Saturday, January 31, 2009

Honda Profit Declined 90%; Porsche Sales, Profit Drop

By YOSHIO TAKAHASHI in Tokyo and CHRISTOPH RAUWALD in Stuttgart The deep slump in global automobile sales has caught up with Honda Motor Co. and Porsche Automobil Holding SE, two of the industry's most reliable profit-makers. Honda Motor and Porsche, two of the strongest auto makers, reported their earnings dropped sharply. Honda, which cited weak consumer confidence for a 90% decline in profit, builds the Civic sedan in Greensburg, Ind. Honda reported Friday a 90% drop in net profit for the December quarter, dragged down by the credit crisis, cautious consumer sentiment and the yen's strength, and further slashed its forecast for the full fiscal year. Porsche, meanwhile, said revenue in the first six months of its current fiscal year fell 14% to €3 billion ($3.84 billion) as a result of a 27% decline in vehicle sales in the period from August to January. Porsche did not release precise profit figures. Chief Executive Wendelin Wiedeking said operating earnings fell in line with the sales decline, but pretax earnings at the group level rose thanks to substantial gains on its controlling stake in Volkswagen AG. The industry's crisis "has obviously reached a new, unprecedented magnitude," said Mr. Wiedeking at Porsche shareholder's meeting Friday in Stuttgart, Germany. The difficulties Honda and Porsche are encountering underscore the deep trouble in the auto industry. Both companies typically outpace most of their rivals in profit and for years have posted consistent gains. The downbeat results come a day after Ford Motor Co. reported a $5.9 billion loss in the fourth quarter, and a $14.57 billion loss for 2008, the worst in its 106-year history. The sharp profit drop for Tokyo-based Honda, the first of Japan's top three car makers to report results for the December quarter, bodes ill for its local rivals. Analysts expect Toyota Motor Corp. and Nissan Motor Co. to post losses in the period. Ford Posts Loss of $5.9 BillionAuto Sales Continue to SkidThis fiscal year's operating loss for Toyota, which will release earnings Friday, is likely to balloon from the 150 billion yen ($1.66 billion) the company projected just a month ago, the Nikkei reported Friday. Nissan will release earnings on Feb. 9. Honda, Japan's second-largest car maker by volume after Toyota, posted a net profit of 20.24 billion yen in the three months to Dec. 31, down from a 200 billion yen profit a year earlier. The maker of the Civic and Accord brands, as well as the Acura upscale line of vehicles, logged an operating profit of 102.45 billion yen, tumbling from 276.24 billion yen a year earlier. Sales fell 17% to 2.53 trillion yen in the quarter. Honda, like its competitors, recently stepped up efforts to cut back production for the current fiscal year to bring down inventory levels as demand collapses in the U.S., Europe and Japan. For the current fiscal year through March, the company lowered its net profit outlook to 80 billion yen from 185 billion yen. Sales are now pegged at 10.10 trillion yen, lower than the 10.40 trillion yen previously forecast. Shares of Honda fell 9.2%, or 210 yen, on the Tokyo exchange while Porsche's shares rose 2.4%, to €46, in Frankfurt trading, both on Friday. Write to Yoshio Takahashi at and Christoph Rauwald at

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