⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Honda lowers profit outlook for a second time amid chip shortage

Published 11/05/2021, 02:15 AM
Updated 11/05/2021, 08:11 AM
© Reuters. FILE PHOTO: Honda's logo on its Modulo model is pictured at its showroom at its headquarters in Tokyo, Japan, February 19, 2019.  REUTERS/Kim Kyung-hoon
TM
-

TOKYO (Reuters) -Honda Motor Co cut its full-year profit forecast for a second time on Friday as a persistent global shortage of semiconductors forces it to cut vehicle production and rising steel and material prices eat into profit margins.

Like other automakers, Honda's production plans have been hit by the chip shortage, with global output in September falling 30% from a year ago, even as demand in key markets, such as China rebounds from a pandemic slump.

"We believed supplies shortages would be limited, but we now see the supply shortage is more serious and will last longer," executive vice President Seiji Kuraishi said at a press briefing.

Honda was also dealing with rises in the cost of materials, including steel that were difficult to pass on to consumers, he added.

Honda's latest forecast for a operating profit of 660 billion yen ($5.80 billion) for the year to March 31 is 15% down form a prediction made in August, and lower than a mean forecast of 764.5 billion yen by 20 analysts, Refinitiv data showed.

Japan's No. 2 car company on Friday also cut its vehicle sales plan to 4.2 million vehicles from 4.85 million this business year, down from 4.5 million in the previous 12 months.

On Thursday, larger rival Toyota Motor (NYSE:TM) cut its full-year sales target and warned the lack of semiconductors still posed risks to its annual production plans.

Honda's Kuraishi said the company expect chip shortages to ease after March and should not to affect its plans to accelerate a shift to electric cars and other zero-emission vehicles.

The Japanese carmaker is aiming to increase its ratio of EVs and fuel cell vehicles (FCVs) to 100% of all sales by 2040, with all new models in China be EVs or hybrid cars from 2030.

Honda is also developing self-driving technology, and says it plans to put advanced driver-assistance systems in all of its models in major markets by 2030.

© Reuters. FILE PHOTO: Honda's logo on its Modulo model is pictured at its showroom at its headquarters in Tokyo, Japan, February 19, 2019.  REUTERS/Kim Kyung-hoon

For the three months to Sept. 30, Honda said operating profit fell by almost a third to 198.9 billion yen. That result was higher than an average forecast of 183.5 billion based on estimates from nine analysts, Refinitiv data showed.

($1 = 113.7100 yen)

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.