A sales rebound as production of models like the Civic returned to normal helped boost Honda earnings.
Honda earnings for the January to March quarter rebounded by 61% as the maker was able to finally overcome production cuts forced by last year’s devastating earthquake and tsunami in Japan. But the disaster still took a sharp toll on Honda’s full-year profits.
Honda’s first-quarter sales rebound would have triggered even better results were it not for lopsided exchange rates that cut sharply into margins in the U.S. and other parts of the world. That’s one reason Honda came in significantly below industry analysts’ expectations for the quarter.
The third-largest of the Japanese makers reported earnings of 71.5 billion yen, or $882.7 million during the final quarter of the Japanese fiscal year. That was up from 44.5 billion yen during the same quarter of 2011. But a poll of analysts by FactSet had predicted earnings of 93.2 billion yen, a significant shortfall.
Nonetheless, it was a sharp turnaround for a manufacturer that saw earnings plunge during most of the previous three quarters as it struggled to keep factories rolling. Honda was the only one of the Japanese makers to suffer a death at one of its operations during the March 2011 natural disaster. And, like its national rivals Honda quickly felt the impact of parts shortages, losing 100s of thousands of units of lost production over the coming months.
The dire situation was compounded, last autumn, by flooding in Thailand that shut a key Honda assembly plant and had others again struggling with parts shortages.
With minor exceptions, operations were largely back to normal by January and with many loyal customers waiting for inventories to recover sales surged, revenues rising 8.7%, year-over-year, to 2.405 trillion yen.
The maker benefited from strong demand for its automotive products in both the U.S. and Japan. But it also saw a surge in sales of motorcycles, especially in Asia and South America. Overall, that unit reported a nearly 18% jump in demand.
(Ford earnings tumble on weak sales in Europe, China. Click Herefor more.)
But a good quarter could not save the full fiscal year, Honda’s profits falling 60% to 211.4 billion yen during the period from April 1, 2011 to March 31, 2012. Full-year sales, meanwhile, fell 11.1%, to 7.948 trillion yen.
The earthquake and tsunami were not the only factors rattling Honda’s balance sheet. The maker also struggled to overcome the impact of the rising yen, which hit a peak of 76 to the dollar during the fiscal fourth quarter and averaged just over 80 during the period, compared with about 86 a year before.
Like its Japanese competitors, Honda has been racing to find ways to curb costs and is continuing to move more and more of its production out of Japan to minimize the yen’s impact.
Honda officials said they expect net earnings to more than double during the current fiscal year to 470 billion yen, while sales are expected to rise nearly 30%, to 10.3 trillion yen.