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Honda full-year profit tumbles on airbag scandal
[TOKYO] Honda Motor said Friday its full-year net profit dropped by a third, pressured by the exploding airbag crisis at key supplier Takata that has led to a worldwide recall.
Tokyo-based Honda is the biggest buyer of airbags from Takata, which is struggling to overcome a defect that has been linked to the deaths of 13 people and has led to the global recall of tens of millions of inflators.
Honda said net profit came to 344.5 billion yen (S$4.33 billion) for the fiscal year to March, down 32.4 per cent year on year.
Operating profit dropped 24.9 per cent to 503.4 billion yen, while annual sales rose 9.6 per cent to 14.6 trillion yen, Honda said.
The company mainly attributed the profit declines to "quality-related costs" linked to the airbag crisis at Takata.
US auto safety regulators last week ordered Takata to recall between 35 million and 40 million airbags installed in US cars, in a push for the replacement of dangerously explosive inflators.
The decision came after the National Highway Traffic Safety Administration concluded that the inflators are prone to ruptures, adding to nearly 29 million Takata airbags already recalled in the US.
Takata said Wednesday that in the business year to March it logged a net loss of 13.08 billion yen.
The company said it posted a special loss linked to the airbag problem, including a penalty levied in the United States.
Local media said Honda would recall an additional 20 million Takata-made airbags globally but a Honda spokesman denied the reports.
"We had assessed that Honda had been turning the corner of the negative impact of the airbag accidents but it appears to be lingering," said Shigeru Matsumura, analyst at SMBC Friend Research Center.
Honda also said its expects net profit in the current fiscal year to rise 13.2 per cent to 390 billion yen but sales are forecast to fall 5.8 per cent to 13.8 trillion yen.
Rival Toyota warned this week that its net profit for the current year to March 2017 will fall by about a third as a stronger yen and a slowdown in Chinese growth and other emerging markets dent its bottom line.
Nissan, which on Thursday announced it was taking a 34 per cent stake in troubled Mitsubishi Motors, said its net profit would remain virtually unchanged for the current year but forecast a 10.5 per cent fall in operating profit because of the stronger yen.