(Aug 5): Honda Motor Co raised its profit outlook after the motorcycle business, a weak yen and US demand for hybrids lifted quarterly results to a record.
The Japanese carmaker now sees ¥650 billion (US$4.1 billion) in operating profit for the fiscal year ending March 2027, exceeding its prior forecast of ¥500 billion and analysts’ projection for ¥676 billion. The company now sees sales at ¥24.15 trillion, compared with analysts’ prediction and the prior outlook of ¥23.2 trillion.
The success of the motorcycle business, in particular, stood out as management works to recover from a ¥2.5 trillion impairment charge in March, which led to the manufacturer posting its first annual loss since its founding in 1948. Record profits from fast-growing markets such as India and Brazil helped make up for weakness in cars, as the automaker seeks to execute a turnaround.
“Uncertainty surrounding the situation in the Middle East makes it necessary to carefully assess risks related to sales volume, material costs and other factors,” chief financial officer Masao Kawaguchi said in a briefing.
Quarterly profit reached a record thanks to Honda’s motorcycle business, which accounted for about ¥234 billion of the ¥531 billion for the period that ended in June. Analysts had been expecting ¥300 billion for the quarter. Meanwhile, its automobile business saw steady sales in North America but lost ground in China. Net sales rose 14% to ¥6.1 trillion.
“Honda’s efforts to improve its auto cost structure had already been bearing fruit but the progress was obscured by battery EV losses and parts shortages,” said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “The underlying improvement became much clearer in the first quarter.”
Honda’s prediction for a profit rebound this fiscal year leans on currency tailwinds and US demand as it looks to overhaul its struggling automobile business. Honda’s lacklustre lineup has kept it from competing with frontrunners in the industry’s transition toward battery-powered cars with sophisticated technology. No EV-related losses were incurred during the first quarter, Kawaguchi said.
The task of stabilising Honda’s car business falls on CEO Toshihiro Mibe. Honda plans to roll out 15 new hybrid models by March 2030, primarily in North America, as part of its effort to reallocate resources away from EVs and toward mixed powertrain vehicles. Meanwhile, plans to build an EV battery supply chain in Canada are indefinitely on hold.
Mibe previously said the company is also aiming to get its four-wheeler business back on its feet within three years, with North America, India and Japan identified as core markets.
Honda and Nissan Motor Co plan to develop software for next-generation vehicles together, Kyodo News reported in July. This hints at a repeat of a failed tie-up between the two carmakers, but it highlights the need for legacy manufacturers to band together to hold their ground in the US and China.
“China’s market for internal combustion and gas-electric hybrid cars is shrinking more drastically than we initially expected,” Kawaguchi said, adding that using a local partner’s production platform is an option.
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