Honda's profit tumbles 43 pct in Q4, net profit slumps 8.9 pct in 2014

Honda Motor said on Tuesday its profit in the fiscal fourth quarter of 2014 tumbled 43 percent, as the costs of a massive global airbag-related recall weighed heavily, despite a weaker yen giving the automaker a competitive edge overseas and helping brisk sales in Asia.

Honda announced a profit of 97.8 billion yen (897 million U.S. dollars ) for Q1 this year, dropping from the 170.5 billion yen logged in the same period a year earlier, but quarterly sales rose 8 percent to 3.35 trillion yen, the automaker said.

Honda also said that its consolidated operating profit dropped 13.1 percent to 651.68 billion yen in the business year 2014 ended March, on a 6.8 percent increase in sales totaling 12.65 trillion yen.

The Tokyo-based manufacturer said that the weak yen helped pare losses, however, as its profit margins are increased when the yen is weak and robust sales in developing economies also helped cancel out some of the losses due to the Takata debacle.

But the year-on-year decrease was again largely blamed on Takata Corp's faulty airbags installed in some of Honda models that had to be recalled, as the airbags' overly explosive deployment caused pieces of shrapnel to spray inside the car, resulting in at least six fatalities worldwide.

Looking ahead for the year through March 2016, the maker of the Accord sedan, and CR-Z sports coupe, said it now predicts its group net profit to reach 525 billion yen, taking into account the yen's possible rise, which would make importing parts more expensive and the vehicles' less financially competitive in overseas markets.

In terms of profit, however, Honda said its operating profit will hit 685 billion yen on sales of 14.5 trillion yen for the current business year, rebounding from falling domestic sales last year due to the downside effects of the April tax hike from 5 to 8 percent, although sales in North America and Asia remained solid, it said.

The recall issues and other quality issues tainting the image of Honda have forced many of the automakers' top executives to take pay cuts and its President Takanobu Ito said he would step down from his position to take responsibility for the recalls. Endi