TOKYO (Reuters) - Honda Motor Co <7267.T> on Tuesday cut its annual profit forecast as a deepening financial crisis hammers global car demand and sends the yen soaring.
Japan's second-biggest automaker now expects its net profit for the business year to March 31 to come to 485 billion yen ($5.20 billion), down 19 percent from last year and lower than its previous forecast of 490 billion yen. Eleven brokerages had forecast an average 503 billion yen, although that consensus came before the yen's rapid ascent in the last few days.
Honda now expects operating profit, which excludes earnings from China, of 550 billion yen instead of 630 billion yen.
The new forecasts on based on assumptions that the dollar would average 100 yen and the euro 135 yen for the October-March second half -- far more favorable than current levels of around 95 yen and 120 yen.
Honda is considered one of the best-placed among global automakers to weather the storm of collapsing car demand and shrinking margins thanks to its manufacturing flexibility and vehicle line-up geared toward fuel-efficient models.
Across the Pacific, Detroit's loss-making General Motors Corp
But even Honda will struggle against a steeper-than-expected contraction in U.S. and European car sales and a spillover effect into China, India and other emerging markets that in seen continuing at least through next year.
In a further blow, Japanese automakers will see the value of their earnings overseas dissipate on a soaring yen. Honda estimates every 1-yen fall in the dollar shaves 20 billion yen from its operating profit.
The dollar has fallen about 16 percent versus the yen since the start of 2008 and about 12 percent since the end of September.
The yen has also risen sharply against the euro, Brazilian real and a basket of Asian currencies.
In the July-September second quarter, Honda's net profit fell 41 percent to 123.32 billion yen. Operating profit plunged 48 percent to 148.85 billion yen while revenue fell 4.9 percent to 2.83 trillion yen.
Shares of Honda have roughly halved in the past three months, in line with the Tokyo's transport sub-index <.ITEQP.T>.
Before the results, Honda ended up 14 percent at 2,065 yen, while the transport sector gained 9.8 percent.
(Reporting by Chang-Ran Kim; Editing by Lincoln Feast)
