January 29, 2016 / 9:14 AM / in 2 years

UPDATE 1-Honda's Q3 operating profit slides on recall costs

* Q3 op profit 163 bln yen vs 199 bln expected by analysts

* Executive says wants Takata to identify air bag fault quickly

* Honda recalled 5 mln cars globally in Q3 due to air bags (Adds executive’s comments, details of results)

By Naomi Tajitsu

TOKYO, Jan 29 (Reuters) - Honda Motor Co’s third-quarter operating profit fell a bigger than expected 22 percent due to a rise in costs stemming from a massive global recall of air bags made by Takata Corp.

Japan’s third-biggest automaker is Takata’s biggest customer and its models account for roughly half of the nearly 50 million cars recalled globally due to air bags which have exploded with excessive force to spray metal shrapnel inside vehicles, which has led to 10 fatalities and about 100 injuries.

Honda urged Takata to boost efforts to supply replacement parts.

“This is a big recall, and it continues to cause uncertainty among customers,” Honda executive vice president Tetsuo Iwamura told a results briefing.

“We would like them to investigate the cause (of the air bag defects) as quickly as possible, and accelerate the replacement process for recalled parts.”

Iwamura added that the automaker had attended a meeting held by the embattled parts maker earlier in the day, while declining to offer further comment on the matter.

Following that meeting, Takata, mired in a long-running safety recall crisis, said its Chairman and CEO, Shigehisa Takada, had no intention as of now to resign.

Honda said it had recalled around 5 million cars globally in the third quarter due to potentially faulty air bags, which had increased its overall recall costs to 2.2 percent of sales through the third quarter, up from 1.9 percent through the second quarter.

The company, which makes the Accord and Civic models that are among the best-selling cars in the United States, said its operating profit for the October-December quarter fell 22.3 percent to 163.0 billion yen ($1.35 billion).

Analysts had forecast operating profit to come in at 199.2 billion yen, drawn from forecasts from 10 analysts, according to Thomson Reuters I/B/E/S data.

In addition to rising recall costs, the automaker said it was also hit by a negative currency impact following a depreciation in emerging currencies, including the Brazilian real, against the U.S. dollar.

The automaker posted a net profit of 124.1 billion yen in the quarter, down 18.5 percent from 152.3 billion a year ago and less than an average estimate of 148.90 billion yen drawn from the forecasts by analysts.

While sales revenue rose 3.4 percent, Honda pared its outlook for full-year sales revenue due to expectations that it would sell less cars in Asia and Japan than previously forecast. ($1 = 120.7300 yen) (Reporting by Naomi Tajitsu; Editing by Muralikumar Anantharaman)

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