Honda flags first annual loss, hit by $15.7 billion EV charge

By Daniel Leussink

TOKYO, March 12 (Reuters) - Honda ‌will fall to its ​first ​annual loss in almost 70 years as a listed company, hit by up to $15.7 billion in restructuring costs at its EV business, it said on Thursday, as weaker-than-expected demand for ‌the technology hammers automakers.

Under President Donald Trump, Washington has ended government support for EVs, ⁠forcing the likes of Ford and Stellantis to rethink their strategies and book hefty write-downs of their own.

Japan's second-largest automaker said ‌it expects a hit of up to ‌2.5 trillion yen ($15.7 billion) as it cancels three EV models planned for production in the U.S.

While analysts had expected further EV-related losses at Honda, the size of Thursday's write-down was a surprise, said ​Julie Boote, autos analyst at Pelham Smithers Associates.

"The main surprise was that the U.S. production programme was cancelled, rather than just scaled down. Honda had a very ambitious EV expansion plan, which was badly ⁠affected by the changing market environment," Boote said.

CEO Toshihiro Mibe told a press conference that EV demand had fallen sharply, making it "very difficult" ​to sustain profitability.

Honda is also writing down the value of its China business, where it has struggled to compete with the advanced, software-driven cars of rivals such ​as BYD.

Honda said it now expects to lose as much ‌as 570 billion yen ($3.6 billion) in the year to the end of March, compared with a previous forecast for a 550 billion yen profit. That would be its ⁠first annual loss since it listed on the stock market in 1957, a company spokesperson said.

U.S.-listed shares fell about 8% in premarket trade after the announcement.

BIG WRITEDOWNS ON EVS

Several global automakers have booked painful write-downs as they scaled back ⁠their EV ambitions in recent months.

Honda's charge brings the industry tally to about $67 billion. General Motors has warned of a $7.6 billion ​hit, while Stellantis has flagged $25 billion and Ford $19 billion.

In addition to its main markets of Japan and the U.S., Honda said it will strengthen its model line-up and cost competitiveness in India, where it sees scope to expand.

Under pressure from ‌Chinese rivals across Asia and elsewhere, Japanese automakers have increasingly focused on India, a market where - like the U.S. - Chinese automakers are effectively shut out.

Mibe and Executive ‌Vice President Noriya Kaihara will voluntarily forgo the equivalent of 30% of their compensation for three months while some ⁠other executives will give up 20%, Honda ‌said.

The company plans to announce a ​revamped mid-to-long-term business strategy in the next fiscal year.

($1=158.8900 yen)

(Reporting by Daniel Leussink, Kantaro Komiya and Maki Shiraki. Writing by David Dolan. Editing by Clarence Fernandez, Christopher Cushing and ‌Mark Potter)

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