Thailand floods hit Honda’s forecasts

FLOODING in Thailand and uncertainty in currency markets have forced Honda to withdraw its profit forecasts for the year.

The Japanese car maker, which is only just recovering from March’s earthquake and ensuing tsunami in its homeland, warned that the flooding had caused damage to its factory in Thailand’s Ayutthaya province.

Honda said its North American production would be half of its original plan from tomorrow through to 10 November at its six plants in the United States and Canada due to parts shortages resulting from the floods.

Fumihiko Ike, Honda’s chief financial officer, said: “To put it bluntly, we’re in a really tough spot. We’re in a much more difficult position because our car factory is inundated.”

Honda, the only car maker in Thailand with a flooded factory, builds about 5 per cent of its cars there, with more than a third of the vehicles bound for export.

Ike warned that some of the company’s suppliers had also been affected by the flooding and so there would be a knock-on effect down the supply chain.

He said it could take until the middle of December to remove flood water from the Ayutthaya’s industrial estate. Restoring work at the damaged facility would probably take a few months from there, meaning work could be halted through the end of the business year, Ike added.

Yoshihiro Okumura, general manager at Chibagin Asset Management, said: “The extent of the flood damage is a concern and will weigh on Honda’s shares.”