Honda is cutting spending on new models, an ominous trend for a company known for its R&D.
Honda Motor Company, the second larger automaker in Japan, reported in Tokyo today a net loss of almost $2 billion, ¥186.1 billion, for its fiscal fourth quarter ending March 31, 2009. The loss was, not surprisingly, attributed to a global decline in demand for its fuel-efficient vehicles.
Honda still managed to show a profit for the full year of $1.46 billion, ¥137.0 billion, a decrease of 77% compared to the previous a year. Honda is, however, predicting a further decline in results next year to ¥40 billion, a 71% decrease, as the effects of the global Great Recession drag on. Competing Japanese companies, Toyota and Nissan, are expected to post large, full-year losses this year.
Honda sales this year, except for Motorcycles, declined. Motorcycles, at 10.114 million units, rose +8.5%; Automobiles, at 3.517 million units were off -10.4%; and Power Products, 5.187 million units, declined -14.4%.
Next year, Honda predicts that Motorcycle sales will decline to 8.595 million units or -15%; Automobiles will go down to 3.21 million units, -8.7%; Power Products will be off -10.2%, at 4.66 million units.
In 2009, consolidated operating income amounted to ¥ 189.6 billion, $2 billion, and a drop of 80%, due to decreased profit from lower revenue, increased raw material costs, an increase in fixed costs per unit as a result of reduced output.
The appreciation of the Japanese yen also hurt results, as did the write-down and expenses related to Honda’s sale of its ultra-expensive Formula One racing team. Honda also incurred costs for cancellations of the development of new models, perhaps the most ominous development for the research-oriented firm.
Honda plans to distribute quarterly cash dividends of ¥8 per share for each quarter for the year ending March 31, 2010. The total cash dividends for the fiscal year ending March 31, 2010 are planned to be ¥32 per share, a decrease of ¥31 from the annual dividends to be paid for the year ended March 31, 2009.
| Yen (billions) | 4th quarter ended March 31, 2008 |
4th quarter ended March 31, 2009 |
Difference (% change) |
Status of the fiscal 4th quarter ended March 31, 2009 |
|
| Net sales and other operating revenue | 3,055.5 | 1,783.8 | -1,271.6 | (-41.6) | Decreased 2nd consecutive year |
| Operating income (loss) | 168.8 | (283.0) | -451.8 | Decreased 3rd consecutive year | |
| Income (loss) before Income taxes | 146.8 | (309.5) | -456.4 | Decreased 3rd consecutive year | |
| Equity in income of affiliates | 24.3 | 2.7 | -21.6 | (-88.7) | Decreased first time in 2 years |
| Net Income (loss) | 25.4 | (186.1) | -211.5 | Decreased3rd consecutive year | |
Exchange rate: Honda’s average rates for this fiscal 4th quarter: ¥94=$1 / ¥121=€1; for previous fiscal 4th quarter: ¥106=$1 / ¥158=€1
| Yen (billions) | Fiscal year ended March 31, 2008 |
Fiscal year ended March 31, 2009 |
Difference (% change) |
Status of fiscal year 2009 | |
| Net sales and other operating revenue | 12,002.8 | 10,011.2 | -1,991.5 | (-16.6) | Decreased first time in 9 years |
| Operating income | 953.1 | 189.6 | -763.4 | (-80.1) | Decreased first time in 2 years |
| Income before Income taxes | 895.8 | 161.7 | -734.1 | (-81.9) | Decreased first time in 2 years |
| Equity in income of affiliates | 118.9 |
99.0 |
-19.9 | (-16.7) | Decreased first time in 10 years |
| Net Income | 600.0 | 137.0 | -463.0 | (-77.2) | Decreased first time in 2 years |
Exchange rate: Honda’s average rates for the fiscal year ended March 31, 2009: ¥101=$1 / ¥142=€1; for fiscal year ended March 31, 2008: ¥114=$1 / ¥162=€1