Daily Management Review

Honda's annual profit plummets by 42.4%


Net profit of the Japanese automaker Honda Motor Co. declined by 42.4% to 610.3 billion yen in the fiscal year that ended on March 31, 2019. Operating profit declined by 12.9% to 726.3 billion yen.

Revenue rose by 3.4% to 15.89 trillion yen, the company said. Operating profit in the financial quarter IV fell by 66.6% to 42.4 billion yen against 126.8 billion yen in the fourth quarter of the year before last, mainly because of the costs associated with optimizing production capacity in Europe, as well as unfavorable exchange rates difference

The company's net loss in the last quarter was 13 billion yen, compared with a net profit of 107.75 billion yen a year earlier.

In February, Honda announced reorganization of the global production network, within which a number of enterprises in Europe are to be closed in 2021. In this regard, the company suffered a one-off loss of 68.09 billion yen.

Meanwhile, Honda's revenue in the fourth quarter increased by 3.4% to 4.049 trillion yen thanks to increased revenues from car sales (+ 3%) and financial services (+ 17%). Motorcycle production unit revenue decreased by 6%.

According to Honda's forecast, operating profit will increase in the current fiscal year by 6% to 770 billion yen, net profit - by 9% to 665 billion yen, revenue will decrease by 1.2% to 15.7 trillion yen.

Honda CEO Takahiro Hachigo said on Wednesday that the company intends to reduce the range of models of cars produced by 2025, as well as to achieve full utilization of the company's global production capacity by 2022.

Honda shares fell 2.8% in Tokyo on Wednesday; the company released its statements after the market closed.

source: ft.com