* Cuts FY profit fcast by 20 pct to 375 bln yen
* Exec hopes China output back to normal in Feb
* Q2 profit jumps to 82.2 bln yen, below mkt fcast
* Exec: no changes to China investment plans
* Honda shares close down 4.7 pct
By Yoko Kubota
TOKYO, Oct 29 Honda Motor Co cut its
full-year net profit forecast by a fifth after sales in China
were hit by a popular backlash against Japanese goods, and
warned it could be February before business in the world's
biggest autos market returns to normal.
The cut, prompted by a slump in sales amid often violent
protests in a dispute about ownership of islands in the East
China Sea, makes it likely that bigger Japanese rival Nissan
Motor, and possibly Toyota Motor, will follow
suit when they report quarterly earnings early next week.
"It's likely Toyota and Nissan are going to cut forecasts in
the same way. A cut was to be expected because the problems with
China weren't factored into forecasts," said Fujio Ando,
managing director at Chibagin Asset Management.
Demand for Honda, Toyota and Nissan cars slumped in China in
September as tempers flared in the territorial dispute, with
South Korea's Hyundai Motor and Germany's BMW
picking up market share. Toyota has said its China
sales dropped 49 percent in September.
Sales by Honda and its China joint ventures dropped 40.5
percent last month. China is Honda's second-biggest market after
the United States, accounting for 17 percent of 2011 sales.
Honda said on Monday that its two biggest China plants would
continue to run on one shift, rather than two, until at least
the middle of next month, with output then gradually picking up
ahead of Chinese New Year in February - a traditional buying
season. It cut its full-year China sales forecast by 17 percent
to 620,000 vehicles, but said there would be no change to its
investment there. Honda plans to invest $880 million to expand
capacity at its plants in Guangzhou and Wuhan over the next few
"China is the world's biggest auto market and there's no
doubt it will continue to grow. We will continue our current
(investment) plan," Executive Vice President Tetsuo Iwamura told
a results briefing.
Honda, whose models include the Accord, Fit/Jazz, Civic and
CR-V, cut its net profit forecast for the year to March to 375
billion yen ($4.7 billion) from 470 billion yen. Last year,
Honda reported net profit of 211.5 billion yen. It also cut its
forecasts for annual operating profit and revenue, citing
uncertain markets in China, Europe and India.
Shares in Honda - which fell 15 percent to near 9-month lows
amid the China protests - ended 4.7 percent lower at 2,399 yen,
their biggest one-day fall in nearly 5 weeks.
Honda released its quarterly earnings three hours earlier
than planned, after accidentally posting the results on its
website. It took down the numbers, but was told by the Tokyo
Stock Exchange to bring forward the full announcement, a Honda
Net profit for July-September rose 36.1 percent to 82.2
billion yen ($1.03 billion), some way below the average estimate
of 107.2 billion yen from six analysts polled by Thomson Reuters
I/B/E/S. A year ago, Japanese manufacturers were still reeling
from the March earthquake and tsunami.
Honda's quarterly profits were also dented by start-up and
advertising costs for the new Accord sedan, which went on sale
in the United States in September, but the refresh helped
Japan's third-biggest automaker increase its share of the U.S.
car and light truck market to 8.7 percent in September.
The fallout from the Japan-China dispute could run into the
current and fourth quarters, analysts have warned. Takaki
Nakanishi, an analyst at Bank of America Merrill Lynch in Tokyo,
said the impact could, at best, last 3 months, and up to 6
months in a pessimistic scenario.
CEO Takanobu Ito, 59, an engineer who took charge three
years ago, has set a demanding goal to nearly double global car
sales to 6 million in four years. Worldwide production jumped 69
percent in April-September to above 2 million vehicles.
The carmaker on Monday trimmed its full-year global sales
forecast to 4.12 million vehicles from an earlier estimate of
4.3 million. It said vehicle sales in July-September rose 47
percent to 996,000.
Toyota and Nissan report their quarterly earnings on Nov. 5
and Nov. 6, respectively.
Last week, Hyundai increased its quarterly net profit by 13
percent to $2 billion, but several European automakers felt the
squeeze of the region's debt crisis, with Peugeot
accepting state aid and even leader Volkswagen
reporting lower profits.