Japan’s Honda Motor third-quarter profit drops

Honda Motor Co Ltd on Friday reported a 40.2 per cent drop in third-quarter operating profit, missing market expectations due to higher discounting and quality-related costs.

Japan’s third-biggest automaker posted profit of 170.1 billion yen ($1.56 billion) for October-December, from 284.5 billion yen in the same period a year earlier.

The result compared with the 208.8 billion yen median of 10 analyst estimates compiled by Refinitiv.

Honda kept its full-year profit forecast at 790 billion yen, though it now assumes the domestic currency will trade around 111 yen to the U.S. dollar through March 31, from a previous forecast for 110 yen.

The weaker profit comes as Honda faces easing global demand for cars and the possibility of a new trade deal between Japan and the United States, while investing heavily in self-driving and low-emission vehicle technology to keep pace with rivals.

Honda’s global automobile sales came in at 1.41 million vehicles in October-December, versus 1.34 million a year earlier, boosted by rising sales at home and in Asia.

Honda sold 498,000 units in North America during the period, up from 491,000 a year earlier, bucking the trend of slowing demand in the United States.

But profitability took a hit from an increase in selling incentives, the company said.

In China, another key market where sales have also cooled after years of growth, Honda sold around 1.43 million vehicles in 2018, down slightly on the previous year.

While sales in the past few months have held up against an overall market slowdown, Honda was stung earlier in the year by a quality issue with its Civic sedan, the CR-V SUV crossover and other popular models. (Reuters/NAN)