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  1. Honda posts surprise Q4 loss, dragged down by Takata recalls

Honda posts surprise Q4 loss, dragged down by Takata recalls

Honda Motor Co posted on Friday a surprise net loss for the fourth quarter as its quality-related costs, mostly to recall Takata-made air bag inflators, nearly quadrupled for the full business year.

By: | Tokyo | Published: May 13, 2016 3:35 PM
Honda, Takata airbags, Us transportation department, Japan, third largest automaker, yen, rupee, currency Honda Motor Co posted on Friday a surprise net loss for the fourth quarter as its quality-related costs, mostly to recall Takata-made air bag inflators, nearly quadrupled for the full business year. (Photo: Reuters)

Honda Motor Co posted on Friday a surprise net loss for the fourth quarter as its quality-related costs, mostly to recall Takata-made air bag inflators, nearly quadrupled for the full business year.

For the three months ended March 31, Japan’s third-largest automaker by sales posted a net loss of 93.4 billion yen ($859.56 million), compared to the profit of 115.35 billion yen expected in a survey of nine analysts by Thomson Reuters I/B/E/S.

Honda said its full-year results absorbed the impact of roughly 267 billion yen more in quality-related costs than its original estimate after the U.S. Transportation Department ordered an expansion of recalls to replace potentially deadly air bag parts made by Takata Corp.

The company said it had set aside a total 436 billion yen for air bag-related costs in the last business year, versus 120 billion yen in the previous year.

Air bag inflators made by Takata have been blamed for at least 11 deaths, mostly on cars made by Honda, the supplier’s biggest customer. U.S. authorities said earlier this month that Takata must file new defect reports covering 35-40 million additional inflators that will lead to recalls by automakers.

Still, Honda forecast a 13.2 percent rise in net profit for the current year, with brisk global auto sales expected to offset the negative impact of a stronger yen.

Honda said it expected group profit for the year ending March to rise to 390.0 billion yen ($3.59 billion) from the previous year’s 344.5 billion yen.

Honda assumes the dollar will average 105 yen this year, compared with last year’s average of 120 yen.

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