Honda profits drops to four-year low due to coronavirus

Honda Motor on Tuesday published its lowest operating profit in four years and refrained from providing an earnings outlook for 2020 due to uncertainty about the longer-term impact of the coronavirus on worldwide auto demand.

Honda and other automakers have started to restart operations at their vehicle plants, but face weak demand as job losses and concern about a worldwide economic downturn weigh on consumer spending.

Automakers are also attempting to cope with supply chain disruptions and social distancing measures to control the spread of the coronavirus that are expected to limit output in the coming months.

“It is difficult to reasonably evaluate the impact of COVID-19,” Executive Vice President Seiji Kuraishi said in a livestreamed press briefing. “We will release a forecast when we can.”

The automaker’s operating profit for the year ended in March dropped 13% to 634 billion yen ($5.9 billion), short of a consensus estimate of 669 billion yen ($6.24 billion) profit drawn from 19 analysts polled by Refinitiv. The company said there was a cut of operating profit by 130 billion yen ($1.21 billion) due to coronavirus.

In the three months duration, which ended March 31, Honda posted an operating loss of 5.2 billion yen, its first quarterly loss in four years, led by a 28% decline in vehicle sales.

Some analysts believe global vehicle sales this year could decline by a third, a much bigger drop than the 11% fall observed in 2009-10 business year due to the global financial crisis.

For the year ended March, combined yearly sales at Japanese automakers dropped 7.3% to a four-year low of 26.5 million vehicles, calculations by Reuters show. Honda observed a 8.5% drop.