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Honda takes financial hit from earthquake

August 2, 2011
Filed under Features

Honda Motor Co., Ltd. saw significant effects of the March earthquake in Japan on its first fiscal quarter, though motorcycle revenues and power product sales were two highlights in a bleak report.

Honda reported a net income decrease of 88.3 percent to $394 million during the quarter that ended June 30. Consolidated net sales and other operating revenue dropped 27.4 percent to $21.2 billion, and consolidated operating income decreased 90.4 percent to $280 million. The decreases were attributed to the impact of the earthquake on automobile sales and revenue, an increased in fixed cost per unit as production output has reduced and unfavorable foreign currently effects, despite decreased SG&A expenses.

Though the business as a whole suffered, the motorcycle segment saw some increases. Operating income from the motorcycle business jumped 43.5 percent to $557 million due to increased revenue. This was despite a 4.7 percent decrease in worldwide unit sales that was credited to the exclusion of unit sales after the dissolution of a joint venture in Asia, a late shipment and decreased sales in North America. North American unit sales dropped to 24,000 units from 30,000 during the year-ago period. Worldwide motorcycle unit sales totaled 2.8 million units for the quarter.

Power product unit sales were positive, with a 5 percent increase worldwide to 1.5 million units. This was mostly due to an increase in sales in Europe, Asia and Japan. North American sales dropped 7.7 percent as only 577,000 units were sold. Operating income for the segment was $3 million.

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