Asian Earnings Swell From U.S. Consumer Spending, China's Economic Growth

Asian companies including Samsung Electronics Co., Hyundai Motor Co. and Nippon Yusen K.K. boosted earnings last quarter as economic growth in the U.S. and China spurred consumers to buy more electronics and cars.

Samsung, the world’s second-largest maker of mobile phones, raised net income in the three months ended Dec. 31 by 13 percent from a year earlier, it said Jan. 28. Profit at Hyundai, South Korea’s largest carmaker, jumped 48 percent to a record, while earnings surged 10-fold at Nippon Yusen, Japan’s largest shipping line, the companies reported separately.

Spending by U.S. consumers climbed the most in more than four years in the quarter, helping Asian manufacturers sell more goods in the world’s largest economy, while economic expansion accelerated in China. Canon Inc. and Honda Motor Co. projected rising sales and profits as demand for cameras and cars rebounds.

“Our profitability is getting close to where we were before Lehman collapsed,” Yoichi Hojo, Honda’s chief financial officer, said in a Feb. 2 interview, referring to the 2008 financial crisis that felled Lehman Brothers Holdings Inc. and led to a global recession. The Tokyo-based carmaker, Japan’s third-largest, raised its full-year profit forecast on Jan. 31.

Rising incomes and a payroll tax cut may help sustain higher U.S. consumer spending in 2011. China’s economy, estimated to have surpassed Japan as the world’s second-largest last year, may grow 8.7 percent this year after expanding 10 percent in 2010, the World Bank said Jan. 12.

‘Recovery Trend’

Asian earnings reports “confirm a recovery trend is continuing,” said Makoto Kikuchi, chief executive officer at Myojo Asset Management Japan Co., a Tokyo-based hedge fund advisory firm.

Samsung’s net income of 3.42 trillion won ($3.1 billion) last quarter exceeded analyst estimates and was boosted by demand for the Suwon, South Korea-based company’s smartphones and tablet computers.

Industrywide sales of smartphones and tablets will probably grow to about 1 billion units by 2015 from 300 million last year, according to Meritz Securities Co.

Demand for the gadgets also bolstered earnings at companies that make semiconductors. The market for NAND flash memory chips used to store data in smartphones, music players and digital cameras may expand 18 percent this year after climbing 38 percent in 2010, according to IHS Inc.’s ISuppli.

Consumer Electronics

Samsung, the world’s largest maker of NAND memory chips, said profit from its semiconductor division rose 34 percent last quarter. Toshiba Corp., the second-largest maker of flash memory, raised its full-year profit forecast 43 percent to 100 billion yen ($1.2 billion) as the Tokyo-based company reported a fourth straight quarterly profit.

Total shipments of consumer electronics products may rise 2.6 percent to 1.6 billion units in 2011 after climbing 4 percent in 2010, ISuppli said Jan. 25. Canon, the world’s largest camera maker, said Jan. 27 its sales of cameras with interchangeable lenses may rise 18 percent, driving a projected 26 percent jump in profit this year.

Canon’s net income in 2010 surged 87 percent to 246.6 billion yen, the Tokyo-based company said.

Sony Corp., Japan’s biggest exporter of consumer electronics, reported profit that beat analyst estimates after earnings from its PlayStation games division doubled and camera sales rose. Net income fell 8.6 percent to 72.3 billion yen in the quarter ended Dec. 31, compared with the 65.9 billion yen average of six analyst estimates compiled by Bloomberg.

U.S. Auto Sales

Demand for consumer electronics gained as the U.S. economy expanded at a 3.2 percent annual rate last quarter. The economy grew 2.9 percent on a full-year basis, the most in five years, helping automakers as the nation’s vehicle demand rose 11 percent from a 27-year low in 2009.

Passenger-car sales in China, which overtook the U.S. as the world’s largest vehicle market in 2009, surged 33 percent last year to 13.8 million as rising affluence and government stimulus measures increased demand.

Hyundai said Jan. 27 its profit last quarter rose to 1.4 trillion won as the Seoul-based company’s U.S. vehicle sales jumped 38 percent from a year earlier, while deliveries in China climbed 22 percent.

Honda raised its profit forecast for the year ending March 31 by 6 percent to 530 billion yen, citing the outlook for the U.S. auto market.

Toyota Motor Corp., the world’s largest carmaker, is scheduled to report earnings Feb. 8.

Growing demand for goods from Asia is also boosting container-shipping rates, benefiting Nippon Yusen and China Cosco Holdings Co.

Nippon Yusen’s profit for the three months ended Dec. 31 jumped to 26.9 billion yen as rates for transporting goods by container to the U.S. and Europe rose, it said Jan. 31.

China Cosco, China’s biggest shipping line, expects to post a 2010 profit, rebounding from a loss in 2009, the Tianjin-based company said Jan. 5.