Honda cuts FY 2008 earnings forecast again, puts off capex plans+

TOKYO, Dec. 17 Kyodo - Honda Motor Co. on Wednesday announced its third downward revision to its group earnings forecast for fiscal 2008, slashing its net profit projection by 61.9 percent from the previous estimate to 185 billion yen due to plummeting global
auto sales and the yen's sharp appreciation.

Japan's second-largest carmaker said it is likely to incur a group operating
loss of 190 billion yen for the second half of the current fiscal year that
began in October, marking red ink for the latter half of a business year for
the first time in at least two decades.
To cope with slowing auto demand, Honda said it will delay the launches of new
plants and products, and cut an additional 450 non-regular jobs in Japan by
early February in addition to the already announced 760 temporary-job cuts.
It will postpone the opening of a new factory in Yorii, Saitama Prefecture,
which was scheduled to begin production in 2010, for more than a year. Honda
subsidiary Yachiyo Industry Co. will also delay the start of full-fledged
operations at a new factory in Yokkaichi, Mie Prefecture, by over a year from
the initially planned 2010, Honda said.
As to overseas production, Honda will postpone output expansions, originally
planned for mid-2009 in Turkey and for 2010 in India.
Honda also said it will scrap its plan to launch the luxury Acura brand of cars
in Japan in around 2010, and discontinue the development of a successor model,
equipped with the V10 engine, to the NSX sports car.
Through such measures, Honda plans to cut its capital investment for fiscal
2008 by 60 billion yen from its earlier planned 710 billion yen.
Honda President Takeo Fukui said at a press conference the company has
thoroughly reviewed its investment and development plans in a bid to focus its
business resources on promising areas such as fuel-efficient cars and small
cars, and that it will implement revised plans swiftly.
''We think we are in an urgent situation where a slight delay in management
judgment could cost the company its neck,'' he said.
For the full year to next March 31, Honda expects to post an operating profit
of 180 billion yen, down 67.3 percent from the previous forecast, on sales of
10.4 trillion yen, down 10.3 percent.
As factors largely contributing to the earnings forecast cuts, Fukui blamed the
surging yen, which recently hit a 13-year high of around 88 to the U.S. dollar,
and called on the government and the Bank of Japan to take swift actions to
stem the yen's surge in a bid to save Japan's export-oriented economy.
A higher yen eats into Japanese firms' overseas earnings when they are
repatriated.
Honda halved its dividend payout for the October-December quarter to 11 yen per
share from 22 yen it planned in October, and abandoned its earlier plan to pay
22 yen in dividend for the January-March quarter.
Honda, which made downward revisions to its earnings forecasts in July and
October, said it will also cut its global sales volume target to 3,650,000
vehicles for the current fiscal year, down from 4,015,000 in the earlier plan.
Honda said it will impose a 10 percent remuneration cut on board members
beginning in January in light of the company's deteriorating earnings.
To expand the lineup of environmentally-friendly cars, Honda said it plans to
launch the Insight hybrid car in Japan next spring at a price of less than 2
million yen, introduce a new hybrid sports car in 2010 and accelerate efforts
to develop medium and large-sized hybrid cars.
It also plans to launch a car that is smaller than its Fit compact car within a
few years for the markets of emerging countries.
==Kyodo