Honda profit outlook for the year weighed down by quality issues

Honda profit outlook for the year weighed down by quality issues image

The third largest Japanese automaker has recently revealed a mostly flat profit forecast for the fiscal year that started on April 1.

Honda said its net profit would slightly go up – by just 0.4 percent – during the new fiscal year ending March 31, 2016, with the earnings impacted by the numerous new expanses – including ones triggered by quality problems and currency swings. The issues would also overcome almost all increases yielded by higher global sales. The fiscal year that recently concluded also saw Honda report earnings that were below its forecasted guidance, with numerous quality problems hitting vehicle development, lifting costs and impacting sales. 2014’s earnings shortfall was in part related to the ongoing quality issues and associated costs and in part due to weaker than usual United States and Japan deliveries, according to Honda Executive Vice President Tetsuo Iwamura.

The US, Honda’s largest market, has seen a sales dip due to the automaker’s aging model range and because its strongest segment – the passenger cars – has seen dropping sales as the consumers turn back to SUVs and pickup trucks thanks to the lower fuel prices. Honda has forecasted its net profit would amount to 525 billion yen ($4.41 billion) during the 2015-2016 fiscal year, having to cope with unfavorable exchange rates. As far as the January to March quarter, net profit slid 43 percent to 97.8 billion yen, with US deliveries further impacted by the US West Coast port labor clash and the slow production output at a new plant in Mexico, caused by quality control woes.

Via Reuters

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