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Honda trims full-year profit forecast, says China sales poorer



3:38am EST

By Yoko Kubota

TOKYO (Reuters) - Honda Motor Co Ltd (7267.T: Quote, Profile, Research, Stock Buzz) has trimmed its annual net profit forecast by 1.3 percent to 370 billion yen ($4.1 billion) on poorer than expected car sales in China and Europe, even as it sees strong sales in the United States, its biggest market.

Japan's third-biggest automaker said its net profit for Oct-Dec was 77.4 billion yen ($849.9 million), compared with the 47.7 billion yen booked last year when it suffered from disrupted supply chains after floods hit it and its suppliers' factories in Thailand.

The third quarter result was below the average estimate of 111.4 billion yen among seven analysts polled by Thomson Reuters I/B/E/S.

"The market had expected the company to release a bright outlook on the back of a weakening yen," said Yoshihiro Okumura, an analyst at Chibagin Asset Management.

"It was negative that the company did not raise its full-year outlook. Now, investors will be watching how the carmaker will try to raise sales in the core U.S. market this year."

Honda, which relies on the U.S. for 40 percent of its global sales, maintained its North American car sales forecast for the year to March. For rivals Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) and Nissan Motor Co Ltd (7201.T: Quote, Profile, Research, Stock Buzz), the U.S. accounts for about a quarter of global auto sales.

In calendar year 2012 the U.S. auto market posted its strongest sales figures since 2007 at 14.5 million vehicles, and the momentum is likely to continue into January.

Honda cut its global car sales forecast to 4.06 million vehicles from 4.12 million, and its European car sales outlook to 185,000 vehicles from 205,000.

In China, Honda sold 604,000 vehicles in 2012, lower than the initial goal of 750,000 it set before sales started falling in September. The financial year in China ended in December.

Japanese brands in China suffered from an outbreak of anti-Japan sentiment in late 2012 after the two countries became embroiled in a diplomatic dispute over islands both claim as their own. The pace of recovery in China is slower than Honda had expected, Executive Vice President Tetsuo Iwamura said.

YEN IMPACT

In the final quarter and the next business year, Japanese carmakers will be helped by the yen's recent weakening against the dollar, as they can convert overseas profits back to the yen at a more favorable rate and export cars more cheaply.

The Japanese currency is trading around 91 to the dollar, well down from 78 at the start of the October-December quarter.

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