Honda returns to profit but expects chip shortage to crimp 2021 earnings

Car compnay, like global peers, has been struggling to ramp up car production due to chip shortage

A pedestrian walks past a showroom of Honda Motor in Tokyo on May 14th. Photo by Kazuhiro Nogi/AFP via Getty Images

A pedestrian walks past a showroom of Honda Motor in Tokyo on May 14th. Photo by Kazuhiro Nogi/AFP via Getty Images

 

Honda Motor Co on Friday reported a rebound to profit for the fourth quarter helped by cost cuts but warned semiconductor shortages and higher raw material costs would curb growth in the current year.

Its forecast for operating profit for the year that began on April 1st of 660 billion yen (€4.99 billion) was short of the 791.7 billion forecast by analysts, SmartEstimate data showed.

Honda, like its global peers, has been struggling to ramp up car production due to a shortage of chips, exacerbated by a fire at Renesas Electronic Corp’s chip plant in Japan and blackouts in Texas where a number of chipmakers have factories.

Competitor Toyota gave a more upbeat forecast for the full fiscal year, confident it can tackle a global chip shortage that has stung its rivals.

Nissan, Japan’s number three automaker, on Tuesday predicted it will break even, defying expectations for a return to profitability.

Honda plans to sell 5 million vehicles this business year, up from 4.5 million in the previous 12 months.

In the three months to March 31st Japan’s number two carmaker by sales posted an operating profit of 213.2 billion yen following a 5.6 billion yen loss a year earlier. That result was better than a consensus estimate of 107.4 billion yen profit from nine analysts surveyed by SmartEstimate. – Reuters