Honda: 5.4% dip in 1Q profits
Honda Motor Co., Ltd., Tokyo, says global motorcycle unit sales during the fiscal first quarter increased 9.5% to 2,001,000 units, but reports revenue decreased 4.1%, to $2.02 billion due to the appreciation of the yen against the U.S. dollar, which had negative currency translation effects.
Honda’s consolidated net income for the fiscal first quarter ended June 30, 2003 totaled $850 million, a decrease of 5.4% from the same period in 2002. The manufacturer says unit sales in all of its business categories, namely motorcycles, automobiles and power products, increased for the quarter, and reported consolidated net sales and other operating revenue of $16.76 billion for the period, an increase of 3.7% over the corresponding first quarter of 2002.
A strong yen hurts Japanese manufacturers like Honda, which makes a large portion of its profits in North America and other foreign markets, by pushing down the value of its overseas earnings when converted into yen. Had the exchange rate of the yen remained unchanged from the same period in 2002, Honda says, revenue for the quarter would have increased by approximately 8.2%.
Consolidated operating income for the first quarter was $1.25 billion, a decrease of 12.1% compared to the same period in 2002. The company says an appreciation of the yen and an increase in selling, general and administrative (SG&A) expenses offset increased revenue, ongoing cost reduction efforts and a decrease in research and development (R&D) expenses. Consolidated income before income taxes for the quarter totaled $1.24 billion, a decrease of 9.6% from the same period in 2002.
Honda says unit sales of automobiles increased by 2.0% to 708,000 units, due primarily to favorable sales in North America, Europe and Asian countries; while unit sales of power products represented a revenue increase of 8.8% to $716 million.
Even with the first quarter forecast, Honda says it is expecting its third straight year of record profits, up from $3.6 billion in fiscal 2002 to a new forecast of $3.8 billion for the fiscal year ending March 31, 2004.
Counting on a weaker yen to make up the difference, Honda kept its $69.6 billion sales forecast, up 4.1% from the $66.8 billion posted for 2002.