Wed, Feb 01, 2012 - Page 10 News List

Honda earnings tumble sharply

AP, Tokyo

Battered by the strong yen and supply disruptions from Thailand’s floods, Honda said yesterday that its net earnings in the October-to-December quarter tumbled 41 percent to ¥47.6 billion (US$624 million) and projected a sharp fall in full-year profits.

The Japanese automobile and motorcycle maker forecast it would earn ¥215 billion for the fiscal year through next month, down nearly 60 percent from the ¥534 billion it earned the previous fiscal year.

Honda, which makes the Accord sedan and Odyssey minivan, had scrapped its earnings forecast in October, when it reported its previous quarterly results, because the flooding in Thailand — a key Asian production hub for Honda and many Japanese companies — made the outlook too uncertain.

Honda Motor Co stopped making cars at its automobile assembly plant in Ayutthaya, north of Bangkok, in October after it was damaged in the worst floods to hit Thailand in 50 years. The company said in a statement that it was making progress on draining the plant of floodwater and cleaning up equipment, and that production was expected to resume by the end of next month.

The flooding also disrupted the output at many Honda suppliers in Thailand, forcing it to reduce production as far away as the US and Canada. Honda said production in neighboring Asian countries interrupted by the problems in Thailand was expected to return to normal by April.

All told, the problems related to flooding in Thailand have cost the company 260,000 vehicles in lost production worldwide, according to Tomohiro Okada, a company spokesman.

The company said it is working with the local industrial park to build water-protection walls around the plant and would make requests of the Thai government to take steps to prevent the risk of flooding in future.

The Thai plant makes the Jazz, Civic, Accord, CR-V sports utility vehicle and other vehicles.

Quarterly sales slid 8 percent during the fiscal third quarter to ¥1.942 trillion. The company projected that full-year sales would decline 12.2 percent to ¥7.85 trillion.

The strong yen, which erodes exporters’ foreign earned income when repatriated, also ate into the company’s income.

Compared with the same quarter a year earlier, unfavorable exchange rates reduced the company’s operating income by ¥33.6 billion, Okada said.

Global vehicle sales in the quarter declined 2.9 percent from a year ago to 830,000 units, the company said. Vehicle sales in Japan rose 16 percent and in North America increased 2 percent from the same quarter a year ago, while unit sales in Europe, Asia and other regions fell.

Another bright spot for the company was its motorcycle business, which is experiencing strong demand in emerging markets. Motorcycle sales rose 6.3 percent during the quarter from the same quarter a year ago to nearly 3.1 million units.

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