Honda forecasts profit for fourth quarter but concerned over chip shortage

Honda Motor on Friday reported a rebound to profit for the fourth quarter, helped by cost reductions but warned semiconductor shortages and higher raw material costs would cut growth in the current year.

Its forecast for operating profit of 660 billion yen ($6.04 billion) in the year that started on April 1 was short of a 791.7 billion estimate by analysts.

Seiji Kuraishi, Honda’s executive vice president, said 100,000 vehicles were impacted in 2020 by the chip shortage, and its impact will be observed in the first half of the year.

“We currently expect all those loss effects on production will be traded off at the end of the year,” he said at an online revenues briefing.

Honda, like its worldwide peers, has been struggling to increase car production because of the chip shortage.

The chip shortage, which has hit automakers worldwide, emerges from a confluence of factors as automakers, which closed plants for two months during the coronavirus pandemic last year, rival against the sprawling consumer electronics industry for chip supplies. A factory fire suffered by Japanese chipmaker Renesas this year is also cited as a reason behind the chip shortage.

Honda plans to sell 5 million vehicles this business year, increasing from 4.5 million in the earlier 12 months.