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Honda sees auto sales edging up, profit sliding in 2017/18
[TOKYO] Honda Motor Co forecast a 16 per cent fall in operating profit for the current financial year as the Japanese automaker sees higher auto sales being offset by a stronger yen and research and development costs.
Japan's No 3 automaker said it expects an operating profit of 705 billion yen (S$8.85 billion) in the year to March, down from 840.7 billion yen posted in the year just ended, and lower than an average estimate of 850.8 billion yen according to 23 analysts polled by Thomson Reuters I/B/E/S.
It sees a 14 per cent slide in net profit to 530.0 billion yen this year.
Honda's projections are based on a forecast that the yen will average 105 yen to the US dollar through March, stronger than both its 108 yen rate in the year just ended.
Executive Vice President Seiji Kuraishi acknowledged that Honda's expected currency hit of 95 billion yen was based on a"conservative" yen forecast, adding that growing costs to create next-generation cars would also impact earnings. "Our costs are rising to develop new technologies which will be needed in the future, like automated driving functions and electric cars," he told reporters at a results briefing.
Honda's ongoing research and development of self-driving cars, lower-emissions powertrains and new mobility services comes as Japanese automakers look for ways to add more value to their cars beyond the quality and reliability which fuelled their global growth over the past decades.
Honda expects its global vehicle sales to edge up 1 percent to 5.08 million this year, bolstered by growth in Asian sales to 2.06 million units, beating out North America to become Honda's top market as more Chinese drivers flock to its cars.
The company expects to sell 1.92 million vehicles in North America, 2.5 per cent less than the year just ended as it struggles to sell sedans including the Accord, which have fallen out of fashion in the past few years.
Honda has been ramping up production of SUVs to keep up with strong demand for larger models in the United States, although overall vehicle sales show signs of slowing following a boom cycle after the global financial crisis.