Japan carmakers to lose money in Q3, revisions eyed

By Chang-Ran Kim, Asia autos correspondent

TOKYO (Reuters) - Japanese automakers are looking at an ugly third-quarter earnings season that will almost certainly include profit warnings from Nissan Motor Co (7201.T) and others that have not updated their outlooks in the past three months as global vehicle demand shows no sign of reviving.

Even Honda Motor Co (7267.T), which slashed its forecasts in mid-December, could lower its annual outlook for a fourth time after outlining more production cuts at home for the business year ending on March 31.

With production and sales in various markets plumbing multi-decade lows in recent months, operating losses at the top three -- Toyota Motor Corp (7203.T), Honda and Nissan -- for October-December are a foregone conclusion, analysts said.

Many analysts have also lowered their projections for next business year, when global vehicle sales are expected to shrink further led by recession-hit Europe, Japan and the United States.

"I''m telling investors simply to wait," said Tatsuo Yoshida, an auto analyst at UBS Securities.

"The news flow and currency markets are too unstable right now," he said, citing the frequent announcements of production cuts across the industry.

Consensus estimates have Toyota posting the biggest quarterly loss out of Japan''s top five automakers, which also include Mazda Motor Corp (7261.T). Suzuki Motor Corp (7269.T) is expected to post a small profit, while five analysts polled by Reuters Estimates put Toyota''s loss at 263 billion yen ($2.95 billion). Toyota, the world''s biggest automaker, has never posted a quarterly operating loss.

Nissan is seen swinging to a third-quarter loss of 81.7 billion yen, paving the way for its first annual operating loss in 14 years.

"Compared with rivals, Nissan''s management has been relatively quick to implement crisis measures in expectation of a downturn in the business environment," HSBC auto analyst Seiji Sugiura wrote in a report, citing early production adjustments in the United States and the freezing of new pickup truck development, among other steps.

He added, however, that Nissan was still vulnerable to the faster-than-expected declines in sales, which are slowing automakers'' efforts to bring inventory levels under control.

Unusually, Nissan Chief Executive Carlos Ghosn is scheduled to preside over the third-quarter results briefing on February 9, when he is expected to unveil measures to stop the bleeding. Ghosn normally appears only for full-year earnings announcements.

The CEOs of Mazda, Suzuki and Mitsubishi Motors Corp (7211.T) will also preside over their companies'' briefings.

COST CUTTING URGENT

With factories closing for weeks or months at a time, analysts said they would be looking for automakers to outline more countermeasures to conserve cash over the next few years.

"Toyota will need to reduce total fixed costs by 10 percent to return to a profit, and we think this is likely to take at least two years," said JPMorgan Securities analyst Takaki Nakanishi.  Continued...