Honda Motor Co. (HMC) announced its sales and earnings guidance for fiscal 2012 more than a month after releasing its last year results as it needed more time to assess the impact of the earthquake and tsunami in Japan on March 11.
The automaker expects a stark 63.5% drop in profit to ¥195 billion ($2.4 billion) for the fiscal year from ¥534 billion recorded in the previous fiscal year.
Honda’s projection of lower profit was driven by declining sales, cost of fixing damaged property and equipment, higher raw material costs, higher research and development expenses and unfavorable exchange rate. It was based on an average dollar exchange rate of ¥80 and a euro exchange rate of ¥110 for the year.
The Zacks #3 Rank (Hold) company anticipates global vehicle sales to dip 6% to 3.3 million vehicles from 3.51 million vehicles a year ago on lower production due to parts shortage resulting from the twin disasters in Japan.
However, motorcycle sales are expected to rise 10.5% to 12.65 million units, despite a planned 20% decrease in motorcycle production to 14.5 million vehicles, reflecting the dissolution of an Indian joint venture, Hero Honda. Consequently, revenues are expected to fall 7% to ¥8.3 trillion ($104 billion) during the year.
Honda revealed that vehicle production in Japan will return to near-normal levels by the end of this month and production in regions outside of Japan will be back to pre-disaster levels in August or September.
Due to the disaster in Japan, Honda’s product launches suffered a setback. The launch of its new Fit Shuttle model has been delayed by 3 months due to the difficulty in procuring components for manufacturing the vehicle. This apart, sales of the recently launched revamped Civic have been limited and the automaker has decided to resume full production of the vehicle not before fall.
Recently, Toyota Motor Corp. (TM) also unveiled its guidance for fiscal 2012. The company expects full-year profits to fall 31% to ¥280 billion ($3.5 billion) from ¥408 billion a year ago, driven by lower sales and stronger yen.
The automaker has projected global sales to decrease to 7.24 million vehicles from 7.31 million vehicles in fiscal 2011, which will reduce earnings by ¥120 billion. These figures included sales at truck maker Hino Motors Ltd. and compact car maker Daihatsu Motor Co.
Apart from Honda and Toyota, Nissan Motor Co. (NSANY), allied with Renault SA of France, is expected to release its full year outlook before its shareholders’ meeting on June 29.
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