Arab Today, arab today honda reports surging profit but slashes forecast
Last Updated : GMT 23:40:25
Arab Today, arab today
Arab Today, arab today

Honda reports surging profit but slashes forecast

Arab Today, arab today

Arab Today, arab today Honda reports surging profit but slashes forecast

Tokyo - AFP

Honda Motor shares tumbled on Monday after the Japanese automaker warned that its full-year results would be much weaker than forecast, even as its first-half profit more than doubled to $2.7 billion. Investors pushed the stock down 4.65 percent to 2,399 yen by the close in Tokyo as they reacted to news that the maker of the Accord and Civic would report a profit that was 20 percent lower than previously expected. Blaming a strong yen and weakening sales, Japan\'s third-biggest automaker said it now expects to earn 375 billion yen ($4.7 billion) in its fiscal year to March 2013, down from an earlier 470 billion yen forecast. Sales were tipped to fall to 9.8 trillion yen, from 10.3 trillion yen. \"We expect earnings to come below the estimates announced on April 27, 2012, due to a decrease in sales volume amid the changing business environment and the impact of currency exchange rates,\" Honda said in a statement. Honda\'s profit and sales downgrade, which dragged down the shares of rivals Nissan and Toyota, stood in marked contrast to its latest half-year results. These saw net profit soar to 213.96 billion yen, up from 92.23 billion yen in the same period a year earlier. Sales in the period were 4.71 trillion yen, up from 3.60 trillion yen. Honda said the rosy results were largely due to a rebound from last year\'s quake-tsunami disaster. The automaker did not elaborate on the impact of a simmering territorial dispute between Tokyo and Beijing, which has put the brakes on Japanese carmakers\' sales in China, the world\'s biggest vehicle market. The two Asian giants remain locked in a festering row over islands in the East China Sea controlled by Japan but claimed by China, sparking double-digit sales declines in September for Japan\'s biggest automakers. Japanese factories and businesses across China closed or scaled back operations in September over fears they or their workers could be targeted by mobs protesting against Tokyo\'s nationalisation of the islands. \"Honda\'s sales apparently felt the impact from a weaker China market, as well as the stronger yen, and (this) raises the possibility that it will revise down its full-year forecast yet again,\" Hideyuki Ishiguro, strategist at Okasan Securities, told Dow Jones Newswires. \"Of course Honda\'s problems are not unique -- the magnitude of the China component in its earnings may be most felt in Nissan Motor\'s earnings, since it has the heaviest proportional exposure to China.\" Shares in Nissan, which has yet to report its latest quarterly results, were off 2.18 percent to 670 yen while Toyota shares fell 1.62 percent to 3,030 yen by the close. Japanese automakers saw extensive damage to their supply chains as a result of the twin disasters in Japan last year as well as record flooding in Thailand. A high yen also ate into exporters\' sales and profits. The country\'s automakers have come under pressure from the value of the currency, which last year hit record highs against the dollar and remains strong. This makes exports relatively more expensive overseas and cuts the value of repatriated earnings. While the number of vehicles that Honda sold rose strongly in the first half -- including a 73 percent jump in the key North American market -- the company said revenue in Europe, the Middle East and South America all weakened \"mainly due to unfavourable foreign currency translation effects\". The number of motorcycles that Honda sold in the first half rose by about 7.0 percent on-year, it added.

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