x Abu Dhabi, UAEThursday 27 July 2017

Honda trims full-year profit forecast as China car sales fall

Honda trimmed its annual net profit forecast by 1.3 per cent to ¥370 billion after car sales have been knocked in China, and as it continues to struggle in Europe.

Honda trimmed its annual net profit forecast by 1.3 per cent to ¥370 billion after car sales have been knocked in China, and as it continues to struggle in Europe.

Japan's third-biggest automaker said its net profit for October-December was ¥77.4bn, compared with the ¥47.7bn it booked last year when it suffered from disrupted supply chains after floods hit it and its suppliers' factories in Thailand.

The result was below the average estimate of ¥111.4bn among seven analysts polled by Thomson Reuters.

Honda is the first among major Japanese automakers to announce its third quarter earnings. Toyota is set to announce on February 5 and Nissan on February 8.

In the final quarter they will be helped by the yen's recent weakening against the dollar, as they can convert overseas profits back to the yen at a more favourable rate and export cars more cheaply.

Among Japan's top three car makers Honda relies most heavily on the United States, which accounts for some 40 per cent of its vehicle sales by volume. For rivals Toyota and Nissan, the US accounts for about a quarter of global auto sales.

In calendar year 2012 the US auto market posted its strongest sales figures since 2007 at 14.5 million vehicles, up 13 per cent from 2011, and the momentum is likely to continue into January as well.

The yen's value eased 11 per cent versus the dollar between October and December, trading at around ¥86.7 to the dollar by the end of the quarter from ¥78 at the start. Since then it has weakened further to around ¥91 to the dollar.

 

* Reuters