Recalls Push Honda into Quarterly Loss

Honda Motor Co. hiked car sales 11% to 980,000 units in the fiscal fourth quarter ended March 31, and its revenue grew 5% to 3.7 trillion yen ($34 billion).

But a steep rise in recall costs associated with Takata Corp. airbag inflator replacements pushed the company into a 93.4 billion-yen ($856 million) net loss for the period. It was the company’s first quarterly loss in seven years.

For the full fiscal year, Honda’s operating profit shrank 25% to 503 billion yen ($4.6 billion), and net profit plunged 32% to 345 billion yen ($3.2 billion). Car sales in the 12-month period grew 4% to 4.92 million vehicles, and revenue climbed 10% to 14.6 trillion ($134 billion).

Honda set aside 556 billion yen ($5.1 billion) to replace Takata airbag inflators in the last two fiscal years. It has allocated 436 billion yen ($4 billion) more to cover 21 million additional devices it plans to recall in the next few years. Exploding Takata airbag inflators have been linked to 13 fatalities worldwide, 12 of them in Honda vehicles.

The company predicts a financial rebound in the fiscal year that began April 1. It expects it net profit will climb 13% to 390 billion yen, even though a stronger yen will cut revenue 6% to 13.8 trillion yen.