Numbers dented, Honda reduces profit forecast

30 January 2009

Set to post an operating loss of around $3.7 billion during the current quarter, Japanese automaker Honda has lowered its profit forecast for the fourth time during this fiscal.

Following Toyota into the red, Honda has now said that it expects a net profit of 80 billion yen, equivalent to $895 million, for the financial year ending 31 March 31 2009, as against its previous forecast of 185 billion yen from December 2008.

Japanese automakers are following the Big Three from Detroit, who have been bleeding cash each quarter since over a year now. Honda's quarterly ahead of the weekend show that the auto company is on course to post an operating loss of at least $3.7 billion from January to March this year.

Reports said that the softening of demand from the West as well as economic slowdowns in Asia and Brazil compounded with the yen's devastating surge would ensure Honda's profit gets an ugly red dent.

Things would be marginally better for Honda as compared to rival Toyota, which is facing a historic full-year operating loss, as it expects to manage a marginal operating profit of 140 billion yen ($1.6 billion) for the full year ending March 2009.

Toyota, on the other hand, is looking at a full-year operating loss of at least 150 billion yen ($1.7 billion), and as much as 400 billion yen ($4.5 billion) as predicted by domestic media reports, its first loss in its 71-year history.