Honda Motor Co.
) plans to terminate 800 jobs at its South Marston plant near
Swindon in southwest England due to sagging demand for its
vehicles in Europe. The job cut would take place in the second
quarter of the year.
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The plant, which manufactures Civic, Jazz and CR-V models, has an
annual production capacity of 250,000 cars. The company employs
3,500 people at the plant and produced 150,000 vehicles in 2012.
Many global automakers, including
Ford Motor Co.
General Motors Company
), and many European automakers such as
) are resorting to job cuts and plant closures, as it became no
longer feasible for them to undertake full-fledged operations in
the continent. Honda is no exception. Demand for cars continues
to slump in Europe's major markets, including France and Germany.
Last year, Honda added 500 workers and invested £267 million
($430 million) in the South Marston plant in anticipation of
higher demand for its vehicles. However, sales in the continent,
mainly Spain and Greece, fell by nearly a million, disappointing
the company and prompting it to cut jobs.
Honda, a Zacks Rank #5 (Strong Sell) stock, reported a 36.1% rise
in profits to ¥82.23 billion ($1.06 billion) or ¥45.63 (59 cents)
per share in the second quarter of its fiscal 2013 ending Mar 31,
2013 from ¥60.43 billion or ¥33.53 per share in the year-ago
quarter. However, earnings per share in the quarter lagged the
Zacks Consensus Estimate by 33 cents.
Consolidated net sales and other operating revenues in the
quarter appreciated 20.4% to ¥2.27 trillion ($29.27 billion)
driven by higher revenues from the company's Automobile segment
with the recovery from the impact of twin disaster in Japan in
2011, offset partially by unfavorable foreign currency
Despite better results, Honda downgraded its revenue and earnings
guidance for fiscal 2013 due to a negative impact from increased
SG&A expenses and R&D expenses, and unfavorable currency
The company has projected revenues to improve 23.3% ¥9.80
trillion, operating profits to rise 124.8% to ¥520 billion, net
profit to go up 77.3% to ¥375 billion and earnings per share of
¥208.07 for the year. This compared with the prior outlook of a
29.6% increase in revenues to ¥10.30 trillion, 168% rise in
operating profits to ¥620 billion, 122.2% increase in net profit
to ¥470 billion and earnings per share of ¥260.78 for the year.