Honda Profit Plunges

However company is optimistic about future.

Japan's third-largest automaker Honda Motor on August 1 that its net profit for the April-June quarter fell nearly 90% on the strong yen and the impact of the March disasters on production and sales.

However, it raised its forecasts for the full year from earlier estimates in reflection of a faster-than-expected recovery of parts supplies that were heavily disrupted by the March 11 earthquake and tsunami.

The maker of the Civic and Accord said net profit for the fiscal first quarter ended June 30 plunged 88.3% to 31.7 billion yen (US$394 million).

Net sales fell 27.4% to 1.7 trillion yen compared to the same period last year, while operating profit tumbled 90.4% on-year to 22.5 billion yen.

The slump was "mainly caused by the impact of the Great East Japan Earthquake... and the unfavorable foreign currency translation effects," Honda said . Honda profits have been hit by a loss in production, decreased sales and restoration costs, effects that have been compounded by the rise of the yen against the dollar and euro as well as higher raw material costs.

However, Honda raised its net profit forecast to 230 billion yen this financial year from a June estimate of 195 billion yen, although the latest figure represented a 56.9% drop from the year-earlier profit.

Annual operating profit was expected to slide 52.6% on-year to 270 billion yen, better than a June forecast of 200 billion yen. Global sales are now expected fall 2.7% on-year to hit 8.7 trillion yen, instead of the 8.3 trillion yen forecast in June.

Honda's recovery has been slower than its peers, seeing June production decline 44.5% on-year compared to a 7.9 % fall for Toyota and growth of 18.5% for Nissan.

Japan's automakers are ramping up their hiring of temporary workers to help catch up with demand as supply chains recover. Toyota has said it plans to hire up to 4,000 contract workers, while Honda has said it needs to hire up 3,000, according to Dow Jones Newswires.

Copyright Agence France-Presse, 2011

See Also
Honda to Recall 200,000 Cars Globally

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