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Honda Profits Tank, Maker Hints at Further Troubles Ahead

Japanese maker withdraws sales guidance for rest of year.

by on Oct.31, 2011

Shortages of the 2012 Honda Civic were a significant drag on the maker's earnings.

Honda saw profits for the second quarter of its fiscal year plunge by 68%, well beyond what analysts had been anticipating – and the maker is hinting the situation may not improve as quickly as it originally anticipated.

Honda had been hoping to begin a much-anticipated turnaround as it finally got its plants back up to speed in the wake of the March 11 Japanese earthquake and tsunami. But the maker is warning it now faces another serious setback as the disastrous floods in Thailand knock a critical plant out of action.

“To put it bluntly, we’re in a really tough spot,” said Honda Chief Financial Officer Fumihiko Ike,” during a briefing on the second quarter results.  “We’re in a much more difficult position because our car factory is inundated.”

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While the maker’s U.S. dealers do no market any vehicles sold in Thailand, that doesn’t mean Honda of America is out of the woods.  The loss of the Thai plant could have a significant global impact, as it produces parts and components used at Honda plants around the world.  Making matters worse, about 10% of Honda’s Tier-One suppliers in Thailand have also been flooded and so have others down the supply chain.

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