Honda may revise its full-year profit forecast due to market turmoil

Article by Christian A., on August 9, 2011

Honda Motor Co. has disclosed that it may change its estimates on its full-year profit in October, the time when it posts its earnings in the first six months of 2011. The forecast will depend on how long the recent market turmoil lasts. A prolonged decrease in U.S. equities will lead to a drop in consumption as well as delayed vehicle purchases, Fumihiko Ike, chief financial officer at Honda, told reporters in Tokyo.

He added that the company is also concerned that the yen may strengthen to the low 70s versus the dollar, and will further adversely affect earnings from exports. U.S. stocks dropped the most since December 2008 and U.K. stocks sank since July 2010.

Policy makers of Federal Reserve are set to have a one-day meeting because the downgrade of the U.S.'s top credit rating by Standard & Poor's invoked rumors that America will be experiencing a recession.

According to Ike, the current question is what will happen to the macro economy and how long the current turmoil will persist. He added that "this is a new scenario" that is not part of the current forecast of the company. Last August 1, the company increased its full-year net income estimate by 18 percent to 230 billion yen ($2.98 billion), based on the quicker-than-expected recovery from the March 11 earthquake that hit Japan.

The company is basing its fiscal year estimate on 80 yen versus the dollar and 112 yen versus the euro. Tokyo-based Fukoku Capital Management’s president Yuuki Sakurai said that consumers in the U.S. react to the market very quickly, thus, their mindset could turn negative and they would abstain from buying new cars.

Topics: honda

If you liked the article, share on:

Comments

Recommended

Is there anything more exciting than a spoiler? Well, for those who didn't know, there are those who have already seen the Mercedes-AMG Project One (in the flesh) way before...
by - April 25, 2017
Does the Honda Passport ring a bell to you? This was the first ever SUV that was sold by the Japanese automaker, but it was not that successful compared with...
by - April 25, 2017
Wagon buyers who prefer their vehicle to be luxurious, you will have an entirely brand new selection at the latter part of this year. Porsche will start rolling out 4...
by - April 25, 2017
McLaren rejects the idea of creating anything other than a sports car. That means that vehicles that would be ideal for families such as an SUV or a crossover are...
by - April 25, 2017
The new and improved Opel Grandland X is out, and this large SUV is something the European market did not know they would need. Now measuring at 14.7 feet (4.48...
by - April 25, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries