By Chang-Ran Kim
TOKYO, Oct 24 (Reuters) - Toyota Motor Corp and Honda Motor Co are set to report record profits for the six months to September, underlining the strength of Japanese automakers, which are enjoying robust sales in North America.
Japan's top two automakers do not give forecasts for half-year group operating profit. But an average of four analysts' projections put the figure for Honda at around 337 billion yen ($2.7 billion), up 4.7 percent from the same period last year.
Business daily Nihon Keizai Shimbun reported on Thursday that Toyota would post a 42 percent jump in its operating profit to 720 billion yen, which would be far above an analysts' consensus of about 630 billion yen.
The auto industry has been one of the few sectors to enjoy rosy profits in Japan, where most companies continue to be affected by a shaky economy.
Third-ranked Nissan Motor Co , which has staged a spectacular revival from near bankruptcy in the past few years, surprised industry watchers on Wednesday by reporting an 84 percent surge in half-year operating profit. It also lifted full-year forecasts by 30 percent.
Analysts said profit swings are normally less wild at Toyota and Honda since their businesses are more stable.
But the Nihon Keizai said Toyota likely cut costs by over 100 billion yen as part of its aim to reduce procurement costs by 30 percent over three years. Nissan's bigger-than-expected leap in profits was largely due to savings of 102 billion yen in purchasing costs.
HONDA SEES BETTER SECOND HALF
For Honda, although it posted record profits in the first quarter, results were far worse than many expected and most analysts foresee much the same for the six months to September.
"The Accord and Civic are not contributing to the first half and that's putting pressure on profitability in North America," said Steve Usher, senior analyst at JP Morgan. He said 88 percent of Honda's operating profit is made in the region.
"Things at home are also slowing down as the Fit (subcompact) reached its anniversary in June."
But the flip side of a lukewarm first half is the likelihood of a better showing in the second, lined up with powerful new launches.
Profits should be lifted by the newest version of its flagship Accord, which hit U.S. showrooms last month. The Pilot sport-utility, the newest addition to the high-profit segment, will also be making its first full contribution.
For the full year to March, Honda expects operating profit to rise 13 percent to 720 billion yen, renewing last year's record. The consensus forecast is slightly lower at 704 billion yen, according to 23 brokerages surveyed by Multex.
But Usher said Honda should remain comparatively strong in the United States -- its most important market -- in the coming years partly because it will have renewed 85 percent of its products during the four years from 2002.
That compares with 67 percent for Nissan and 48 percent for Toyota.
Honda also offers the lowest sales incentives among its U.S. and Japanese competitors in the United States.
Unlike most other Japanese companies, Toyota does not give full-year income forecasts. But executives have said they aim to surpass last year's record earnings, when it posted a 29 percent leap in operating profit to 1.12 trillion yen.
The median forecast for operating profit by 22 brokerages was 1.25 trillion yen, according to Multex.
NO SWEAT
The continued rise in automakers' profits comes despite an unkind business environment recently, with the exception perhaps of a weakening yen.
For one, the port strike on the U.S. West Coast earlier this month caused a parts shortage that forced automakers to temporarily halt production at several North American plants.
And in Vietnam, the government last month lowered the import quota on components for motorbikes -- a blow for Honda, the nation's dominant motorbike maker.
But analysts said these are only minor factors for Toyota and Honda.
As was widely expected, the port strike ended within two weeks -- not long enough to seriously affect six-month earnings, analysts said.
"Companies always have pockets of reserves that they can use to cover something like this if they wanted to, so it won't be a big issue in earnings terms," said Tatsuo Yoshida, auto analyst at Deutsche Securities.
Likewise, although Honda is the world's biggest motorcycle maker, that segment accounts for just one-10th of its earnings.
Nevertheless, Honda's shares have unexpectedly fallen about four percent this year despite an announcement in April of a dividend hike and plans to buy back up to 100 billion yen worth of its own shares.
Toyota's shares are down about 7.2 percent, while those of Nissan, Mazda Motor Corp and Mitsubishi Motors Corp have seen double-digit leaps largely due to their progress in restructuring.
Honda is due to announce first-half earnings at 3 p.m. (0600 GMT) on Monday, October 28. Toyota's earnings are due at the same time on October 30. ($1=124.52 Yen)