Honda profits shrink to four-year low, coronavirus clouds outlook
INTERNATIONAL - Honda on Tuesday posted its lowest operating profit in four years and refrained from releasing an earnings outlook for the current year because of uncertainty about the longer-term impact of the coronavirus on global car demand.
Honda and other global automakers have begun gradually to resume operations at their vehicle plants, but face weak demand as job losses and concern about a global economic downturn weigh on consumer spending.
Carmakers are also trying to cope with supply chain disruptions and social distancing measures to contain the coronavirus that are expected to limit output in the coming months.
“It is difficult to reasonably calculate the impact of COVID-19,” Executive Vice President Seiji Kuraishi said during a livestreamed press briefing. “We will release a forecast when we can,” he added.
Honda’s operating profit for the year ended in March fell 13% to 634 billion yen ($5.9 billion), short of a consensus estimate of 669 billion yen profit drawn from 19 analysts polled by Refinitiv. The company said COVID-19, the respiratory disease caused by the novel coronavirus, cut operating profit by 130 billion yen.
In the three months that ended March 31, Honda posted an operating loss of 5.2 billion yen, its first quarterly loss in four years, pressured by a 28 percent drop in vehicle sales.
Some analysts believe global vehicle sales this year could shrink by a third, a much steeper decline than the 11 percent fall seen in 2009/10 business year amid the global financial crisis.
For the year ended March, combined annual sales at Japanese automakers fell 7.3 percent to a four-year low of 26.5 million vehicles, calculations by Reuters show. Honda saw an 8.5 percent decline.Reuters