Japanese Car Maker Felt Pinch in U.S., Europe as Currency Fluctuated

TOKYO - Honda Motor Co.'s profit fell 8.5% in the second quarter, hit by curren­cy fluctuations and tumbling sales in Eu­rope and the U.S., but it raised its profit forecast for the year.

The Japanese auto maker's group net in­come for the three months ended September 30 fell to 58.1 billion yen (630.2 million euro), or 59.63 yen a share, from 63.52 billion yen, or 65.19 yen a share, in the same period in the previous year.

Honda's world-wide revenue fell 0.9% to 1.5 trillion yen, as weakness in the dollar and euro eroded the value of Honda's over­seas sales in terms of its home currency. Honda's revenue for the quarter would have increased 4.3% if exchange rates had remained unchanged from last year.

"The decrease in revenues was primar­ily due to currency effects," said Honda Executive Vice President Koichi Amemiya.

Honda, maker of the popular Accord sedan, Odyssey minivan and Civic, is par­ticularly vulnerable to declines in the dol­lar against the yen because it earns more than half its operating income in North America. The dollar fell to an average of about 108 yen for the quarter just ended from about 113 yen a year earlier.

But Honda still expects a solid perfor­mance for the full year. It raised its forecast for group net profit for the year end­ing March to 220 billion yen from an earlier estimate of 190 billion yen, citing a strong showing in the April-to-June period and a stable outlook for the coming six months. The auto maker also raised its group operating profit forecast for the en­tire year to 375 billion yen, from its earlier projection of 310 billion yen.

Honda, the first of Japan's major car makers to report earnings this season, of­fers a look at both the pressures and op­portunities facing the rest of the industry. Toyota Motor Corp. is also expected to re­port that the rising yen hurt profit, though Japan's largest auto maker has also bene­fited from strong sales growth in Japan and the U.S. Nissan Motor Co., meanwhile, is forecasting greatly improved earnings, largely because of an intense cost-cutting campaign. The company, which is 37%, owned by French car maker Renault SA, last week said it sees a profit of 170 billion yen for the half-year and 250 billion yen for the full year, more than four times its pre­vious projection.

Smaller Japanese auto makers are strug­gling. Mitsubishi Motors Co. and Mazda Motor Co. are expected to post billions of yen in losses, mostly from charges taken to deal with underfunded pension plans.

Honda's world-wide automobile sales fell 1.9% in the second quarter, largely be­cause of a 43% decline in sales of automobiles in Europe. Car sales in Japan rose 2.8% but Honda sold 1.6% fewer automobiles in North America.

VOCABULARY:

in terms of - в исчислении, в каком-л. выражении; в показателях, в переводе на

in money terms – в денежном выражении

in real terms – в реальном исчислении

in value terms – в стоимостном выражении

performance –результативность, производительность, эффективность; показатели

performance of the contract – выполнение контракта

performance of the machine – работа машины

performance of the market – конъюнктура рынка

showing – зд.показатели

 

TRANSLATION NOTES:

Honda’s 2^nd quarter net fell 8,5% - во втором квартале чистая прибыль компании Хонда сократилась на 8,5%

В английских заголовках гораздо более употребительны, чем в русских, разного рода сокращения и пропуски. Например, в вышеприведенном заголовке пропущено слово profit. (См. часть Ш, раздел 2, §3)

…for the 3 months ended September, 30 – в течение 3 месяцев, заканчивающихся 30 сентября.

Данная конструкция в отличие от русского языка очень характерна для английского языка. Например, for the year ended March, 200… – в течение года, заканчивающимся в марте 200… года.

 

 

21. Ford Posts Record Results in Third Quarter

Ford Motor announced record third-quarter earnings and a reorganization plan designed to give regional units around the world more autonomy.

Beating Wall Street predictions, Ford posted earnings of $1.1 billion, up 11% from last year. Per-share earnings were 90 cents fully diluted, up from 80 cents a year ago and above the 85 cents expect­ed by analysts.

Ford officials said record sales in North America offset losses in Europe and South America. The company re­ported revenue rose 16% to $37.9 billion and the company's worldwide sales in­creased by 7% for the quarter.

"We continued our strong earnings momentum, despite very competitive markets worldwide, by building our brands, leveraging the synergies of­fered by our global scale and maintain­ing a rigorous cost discipline," Ford CEO Jaq Nassar said.

North American automotive opera­tions reported net earnings of $1 billion for the quarter.

Although worldwide sales increased 7% to 1.6 million vehicles, Ford's losses in South America increased while Euro­pean losses declined.

Ford's South American unit lost $72 million, compared with a loss of $44 million a year ago. Ford said it remains committed to South America despite difficult economic conditions there. It expects to break ground on its new as­sembly plant in the Bahia state of Brazil in the fourth quarter.

Ford lost $171 million in Europe in the third quarter, down from a year-earlier loss of $273 million. The compa­ny said it does not expect to reach its goal of improving operating earnings in Europe this year.

Ford can now boast 14 consecutive quarters of improved earnings.

" To the extent Ford can keep its North American operations plateaued at this level of profitability, and then can take advantage of the turnarounds now — not so much in Latin America but in Europe and Asia — the string of quar­terly successes will continue," said Da­vid Littmann, chief economist at Comerica.

Ford says it also reduced costs for the 11th consecutive quarter. Costs were down $300 million compared to last year.

Ford also announced a reorganiza­tion plan that will give regions more au­tonomy. It formed four business units and promoted Henry Wallace to chief fi­nancial officer from group vice presi­dent of the Asia-Pacific region.

Ford says the reorganization should help Ford quickly respond to regional tastes of consumers. The Ford brand of vehicles will have separate units for North America, Europe, Asia and South America. All of Ford's luxury brands — Lincoln, Volvo and Jaguar — will be part of the Premier Automotive Group.

VOCABULARY:

leveraging the synergies – зд. использовать возможности сочетания ряда факторов

to the extent – пока…

chief financial officer – глава, руководитель финансового отдела компании (или главный бухгалтер)

CEO (Am.E); managing director (Br.E) – главный управляющий компании

 

TRANSLATION NOTES:

per-share earnings were 90 cents fully diluted up from 80 cents – доходность каждой акции возросла с 80 до 90 центов при полной эмиссии (или за счет выпуска новых акций).

diluted earnings per share (diluted EPS, DEPS) - разводненная прибыль на акцию, (чистая прибыль, приходящаяся на одну обыкновенную акцию, рассчитанная с учетом как находящихся в обращении обыкновенных акций, так и акций, которые могут быть выпущены при конвертации облигаций, привилегированных акций и некоторых других конвертируемых долговых обязательств, а также реализации варрантов на акции)

We continued our strong earnings momentum – зд. Мы по-прежнему получаем высокую прибыль…

При переводе сочетаний со словом momentum необходимо искать контекстуальный вариант, отталкиваясь от значения этого слова как физического термина: инерция движения, импульс, кинетическая энергия; очень часто при переводе подходит слово динамика. (См. часть Ш, раздел 2, § 4)

gather/gain momentum – набирать силу, темп

 

22. Ericsson Upbeat Despite Drop in Profits

Ericsson, the world’s largest telecoms equipment company, said net profit slipped for a second successive quarter, but expressed confidence in a stronger second-half performance.

The Swedish company said quarterly net profit dropped 2 per cent from SKr5.8bn ($795m) last year to SKr5.7bn, but was up 25 per cent compared with the first quarter of 2006. The decline was attributable partly to last year’s acquisition of Marconi, the UK equipment manufacturer, which contributed a SKr200m operating loss in the quarter.

The negative impact of the Marconi acquisition, combined with normal fluctuations in operations, pushed the operating profit margin to 18.7 per cent from 21.6 per cent last year, although this was up from 16.9 per cent in the first quarter.

Carl-Henric Svanberg, chief executive, said in an interview it was “logical to expect” the operating profit margin to move above the key 20 per cent level in the second half of the year.

He said the beneficial effects of the Marconi restructuring would start to be felt in the third and in the fourth quarters. “The rationalization measures have not taken effect yet,” he said.

Karl-Henric Sundstrom, chief financial officer, said these included the loss of 1,600 staff and the integration of products, facilities, information technology and the removal of overlaps.

Analysts backed this view. Per Lindberg, of Dresdner Kleinwort, said: “The operating margin should expand quite discernibly in the second half on the back of a seasonal rise in sales, rationalization gains from streamlining of Marconi and an improved business mix.”

Shares in Ericsson have suffered since margins contracted below the 20 per cent level. Its share price has dropped 16 per cent this year. It closed less than 1 per cent down yesterday at SKr22.80.

The slight decline in net profitability during the quarter masked strong growth in sales in most regions. Total net sales rose 15 per cent to SKr44.2bn, compared with SKr38.4bn in 2005. Asia-Pacific sales grew 55 per cent, while Western Europe was up 26 per cent compared with last year, thanks in part to the addition of Marconi. Central and Eastern Europe, the Middle East and Africa sales grew by 24 per cent, while North America dropped 42 per cent year-on-year.

VOCABULARY:

rationalization - рационализация; усовершенствование

overlap - выполнeние одинаковых функций; совпадение; частичное дублирование

 

 

VOCABULARY CHECK

1) Валовая прибыль равна разнице выручки от продажи товаров и себестоимости проданных товаров без учета коммерческих и управленческих расходов.

2) Годовой товарооборот компании составляет около 300 млн. долл.

3) Он рассчитывает, что его подразделение в будущем году достигнет уровня безубыточности.

4) Компания «Боинг» сообщает о хороших результатах своей деятельности в первом квартале прошлого года и росте прибыли. Чистая прибыль компании в отчетный период составила $623 млн. ($0,77 на акцию), а доход компании равнялся $13 млрд.

5) В квартале, который завершился 30 сентября, компания Microchip Technology из Аризоны ожидает доходы в размере $141,5 млн., а прибыль составит около 17 центов на акцию. 17 сентября, подтверждая свои ранние прогнозы, Microchip Technology объявила, что она намерена получить доходы в диапазоне от $136 млн. до $141 млн., а прибыль будет от 15 до 17 центов на акцию. Компания также заявила, что по сравнению с предыдущим кварталом ее оборот повысится на 2%, что вызвано увеличением продаж. Увеличился объем продаж в азиатском регионе, показатель продаж в Северной и Южной Америке остался на прежнем уровне, а в Европе объем продаж сократился.

6) Высокий спрос на цифровые камеры позволил японской компании Nikon утроить свою прибыль. В третьем квартале 2006 финансового года операционная прибыль компании достигла 19,8 млрд. иен (166,5 млн. долларов США) относительно 5,9 млрд. иен (50 млн. долларов США) годом ранее. Доход Nikon в отчётном периоде равен 192,9 млрд. иен (1,6 млрд. долларов США), а в третьем квартале 2005 финансового года выручка составляла 153,7 млрд. иен (1,3 млрд. долларов США).

7) Рост продаж заставил Nikon пересмотреть прогнозы на 2006 финансовый год в целом и повысить уровень ожидаемой операционной прибыли на 18%, до 53 млрд. иен.

 

SECTION 4 GETTING PAID.SERVICING DEBT

LEAD-IN

Sellers and suppliers are often willing to sell on credit and this source of working capitalfinancing is very common for both startup and growing businesses. Trade credit is the generic term for a buyer's purchase of supplies or goods from a seller (supplier) who finances the purchase by delaying the date at which the price is due, or allowing installment payments.

Money that customers (individuals or corporations) owe a company in exchange for its goods or services are accounts receivable or receivables. Customers owing money in this way are debtors. Accounts receivable usually come in the form of operating lines of credit, and are usually due within a relatively short time period, ranging from a few days or weeks up to one year.

If a company has receivables, it means it has made the sale but has yet to collect the money from the purchaser. Most companies operate by allowing some portion of their sales to be on credit. These sales are usually to frequent customers, who are invoiced periodically, allowing them to avoid the hassle of physically making payments as each transaction occurs.

If you look at the balance sheet of a public company, you will usually see accounts receivable recorded as an asset, since it represents a legal obligation for the customer to remit cash for its debts.

Conversely, when a company owes debts to its suppliers or other parties, these are known as accounts payable. Accounts payable or payables are recorded on a company's balance sheet as a short-term (current) liability. Essentially, this represents debt a company must settle within one year. Examples are unpaid phone bills and other utilities. Suppliers waiting to be paid are creditors.

Working capital refers to the cash a business requires for day-to-day operations, or, more specifically, for financing the conversion of raw materials into finished goods, which the company sells for payment. By getting hold of money that it is owed sooner, a company reduces the working capital it has tied up in debtors.

A firm without sufficient working capital has liquidityproblems and may look for a cash injection ora cash infusion.

Earnings not distributed are reserves, which may be used to finance a company’s development in capital spending in investment, or paid out in a later period to shareholders.

Depending on whether you are a borrower, such as a business in need of finance, or a lender, such as a bank, you may describe a loan as borrowing, lending, or debt. The state of being in debt is indebtedness.

Interest for a loan is charged at a percentage rate. The principal is the amount originally lent.

Debt is short-term if it is to be repaid over a few months or a year or medium- or long-term if over a longer period.

If a company fails to make debt repayments on time, or at all, it defaults on the debt.

 

VOCABULARY

working capital	- oборотный капитал, оборотные средства: капитал, участвующий и полностью расходуемый в течение одного производственного цикла; к оборотному капиталу относятся: материальные оборотные средства; денежные средства; краткосрочные финансовые вложения; средства в текущих расчетах
financing source of financing	- финансирование предприятия: обеспечение предприятий необходимыми финансовыми ресурсами - источник финансирования
trade credit	- коммерческий (торговый, фирменный) кредит: кредит, предоставляемый продавцом или поставщиком услуг покупателю в виде отсрочки платежа за проданные товары/оказанные услуги
accounts receivable receivables	- дебиторская задолженность, счета к получению, счета дебиторов; ожидаемые поступления: суммы, которые должны быть получены от клиентов за товары и услуги (напр., средства, причитающиеся рекламному агентству от клиента; средства, причитающиеся издателю по подписке в кредит и т. д.)
accounts payable payables	- кредиторская задолженность, счета к оплате, счета кредиторов: стоимостное выражение обязательств должника перед своими кредиторами, состоит из неосуществленных платежей поставщикам за отгруженные товары, неоплаченных налогов, невыплаченной начисленной заработной платы, неоплаченных долгов
debtor	- должник: лицо, взявшее взаймы у кредитора определенную сумму
creditor	- кредитор: лицо, предоставляющее средства взаймы; может иметься в виду как лицо, предоставляющее прямой кредит (напр., банк), так и лицо, предоставляющее коммерческий кредит (напр., магазин, торгующий в кредит)
tie up	- вкладывать деньги во что-л.
cash injection cash infusion	- денежные вложения, вливания; финансовые инъекции
reserves	- резервный фонд, резерв, резервы: часть нераспределенной прибыли, выделенная для покрытия определенных расходов
capital spending capital expenditure	- капиталовложения; капитальные расходы: затраты на приобретение, возведение, модернизацию и реконструкцию объектов основных средств
borrower	- заемщик
lender	- кредитор
loan borrowing	- ссуда; заем; кредит
lending	- предоставление займов (кредитов, ссуд), кредитование
debt	- долг
indebtedness	- задолженность; сумма долга, размер задолженности
interest	- процент, процентный доход
interest rate	- процентная ставка, ставка процента: плата за кредит в процентном выражении к сумме кредита, как правило, в расчете на один год
principal	- основная сумма, капитальная сумма: сумма, на которую начисляются проценты
short-term debt	- краткосрочный долг; краткосрочная задолженность; текущее [краткосрочное] обязательство: долговые обязательства, которые подлежат погашению в ближайшие 12 месяцев
medium-term debt	- среднесрочный долг, среднесрочная задолженность, среднесрочное обязательство: долговое обязательство со средним сроком погашения; обычно считается, что это обязательство со сроком погашения от 1-5 до 10 лет
long-term debt	- долгосрочный долг, долгосрочная задолженность, долгосрочное обязательство: долговые обязательства со сроками погашения более года (напр., облигации, векселя сроком более года); реже под долгосрочным долгом подразумеваются облигации со сроками свыше 5-10 лет
default	- невыполнение обязательств (по контракту); дефолт, отказ от уплаты долга: состояние, которое возникает, когда заемщик не может выплатить или не выплачивает проценты по долгам или не погашает их; невозможность отвечать по своим финансовым обязательствам

COMPREHENSION QUESTIONS:

1) What do accounts receivable mean? How are they recorded in the balance sheet?

2) What are accounts payable?

3) What does cash flow show?

4) What is overdraft?

5) What does working capital refer to?

6) What may a firm with liquidity problem look for?

7) What do we call the state of being in debt?

8) What is the principal?

9) When does a company default on a debt?

 

VOCABULARY PRACTICE

The major advantages of trade credit are that it is often readily available; it allows you to spread your payments over several months or years; and minimal, or no, downpayment or interest charges are assessed.

The latest of the Small Business Research Trust's authoritative reports shows that the problem of cashflow, payments and debtors remains the most serious one for small firms, after low turnover and lack of business.

While British bankers talk of being in the red because of the old practice of showing overdrawn accounts in red ink, Italians talk about being in the green.

Campeau said Federated and Allied need cash infusions to meet ‘liquidity needs’. They include working capital to buy inventory and funds to pay bond interest due tomorrow.

In Japan, the lending bank and the b orrower are often part of the same associated group of companies. This close connection between lender and borrower makes it easier for the firm to convince the borrower to contribute additional capital and help the firm sort out its problems if things go wrong.

In short-term planning, the planning horizon is rarely longer than the next 12 months. The firm wants to make sure it has enough cash to pay its bills, and that short-term borrowing and lending are arranged to the best advantage.

The growth in earnings had let the company get ahead of schedule in repaying long-term debt, which had been raised from $19 million to $302 million. It is now 18 months early in repaying the principal on its seven-year bank loan.

TEXTS TO TRANSLATE:

23. Latin America Starts to Compete