Report: Honda Profits Drop at End of 2011, Difficult 2012 Ahead

Honda maintained a positive outlook today despite coming out with some disappointing numbers: the company’s operating profit was down 65 percent in the period between October and December. Still, the company promises improvements as it closes the fiscal year on March 31.

Honda’s operating profit was just 44.3 billion yen ($581 million) in the last three months, drastically below where industry analysts said it would be. It now projects that it will end the year with an operating profit of 200 billion yen ($2.62 billion). It’s about 35 percent lower than Honda’s own estimate that it released sometime in August.

There are a number of factors behind these numbers, but chief among them is the one-two punch of the Japanese earthquake and Thai floods that rocked east and southern Asia. Honda was, without doubt, the hardest hit of the three Japanese automakers -- the company estimates it lost the production equivalent of 260,000 cars in the quake and flood. Meanwhile, both Toyota and Nissan returned to full production much earlier than Honda, and have regained market strongholds in the months since both natural disasters happened.

Honda executives haven’t backed down, however, and said that they were bullish about this calendar year. The company predicts a 25-percent increase in sales in North America alone over the calendar year 2011. The goal sounds ambitious--and it is--but a 25 percent increase in American Honda and Acura sales would put the company at about 1.43 million units this year, or bring it back to 2007-2008 levels. It must also grapple with big currency fluctuations -- at the end of 2007, the best of Honda’s last five years, one dollar bought 112.64 yen; at the end of 2011, its worst of the five years, that dollar only bought 77.63.

One bright spot? Honda promises that it’ll complete the all-important refresh of the current Civic this year, either to be debuted late this year or early next. We’ll have to see if it spells more sales for the embattled company soon.

Source: Honda

Gee, I guess people don't actually want boring cars.

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