Net income at Honda fell 7% in quarter ended June 30

Article by Anita Panait, on August 1, 2013

Honda Motor Co. posted a 7-percent drop in net income in the quarter ended June 30, 2013 to JPY122.5 billion ($1.25 billion), from JPY131.7 billion in the same period in 2012. The carmaker attributed the profit drop to lower sales in Japan as well as its continued drop behind other carmakers in SUV and pickup sales in the United States.

The carmaker, however, posted a rise in operating profit in the quarter ended June 30, 2013 to JPY185 billion ($1.9 billion) from JPY176 billion in the same period in 2012. Despite the drop in net income, Honda reiterated its full fiscal year forecast of 58-percent surge in profits to JPY580 billion, boosted by the depreciating yen.

The company’s results were hit by the fact that its sales growth in the US is lower that the auto industry’s. The carmaker’s sales in the US surged 7.1 percent to 407,927 units. Executive Vice President Tetsuo Iwamura remarked that Honda’s light-truck supply was relatively low, but the carmaker is introducing a new model, referring to the Acura MDX luxury sports utility vehicles.

The US currently accounts for around 40 percent of Honda’s global vehicle sales, making the country its largest market. Satoru Takada, an analyst at Toward the Infinite World Inc. told Automotive News that Honda's sales should improve in the second half of 2013, when the carmaker launches its new Fit compact. He remarked that while Honda's US sales are “fairly good,” the carmaker is hampered by lack of pickup trucks and lower sales of aging SUVs like the Odyssey."

Honda posted a decline in vehicle deliveries in Japan in the April-June quarter of 2013 to 140,000 vehicles, compared with 185,000 a year earlier. Honda also reiterated its forecast of JPY12.1 trillion in revenues and JPY780 billion in operating profit for the year ending March 31, 2014. The carmaker also expects to sell 4.3 million vehicles in its current fiscal year. [source: Honda]

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