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Auto Roundup: HMC Misses on Q2 Earnings, Cummins Invests in Exergy & More

Last week, China Association of Automobile Manufacturers (CAAM) released vehicle sales data for October. Total car sales were 2.5 million units, up 6.9% year over year.  Passenger car sales were up 10.7% to 2.23 million units, while commercial vehicles were down 16.2% to 273,000 units. Last month, sales of new energy vehicles (NEVs) totaled 714,000 units, jumping 81.7% year over year. Sales of NEVs totaled 5.28 million units during January-October 2022, rocketing 105.4% from the corresponding period of 2021.

On the news front, Japan-based auto giants Honda HMC and Nissan NSANY came out with their quarterly results, wherein both automakers missed earnings estimates. Auto equipment provider Westport Fuel WPRT also released third-quarter 2022 results, with earnings in line with the Zacks Consensus Estimate but sales lagging the same. Meanwhile, Ryder System R — a reputed player in supply chain, fleet management and transportation solutions— announced a collaboration with Aurora Innovation—a major autonomous vehicle company— to pilot maintenance of autonomous trucks. Leading engine maker, Cummins CMI also made the headlines with the attainment of a minority stake in Exergy Energy.

While R currently carries a Zacks Rank #2 (Buy), HMC, NSANY, WPRT and CMI carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Last Week’s Top Stories

Honda reported earnings of 80 cents per share for second-quarter fiscal 2023, lagging the Zacks Consensus Estimate of 91 cents. The bottom line also fell from the year-ago profit of 88 cents per share. Quarterly revenues totaled $30,824.4 million, topping the Zacks Consensus Estimate of $29,653.6 million. The top line, however, inched down from $30,925.2 million recorded in the year-ago period.

Honda projects fiscal 2023 sales volumes from Motorcycle, Automobile and Power Products segments to be 18.43 million units, 4.1 million units and 5.66 million units in fiscal 2023, compared with the prior estimates of 18.56 million units, 4.2 million units and 5.66 million units, respectively. For fiscal 2023, Honda forecasts revenues of ¥17.4 trillion, up from the prior guidance of ¥16.75 trillion. The fiscal 2023 sales view implies a 19.5% rise year over year. Operating profit is envisioned at ¥870 billion, up from ¥830 billion guided earlier. Pretax profit is forecast at ¥1,080 billion, up from the previous forecast of ¥1,040 billion.

Nissan reported earnings of 15 cents per share for second-quarter fiscal 2022, lagging the Zacks Consensus Estimate of 20 cents. The bottom line also fell from the year-ago profit of 27 cents per share. Quarterly revenues totaled $18,288 million, falling short of the Zacks Consensus Estimate of $18,291 million. The top line, however, increased from $17,612 million recorded in the year-ago period.

Nissan revised its fiscal 2022 (ending Mar 31, 2023) forecasts. The auto biggie expects net sales of ¥10.9 trillion, up from the prior estimate of ¥10 trillion. The projected revenues imply an uptick from ¥8.4 trillion generated in fiscal 2021. Operating profit is now projected at ¥360 billion, higher than ¥250 billion guided earlier. The projected operating profit also indicates a year-over-year surge of 45.5% year over year. Net income per share is projected at ¥39.59, compared with the prior estimate of ¥38.82 but implying a decline from ¥55.07 recorded in fiscal 2021.

Westport incurred a loss of 7 cents per share in third-quarter 2022, in line with the Zacks Consensus Estimate but wider than a loss of 3 cents posted in the year-ago quarter. Westport registered consolidated revenues of $71.2 million in the quarter, missing the Zacks Consensus Estimate of $76 million. The top line also declined 4% from the year-ago level of $74.3 million.

Westport generated an adjusted EBITDA of negative $4.5 million in the third quarter, deteriorating from negative $1.4 million in the year-ago period. The company had cash and cash equivalents of $86.5 million as of Sep 30, 2022, down from $124.9 million at the end of 2021. Long-term debt decreased to $32.8 million at the end of third-quarter 2022 from $45.1 million on Dec 31, 2021. Net cash used in operating activities was $8.59 million during the quarter under review.

Cummins announced that it has obtained a minority stake in Exergy Energy.The partnership will enable the installation of Cummins power system solutions such as generator sets, energy storage systems and switching equipment at the customer location to provide power to the entire operation at the time of grid outages or times of peak usage. A big advantage of the collaboration is that it does not entail any upfront capital investment by the customer. Exergy Energy’s avant-garde software has the potential to track the grid such that during peak usage periods, it automatically shifts the load to the backup power system. This avoids an outage or peak demand charges.

Cummins is driven to help its customers meet their sustainability goals. Many organizations struggle to find solutions to grid power problems, hindered by the upfront capital expense of a generator set and power system components, coupled with the complexity of participating in grid services. Through Exergy Energy, Cummins is contributing to making the process simple by removing the cost barriers of installing and operating a backup generator owing to an economized framework.

Ryder collaborated with Aurora to pilot on-site fleet maintenance. With Ryder technicians embedded at Aurora’s terminal in South Dallas, the goal is to support the current pilot operations and prepare for commercial operations at scale.As part of the pilot project, Ryder will bring experienced technicians to work in unison with Aurora’s at the latter’s South Dallas terminal. Together, they will ensure holistic conservation and maintenance work. Responsibilities will include the upkeep of Aurora’s fleet of autonomous Class 8 tractors, along with inspections and repairs. Inspection and maintenance of trailers for pilot hauls and compliance with DOT standards, and collaboration with Aurora to reduce downtime and improve maintenance operations will be the other aspects.

The partnership will further bolster Ryder’s vision of expediting the commercialization of autonomous technology and the deployment of autonomous trucks across the United States. The collaboration will leverage Ryder’s nearly 90 years of fleet maintenance experience that will strengthen Aurora’s autonomous trucks and add value to its commercial product, Aurora Horizon. Aurora also anticipates significant on-site maintenance in its terminals as it increases pilot customer hauls to 100 per week, expected at the end of 2023.

What's Next in the Auto Space?

Industry watchers will keep a tab on October passenger vehicle registrations to be released by the European Automobile Manufacturers' Association.

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