Chip Crisis Dealt a Huge Blow on Honda

Troubles in semiconductor chip supply have deeply impacted global markets. Honda announced that it expects a 10.3 percent decrease in net profit due to the chip crisis.

The chip crisis dealt a huge blow to Honda. While the difficulties in the supply of semiconductor chips put many global manufacturers in a difficult position, Honda said that they expect their 2021 fiscal year comprehensive net profit to decline by 10.3 percent to 590 billion yen ($ 5.4 billion). Honda shared its expectations for the fiscal year 2021, which will end in March 2022, along with the balance sheet data for the fiscal year 2020, which ended in March 2021. Accordingly, the Japanese manufacturer reported that its net profit for the fiscal year 2021 is expected to decline by 10.3 percent to 590 billion yen ($ 5.4 billion) due to difficulties in semiconductor chip supply. Expecting the demand contraction caused by the coronavirus epidemic to return to normal, the company aims to sell 5 million vehicles and 18 million motorcycles on a global basis.

"We Will Return To Normal In The Second Half"

The company announced a net profit of 657.4 billion yen ($ 6 billion) in fiscal 2020, which ended the previous month. The company experienced an increase in net profit for the first time in the last 3 years. Honda's operating profit increased by 4.2 percent to 660.2 billion yen ($ 6.03 billion), following an 11.8 percent loss of sales. Honda Vice President Kuraishi Seiji, who held the press conference, said, "We expect the impact of the chip supply shortage to continue in the first half of the current fiscal year, but we will return to normal in the second half."