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Honda posts first quarterly loss in 15 years

Hans Greimel
Automotive News
April 28, 2009 - 11:43 am ET

TOKYO -- Honda Motor Co. posted its first quarterly loss in 15 years in the three months ended March 31, but still squeaked out a full-year profit. It forecasts continuing black ink despite falling sales in the fiscal year that began April 1.




In the quarter that ended March 31, Honda posted an operating loss of ?Ñ283.0 billion or $2.91 billion at current exchange rates, Executive Vice President Koichi Kondo said today .

The results marked a dramatic reversal from a year earlier, when the company reported an operating profit of $1.74 billion .

Global unit sales to dealers or distributors in the fourth quarter slid 35.3 percent to 680,000. In North America, volume plummeted by more than half, to 219,000 vehicles from 459,000 the year before.

Revenue tumbled 41.6 percent in the quarter to $18.33 billion. Net income swung to a loss of $1.91 billion from a year-earlier profit of $261.1 million.

All major markets saw regional operating losses.

In North America, Honda swung to a $1.10 billion loss for the quarter from a $648.7 million profit a year earlier.

For the fiscal year that ended March 31, operating profit at Japan's second-biggest automaker collapsed 80.1 percent to $1.95 billion.

Revenue fell 16.6 percent to $102.90 billion, the first drop in nine years. But Kondo said an adverse exchange rate hurt full-year profits even more than falling sales. Net profit fell 77.2 percent to $1.41 billion.

Looking ahead, Kondo warned that operating income will plunge an additional 94.7 percent, to $102.8 million, in the current fiscal year, and net income will drop 70.8 percent to $411.1 million.

Despite plunging profits, Honda is in better shape than some of its rivals. General Motors and Chrysler LLC are struggling for survival, and Toyota Motor Corp. expects to announce its first loss in decades later this month. Honda has yet to post a full-year loss since its founding in 1948.

Honda says it can weather the storm with flexible manufacturing and an emphasis on fuel-efficient cars. Kondo said aggressive cost cuts will keep Honda profitable in the current fiscal year, even though global sales are seen retreating 8.7 percent to 3.21 million vehicles.

In North America, Honda's biggest market, unit sales dropped 19.1 percent to 1.50 million in the year just ended. The decline is expected to continue but at a slower pace, with North American sales shedding an additional 9.8 percent to 1.35 million vehicles this year.

Kondo said the United States is showing signs of bottoming out after Honda's business took an especially steep dive in the January-March fiscal fourth quarter.

Honda aims to bolster this year's operating profit by cutting $433.8 million in r&d costs. The company also will trim capital expenditures by a third, to $4.0 billion.

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