Honda to report a double-digit slide in quarterly operating profit

Article by Christian Andrei, on February 1, 2012

Honda Motor Co. is anticipated to post a double-digit drop in its quarterly operating profit and is believed to have an even bigger decline for the entire year. Honda was hit much worse by the flooding in Thailand and the earthquake in Japan compared to its competitors. Honda, the No. 3 automaker in Japan, is recovering from these supply interruptions the slowest. Its car plant was hit by floods in Thailand too.

This is believed to bring the operating profit of Honda during the October- December period down by 35% to 81 billion yen ($1.06 billion), according to Reuters’ survey of nine analysts.

Honda had withdrawn its earnings guidance last October due to uncertainty on the restart of production in Thailand.

Honda is the first among other Japanese automakers to reveal its earnings for the third quarter. Honda is also expected to give an update on the production in Thailand this week. Last year, Honda’s worldwide output fell by a fifth to 2.909 million cars, plunging below 3 million for the first time in eight years.

Except for Nissan, all other Japanese car companies produced fewer cars but their declines weren’t as major as Honda’s. Thomson Reuters I/B/E/S polled 24 analysts who concluded that for the year to March 31, 2012, Honda's annual operating profit is at 283 billion yen, a 50% drop from 2010-2011 when it felt the impact of the yen's rise against the dollar and euro.

Its consensus forecast is actually much higher than the 270 billion yen Honda estimated in August. As automakers have gradually increased their production in the final months of 2011, investors have turned their attention to an expected surge in sales as Honda restocks its depleted inventory.

Topics: honda, profit

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