Honda Raises Annual Profit Forecast

Honda raised its full-year profit forecast. According to the company, growth in motorcycle sales, along with demand for hybrid vehicles in North America, offset the impact of significant financial losses caused by the restructuring of its electric vehicle business.

In the three-month period ended September 30, Honda's net profit fell 42.8% year-on-year to 65.8 billion yen. Operating profit dropped 39% to 118 billion yen, falling significantly short of the median forecast of 250 billion yen from nine analysts polled by Reuters.

Six-month financial results

For the six months ended September 30, the company's net profit rose 65.7% year-on-year to reach 516.8 billion yen, though this figure also came in below analysts' expectations of 643.2 billion yen.

During the same period, Honda's revenue grew 13.2% to 12.04 trillion yen, while operating profit rose 48.1% to 648.7 billion yen.

Despite the positive half-year results, the company recorded a 484.8 billion yen expense related to the restructuring of its electric vehicle business. Excluding these one-off costs, adjusted operating profit for the first half rose 71.3% to reach 1.13 trillion yen.

Motorcycle sales remain the main driver of growth

The motorcycle business had the most significant positive impact on Honda's results. Over the first six months, motorcycle sales volume rose 10.6% year-on-year to a record 11.9 million units. Growth was particularly driven by demand in the Indian and Brazilian markets.

By contrast, automobile sales fell 6.6% to 1.57 million units, attributed to weakening demand in China. This decline was partially offset by increased demand for compact cars and hybrids in North America.

Raised annual forecast

Despite the differing dynamics across sales segments, Honda improved its full-year forecast. The company now expects operating profit of 780 billion yen, up from its previous forecast of 650 billion yen — a 20% increase.

The net profit forecast was raised from 400 billion yen to 500 billion yen, implying a 25% increase. Meanwhile, revenue expectations were raised from 24.15 trillion yen to 24.4 trillion yen.

Honda cites growth in motorcycle sales, higher automobile sales in North America, and favorable currency exchange rate movements as the main reasons behind the improved forecast.