By Kosaku Narioka
Honda Motor projected a drop in fiscal-year net profit and announced a share buyback after posting a sharp increase in annual profit for the previous year, driven by the recovery of its car business.
The Japanese automaker said Friday that it expects net profit to decline 9.7% to 1.000 trillion yen ($6.43 billion) and revenue to fall 0.6% to Y20.300 trillion for the year that began in April. The company is expecting higher research and development expenses and a stronger yen that reduces the value of profits earned overseas in yen terms.
For the year ended March, net profit climbed 70% as revenue rose 21%, thanks to a recovery in its car business. Honda booked an operating profit for its car segment following a loss the previous year, as sales grew sharply in the U.S. despite a decline in China.
Chief Executive Toshihiro Mibe said hybrid gas-electric vehicles have been selling quite well and that the carmaker is working with suppliers to boost production
Mibe also said Honda is spending more for capital expenditure and research and development to grow its EV business.
Honda and other Japanese carmakers have long produced hybrid vehicles, but they trail companies such as Tesla and China's BYD in full battery-electric vehicles.
Honda said in April that it would invest the equivalent of about $11 billion in building an electric-vehicle manufacturing plant and an EV battery plant in Canada.
On Friday, the automaker projected group car sales to rise 0.3% to 4.12 million units this fiscal year, as gains in North America and Japan are expected to offset a drop in the rest of Asia. It projects group motorcycle sales to increase 5.2% to 19.8 million, thanks to growth in Asia outside Japan.
The company said it will buy back up to Y300.0 billion of its shares by the end of March 2025 as part of efforts to shore up its share price, which is trading below book value. The company said it may repurchase up to 3.7% of its outstanding shares.
Honda's projection of a net profit drop comes after similar forecasts by its rivals earlier this week.
Toyota Motor projected a drop in net profit for the new fiscal year, partly because of higher material and labor costs and research and development expenses. Nissan Motor also forecast lower annual net profit despite projected sales growth, citing heightened competition and high inflation.
--Chieko Tsuneoka in Tokyo contributed to this article.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
May 10, 2024 06:09 ET (10:09 GMT)
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