Honda slashes annual profit outlook on disasters, yen
Honda Motor Co forecast a worse-than-expected 65 percent drop in profit for the year to March after natural disasters in Japan and Thailand hammered it harder than its rivals while the strong yen delivered an added blow.
Japan’s No.3 automaker was the slowest to recover from supply chain disruptions after the earthquake and tsunami in March, while it was alone in having a car factory inundated by historic floods in Thailand, Southeast Asia’s export hub.
I n 2 0 1 1 , H o n d a ’s g l o b a l output dropped by a fifth to 2 . 9 1 mi l l i o n c a r s , s l i p p i n g 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 f ar less severe than at Honda.
Fo r t he bus i ne s s ye a r t o March 31, 2012, Honda said it expects operating profit of 200 billion yen ($2.6 billion), hit also by an estimated 8-yen fall in the dollar to 78 yen.
The new profit forecast is far short of the 270 billion yen it projected in August before withdrawing that guidance, citing uncertainty over when car production could restart in Thailand. Honda typically provides cautious projections.
The “third quar ter was worse than everybody t hought , ” s a i d CLSA Asi a - P a c i f i c M a rke t s a n a l y s t , Christopher Richter.
“But actually their new guidance does imply a pretty good fourth quarter for them and our expectations are for t he m t o e nj oy s o me p re t t y robust growth next fiscal year as they recover from the twin disasters of the ear thquake and the flood.”
Wi t h p r o d u c t i o n s t e a d - i l y r e c ove r i n g i n t h e f i n a l mon t h s o f 2 0 1 1 , i nve s t o r s have tur ned their attention to an anticipated jump in sales as Honda restocks its depleted inventory.
So f a r t hi s ye a r, Honda’s stock is the best perfor mer a mong J a p a n e s e a u t o makers, rising 14.2 percent as of Monday. Tokyo’s auto sector index has gained 8.9 percent.
Still, concer n has lingered over whether Honda might be losing its edge after its topselling Civic got panned in the United States when it was remodeled last year.
(Reuters)