Honda withdraws its earnings forecast after double disaster

 
City A.M. Reporter
HONDA withdrew its annual earnings guidance in an unusual move yesterday due to uncertainty surrounding currency markets and floods in Thailand just as the manufacturer was starting to recover from the March earthquake and tsunami.

Among Japanese automakers, Honda has been hit the hardest by both disasters this year, recovering slowly from the supply disruption in northeast Japan and suffering direct damage at its Thai car factory.

The maker of the Civic and Accord models had been preparing to ramp up overall car production to 125 percent of pre-quake plans in the October-March second half to build up inventory that had fallen after the 11 March disasters at home.

Even before the floods, the dearth of cars had sunk Honda’s sales in the United States, its biggest market, ranking it below Nissan in the last three months.

“To put it bluntly, we’re in a really tough spot,” said Fumihiko Ike, Honda’s chief financial officer. “We’re in a much more difficult position because our car factory is inundated.”

Honda, the only carmaker in Thailand with a flooded factory, builds about 5 per cent of its cars there, with more than a third of the vehicles bound for export.

Japan’s third-biggest carmaker withdrew its forecast for its annual global car sales amid an indefinite suspension of work in Thailand, and uncertainty over how much its other factories can fill the hole.