Honda lowers FY 2008 earnings forecast for 4th time

TOKYO, Jan. 30 Kyodo - Honda Motor Co. on Friday lowered its earnings projection for the fiscal year to March 31 for the fourth time as the yen's steep appreciation has eroded
export earnings further and sales are plummeting amid the global economic
slump.
Honda, Japan's second-largest automaker, now expects to post a group net profit
of 80 billion yen in fiscal 2008, instead of 185 billion yen projected a month
ago. The latest profit projection represents a plunge of 86.7 percent from a
profit of 600 billion yen in fiscal 2007.
''This is the first time in our history that Honda has cut earnings forecasts
four times in a year,'' Executive Vice President Koichi Kondo told a press
conference. ''The (vehicle) market changed more than we expected and this is
why we could not get a full grasp of (the trends) to make full-year
projections.''
For fiscal 2008, Honda is now projecting sales to fall 15.9 percent from the
previous year to 10.1 trillion yen, the first drop in nine years. Its operating
profit is projected to tumble 85.3 percent to 140 billion yen.
In December, Honda projected sales of 10.4 trillion yen and an operating profit
of 180 billion yen.
Honda has been hammered by collapsing global demand for cars and has slashed
production and jobs to reduce inventories as part of restructuring measures,
including its withdrawal from Formula One motor sports operations and the
postponement of factory and product launches.
As part of efforts to cut costs further, Honda said it is aiming to lower
capital investment for fiscal 2008 to 610 billion yen, down 40 billion yen from
the amount planned in December, and to reduce research and development expenses
by 5 billion yen to 595 billion yen.
Honda also revised downward its car sales projection for fiscal 2008 to
3,525,000 units, down 125,000 units from its estimate in December and lower
than the 3,925,000 units it sold the previous year.
It also lowered its sales outlook for motorcycles by 125,000 units to
10,175,000 units, despite sales growth in the October-December quarter. Honda
sold 9,320,000 units of motorcycles in fiscal 2007.
Still, Honda is hoping to escape an annual loss while Toyota Motor Corp. is
expecting to incur an operating loss of 150 billion yen for fiscal 2008, its
first loss since the firm began releasing earnings results for the fiscal year
that ended in March 1941.
For the third quarter of fiscal 2008, Honda reported a net profit of 20.2
billion yen, down 89.9 percent from a year earlier, and an operating profit of
102.4 billion yen, down 62.9 percent, on sales of 2.53 trillion yen, down 16.8
percent.
Honda's vehicle sales during the October-December period fell 5.1 percent from
a year earlier to 940,000 units.
By region, car sales dropped 13.5 percent to 416,000 units in North America,
Honda's biggest market, and domestic sales fell 6.9 percent to 135,000 units.
Sales in Europe dropped 5.6 percent to 85,000 units but sales in Asia outside
Japan rose 15.4 percent to 217,000 units.
During the third quarter, Honda's motorcycle sales increased 5.8 percent to
2,504,000 units, thanks to robust sales in India and Vietnam.
In addition to its dismal car sales, the yen's sharp appreciation against the
dollar and the euro also dealt a heavy blow to export-oriented Honda, slashing
its operating profit for the third quarter by 242.7 billion yen, the automaker
said.
Kondo said the severe business conditions facing the global auto industry are
expected to persist during at least the first half of the next fiscal year.
''Hopefully, we'll see some recovery in the latter half of the fiscal year,''
Kondo said, pinning his hopes on U.S. President Barack Obama's economic
stimulus measures.
==Kyodo