Honda cuts profit forecast; 9-month net profit down 71% image

Honda Motor Co., Japan’s third- largest automobile maker, forecast a worse-than-expected 65 percent drop in profit for the year to March after natural disasters in Japan and Thailand, and the strong yen hammered it harder than its rivals.

The company said Tuesday that its net earnings in the October-December quarter tumbled 41 per cent to 47.6 billion yen ($625 million) and projected a sharply lower full-year profit.

In 2011, Honda’s global output dropped by a fifth to 2.91 million cars, slipping below 3 million for the first time in eight years. All other Japanese automakers, except Nissan Motor Co, also built fewer cars, but the declines were far less severe than at Honda, Reuters reports.

In the quarter ended December quarter, sales fell 8% to ¥1.943 trillion from ¥2.11 trillion and operating profit sank 65% to ¥44.3 billion from ¥125.65 billion.

Net profit for the period (q3) fell 71.4 percent to 139.89 billion yen ($1.84 billion) from 489.53 billion yen, Honda said.

Honda estimates the Thai floods will cost the company 110 billion yen this fiscal year and the appreciation of the yen will cost about 57 billion yen, Takashi Aoki, a fund manager at Tokyo-based Mizuho Asset Management Co. said.

honda-q3-profit-graph

That led the company to lower its forecast for operating profit, or sales minus the cost of goods sold and administrative expenses, by 26 percent to 200 billion yen.

The Japanese automaker said on Tuesday it expects its Thai car factory to be up and running by the end of March, working at full speed in April.
Honda is the first Japanese automaker to report third-quarter earnings.