Honda net profit falls 71%, cuts forecasts

Honda Motor's net profit for the nine months to December slumped by almost three-quarters from the previous year due to Japan's March disasters, huge floods in Thailand, and the high yen, it said on Tuesday. Net profit for the period fell 71.4 percent to 139.89 billion yen ($1.84 billion) from 489.53 billion yen, Honda said. Sales were down 17.6 percent to 5.54 trillion yen and operating profit fell 77.2 percent to 119.39 billion yen. Japanese automakers, including Honda, saw extensive damage to their supply chains as a result of the March earthquake and tsunami in Japan, and flooding in Thailand in the autumn. A high yen, standing at 76.30 to the dollar Tuesday compared with 82.20 a year ago, also ate into exporters' sales and profits. A strong currency makes it harder for domestically made vehicles to be competitive overseas, while Japanese automakers' overseas earnings are eroded when repatriated. Honda's operating profit fell due primarily to a decrease in sales, a lift in fixed costs, rising raw material prices and the high yen. Its mainstay global automobile sales dropped 19.0 percent in volume, more than offsetting increased motorcycle sales in Asia, South America and other regions and depressing overall earnings. The company, which had previously held off giving forecasts for the year to March due to uncertainty related to the Thai flooding, said it expected annual net profit to fall to 215 billion yen, down 59.7 percent from the previous year. Annual operating profit is expected at 200 billion yen, down 64.9 percent from a year ago, on sales of 7.85 trillion yen, down 12.2 percent. It cut its global full-year automobile sales forecast by more than eight percent, from 3.435 million vehicles to 3.15 million. The Thai flooding alone is seen to have depressed annual sales by an estimated 260,000 units, cutting operating profit by 110 billion yen. Thailand's worst flooding in decades has forced Japan's automakers to halt or slow production in Asia and beyond. Honda has idled operations since early October at its four-wheel vehicle factory in Ayutthaya, central Thailand, but expects to restart the plant from late March.