Honda cuts sales guidance as recalls bite, roll-outs delayed
Honda also said operating profit fell 4.1% in July-September, missing the 184.1 billion yen mean estimate of analysts
Tokyo: Honda Motor Co. Ltd cut its sales forecasts for this year citing competition in Japan and China as well as the impact of recalls on new model launches, but said a weak yen will help it stick to its operating profit estimate at ¥770 billion.
Japan’s third-biggest auto maker by revenue also on Tuesday said operating profit fell 4.1% to ¥164.4 billion ($1.52 billion) in July-September, missing the ¥184.1 billion mean estimate of 14 analysts polled by Thomson Reuters.
The results came after US consumers filed a lawsuit against Honda and other car makers as well as Takata Corp. in relation to mass recalls of cars equipped with potentially defective Takata air bags that have been linked to four deaths.
Last week, Honda also apologised for the fifth domestic recall of its Fit hybrid subcompact, for which the chief executive officer (CEO) and a dozen executives took pay cuts. The auto maker said it would consequently re-examine its process for developing cars.
“Our multiple recalls have caused a nuisance for our customers," said Honda executive vice president Tetsuo Iwamura after the results. “As a result of this recall, we have had to do a full inspection of all the new models (in the pipeline). This has caused a delay ... some by as much as six months."
The auto maker now expects to sell 4.620 million vehicles globally this year, 4.3% fewer than previously estimated. It cut its forecasts for Japan and for the rest of Asia by 100,000 vehicles each, but left its North America estimate unchanged.
In revenue terms, Honda now expects ¥12.75 trillion for the year ending March instead of 12.80 trillion previously.
The auto maker also cut its net profit forecast by 5.8% to ¥565 billion, after booking a 17.9% rise in the second quarter to ¥141.9 billion.
Shares of Honda closed 0.7% lower before the earnings release, compared with a 0.4% decline in Tokyo’s benchmark Nikkei index. Reuters
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