Honda expects a 63 percent drop in full-year profit

Article by Christian Andrei, on June 13, 2011

Honda Motor Co. is expecting its net income to drop 63 percent to 95 billion yen ($2.4 billion) in the year ending March 31, 2011, from 534.1 billion yen a year earlier. This forecast is way below Bloomberg’s average estimate of 375 billion yen. In addition, the company expects that this decline is larger than what Toyota Motor Corp. is experiencing.

Both companies are working to restore full production after the March 11 quake and tsunami in Japan damaged component plants and caused power shortages.

The worldwide car sales of the company may drop 6 percent in 2011 to 3.3 million, Honda disclosed recently. The company also shared that the strengthened Japanese currency will also erode profit.

According to analyst Koji Endo at Advanced Research Japan in Tokyo, the outlook is worse than he expected. He said that it "seems" Honda will not be able to recover in the second half of this year, even if Nissan and Toyota may be able to.

Toyota, which is the largest automaker in Japan, has warned last week that its profits may decline 31 percent to 280 billion yen in the year beginning April 1 as worldwide car sales dropped 0.9 percent to 7.24 million.

On the other hand, Nissan Motor Co., which is the second largest car manufacturer in the country, has yet to announce its forecast for the whole year. Meanwhile, Honda has disclosed that its full-year revenue may decrease to 8.3 trillion yen from 8.94 trillion yen in the last fiscal year. The company added that its operating profit may also decrease to 200 billion yen from 569.8 billion yen.

Topics: honda, profit

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