Japan’s Honda sees profits fall due to semiconductor crisis

TOKYO (AP) — Honda’s fiscal first-quarter profit fell 33% from a year ago as a global shortage of computer chips, a pandemic-related lockdown in China and rising raw material costs hurt the Japanese automaker.

Tokyo-based Honda Motor Co. on Wednesday reported profit of 149.2 billion yen ($1.1 billion) in the April-June quarter, down from 222.5 billion yen (1 .7 billion) a year earlier. Quarterly sales fell 7% to 3.8 trillion yen ($28 billion).

Honda kept its full-year profit forecast through March 2023 unchanged at 710 billion yen ($5.3 billion).

The shortage of semiconductors has hurt automakers around the world, including Honda, despite strong demand, and automakers have scrambled to find alternative suppliers.

Honda, which makes the Accord sedan, Odyssey minivan and Civic compact, sold about 815,000 vehicles last quarter, down from 998,000 vehicles in the same period a year earlier. Auto sales fell in almost every region of the world, including Japan, the United States and Europe.

“I ask for understanding from everyone who is still waiting for their vehicles and swear that our entire company is doing everything possible to make deliveries one more day earlier,” Chief Financial Officer Kohei Takeuchi said.

Takeuchi said the shortage of semiconductors has reduced motorcycle production as well as car production, adding to uncertainty about future prospects.

Honda said the recent lockdown in Shanghai was one cause of the computer chip supply shortage, but declined to elaborate.

Although U.S. sales are potentially facing a decline due to worries about the recession and other economic difficulties, Takeuchi acknowledged that he is more concerned about the shortage issue and the production of the cars than the customers were waiting.

Takeuchi noted that motorcycle sales for the quarter, which rose to 4.25 million motorcycles from 3.88 million a year earlier, were booming, particularly in India. The cheaper yen and cost cuts helped maintain overall profitability, he added.

The yen is at its lowest in two decades against the US dollar. A cheap yen has always been a boon for exporters like Honda by increasing the value of their overseas earnings when converted into yen. But it also increases the costs of imported components and materials.

Japan’s top automaker, Toyota Motor Corp., recently announced that its fiscal first-quarter profit fell nearly 18%. Nissan Motor Co. saw its quarterly profit dip to less than half of what it was a year earlier. Both have been affected by the token shortage.

Like the rest of the industry, Honda has aggressive ambitions in electric vehicles. Earlier this year, it announced an investment of 5 trillion yen ($37 billion) over the next decade in such research. This includes working with General Motors Co. in North America to develop models that go on sale in 2024.

To strengthen its capital base and maintain a flexible capital strategy, Honda said it was buying back its own common shares of the company up to 100 billion yen ($740 million), from Friday to March 2023.


Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama

Previous Ex-Twitter employee convicted in Saudi spy case
Next Wall Street roars after inflation cools more than expected | Technology