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By Yumiko Nishitani
TOKYO, Oct 16 (Reuters) - Honda Motor Co (7267.T), Japan’s second-largest automaker, has no plans to change its earnings guidance despite the yen’s renewed strength and worries about a further slowdown in the global economy, its top executive said on Thursday.
The comment came after Toyota Motor Corp (7203.T) President Katsuaki Watanabe said on Wednesday the business environment has deteriorated beyond earlier expectations and predicted the key North American car market would remain sluggish through next year.
Honda president Takeo Fukui told reporters on Thursday: “We will give an update at the announcement of fiscal half results at the end of this month, but at this point we have no plan to revise our full-year earnings estimates.”
Honda is basically on track to achieve global sales volume targets and has kept sales promotion costs under control in the United States, the world’s largest car market, by adjusting the levels of production and inventory, he said.
Honda expects an operating profit of 630 billion yen ($6.29 billion) for the year to March 2009, below a consensus of a 668.4 billion yen profit in a poll of 19 analysts by Reuters Estimates.
Fukui said the automaker did not see any need to change its business strategy even if the dollar falls slightly below 100 yen JPY=.
Honda has assumed the dollar will average 101 yen in the financial year, while Honda vice president Koichi Kondo told reporters on Thursday that the dollar averaged about 108 yen for the company in the April-September first half.
A Toyota company source told Reuters last week that the world’s largest automaker was considering what would be a rare downward revision of its earnings outlook because of sluggish global demand and a firmer yen. [ID:nT69616]
In the United States, where car demand is falling amid a deepening credit crisis, Fukui said “at least at this stage, we are not expecting a major drop in our sales” because of shifting demand in favour of fuel-efficient cars, the type of cars Honda focuses on.
Among emerging markets, Honda’s car sales are growing in China despite falling demand industry-wide, while the company’s motorcycle sales are on track with a plan in India, Fukui said.
On growing signs of an industry realignment, the Honda president said the global car industry is going through a tough time because of soaring fuel and raw materials costs, coupled with cooling consumer sentiment, but that Honda will likely benefit from the demand shift to smaller cars.
“U.S. carmakers, such as General Motors and Ford, reacted too slowly to shifting demand. The age of pickup trucks has ended, and we are not playing in that segment,” Fukui said.
He said he would not object to U.S. government-sponsored financial assistance to these rivals, as such a move would also help those parts suppliers which Honda also uses.
Elsewhere in the industry, Ford Motor Co (F.N) has asked Toyota-affiliated auto parts supplier Denso Corp (6902.T) to buy part of its stake in Mazda Motor Corp, the Nikkei business daily reported earlier on Thursday.
Honda shares closed down 10.2 percent to 2,115 yen. The benchmark Nikkei average .N225 fell 11.4 percent to 8,458.45. ($1=100.12 yen) (Editing by Michael Watson)