Analysts are bracing themselves for a series of profit drop reports from Japan-based biggest automakers due to the global chip shortage. Accordingly, investors looking for trading cues will be correlated to assess the impact of the global chip shortage.
Global chip shortage has been restricting automakers worldwide in production. Furthermore, the surging demand for electronic devices further depletes chip availability. US sanctions against Chinese technology firms are making it more difficult for automakers to get ahold of chips as well. On top of it, the recent fire in Renesas Electronics Corp’s Japan chip plant and blackouts in Texas, where a number of chipmakers’ factories reside, further depress chip shortage.
An analyst at Pelham Smithers Associates, Julie Boote, commented upon the issue. Quoted from Reuters, Boote said, “the big question will be by how much automakers reduce earnings forecasts due to the slowdown in production and, consequently, lower sales,”
“What should be an otherwise strong (post-pandemic) recovery year could be somewhat dampened by the supply predicament,” Boote further continued.
However, analysts are still keeping their hope up for automakers’ earnings. Despite tighter supplies, robust auto demand is especially pushing up vehicle prices in the United States. Thus, automakers’ earnings might still be in the safe zone.
Japan automakers amidst global chip shortage: the predictions
Quoted from Reuters, 24 analysts estimate Toyota Motor Corp to likely report a 12.5% decline in operating profit for the year ended March 31. This translates into a 2.1 trillion yen ($19.30 billion) loss. Refinitiv SmartEstimate further showed that the company might face a rebound in profit to 2.6 trillion yen in the business year started April 1. Amongst other automakers, analysts expect Toyota to suffer the least from the chip shortage.
Meanwhile, analysts predict at least 560 billion yen loss, noting an 11% fall in profit from Honda Motor. Accordingly, Honda’s current business year profit might reach 791 billion yen.
Nissan Motor Co, on the other hand, will likely report a 142 billion yen dent in its profit. This, according to Refinitiv SmartEstimate, is an additional 40.5 billion yen loss from a year prior. Additionally, the company could swing to a profit of 141 billion yen.
The automaker companies have scheduled to report on the earnings. Nissan will be reporting on Tuesday. Following suit are Toyota on Wednesday and Honda on Friday.