I tend to view the quarterly results season, treated most seriously by US-based OEMs and suppliers, with a mixture of interest, resignation and dread. Interest, because, hey, we all want to see a healthy auto industry, don’t we; resignation, it take a fair bit of time and effort to present the results in the way we think you like them (just the facts, no PR BS) and dread – who’s crashed in flames this quarter? Did we miss something important buried in an announcement?
After the train wreck quarters – and Chapter 11 filings – that followed the financial crisis back in 2008/9, it’s a pleasure to write headlines like ‘Visteon back in the black‘ and ‘BMW books record quarterly results‘. Truth be told, the Q3s we’ve had so far – neatly packaged in a handy take-home carton here, BTW, are a bit of a mixed bag with some posting profit, but down along with sales versus 2010, or reduced profits on flat sales or little change year on year. Denso, in particular, was hard-hit by the Japan ‘quake, unsurprising given its Japan-based customers.
Then there were others, like the aforementioned Visteon and BMW, especially BMW, who proved that the entire industry’s post-crisis assault on cost, cost and cost (helped in US cases by the odd bit of Chapter 11 reorganisation which effectively magics debt away so you can start over with a clean slate), was the right strategy, albeit painful in terms of plant closures and job losses.
BMW’s Q3 EBIT was up 92.8% to EUR6,474m and pre-tax profit almost doubled (94.6%) to EUR6,160m. Net profit doubled to EUR4,103m on vehicle deliveries up 16% to 1,232,584 units and revenue 15.4% higher at EUR50,472m. just-auto editor Dave Leggett, an economist by trade and far more acquainted with a balance sheet than yours truly, has taken a Friday afternoon look at the books here.
Bottom line is it’s clear that the hard decisions taken industry-wide, post-2008/9, are now starting to pay back and, with most OEMS and suppliers forecasting higher industry volumes in 2012, Thai flood supply blips not withstanding, it seems that the end of the tunnel is at least in sight.
Thailand-related problems look like being with us a while yet. I touched on post-Japan earthquake, sole-supply sourcing, potential problems last week and this week we’ve seen the problems ripple out to affect auto production in Japan, the US, across the Asia-Pacific, India and South Africa – all global auto assembly hubs – with even the UK launch of the new Honda Civic hatchback, the automaker’s big event in Europe this year, postponed a little. This is all a Japan Earthquake Round Two, so to speak, especially as it seems much of the problems are again with the smaller partsmakers supplying the tier ones but, reading between the lines, it also seems that, having been there, done that, after the March disaster Japan, some processes have been put in place and alternative sourcing is ramping up a bit quicker than it did earlier in the year.
Nonetheless, there will be some hits booked in the next round of quarterly results as lower unit output reins in sales and Honda, whose Thai plant looks like being out of action for at least six months, will likely be hit hardest having already posted a poor set of fiscal Q2/H1 results earlier this week, not least due to the Japan ‘quake and the lukewarm reception its redesigned Civic sedan and coupe have received in North America. Relative minnow Mazda, hard at work convincing us its new Skyactiv technology is the next Big Thing, also is in the doldrums, forecasting a full year loss on currency and Thai flood concerns.
That yen again. Always gets a mention when the Japanese auto and partsmakers announce results. And you can understand why. Little wonder then, as G20 members gathered for their pow-wow in Cannes, the Japanese government this week intervened to slow the rise.
Have a nice weekend.
Graeme Roberts, Deputy Editor, just-auto.com