Pandemic Muscles Into Honda and Mazda's 2019 Profits

The ongoing coronavirus pandemic only reared its spiky head at the tail end of the fiscal year, but the disruption to automakers was strongly felt. In a new vehicle market that was largely cooling off, the impact of fewer sales and idled plants was immediate.

That said, the virus didn’t spread the damage evenly.

On Tuesday, Honda reported a $5.9 billion operating profit for the just-ended fiscal year — a drop of 13 percent over the previous year. Analysts were expecting a slightly better result.

Those same people were left guessing as to the automaker’s current fiscal performance, as Honda didn’t provide an outlook for the current year. Suffice it to say it doesn’t take a psychic to see a dismal year ahead. Honda’s North American plants only came online Monday after shutting down in late March, and weakened economies, existing lockdown measures, and continuing supply chain disruption stands to lower production output and sales across the globe in the months ahead.

Now, Honda’s a major automaker with assembly operations galore and stratospheric annual sales. What about a smaller automaker? Take Mazda, which on Tuesday issued a profit warning to investors. The automaker now expects a 81-percent drop in 2019 fiscal year net income — a significantly worse scenario than the previously predicted 32-percent drop.

The strain on Mazda’s balance sheet is expected to lower its net profit to $112 million; just barely in the black. Operating profit is now predicted to drop 47 percent, a far great amount than the previous 27-percent predicted drop. On top of that, sales projections for 2020 saw another haircut; the automaker now envisions the sale of just over 1.4 million vehicles, down from 1.5 million in an earlier forecast.

It was reported last week that Mazda is seeking $3 billion in financing to tide it through the health crisis.

[Source: Automotive News, Reuters] [Image: Honda]