Honda's quarterly profit sinks 6 percent amid quake damage

AP News
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Posted: Aug 02, 2016 4:04 AM
Honda's quarterly profit sinks 6 percent amid quake damage

TOKYO (AP) — Honda Motor Co. recorded a better-than-expected 174.6 billion yen profit ($1.7 billion) for the fiscal first quarter, as it gradually recovers from damage caused by a quake in southwestern Japan.

Analysts surveyed by FactSet had forecast at 133 billion yen ($1.3 billion) quarterly profit.

Honda said Tuesday that April-June profit fell 6 percent from a year ago, when the Japanese automaker earned 186 billion yen. Earlier this year, Honda posted losses over a massive air-bag recall at its supplier Takata.

Takata uses ammonium nitrate to create a small explosion to fill air bags. But the chemical can deteriorate and burn too fast, blowing apart a metal canister and spewing shrapnel. At least 11 people have died worldwide. Honda is among Takata's biggest customers.

The quality-related expenses continue to weigh on results, Honda said.

A strong yen, which reduces the earnings of Japanese exporters like Honda, is also hurting its results. Honda said the dollar traded at about 108 yen in recent months, compared to 121 yen the same period a year ago.

Tokyo-based Honda, which makes the Accord sedan and Asimo robot, kept its full year forecasts unchanged at 390 billion yen ($3.8 billion) in profit, up 13 percent from the previous year.

The twin earthquakes in Kumamoto in April severely damaged Honda's motorcycle plant.

Honda said it's expecting to sell 4.9 million vehicles for the fiscal year through March 2017, up from 4.7 million sold for the previous fiscal year.

Among other Japanese automakers, Nissan Motor Co. reported last week a 136.4 billion yen ($30.7 million) profit for the fiscal quarter through June, down nearly 11 percent from the same period a year ago, after a mileage testing scandal at its supplier hit its minicar sales in Japan.

Toyota Motor Corp. reports its results Thursday.

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