Honda has forecast a small profit for the current year as it cuts costs to counter plunging car sales and a strong yen, surprising analysts who were expecting its first annual loss.
Car markers everywhere are being hammered by an acute downturn in demand brought on by the worst financial crisis in generations that has some rivals fighting for their very survival.
Honda has been relatively shielded by its manufacturing flexibility, line-up of fuel-sipping cars and its motorcycle business - the world's biggest - but it is still burdened by a huge stockpile of unsold cars, especially in Europe.
The company, which until recently made more than half its operating profit in the United States, said it saw signs that demand there was levelling out after driving sales to a near three-decade low.
“The North American region isn't quite on a recovery track yet, and the support will come from emerging markets. But we're seeing a bottoming out of the overall US market,” executive vice president Koichi Kondo told a news conference.
Risk factors remained, including the fate of Detroit's Big Three and any impact of the outbreak of swine flu, he added.
Domestic rival Toyota, which also relies heavily on the US market, is expected to widen its operating loss this year, while Detroit's Chrysler and General Motors are finalising plans to reorganise or face bankruptcy.
Its fourth-quarter net loss of 186.16 billion yen was a stark contrast to the profit of 25.43 billion yen a year ago.
For the financial year to March 31st, 2010, Honda expects both an operating profit and a pretax profit of 10 billion yen, narrowly escaping its first loss since the company was founded in 1948.
Honda expects its global car sales to fall 8.7 per cent to 3.21 million this financial year and is scaling back capital spending by more than a third to 390 billion yen to preserve cash.
Reuters