Honda expects lower surge in net profit for 2014 fiscal year

Article by Christian A., on April 28, 2014

Honda Motor Co. expects to post a 3.6-percent jump in net profit for the year ending March 31, 2015, to JPY595 billion ($5.8 billion). That compares with the JPY700 billion mean estimate of 20 analysts polled by Thomson Reuters I/B/E/S. Honda remarked that its high level of capital spending will dive slightly this fiscal year to JPY650 billion as it pushes through with its expansion plan.

The carmaker disclosed that commencement of operations at a site in Thailand could face a delay as the country suffers from political uncertainty.

In the fiscal year ended March 2014, Honda posted over a 50-percent surge in net profit, thanks to strong sales of its redesigned Fit compact that countered the effect of a missed target in the United States.

Honda, like other Japanese carmakers, posted a significant surge in net income in the previous fiscal year as the yen dropped nearly 10 percent against the US dollar, boosting the value of overseas profit when converted back into yen.

The lower income forecast for the current fiscal year comes as the yen stabilizes, which means the value of overseas income won’t increase as much as in previous financial year.

Honda expects foreign exchange moves to drop profit by JPY67 billion in the current fiscal year. For the fourth quarter ended March 2014, Honda more than doubled its net profit to JPY170.5 billion.

Honda Executive Vice President Tetsuo Iwamura remarked that the company has entered a stage in which they reap the benefits of investments as they grow.

He, however, said that it would be a challenge to achieve its target of building 6 million vehicles annually by 2016-2017. The carmaker currently builds 4.3 million vehicles, and plans to hike global sales by 12 percent this fiscal year to 4.83 million vehicles. [source: Reuters]

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