Honda Motor net income for the fiscal third quarter ended 31 December, 2011 fell 41.2% to JPY47.6bn on sales off 8% to JPY1,942.5bn ($24,988m).
Honda said this was “due primarily to decreased revenue in the automobile business due to the supply chain disruption mainly caused by Thailand flood and unfavourable foreign currency translation effects, despite increased revenue in the motorcycle business.
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Operating income fell 64.7% to JPY44.2bn ($570m) which the automaker said was “due primarily to a decrease in sales volume and model mix, an increase in fixed costs per unit as production volume decreased, the impact of raw material price increases and the unfavuorable foreign currency effect.”
The automaker’s share of net profit at affiliates fell 47.3% to JPY22.9bn ($295m) due largely to the effect on JVs in China of supply chain disruption following the earthquake in Japan just before the start of the fiscal 2011/12 year.
Honda’s Q3 automobile unit sales fell 2.9% to 830,000 units after volumes fell mainly in Asia due to the Thailand flood which effectively wiped out the automaker’s factory there and severely affected parts supplies to plants in other countries, especially India.
Unfavourable currency exchange reduced financial services revenue 8.5% to JPY124.8bn ($1.61bn). Segment operating income decreased 15.7% to JPY37.5bn ($484m).
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By GlobalDataUnfavourable currency effects also led, again, to an operating loss of JPY2.1bn ($28m) for the company’s power products unit (mowers and generators, etc).
In Japan, revenue from both domestic and exports sales slipped 0.5% to JPY863.1bn ($11.1bn) due to the Thai flood and Honda reported an operating loss for the region of JPY41.2bn ($530m), down JPY55.8bn ($718m) year on year due mainly to increased R&D expenses, the impact of raw material price increases and unfavourable currency.
In North America, revenue fell 2.5%, to JPY986.2bn ($12.7bn), and operating income was off 16.5% to JPY74.8bn ($963m).
In Europe, revenue fell 20.7% to JPY119.4bn ($1.53bn) (Thai floods, currency) but the operating loss of JPY3.8bn ($49m) was an improvement of JPY5.6bn ($72m) year on year due to decreased non-R&D expenses.
In Asia, revenue fell 28.7% to JPY317.6bn ($4.1bn) as increased motorcycle sales failed to offset flood and currency-hit automobile revenue. Operating income fell 62.7% to JPY13.3bn ($172m).
Revenue in other regions including South America, the Middle East, Africa and Oceania was off 13.7% to JPY206.1bn ($2.66bn and operating income fell 20.2% to JPY12.5bn ($161m).
Nine-month results
Honda’s nine-month net income fell 71.4% to JPY139.8bn on revenue down 17.6% to JPY5.54 trillion with earthquake, flood and unfavorable foreign currency effects cited as the main factors, despite increased motorcycle revenue.
Operating income fell 77.2% to JPY119.3bn.
Automobile unit sales fell 19% to 2.15m.
Thai flood costs
Honda said in its financial statement it had booked JPY17.35bn of costs and expenses as a result of the Thai floods which devastated its local factory and destroyed, among other things, a large inventory of completed cars. It said recently it will rebuild the factory but will effectively have to re-equip the entire plant as if it was a new building.
Inventory loss was JPY7.33bn and the loss on damaged property, plant and equipment was JPY7,66bn.
Honda noted insurance has so far covered JPY11.83bn of those losses with further adjustments to come “when final settlements with insurance companies are reached”.
Fiscal 2011/12 outlook
For the full fiscal year, Honda is forecasting 3.15m automobile sales, down 362,000 year on year and 12.67m motorcycles (+ 1.22m). Revenue is expected to be down 12.2% to JPY7.8 trillion, operating income off 65% to JPY200bn and net income down 60% to JPY215bn.
