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General Motors:
General Motors (GM), a US multination automaker, headquartered in Detroit, has presence in
about 157 countries. It is one of largest automakers in the world.
The company reported net income for shareholder of $ 4.9 billion for year 2012, where revenues
were reported at $152.3 billion. The Net income ratio and EPS were down compared to that of
year 2011 mainly on account of sluggish recovery of developed economies around the globes.
In recent earnings results for Q4-2012, the GM reported revenues of $39.3 billion a 3% YoY
growth, with net income attributable to shareholder at $0.9 billion. EPS for fourth quarter of
2012 increase to $ 0.54 compared to same quarter of 2011 at $0.28. The operating cash flows for
the quarter reduced to $ 0.5 billion from Q4-2011 at $1.2 billion.
Honda Motor Company Ltd:
Hond Motor Co. LTd( HMC) is a Tokyo, Japan based manufacturer and distributor of motor
cycles, automobiles and power products. The HMC is largest manufacture of motor cycles in the
world and also one of the leading automakers.
In recent earnings results for Q3-2012 (ending December 31, 2012), the HMC reported net sales
and other operative revenues at USD 28.1 billion (approx), an increase of 24.9% from same
period of last year. The consolidated net income for the quarter grew 62.5% YoY to USD 0.9
billion (approx). Cash flows from operating activities were reported at USD 5.92 billion for a
period of 9 month ended on December 31, 2012.
The HMC has registered remarkable growth in last few years, while the GM could not sustain its
leading market position. The comparison of some financial aspects of both companies are as
follow:
Profit margin: Profit margins denote the profit generating capacity of an entity. Higher the
margins, better the entity. The average operating margins for last three years of GM have been
-4.14% (negative), while that of HMC have been + 4.51%. The Gross profit margins of HMC
were around 25% in last 2-3 year, while that of GM were at lagging 8-9%. The numbers show
clearly that HMC has outperformed GM in profitability and consequent return to shareholders.
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