Honda profits slump as sales fall

Honda has reported a 77% fall in annual profits after a big decline in sales.

In the year to 31 March, Japan's second-largest carmaker made a net profit of 137bn yen ($1.4bn; £981m), down from 600bn yen a year earlier.

Sales at the firm fell 17% to 10 trillion yen, its first decline in nine years. Honda said it now expects sales to continue to decline into 2010.

Honda is now continuing with cost-cutting measures, including the temporary closure of its main UK plant.

Its factory in Swindon shut in February for four months.

Six of its US factories are also seeing temporary closures.

Honda has also cut its research and development budget, and ended its ownership of a Formula One motor sport team.

For the first three months of 2009, Honda made a net loss of 186bn yen, compared with a 25bn yen profit a year earlier.

Honda now expects US sales to fall 10% between now and 31 March next year, while it predicts European sales will decline 17%.

The firm's woes are being mirrored across the motor industry.