Honda reports its lowest operating profit in four years

Honda has reported that its operating profit for the year, which ended in March, has dropped by 13% to 634 billion yen (RM25.7 billion), short of a consensus estimate of 669 billion yen (RM27.2 billion) profit drawn from 19 analysts. It is the automaker’s lowest operating profit in four years, Reuters reports.

In its financial results announced last week, it posted an operating loss of 5.2 billion yen (RM211 million) for the first three months of 2020, its first quarterly loss in four years, as a result of a 28% drop in vehicle sales.

The company said that the Covid-19 outbreak has cut operating profit by 130 billion yen. With the novel coronavirus still causing uncertainty in the market and global car demand, the automaker has refrained from releasing an earnings outlook for 2020.

“It is difficult to reasonably calculate the impact of Covid-19. We will release a forecast when we can,” executive VP Seiji Kuraishi said during a livestreamed press briefing last week.

Like other global automakers, the company is gradually resuming operations at vehicle plants, but all are hampered by weak demand as job losses and concern about a global economic downturn weigh on consumer spending. Automakers are also trying to get to grips with supply chain disruptions and social distancing measures that are expected to limit output in the coming months.

Honda isn’t the only Japanese automaker suffering from the effects of Covid-19. According to calculations by the news agency, combined annual sales at Japanese automakers fell 7.3% to a four-year low of 26.5 million vehicles, with Honda seeing an 8.5% decline.

Tags: COVID-19

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