Honda cuts forecasts again, Toyota losses to balloon
Written on February 1, 2009
Honda Motor Co lowered its annual profit forecasts for a fourth time this year, while rival Toyota Motor Corp’s losses are growing as sliding global car sales force the industry to scale back production further.
The spreading global recession has dealt a severe blow to the auto industry as consumers, fearing for their jobs and finding finance harder to get, have 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, analysts said Honda faces an especially tough quarter because it waited longer than Toyota and Nissan Motor Co to make the move.
Honda this week announced further production cuts of 50,000 vehicles for the business year to March 31, on top of the 370,000 that had been planned in North America, Europe and Japan.
Struggling to clear bloated inventory, Honda is scheduled to close its UK factory for four months starting in February, boding ill for the new business year.
Japan’s second-biggest automaker said on Friday it expected an operating profit for the year to the end of March of 140 billion yen ($1.6 billion), down from a record 953 billion yen last year and below its previous profit forecast of 180 billion yen.
The median forecast of 17 brokerages surveyed by Reuters Estimates was for a full-year operating profit of 135 billion yen and a net profit of 167 billion yen payday loan online.
Analysts have said this year’s final results could still change dramatically depending on how much and how early automakers set aside reserves against financing losses and other costs to start the new year on a cleaner slate.
Honda posted an October-December operating profit of 102.45 billion yen and a net profit of just 20.24 billion yen. A year ago, it made an operating profit of 276.24 billion yen and net profit of 200 billion yen.
Third-quarter revenue fell 17 percent to 2.53 trillion yen.
TOYOTA HEADED FOR DEEPER LOSSES
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, last month projected its first operating loss in the year to March, of 150 billion yen, as capacity utilization at its global factories falls below the break-even point.
A company source told Reuters on Friday that loss would likely expand, citing massive production cuts planned in the coming months. The Nikkei business daily reported the loss may reach 400 billion yen.
Ford Motor Co reported on Thursday a record $14.6 billion loss for 2008, when it burned through $21 billion in cash.
Filed in: technology.