Japanese Automakers Issue Profit Warnings

Two Japanese automakers, including Honda Motor, issued profit warnings for the current financial year on worries a stronger yen would erode their operating earnings, wiping out the impact of record high global vehicle sales. The outlook highlights fears of a rising yen disrupting an export-led recovery of Japan’s economy. For the country’s automakers, it is a double whammy: they have to battle currency fluctuations even as they navigate mounting competition in their biggest markets, China and the United States, Reuters reported. Honda on Friday forecast a surprise 16% drop in operating profit to 700 billion yen ($6.40 billion) for the year to March 2019, versus a consensus estimate for a rise, while Mazda Motor Corp projected a wider-than-expected drop of 28% to 105 billion yen. “Last year our forex rate was 111 yen and this year we are expecting 105 yen, so we’ll feel a big currency impact from exports of auto parts and finished vehicles,” Honda’s senior managing director, Kohei Takeuchi, told reporters at a briefing.