TOKYO -- Honda Motor Co. is reporting an $860 million loss for January-March, as the Japanese automaker is hit by costs for a huge air-bag recall and an unfavorable shift in exchange rates.
Tokyo-based Honda reported a $754 million profit in the same quarter of 2015.
Honda is the biggest customer of Japanese air-bag maker Takata Corp., which produced millions of defective air-bags whose inflators can explode with too much force, spewing shrapnel inside the vehicle.
Honda said Friday that quarterly sales rose 5 percent to $34 billion as vehicle sales grew.
For the fiscal year that ended in March, Honda's profit plunged 32 percent to $3.2 billion as quality-related expenses and the strong yen offset gains from cost cuts and strong performance in the North American market.
The weak yen works as a plus for Japanese exporters such as Honda, but the currency has been strengthening lately. For the fiscal year through March, the dollar cost 115 yen, down from 119 the previous fiscal year, according to Honda's average rate.
Honda sold 4.7 million vehicles in fiscal 2016, better than the 4.3 million vehicles it had sold the previous fiscal year. It sold 17.1 million motorcycles, slightly fewer than the 17.6 million sold the previous fiscal year.
It expects to sell 4.9 million vehicles and 18.4 million motorcycles for the fiscal year through March 2017 and forecasts a 45 percent recovery in annual profit to $3.6 billion.
Honda said other quality-related expenses hurt earnings, but the biggest damage came from Takata-related recalls.
So far, Honda has recalled cars fitted with 51 million Takata air-bag inflators. Some vehicles are being recalled many times because cars have many air bags. The number doesn't account for the additional recalls announced last week.
Under that agreement, the U.S. National Highway Traffic Safety Administration added up to 40 million Takata air bags to the ongoing recall that already included 28.8 million air bags. On a global scale, that could mean more than 100 million inflators.
The inflators are responsible for at least 11 deaths worldwide and more than 100 injuries, and authorities in Malaysia are investigating two more recent deaths in cars with Takata air bags that ruptured.
Business on 05/14/2016