Honda profits hit by Takata recall

Japan
Published:  04 August, 2016

Honda Motors recorded a better-than-expected 174.6 billion yen profit ($1.7 billion) for the fiscal first quarter, as it gradually recovers from damage caused by a quake in southwestern Japan and Takata airbag crisis.

Honda said on August 2 that April-June profit fell 6% from a year ago, when the Japanese automaker earned 186 billion yen. Earlier this year, Honda posted losses over a massive air-bag recall at its supplier Takata.

Takata uses ammonium nitrate to create a small explosion to fill air bags. But the chemical can deteriorate and burn too fast, blowing apart a metal canister and spewing shrapnel. At least 11 people have died worldwide. Honda is among Takata's biggest customers.

The quality-related expenses continue to weigh on results, Honda said.

A strong yen, which reduces the earnings of Japanese exporters like Honda, is also hurting its results. Honda said the dollar traded at about 108 yen in recent months, compared to 121 yen the same period a year ago.

Honda said it's expecting to sell 4.9 million vehicles for the fiscal year through to March 2017, up from 4.7 million sold for the previous fiscal year.

Among other Japanese automakers, Nissan Motor Co. reported last week a 136.4 billion yen ($30.7 million) profit for the fiscal quarter through June, down nearly 11% from the same period a year ago, after a mileage testing scandal at its supplier hit its minicar sales in Japan.

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