Honda Q1 Net Income Drops 96% as Revenue Dives

Honda Motor Company, Ltd. net income for the fiscal first quarter ended June 30, 2009 totaled ¥7.5 billion ($79 million), a decrease of 95.6% from the same period in 2008. Net income per common share for the quarter amounted to ¥4.17 ($0.04), a decrease of ¥91.39 from ¥95.56 for the corresponding period last year. (One Honda American Depository Share represents one common share.)

Consolidated net sales and other operating revenue for the quarter amounted to ¥2,002.2 billion (USD 20,854 million), a decrease of 30.2% from the same period in 2008, primarily due to decreased revenue in the automobile business and unfavorable currency translation effects. Honda estimates that if calculated at the same exchange rate as the corresponding period in 2008, revenue for the quarter would have decreased by approximately 20.7%. Critics have long maintained that the Japanese government manipulates the yen to help its export dependent economy.

Honda’s consolidated operating income for the quarter totaled ¥25.1 billion ($262 million), a decrease of 88%, due primarily to decreased profit attributable to decreased revenue, the increase in fixed costs per unit as a result of reduced production and the unfavorable impact of currency effects caused by the appreciation of the Japanese yen.

Consolidated income before income taxes and equity in income of affiliates for the quarter totaled ¥5.4 billion ($57 million), a decrease of 97.6% from the same period in 2008. Equity in income of affiliates amounted to ¥14.2 billion ($148 million) for the quarter, a decrease of 62.7% from the corresponding period last year.

Sales in all of Honda’s business units for the quarter were negatively affected by the ongoing Great Recession.

Motorcycle sales totaled 2.3 million, a decrease of 17.1% from the same period last year. 

Honda’s automobile sales totaled 766,000, a decrease of 20.4% from the same period last year. In Japan, unit sales amounted to 128,000 thousand units, the same level compared to the same period last year due mainly to favorable sales of Insight and FREED despite weak demand in the market. Vehicle sales outside of Japan decreased 23.5% to 638,000 from the corresponding period last year, due mainly to decreased unit sales in North America.

As a result of the decline in vehicle sales, Honda reported operating loss of ¥21.3 billion ($223 million), a decrease of ¥171.7 billion from the same period last year, due primarily to decreased revenue, the increase in fixed costs as a result of reduced production and the unfavorable impact of currency effects,

Revenue from customers in the financial services business increased 6.9% to ¥155.9 billion ($1.624 million) from the same period in 2008, due mainly to an increase in operating lease revenues. Operating income increased 62.8% to ¥46.8 billion (USD 488 million) from the same period in 2008, due primarily to the decreased allowance for losses on lease residual values and a decrease of funding cost.

Honda’s power product unit sales totaled 1,158,000 units, a decrease of 13.5% from the same period in 2008.

Honda increased its full-year forecast 38% to ¥55 billion for the year ending March.