Takeo Fukui, president of Honda Motor Co., speaks during a news conference in Tokyo on Nov. 17, 2008. Photographer: Tomohiro Ohsumi/Bloomberg News
Dec. 18 (Bloomberg) — Honda Motor Co., Japan’s second- largest automaker, fell 3.5 percent after cutting its profit goal as the yen rose to a 13-year high against the dollar and sales in North America and Europe dropped.
Honda declined 66 yen to 1,825 yen at the 3 p.m. close on the Tokyo Stock Exchange. Toyota Motor Corp., the country’s largest automaker, fell 2.3 percent, while Nissan Motor Co., the No. 3 carmaker in Japan, added 0.7 percent.
Honda cut its full-year forecast 62 percent yesterday as the global recession cripples sales in the U.S., Japan and Europe. The yen’s 28 percent gain against the dollar and 31 percent rise against the euro this year has hammered Honda’s profit, forcing it to cut jobs, lower management pay and withdraw from Formula One motor racing.
“The speed of falling sales and worsening profitability has been faster than expected since October,” Koji Endo, an analyst at Credit Suisse Securities (Japan) Ltd. in Tokyo, said in a report to clients. “Streamlining is the only way for Honda to tackle that.”
Endo cut his rating on Honda to “underperform” from “neutral” after the company’s announcement.
Tokyo-based Honda expects net income of 185 billion yen ($2.1 billion) for the year ending March 31 compared with an earlier forecast of 485 billion yen, it said. That would be 69 percent lower than last fiscal year. Operating profit may total 180 billion yen, compared with a previous estimate of 550 billion yen.
To contact the reporter on this story: Naoko Fujimura in Tokyo at [email protected]; Tetsuya Komatsu in Tokyo at [email protected]
Last Updated: December 18, 2008 01:43 EST
By Naoko Fujimura and Tetsuya Komatsu
Source: Bloomberg