Honda now expects operating profit of 140 billion yen ($1.46 billion) in the fiscal year ending March 31, compared with an earlier forecast of $1.88 billion. The new target, released just a month after an earlier downgrade, represents an 81.1 percent tumble from last year.
Honda says it will significantly cut capital (trimmed by $416.7 million to $6.35 billion) as well as research & development costs (cut by $52.1 million to $6.20 billion) as sales continue to slide.
North American sales were down 16.8 percent while in Europe sales fell a total of 5.6 percent.
Honda President Takeo Fukui has shifted into crisis mode. He has slashed sales and profit forecasts, delayed plant openings, trimmed jobs, cut executive pay and has axed programs such as the NSX sports car to rein in costs.
“We expect it to continue like this for the first half of the year,” Executive Vice President Koichi Kondo said. “We can only hope it improves in the second half. In this environment, we can’t afford to increase capital outlays by 20 to 30 billion yen every year. We will sort out our priorities, such as continuing to invest in environmental technologies while reducing the number of models.”