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Honda profit warning eyed as urgent briefing called

Honda Motor Co moved up its year-end news conference by two days to Wednesday, with a day's notice, raising the possibility that Japan's No.2 automaker could issue its third profit warning this year.

Honda Executive Vice President Koichi Kondo told Reuters last month the automaker's profit forecasts for the business year to March 2009 would have to be revised, saying that meeting them would be a “Herculean task” in light of tanking vehicle sales around the world.

Tokyo Stock Exchange rules stipulate that listed companies must swiftly announce any changes to guidance if the new profit figure is off by more than 30%, or revenue by more than 10%.

Honda declined to comment on the possibility of a profit forecast revision. It did not give a reason for the abrupt change in plan.

Many companies announce earnings results and forecast revisions at 3 p.m. to coincide with the close of stock trading in Tokyo. Honda was originally scheduled to hold the annual year-end news conference on Friday morning.

Honda also cancelled Fukui's presentation to sector analysts on Friday, and instead scheduled an investor relations meeting on “management strategy” with Executive Vice President Kondo on Wednesday evening in Tokyo.

“We think the company is likely to explain specific details and implications of its management policy going forward as it seeks to respond to the changes in its business environment since October,” JPMorgan auto analyst Takaki Nakanishi wrote in a note to clients.

“In addition to plans to cope with the changing environment going forward, we think the time is right for management to explain its operating projections in light of the change in the climate for earnings,” he added.

Last week, Honda said it would cut another 119,000 units from planned production in North America through March, less then a month after announcing cuts of nearly 80,000 units on three continents.

In a further and perhaps bigger blow, the Japanese currency has strengthened to 13-year highs, trading below ¥90 yen in European trade on Tuesday.

Honda, which has set its dollar assumption at ¥100 for the October-March second half, says every ¥1 swing in the dollar affects annual operating profit by about ¥20 billion ($220 million).

On October 28, Honda lowered its earnings forecasts for this business year by 13% at the operating level, much tamer than the profit warnings given subsequently by domestic rivals Nissan Motor Co and Toyota Motor Corp. (Reuters)