northeastern japan

Honda’s Quarterly Profit Plunges on Disaster

TOKYO (AP) — Honda’s quarterly profit plunged nearly 90 percent after the quake in northeastern Japan hammered production and sales, but the automaker raised full-year forecasts as its confidence in a recovery mounts.

Honda Motor Co. said Monday its April-June profit tumbled to 31.7 billion yen ($406 million) from 272.4 billion yen a year earlier. Japan’s No. 3 automaker said it managed to remain in the black thanks to its growing motorcycle business.

Tokyo-based Honda, which makes the Odyssey minivan and Fit subcompact, now expects a 230 billion yen ($2.9 billion) profit for the fiscal year ending March 2012.

That is less than half of Honda’s 534 billion yen profit in the previous fiscal year, but is better than the 195 billion yen ($2.5 billion) it forecast in June.

Honda also raised its annual sales projection to 8.7 trillion yen ($112 billion), down 3 percent from the previous year, but better than the 8.3 trillion yen ($106 billion) it expected in June.

The manufacturer expects to sell 3.435 million vehicles worldwide, some 135,000 more than it had given as its forecast in June. It sold 3.512 million vehicles the previous fiscal year.

Honda’s motorcycle business is booming, and the automaker expects to sell 12.7 million motorcycles for the fiscal year through March 2012, up from 11.45 million the previous year. That’s also better than its earlier forecast to sell 12.645 million motorcycles this fiscal year.

Production at all of Japan’s automakers was disrupted after parts suppliers were damaged in northeastern Japan by the March 11 earthquake and tsunami.

Honda’s quarterly sales dropped 27 percent to 1.7 trillion yen ($22 billion).

Weighing on the bottom line of Japanese automakers is the strong yen, which erodes the value of overseas earnings.

Honda is counting on the dollar trading at 80 yen for this fiscal year, but the greenback has slid to below 80 yen in recent weeks. An unfavorable exchange rate erased 22.5 billion yen ($288 million) from Honda’s operating profit in the latest quarter.

But Honda and others are saying that recovery from the disasters is coming quicker than expected, and production levels are projected to return to normal later this year. Strong growth momentum from markets such as China, Southeast Asia and India is also helping.

Mitsubishi Motors, which also released results Monday, said it sprang back into the black for the first quarter as growth in emerging markets offset quake damage. It posted a 4.3 billion yen ($55 million) profit for the April-June period compared with a loss of 11.8 billion yen a year earlier.

The Tokyo-based manufacturer of the i-MiEV electric car left its annual forecast unchanged at a 20 billion yen ($256 million) profit, pointing to uncertainties in the global economy.

Last week, Nissan Motor Co., Japan’s No. 2 automaker, reported a smaller-than-expected 20 percent drop in quarterly profit at 85 billion yen ($1 billion). Chief Executive Carlos Ghosn said the result showed Nissan’s resilience despite the odds.

Nissan, based in Yokohama, stuck to its forecast for annual profit to fall 15.4 percent to 270 billion yen ($3.5 billion) in the fiscal year ending March 2012. But it is expecting vehicle sales to rise 9.9 percent to 4.6 million vehicles, a record for Nissan.

Mazda reported its third straight quarter of red ink, suffering a 25.5 billion yen ($327 million) loss, but expects to return to the black in the fiscal year ending March 2012.

The maker of the Miata and RX-8 sportscars expects to sell more vehicles than the previous year at 1.3 million vehicles, up 2.6 percent on year, with much of the momentum coming from China.

Toyota Motor Corp., the world’s biggest automaker, reports earnings Tuesday.

A possible electricity shortage is another concern for Japanese automakers, but they appear to be keeping that under control by taking Thursday and Friday off and cranking up their assembly lines on weekends.

Japanese companies are trying to reduce electricity consumption by 15 percent after the March disaster sent several reactors at Fukushima Dai-ichi nuclear plant into meltdown. Another plant in central Japan has also been temporarily shut down because of quake concerns.

Honda stock rose 1.5 percent to 3,125 yen, while Mitsubishi Motors gained nearly 2 percent to 103 yen. Both companies’ earnings were announced after trading ended in Tokyo.

Article source: http://www.nytimes.com/aponline/2011/08/01/business/AP-AS-Japan-Earns-Honda.html?partner=rss&emc=rss

The Assembly Line Is Rolling Again, Tenuously, at Honda in Japan

A little more than a month after the earthquake and tsunami devastated the automobile industry’s supply chains in Japan, Honda — like the other main Japanese car makers — has resumed domestic production.

Slogans or no, however, it is a tenuous triumph.

Honda’s factory here in Sayama, a suburb of Tokyo, was not damaged in the disasters. Neither was its other major plant, about 200 miles southwest of here. But auto production in Japan is at only half the normal level for Honda — as it is for Honda’s bigger rivals, Toyota and Nissan.

That is mainly because many of the 20,000 to 30,000 parts that go into a Japanese car come from the earthquake-stricken region in northeastern Japan, where numerous suppliers were knocked off line. Unless part makers can resume production soon, the auto companies might have to shut down once again.

“We cannot continue for a long time,” said Ko Katayama, the general manager at Honda’s factory here, declining to specify how long production could continue. “Sooner or later, it’s going to run out.”

Honda is now making only 400 to 450 vehicles a day at the factory in Sayama. That is down from the daily pace of 800 to 900 before the earthquake, said Atsushi Nemoto, a company spokesman.

The production shortfalls for Japan’s biggest automakers will crush earnings that had just begun to recover from the global slump caused by the world financial crisis. Over the long term, the Japanese industry could lose global market share — in recent years it has been nearly 30 percent — as overseas customers sample other brands.

Analysts say Japan’s car companies might also resign themselves to making even more of their products offshore. Even before the March disaster, Japan’s top three automakers were producing most of their vehicles outside the country. (In Honda’s case, only about 27 percent of its 3.6 million cars last year were made in Japan.)

Of course, if vital parts remain unavailable, some factories outside Japan are also being affected, though not to the same extent as those in Japan. Honda, for instance, has said it will produce at a reduced rate in North America at least through May 6.

Noriyuki Matsushima, automobile analyst at Citigroup, estimates that global production by Japanese automakers will decline 15 percent in the fiscal year that ends next March. He predicted full Japanese auto production would not resume until October.

“In a worst-case scenario,” he wrote in a recent report, industry operating losses in the first half of the fiscal year would be “the biggest ever, surpassing even those posted at the time of the Lehman Brothers bankruptcy.”

The limited scope of the recovery at the Honda factory here, known as the Saitama plant, was evident on Monday. The company had invited reporters to observe operations that had resumed a week earlier. But access was limited to a single spot near the end of the assembly line, where workers in white company jackets and trousers put finishing touches on Elysion minivans, a model sold only in Japan.

A Honda official acknowledged that if reporters had viewed the entire factory, they would have seen stretches of the assembly line containing no cars.

Toyota, too, which had resumed production in all 17 of its domestic factories as of Monday, is working at only half volume, said Shiori Hashimoto, a spokeswoman. It plans to shut factories again from April 28 through May 9 for an extended version of Japan’s Golden Week — a period containing several national holidays. And even after production resumes at half volume, Ms. Hashimoto said, the situation is uncertain beyond June 3.

In the last week Nissan has also resumed production at all five of its car factories and two engine factories in Japan — including the Iwaki engine plant that was heavily damaged by the earthquake. But Nissan, too, is producing only about half as many vehicles as usual, Mitsuru Yonekawa, a spokesman, said.

Koji Endo, a managing director at Advanced Research Japan, an equity research firm, said automakers “could have a June crisis” when inventories of crucial parts run out. “There is a very good chance they will have to shut down again,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=5e3dafa2df468793d6d4284b718e7f0a

Honda’s Quarterly Profit Plunges on Disaster

The Assembly Line Is Rolling Again, Tenuously, at Honda in Japan

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