Global Automotive Technology :: A Complete B2B, Media Portal for Automotive Industry

Thai managers are trusting that a two-meter-high cordon of sandbags will save their factories from floodwaters spilling out from Bangkok. It may be too late to rescue the company’s earnings forecast.

Floods in Thailand, the biggest Southeast Asian manufacturing hub for Japanese auto-related companies, have led to a shortage of parts and idled production of Prius hybrids and Camry sedans at Toyota’s plants southeast of Bangkok. That may lead the company to cut its full-year profit forecast when it announces second-quarter earnings Nov. 8, said Yuuki Sakurai, Tokyo-based president at Fukoku Capital Management.

Japanese automakers are struggling to recover from the aftermath of March’s record earthquake and contend with a yen close to its highest level in more than 60 years. Now, shortages of Thai parts from the country’s worst floods in half a century are spreading disruptions to their car plants from Malaysia to Japan and the U.S., adding to the 22 percent drop in the Topix transport index since the March 11 temblor.

“The timing of the Thai floods couldn’t have been worse,” said Vivek Vaidya, automotive and transportation director at research firm Frost & Sullivan in Singapore. “The Japanese automakers were looking at reviving production, ramping up the parts supplies and assembly in overseas plants, and the floods have come and squashed their dreams.”

Toyota is still assessing the impact of the Thai floods on its earnings, according to Amiko Tomita, a spokeswoman for the company.

Honda Motor Co., which made about 5 percent of all its cars in Thailand last year, yesterday said its factories may be flooded until mid-December and the financial toll will be big enough for the company’s annual earnings guidance to be unreliable. The Tokyo-based company said it plans to cut output at six plants in the U.S. and Canada by about half from Nov. 2 through Nov. 10 because of the Thai floods in Thailand.

Missed Forecast

Honda, Japan’s No. 3 automaker, reported net income of 60.4 billion yen in the three months ended Sept. 30, from 135.9 billion yen a year earlier. That missed the 66.1 billion yen average analyst estimate compiled by Bloomberg. Nissan Motor Co., Japan’s second-largest automaker, has also closed its Thai factory and is scheduled to report earnings tomorrow.

Tokyo-based Honda has been hardest hit because its assembly lines and suppliers are clustered around the ancient capital of Ayutthaya, north of Bangkok, much of which lies under as much as three meters of water, according to Vaidya.

Toyota affiliate Aisin Seiki Co., which makes aluminum die- cast parts for the Toyota City, Aichi-based company, closed its factory in Ayutthaya on Oct. 18 and evacuated 1,500 workers after waters rose higher than 1.6 meters around the plant, spokesman Masayuki Toyama said. More than 100 suppliers have been affected, according a Toyota official in Thailand who asked not to be identified, citing company policy.

Comments

RSS

All rights reserved."