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Honda sees 65% fall in 2011/12 oper profit, lags consensus

Honda sees 65% fall in 2011/12 oper profit, lags consensus
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First Published: Tue, Jun 14 2011. 02 01 PM IST
Updated: Tue, Jun 14 2011. 02 01 PM IST
Tokyo:Honda Motor Co forecast a 65% fall in annual operating profit on Tuesday, hampered by a lingering disruption to vehicle production from the 11 March earthquake.
Japan’s third-biggest automaker expects an operating profit of ¥200 billion ($2.49 billion) in the business year to 31 March, 2012 lagging by far a consensus forecast of ¥407.2 billion, according to a post-quake survey of 20 analysts by Thomson Reuters.
It expects net profit, which includes earnings from China, to decline 63% to ¥195 billion, assuming an average dollar rate of ¥80 and a euro rate of ¥110 for the year.
Honda, like other Japanese automakers, had delayed providing financial forecasts given a lack of clarity over when parts supply would recover after the magnitude 9.0 qc in Japan’s northeast. In late April, it announced a 52% drop in January-March operating profit as production came to a virtual halt in the second half of March.
Shares in Honda have fallen 12% in the last three months, underperforming a 9% decline in Tokyo’s transport sector subindex.
Honda, like other Japanese automakers, had delayed providing financial forecasts because of uncertainty over when parts supplies would recover after the magnitude 9.0 quake in Japan’s northeast. In late April, it announced a 52%drop in January-March operating profit after production came to a virtual halt in the second half of March.
“These figures are pretty bad,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo, adding they could temporarily push Honda’s stock lower.
“They are very, very conservative and come in well below what analysts had expected. Honda had some R&D centres damaged by the quake and I had the impression that its recovery hasn’t been as speedy as its peers.”
The difficulty in procuring hundreds of components caused Honda to delay by three months the launch of its new Fit Shuttle model. The wagon, which will carry a hybrid option, debuts this week to take on Toyota’s new Prius Alpha.
More worrisome is the loss in potential sales of the remodelled Civic in the key US market after its limited launch in April. Honda has said it would not resume full production until sometime in the fall.
Honda said in a statement it expects production in Japan to be “nearly normalised” late this month, while overseas output could take until August or September.
Honda said it expects to sell 3.3 million cars this business year, 6% fewer than last year. It expects motorcycle sales to rise 10.5% to 12.645 million units.
For the industry as a whole, a recovery in the supply chain has progressed faster than initially feared, prompting some automakers to project a sales increase this year and offer a surprisingly upbeat outlook.
Mitsubishi Motors Corp said on Monday it expects full-year operating profit to rise 25%, saying initial concerns over a prolonged supply disruption had been dispelled.
Top-ranked Toyota Motor Corp , however, forecast a larger-than-expected 35% fall in annual profit on Friday, saying it still expected a full, unrestricted return to normal production in November.
Having hit multiple-year highs before the 11 March earthquake on expectations for demand growth in its key US market, Honda’s shares have shed some 14% after the disasters. That compares with Toyota’s post-quake fall of 11.5% and the Nikkei’s slide of 8.5%.
Before the forecasts were announced, Honda shares rose 0.7% to ¥2,931.
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First Published: Tue, Jun 14 2011. 02 01 PM IST