Honda Motor Co. forecast profit that fell short of analyst estimates as the carmaker recovers from its worst vehicle recalls in decades.
Net income will probably rise to ¥525 billion in the fiscal year ending March 2016, based on U.S. GAAP accounting standards, from ¥522.8 billion a year earlier, the company said in a statement Tuesday. That compares with the ¥661 billion average of 25 analyst estimates compiled by Bloomberg.
Honda has trailed industrywide growth and lost market share in the U.S., its largest market, as mainstay models such as the Civic compact and Accord sedan age and as competitors offer higher incentives. President Takanobu Ito will step down in June after quality problems led to the company's biggest vehicle recalls in decades and delayed the introduction of new models.
"The company is waiting for the boost from major new models, such as the Pilot SUV and Civic," Koichi Sugimoto, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co., said before the earnings announcement. "But there are still lingering concerns over recall costs and the impact on Honda's reputation."
Honda has revamped its research units after the recalls, linked to flawed air bags made by Takata Corp. as well as its own new hybrid systems in the best-selling Fit compact car and Vezel SUV.
The company, which is switching to the International Financial Reporting Standards system, said full-year net income under IFRS will probably also be ¥525 billion.