Honda trims full-year profit forecast
Automaker hurt by weak sales in Europe, China
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Honda Motor Co. cut its full-year profit forecast as lower sales in China and Europe overshadowed the benefits from the weaker yen.
Net income will likely be 370 billion yen ($4.1 billion) in the 12 months ending March 31, compared with its previous estimate for 375 billion yen, the company said in a statement today. Honda maintained its projections for operating profit and revenue, while cutting its forecast for global deliveries to 4.06 million from 4.12 million.
Honda said its net profit for October-December rose 62 percent to 77.4 billion yen, compared with the 47.7 billion yen it booked last year, when it suffered from disrupted supply chains after floods hit it and its suppliers' factories in Thailand.
While Honda recovered from disruptions stemming by natural disasters in 2011, the company reported lower sales in China as a territorial dispute over a group of islands in the East China Sea fueled a consumer backlash in the world's biggest auto market. Honda has said production at all five factories in China have resumed to double shifts as anti-Japan sentiment in country faded.
'Tough' Europe
The sales slump in China was more than expected and the market situation in Europe is "very tough," Honda Chief Financial Officer Fumihiko Ike said in today's briefing.
The automaker cut its full-year Europe sales forecast to 185,000 units from the previous estimate of 205,000, according to the company.
Things are much better in the Unites States for Honda, which aims to top its 2007 record of 1.55 million sales in the market this year, said Tetsuo Iwamura, the Tokyo-based automaker's executive vice president.
"We wish to exceed that," Iwamura said earlier this month at the Detroit auto show. "We are trying to challenge for record sales."
Currency gain
Honda revised its full-year outlook for the yen against the dollar to 81 from 80, and 105 from 103 versus the euro. That means the company has room to beat its financial projections as the yen last traded at about 91 against the dollar and 123 versus the euro.
"We appreciate the recent trends in the weaker yen, but our goal is to localize production as much as possible, and to keep exports at about 10-to-20 percent," Tetsuo Iwamura, Honda executive vice president, said at a briefing in Tokyo today.
Among Japan's top-three carmakers Honda relies most heavily on the United States, which accounts for about 40 percent of its vehicle sales by volume. For rivals Toyota and Nissan, the U.S. accounts for about a quarter of global auto sales.
In calendar year 2012 the U.S. auto market posted its strongest sales figures since 2007 at 14.5 million vehicles, up 13 percent from 2011, and the momentum is likely to continue into January as well.
The yen's value eased 11 percent versus the dollar between October and December, trading at around 86.7 to the dollar by the end of the quarter from 78 at the start. Since then it has weakened further to around 91 to the dollar.
Honda is the first among major Japanese automakers to announce its third-quarter earnings. Toyota Motor Corp. is set to announce on Feb. 5, and Nissan Motor Co. on Feb. 8.
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