japans honda upgrades fullyear outlook on weak yen
Last Updated : GMT 05:17:37
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To support US firms over foreign imports

Japan's Honda upgrades full-year outlook on weak yen

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Emiratesvoice, emirates voice Japan's Honda upgrades full-year outlook on weak yen

Japan's Honda
Tokyo - Arab Today

Honda on Friday upgraded its full-year outlook thanks to a weaker yen but analysts warned of an uncertain outlook for the auto industry following Donald Trump's drive to support US firms over foreign imports.

The company forecast net profit to hit 545 billion yen ($4.8 billion) for the fiscal year through March, up from its earlier estimate of 415 billion yen.

It also tipped sales to reach 13.8 trillion yen, up from 13.4 trillion yen projected earlier.

The upward revisions came as the yen has weakened against the dollar on bets Trump's promises to boost spending and cut taxes will fire the US economy, stoke inflation and lead to higher interest rates.

The improved currency conditions offset an expected fall in sales, Honda said.

"The weak yen trend has prevailed in the third quarter, which is a major factor behind recovery in the Japanese auto industry," Shigeru Matsumura, analyst at SMBC Friend Research Center, said before the announcement.

A weaker yen boosts exporters' bottom lines by making their products relatively less expensive overseas, while inflating the value of their earnings abroad when repatriated.

"But the outlook for the Japanese auto industry is quite unclear because of political risks of the Trump administration," Matsumura said.

Last month, Trump threatened punitive tariffs on imports of Japanese cars into the United States in a bid to force them to manufacture and hire there.

He targeted Toyota in one his fiery tweets, criticising its ongoing project to build a new factory in Mexico and threatening it with painful tariffs.

The industry is also concerned about the impact of Trump's foreign exchange policy, "which is unpredictable and potentially the biggest risk", Matsumura said.

In a speech to business executives, Trump this week accused Tokyo of keeping its currency undervalued  to give it an unfair trade advantage

For the nine months to December, Honda's net profit rose 18.9 percent on-year to 520 billion yen. Revenue, however, fell 6.5 percent to 10.2 trillion yen.

Honda said a decline in "quality-related expenses" contributed to the profit gain, hinting that the impact of the scandal at supplier Takata, whose defective airbags are linked with at least 16 deaths in the industry's biggest-ever safety recall, was easing. 

Honda is Takata's biggest airbag customer.

Sales volume for vehicles rose in major markets around the world, including North America, while sales of motorcycles slumped in Japan but rose in other Asia, Honda said.

The increased profit and higher forecasts came as Honda recovers from damage to factories in the southern Kyushu region of Japan, which was hit by two strong earthquakes in April that killed some 50 people.

Toyota and Nissan are scheduled to release their nine-month results next 

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