobs data on Thursday also spurred hopes of a recovery.

The April data was revised up from 5.2% and was the biggest monthly gain since 1953.

The Nikkei has risen 44% since it reached a low of 7,000 on March 10 and 3.8% in the past week.

Among the gainers on Friday were CSK Holdings, up 19.05% at 500 yen, Nippon Soda, up 11.48% at 476 yen and Yahoo Japan, up 8.29% at 30,550 yen.

Surprise trade surplus for Japan

Japan's export slump eased in April, leading to an unexpected trade surplus for the world's second largest economy, official figures show.

Exports fell by 39.1% compared with the same month last year, slightly better than the 45.6% fall recorded in March.

This resulted in a trade surplus of 68.9bn yen ($722.7bn; £452.7bn), much better than economists had expected and Japan's third straight monthly surplus.

Japan's economy shrank at a record rate in the first three months of this year.

'Optimistic'

"Today's release supports our view that exports are past the worst," said Chiwoong Lee at Goldman Sachs.

A slump in exports, triggered by the global economic slowdown that hit demand for Japanese cars, electronics and other goods, led to an economic contraction of 4% between January and March this year.

But some economists are predicting a turnaround in the country's economic fortunes.

Government stimulus and a recovery in exports should ensure that the economy avoids contraction in the current quarter, said Masamichi Adachi at JP Morgan.

"In the short term, we are rather optimistic. But after that, there are many challenges facing the Japanese economy," he added.

Last week, Japan's central bank upgraded its economic outlook, saying the worst of the recession might be over.

Japan upgrades economic outlook

Japan's central bank has upgraded its economic outlook, saying the worst of the recession might be over.

The move came after the bank's two-day policy meeting, at which it opted to keep interest rates on hold at 0.1%.

While domestic demand is expected to remain low, the bank said exports, on which Japan is heavily reliant, were forecast to pick up.

Data on Thursday showed Japan's economy shrank in the first quarter at its fastest rate since records began.

Output contracted by 4% during the first three months of the year, or by 15.2% on an annual basis, as exports fell, according to official figures.

Recovering

"The pace of deterioration in the Japanese economy will likely moderate," the Bank of Japan said.

"Going forward, although domestic private demand is likely to continue to weaken, exports and production, after levelling out, are expected to start recovering and public investment to increase."

The latest outlook is more optimistic than the bank's forecast in April, when it said economic conditions had "deteriorated significantly".

While the bank did not provide new growth forecasts with numbers, it said it would expand the types of collateral on offer in order to encourage lending.

Toyota unveils new Prius hybrid

Toyota, the world's biggest carmaker, has revealed the latest revamp of its Prius petrol-electric hybrid in Japan.

The carmaker said it has had 80,000 advance orders in Japan. It is aiming for sales of 400,000 a year globally.

Incoming president Akio Toyoda, the grandson of the company's founder, said the future of cars rests on this model.

Prius is the world's best-selling hybrid, but Toyota's dominance of the sector has been challenged by rival Honda's cheaper Insight model.

The new Prius gets a combined 50 miles per gallon, compared with 46 mpg for the 2009 model, Toyota said.

It has not yet announced when the new version will be available outside Japan.

Worst loss

The carmaker is pinning its hopes on a new Prius boosting sales, after this month reporting its worst annual loss of 436.94bn yen ($4.4bn; £2.9bn) in the year to 31 March, due to the deepening recession and strong yen.

The Prius, launched in 1997, is now in its third generation.

By the end of April, Toyota said it had sold 1,028,000 of the cars worldwide, more than half of them in North America.

Toyota said its Japan prices for the Prius would start at just over 2m yen, or about £13,800 ($20,900), which is cheaper than the current Prius.

It also announced it will cut the price of the second-generation model on sale now, to 1.89m yen, the same price as Honda's Insight.

Suzuki boosted by sales in India

Suzuki Motors has avoided reporting a loss for the January to March quarter, helped by growth in India, but was downbeat about future sales.

The carmaker made a net profit of 5.8bn yen ($59m; £39m), during its fiscal fourth quarter, down 27% on a year ago.

Suzuki controls about half of the car market in India through its local unit Maruti Suzuki, which has seen sales rise for four months in a row.

The firm now expects global profits to fall 82% in its current financial year.

Suzuki predicts they will decline to 5bn yen due to the global slump in demand for new cars.

It also expects it will be affected by the continuing strong yen, which eats into its overseas earnings.

Indian boom

In India, Maruti's sales rose to 64,857 vehicles in April, helped by its bestselling Alto car and new models such as the A-Star and Swift DZire.

The rise in Indian sales contrasts with falling demand in the US, Europe and Japan, which Suzuki's rivals Toyota and Honda have been more exposed to.

On Friday Toyota said it forecast an annual loss of 550bn yen and expected to sell one million fewer cars this year.

Suzuki's revenues for the January to March period declined 27% to 670bn yen.

Japan in surprise economy boost

Industrial output in Japan rose in March for the first time in six months, according to government figures.

Production rose by 1.6% in March compared with February, after months of dramatic decline.

The larger-than-expected increase is being seen as a sign that the country's plunge in production and exports may be nearing an end.

The world's second biggest economy has been hit hard by the global downturn, sliding into a sharp recession.

These are grim times for Japan's economy but the latest figures from the government show a small improvement.

But the new figures are a sign that the strategy of Japan's manufacturers - to mothball production lines, reduce shifts and lay off staff - may be working.

With stockpiles of unsold goods diminishing some factories are starting to come back to life.

Japan has been hit badly by the downturn because worldwide demand has collapsed for its cars and electronics.

The increase follows figures earlier this month showing that exports have also risen slightly, although shipments are still running at just over half the levels of a year ago.

A government survey of manufacturers showed they expect industrial production to continue to rise, by 4.3% during April and by 6.1% in May.

Japan expects slump in economy

Japan says it expects its economy to shrink by 3.3% over the coming year - the country's worst slump in at least half a century.

The news comes as the government prepares to present a 15.4 trillion yen ($159bn; £109bn) economic stimulus plan to parliament.

The projected downturn for the 2009 fiscal year would be the worst since Tokyo began measuring growth in 1955.

It follows an estimated decline of 3.1% in 2008, the government said.

Finance Minister Kaoru Yosano said the world's second biggest economy remained vulnerable to fresh turmoil overseas.

"Exports have plunged much harder than our expectation," he said.

Government estimates of the decline have been revised radically downward, in what officials described as quickly changing conditions.

"The global economic crisis and economic downturn is increasing in severity, and Japan's export market is rapidly shrinking," the Cabinet Office said in a statement.

Japan PM unveils $150bn stimulus

Japan has formally unveiled its record $150bn (£105bn) stimulus package as it seeks to revive its flagging economy.

Prime Minister Taro Aso said the plan - worth about 3% of its gross domestic product - aimed to protect livelihoods and to foster future growth.

The 15.4 trillion yen package includes measures to boost fuel-efficient vehicles and consumer electronics.

Japan's economy has been battered by a collapse in exports and is facing its deepest recession since World War II.

Japan's ruling coalition plans to put the stimulus package before parliament by the end of the month.

'Opportunity'

"We are implementing a resolute policy in the form of economic crisis measures in order to protect the livelihoods of the people," Mr Aso told a news conference.

"The first of our objectives is to prevent the economy from falling through the floor. Another objective is to give a sense of security to the people," he said.

This is the government's third stimulus plan in the past year. It comes on top of 12tn yen of spending in earlier packages, as well as tax breaks and cash handouts.

It also creates a financial safety net for temporary workers, boost struggling firms and support regional economies.

Mr Aso said the new steps would be partially funded by issuing new government bonds.

Japan has been worst-hit among advanced nations by the global economic downturn.

Its exports have halved amid an unprecedented collapse in worldwide demand for the cars and electronic gadgets the country produces.

The government has a long-term goal to shift the economy's focus from exports to domestic sectors poised for major growth.

It wants to be a world leader in energy efficient technology and to bolster care for its huge and growing elderly population.

The aim is to create as many as two million jobs in the next three years.

Shares higher

On Thursday, shares in Tokyo gained as details of the stimulus plan emerged.

Japan's benchmark Nikkei 225 index closed at a three-month high, rising 3.74% to finish at 8,916.06.

Shares in carmakers and solar power-related firms gained.

"This may contribute to GDP for a year," said Masamichi Adachi, an economist at JP Morgan. "The consequences over the longer term are negative as we are piling up more of a fiscal burden. Bond issuance will go up from here on."

The package came out as figures showed Japan's machinery orders unexpectedly rose in February thanks to gains in the services sector.

Dollar rises above 100-yen mark

The US dollar rose briefly above 100 yen in Asian trading on Friday, the first time it had done so since early November 2008.

The news boosted shares in Japanese exporters, with the likes of Sony and Toyota Motor closing higher.

The dollar later fell to 99.50 yen amid nervousness ahead of the US jobless figures due later on Friday.

In the first three months of 2009, the dollar had its best quarterly performance against the yen since 2001.

"The yen selling was not sustainable before the US jobs data release," said a dealer at a Japanese brokerage.

"Opinion may be tilted towards the yen weakening in the longer term, but the market would first like to see this major event through."

The yen has been falling in value as a result of weak Japanese economic data and speculation that Japanese investors are planning to move funds overseas in the new financial year.

Japan's retail woes add to slump

Retail sales in Japan saw their biggest fall in seven years in February, adding to fears of a deepening recession.

Shoppers spent 5.8% less than a year earlier, bringing the total value of sales to 9.98tn yen ($101bn), according to government figures.

The figure is more than twice January's year-on-year decline of 2.4% and is the sixth monthly decline in a row.

Meanwhile, South Korea and Vietnam also reported weak economic data, as the slowdown hits Asia's economies.

South Korea's economy grew less than first estimated in 2008, expanding 2.2%, compared with a initial estimate of 2.5%.

Vietnam's economic growth rate slowed to 3.1%, its lowest rate in a decade, according to an estimate for the first quarter.

Deflation fears

In Japan, consumer price inflation remained unchanged for a second month in a row.

The Consumer Price Index (CPI) figures, which exclude volatile fresh food prices, prompted analysts to warn that Japan was on the brink of a return to the deflation that plagued it in the late 1990s.

"We are expecting deflation to last for two years, well into 2010," said Hiroshi Watanabe, an economist at Daiwa Research Institute.

'Worst crisis'

The figures were the latest in a stream of grim statistics charting Japan's economic woes.

The country's exports saw a record plunge of 49.4% year-on-year in February, as worldwide demand for its products collapsed.

Japan's economy contracted by 3.3% in the last quarter of last year - its worst showing since the oil crisis of the 1970s.

Economic Minister Kaoru Yosano has said Japan is facing its worst economic crisis since the end of World War II.

Japanese stocks skirt 26-year low

Japanese stocks traded close to 26-year lows in Tuesday trading as investor concerns about the health of the financial system persisted.

Japan's Nikkei 225 touched 7,088.47 on Tuesday morning, close to the 26-year low that it hit in October. However, it later recovered some ground.

Other Asian markets also fell, with Hong Kong's Hang Seng index down 1.5%.

On Monday, the US Dow Jones share index fell below 7,000 points for the first time since 1997.

Japan's industrial output plunges

Japan's industrial production fell by 10% in January - the biggest monthly drop since records began more than half a century ago, the government says.

It is the fourth successive month that factory output has fallen, as the world's second-biggest economy suffers its worst recession in decades.

The latest figures come days after the government said exports plunged 45.7% in January compared with a year ago.

Japan's economy is suffering because of falling demand for its products abroad.

Consumers around the world afraid of losing their jobs in the global downturn no longer want to buy Japanese electronic gadgets and cars, the BBC's Roland Buerk in Tokyo says.

The country's car production plunged a record 41% year-on-year in January, according to the Japan Automobile Manufacturers' Association.

It said 576,539 vehicles were produced in January compared with 976,975 for the same month of 2008.

Painfully exposed

The Japanese themselves are also shopping less, with average household spending falling 5.9% in January compared with the same month a year ago, our correspondent says.

Jobs are also being slashed - the number of people unemployed rose by more than 200,000.

"The recession is having an increasing impact on the real economy," Finance Minister Kaoru Yosano said.

Japan was once seen as relatively immune to the global crisis because its banks were not as exposed to bad loans as those in the US and Europe, our correspondent says.

But he says that Japan's reliance on foreign markets to drive its economy out of a long slump in the 1990s has left it painfully exposed.

Japan finance minister steps down

Japan's Finance Minister Shoichi Nakagawa has resigned, amid claims that he was drunk at a recent G7 meeting.

Mr Nakagawa said earlier that he would wait until parliament had approved a supplementary budget to step down.

But he brought forward his departure after calls for his immediate exit escalated.

Prime Minister Taro Aso said he respected Mr Nakagawa's decision and named Economics Minister Kaoru Yosano to take over the finance portfolio.

At a news conference just hours after his appointment, Mr Yosano said the country's economy had deteriorated "beyond expectation".

Mr Yosano said his priority was to "smooth" the financial system as well as stimulating demand.

He said he would decide whether to take additional steps after consulting not only the government but business leaders, academics and the media.

'Embarrassing'

Mr Nakagawa's departure is seen as a major blow to Mr Aso's government in an election year.

The prime minister was already facing plummeting support; a poll by broadcaster NTV on Sunday put backing for his cabinet at 9.7%.


Voters are worried both about the economy and Mr Aso's leadership credentials in the wake of a series of gaffes, analysts say.

Mr Nakagawa apologised for "causing such a big fuss" and told journalists: "I decided that it would be better for the country if I quit."

He has already apologised for his behaviour at last weekend's news conference in Rome but blamed cold remedies for a slurred performance there.

He said he had not drunk more than a sip of alcohol before facing the media.

The news conference in Rome followed a meeting of finance ministers focussing on the current world economic crisis.

Footage showed Mr Nakagawa slurring his speech and closing his eyes repeatedly as if he was dozing off.

At one point, he mistook a question aimed at the governor of the Bank of Japan as one intended for him.

"It's embarrassing," said Democratic Party Secretary General Yukio Hatoyama. "This has sent a message to the whole world. He's damaged the national interest."

He explained that he had sipped wine at a luncheon toast on the day of the news conference, but had not consumed an entire glass.

He said he had taken too much medicine, including cold remedy, and that had made him drowsy.

Mr Nakagawa has denied reports - including the view of a former prime minister - that he is a regular drinker.

Japan's economy in quarterly dive

Japan's economy contracted by 3.3% in the last quarter of last year - its worst showing since the oil crisis of the 1970s, official figures show.

It comes as the country faces its worst economic crisis since the end of World War II, said Economic and Fiscal Policy Minister Kaoru Yosano.

The slowdown in the world's second-biggest economy is steeper than in the US or Europe.

Japan has been hit particularly hard by falling global demand for its products.

Exports, particularly of electronics and cars, have slumped and production has been slashed.

Consumers have cut back too, alarmed by rising unemployment.

Now the government has confirmed that in October to December last year Japan's gross domestic product fell by 3.3%.

It is the equivalent of an annual decline of 12.7% - the worst figures since the 1970s.

Worst since war

"This is the worst economic crisis in the post-war era. There is no doubt about it," Mr Yosano said at a news conference.

"The Japanese economy, whose growth is heavily dependent on exports of automobiles, machinery, and IT equipment, was literally battered" by the global downturn, he said.

He said the government would consider new stimulus measures to aid the economy.

"Japan alone won't be able to recover. The economy has no border. It is our responsibility to rebuild the domestic economy for other countries," he added.

Prime Minister Taro Aso is hampered in his response by a divided parliament and a fractious ruling party.

There were reports over the weekend that he is considering another stimulus package of government spending worth 20 trillion yen ($218bn; £152bn).

But the latest opinion poll has showed fewer than 10% of people support the prime minister, who must call a general election by September.

Japan corporate bankruptcies soar

Corporate bankruptcies in Japan reached 1,360 cases in January, a 15.8% increase on the previous year and a six-year monthly high, new data shows.

Bankruptcies at market listed companies hit a record high of 35 for the year to 31 March, the highest since World War II, said Tokyo Shoko Research.

It said smaller companies have been particularly affected as banks focus on lending to bigger rivals.

Bankruptcies have been especially prominent in the manufacturing sector.

It was the eighth consecutive month that the number of bankruptcies increased.

Several carmakers in Japan and around the world have cut production as consumers grow more cautious about splashing out on big ticket items.

Secondary parts suppliers, and companies involved in the peripheries of the manufacturing trade have also been badly hit by the economic downturn.

Japanese firms are also being hit by the strong yen - which with electronic firms particularly affected.

A stronger yen makes Japanese products less competitive and cuts into the value of overseas earnings.

Tokyo Shoko Research said the number of bankruptcies was not likely to decelerate in the near future as a range of manufacturers - from car and electronics manufacturers to semiconductor makers - continue to see profits hit by economic conditions.