Honda’s Profits in Fourth Quarter Cut by Recalls, Exchange Rates

Honda Motor Co. reports its revenue in September-December rose 3% to 3.6 trillion yen ($30 billion), as unit sales climbed nearly 5% to 1.23 million vehicles.

But recall costs and the impact of the strong American dollar slashed the company’s operating profit 22% to 163 billion yen ($1.3 billion). Net income fell 19% to 124 billion yen ($1 billion).

Honda booked a 52 billion-yen ($426 million) charge for quality and recall costs, most of them related to the company’s expanding recalls to replace potentially fatal Takata Corp. airbag inflators. Unfavorable exchange rates cut operating profit by another 19 billion yen ($157 million).

The company says its unit sales for the quarter slipped 2% to 466,000 units in the U.S. and dropped 7% to 151,000 vehicles in Japan. Volume rose 17% to 503,000 units in Asia and 19% to 43,000 vehicles in Europe.

Honda predicts its operating profit for the current fiscal year ending March 31 will rise 2% to 685 billion yen ($5.7 billion), and net income will grow 3% to 525 billion yen ($4.3 billion).