Honda Profits Hit Hard By Air Bag Recalls

Honda has announced a 43% fall in fourth quarter profit, with the cost of air bag recalls offsetting strong sales in Asia.

The Tokyo-based firm reported a profit of $897m (£586.6m) for the January to March period, significantly down on the $1.43bn (£935m) revealed a year earlier.

The performance would have been worse but for the positive effect of a weak yen on exports.

The car giant was hardest hit by a recall of air bags manufactured and supplied by fellow Japanese company Takata, which were fitted in a wide range of Honda models and millions of others worldwide.

It was discovered that the defective airbags could explode if subjected to excessive force and at least six deaths have been linked to the problem.

Faulty air bags and other recall issues tarnished Honda's reputation for quality and severely dampened sales though growth was measured at 8%.

Sales in its home Japanese market have also been damaged by tax rises, as the country continues its efforts to tackle decades of deflation and ease its debt mountain.

Honda, which also makes motorcycles, business jets and lawn mowers, expects profit for the financial year to the end of March 2016 to be little different to those posted for 2015.

It is forecasting a profit of $4.41bn (£2.88bn).

The company reported profit of $4.39bn (£2.87bn) for its 2015 financial year end, down 8.9% on the previous 12 months.

It has two car plants and one engine manufacturing facility in the UK.

Output has been hurt in recent years by the slowdown in the European car market, despite the UK remaining resilient.

It recently announced a £200m investment in its facilities at Swindon to make it a global hub for the next generation of Civic cars.