Honda Motor Co. said Thursday its quarterly profit dropped 38 percent due to a slump in car production following last month's earthquake and withheld earnings projections amid a chronic shortage of auto parts.
The company said it would let go all 600 contract workers at one of its two auto factories in Japan. Honda has been struggling to maintain limited vehicle manufacturing because of parts shortages following the March 11 quake and tsunami.
Honda's net profit for the January-March quarter shrank to 44.5 billion yen ($545 million). Revenue fell 2.9 percent to 2.21 trillion yen.
"The March quake was the biggest reason for declining profit. We simply could not produce cars due to parts shortages after the quake," said Honda spokesman Tomohiro Okada.
The magnitutue-9.0 earthquake and tsunami destroyed many factories in northeastern Japan, causing severe auto parts shortages for Honda and other automakers.
The twin disasters forced Honda to shut down its entire production in Japan from March 14 to April 10, resulting in a production loss of 58,500 cars.
Faced with a parts supply crunch, Honda's auto plants in Japan will operate at half capacity until the end of June. Honda said it doesn't expect to return to full production in Japan until the end of the year.
Apart from production losses, Honda's sales in Japan took a beating during the January-March quarter.
Honda sold 142,000 cars in Japan during the quarter, down 21 percent from the same period a year earlier. But the company's auto sales abroad rose 3.8 percent to 718,000 cars thanks to brisk demand in North America and China.
Honda did not provide earnings projections for the current fiscal year to March 2012 due to uncertainty over parts supplies.
Honda said it would cut all 600 contract workers at its plant in Saitama, north of Tokyo, by not renewing their three-month contracts. The workers will lose their jobs by the end of September.
Meanwhile, Mazda Motor Corp. reported Thursday a net loss of 62.8 billion yen in the January-March quarter, reversing from a net profit of 9.9 billion yen a year earlier. Mazda blamed the March disasters for the quarterly loss.
Shares in Honda rose 2.9 percent to close at 3,190 yen on the Tokyo Stock Exchange on Thursday. Mazda's stock price slipped 0.5 percent to 185 yen.