Honda’s profit drops on air bag re­call woes de­spite a weak yen

The China Post - - WORLD BUSINESS - BY YURI KAGEYAMA

Honda’s profit for the fis­cal fourth quar­ter dropped 43 per­cent as the costs of air bag re­calls off­set the pos­i­tives of a weak yen and strong ve­hi­cle sales in Asia.

Honda Mo­tor Co. re­ported Tues­day a profit of 97.8 bil­lion yen (US$897 mil­lion) for Jan­uaryMarch, down from 170.5 bil­lion yen a year ear­lier.

The Ja­panese au­tomaker has been the hard­est hit by a re­call of air bags man­u­fac­tured by Takata Corp. of Ja­pan, which sup­plied air bags for a wide range of Honda mod­els.

In the de­fect, the air bag in­fla­tors can ex­plode with too much force. At least six peo­ple have died world­wide due to the prob­lem.

The maker of the Ac­cord sedan, Odyssey mini­van and Asimo robot also suf­fered other qual­ity lapses, re­call­ing its hy­brid mod­els sev­eral times last year. Ex­ec­u­tives have taken pay cuts and Pres­i­dent Takanobu Ito has an­nounced his res­ig­na­tion to take re­spon­si­bil­ity for the em­bar­rass­ing prob­lems.

The prob­lems have tar­nished Honda’s rep­u­ta­tion for qual­ity, damp­ened sales and slowed down model devel­op­ment.

Quar­terly sales rose 8 per­cent to 3.35 tril­lion yen (US$28 mil­lion).

The weak yen helped to limit the fall in Honda’s profit as it adds to the value of over­seas sales of Ja­panese ex­porters.

Honda, which also makes mo­tor­cy­cles, busi­ness jets and lawn mow­ers, ex­pects profit for the fis­cal year through March 2016 to be lit­tle dif­fer­ent from the year just ended March 2015. It’s pro­ject­ing a profit of 525 bil­lion yen (US$4.41 bil­lion).

It re­ported profit of 523 bil­lion yen (US$4.39 bil­lion) for the fis­cal year just ended, down 8.9 per­cent from the pre­vi­ous fis­cal year.

The re­call costs and a decline in auto sales in Ja­pan helped drag prof­its down, ac­cord­ing to Honda.

Toy­ota Mo­tor Corp., the world’s big­gest au­tomaker in ve­hi­cle sales, re­ports earn­ings May 8. Nis­san Mo­tor Co., al­lied with Re­nault SA of France, re­ports re­sults May 13.

Newspapers in English

Newspapers from Taiwan

© PressReader. All rights reserved.