Tokyo: Honda Motor Co posted a 63% drop in quarterly operating profit and lowered its annual profit forecasts for a fourth time this year as a stubborn slide in global car sales forced it to make further production cuts.
Japan’s second-biggest automaker now expects an operating profit for the year to end-March of ¥140 billion ($1.6 billion), down from a record ¥953 billion last year and compared with its previous forecast of 180 billion yen.
The spreading global recession has dealt a severe blow to the auto industry as consumers, fearing for their jobs, put off buying big-ticket items. Tightening credit has also made it difficult for potential buyers to get financing.
While a shrinking car market has forced automakers everywhere to scale down production, Honda faces an especially tough quarter because it waited longer than Toyota Motor Corp and Nissan Motor Co to make the move.
Honda this week announced further production cuts of 50,000 units for this business year, on top of the 370,000 that had been planned in North America, Europe and Japan.
Struggling to work down bloated inventory, Honda is scheduled to close its UK factory for four months starting in February, boding ill for the new business year.
Honda posted an October-December operating profit of ¥102.45 billion and a net profit of ¥20.24 billion. A year ago, it made an operating profit of ¥276.24 billion and net profit of ¥200 billion.
Still, Honda is among the few Japanese automakers expected to escape an annual loss.
Toyota, until last year the most profitable automaker in the world, has projected its first operating loss for the year to March as capacity utilisation at its global factories falls below the break-even point.
Honda has never posted a loss in its 60-year history.
Toyota, Mazda Motor Corp and Suzuki Motor Corp report their earnings next week, with Nissan Motor Co results due on 9 February.
Shares of Honda rose 6.3% in October-December, beating a 3.6% drop in Tokyo’s transport sub-index.