Honda Motor more than doubled first-quarter net profit and raised its annual forecasts, as the yen's weakness boosted quarterly results and lifted earnings prospects.
The Japanese automaker said Wednesday that operating profit for its car business climbed for the three months ended June, driven partly by a weaker yen, which boosts the value of profits earned abroad in yen terms.
Chief Financial Officer Masao Kawaguchi said car sales fell in China but rose in the U.S. as consumers favored fuel-efficient cars, including hybrids, due to higher gasoline prices.
Kawaguchi said the Chinese economy isn't great and that a shift away from gasoline-powered vehicles is accelerating, likely because of rising oil prices.
Honda left its global vehicle sales forecast for the year ending March 2027 unchanged. With the impact of the Middle East conflict on the global economy still unclear, the company plans to update sales forecasts after the second quarter, Kawaguchi said.
As part of efforts to bolster its car business in China, Honda in July extended its joint venture with Guangzhou Automobile Group through 2038. Honda's sales in the country have fallen in recent years due to intense competition and a shift away from gas-powered vehicles in the world's largest auto market.
Operating profit also increased for its motorcycle business in the first quarter thanks to higher sales in India and Brazil.
The company projected higher revenue and net profit for the full year, citing the yen's recent depreciation.
That would mark a reversal from the net loss Honda Motor recorded in its latest fiscal year, its first since listing in 1957, as it booked electric-vehicle losses equivalent to about $10 billion after giving up on its main EV plans in the U.S.
Honda is aiming to improve its hybrid EV offerings to shore up its car business's profitability, and plans to end production of the only EV it sells in the U.S., the Prologue sport-utility vehicle, this year.
After reporting an annual loss in May, Chief Executive Toshihiro Mibe said he was abandoning a target he set in 2021, when he said all Honda cars would be EVs or fuel-cell vehicles by 2040.
The move mirrors that of most automakers in the U.S., including Volkswagen, Stellantis and Ford, which are pulling back from their once-aggressive efforts to increase EV production.
The Japanese automaker's net profit reached 450.9 billion yen, equivalent to $2.86 billion, in the first quarter, far exceeding the Y208.2 billion estimate in a poll of analysts by data provider Quick. Revenue climbed 13.5% to Y6.062 trillion.
For the fiscal year, Honda maintained its expectation to sell 22.80 million motorcycles and 3.39 million cars. It projected an 11% increase in revenue to Y24.150 trillion and net profit of Y400.00 billion, up from previous expectations of Y23.150 trillion and Y260.00 billion, respectively.
The company increased its estimate for annual EV-related losses to Y520 billion from Y500 billion due to a weaker yen. Kawaguchi said most of that is payment to North American suppliers.
Comments