Honda Motors reports $2 billion loss

Honda Motors reports $2 billion loss
# 28 April 2009 17:03 (UTC +04:00)
Baku-APA-Economics. Honda Motor Co. said Tuesday it lost 1.9-billion-dollars in the fourth quarter due to weak sales, but said it was hopeful the giant US car market might be over the worst of the slump.
However, Japan’s second-largest automaker posted a profit for the year, helped by brisk demand for motorcycles, particularly in emerging economies.
For the three months to March, Honda logged a net loss of 186.1 billion yen (1.9 billion dollars), against a year-earlier profit of 25.4 billion yen.
It reported an operating loss of 283.0 billion yen as revenue tumbled 41.6 percent from a year earlier.
"The real economy continued to deteriorate in the US and Europe, and the recession became more serious," said Honda chief financial officer Yoichi Hojo.
Asia’s economy, including Japan, also worsened, he added.
Japanese car makers have taken a heavy blow from the global economic downturn, which has caused sales to plunge.
A stronger yen has been an extra headache, reducing the value of companies’ overseas earnings and making it harder for them to stay competitive in foreign markets.
But Honda -- which announced in December its shock withdrawal from Formula One due to the credit crunch -- said it saw some glimmers of optimism.
"In North America, I think we have hit the bottom, but it’s still uncertain how we can rebound," said Honda executive vice president Koichi Kondo.
He said a deadly outbreak of swine flu in Mexico was one risk factor, although Honda has no plan for now to close its plant there.
For the full business year to March, Honda’s net earnings slumped 77 percent to 137.0 billion yen. Operating profit dived 80.1 percent to 189.6 billion yen as revenue declined 16.6 percent.
Honda is expected to be the only one of Japan’s top three automakers to make a profit for the past financial year, helped by robust sales of two-wheelers.
"Honda was less impacted by the global auto slump than its Japanese rivals as its motorcycle business helped it spread its sources of earnings," said Yasuaki Iwamoto, an auto analyst at Okasan Securities.
"Honda’s smaller dependence on large passenger cars also helped it avoid a direct hit from the crisis," Iwamoto said.
While Honda’s automobile sales fell by 10.4 percent last year demand for its motorcycles rose 8.5 percent.
For the current year to March, Honda forecast net earnings of 40 billion yen and operating profit of 10 billion yen. The group expects to sell 3.21 million automobiles and 8.60 million motorcycles over the 12 months.
Iwamoto said cost cuts were essential for all automakers given the current industry crisis.
"The industry’s in a state of emergency. No company can survive without effective cost reduction measures, including personnel cost cuts," he said.
Honda said in January that it was cutting more than 3,000 jobs in Japan.
The company is chasing the lead of its bigger rival Toyota Motor in fuel-sipping vehicles and has received brisk orders for a second-generation Insight hybrid that it recently launched in Japan.
Toyota, the world’s biggest automaker, has said it expects to report a net loss of 350 billion yen for the year to March while Nissan Motor Co. has forecast a net loss of 265 billion yen for the same period. Source: AFP
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