Honda Slashes Profit Outlook On Disasters, Sees Rebound

TOKYO (Reuters) - Honda Motor Co slashed its annual profit guidance to the lowest level in three years as it counted the cost of natural disasters in Japan and Thailand and a strong yen. But it forecast a healthy rebound next year.

Japan's No.3 automaker was the slowest to recover from the supply chain disruptions after the Japanese earthquake and tsunami and it was the only carmaker whose factory was inundated by historic floods in Thailand, Southeast Asia's export hub.

Honda cut its expectations for operating profit for the business year to March 31 by a quarter to 200 billion yen ($2.6 billion), below the average forecast of 24 analysts polled by Thomson Reuters I/B/E/S of 283 billion yen. It marks a drop of 65 percent compared with year-earlier profits.

"Any way you look at it, this has been an extremely tough year for Honda," Chief Financial Officer Fumihiko Ike told a news conference on Tuesday after Honda released its results.

"We consider this to be a year of unparalleled, abnormal difficulty, and even though the global economy may not be looking good now, we'll see a big leap next year and beyond," he said.

In the face of the disasters, the firm's global output dropped last year by a fifth to 2.91 million cars, slipping below 3 million for the first time in eight years. Production at other Japanese automakers, except for Nissan Motor Co, also fell but not so severely.

Honda had withdrawn its previous operating profit forecast three months ago because of uncertainty over when production could restart following the floods. The dollar's estimated 8-yen fall to 78 yen also hurt profits.

Honda, whose bottom line has been propped up by its leading motorcycle business and a strong finance arm, expects net profit to fall 60 percent to 215 billion yen in the financial year. The figure, reported under U.S. accounting standards, includes earnings made in China.

"It was a tough year, with the earthquake and Thai disasters, so there is a sense out there that it's only natural for the numbers to look bad," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

While Honda's new forecast may trigger a temporary drop in its shares, he added that they were supported by solid demand.

Quarterly profit was also grim. The company said operating profit for the October-December quarter slumped 65 percent to 44.3 billion yen, well below an average estimate of 81.2 billion yen in a Reuters poll of nine analysts.

4 MILLION CARS

The Thai floods have hurt other Japanese companies as well. Toshiba Corp on Tuesday posted a 72 percent decline in quarterly operating profit, partly a result of the disaster.

Honda estimated lost sales owing to the Thai floods would add up to 260,000 vehicles this business year. It cut its worldwide sales outlook to 3.15 million from the previous forecast of 3.435 million.

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