Honda Lifts Profit Outlook 20% Despite EV Restructuring Costs

Honda Motor raised its full-year operating profit forecast by 20% to 780 billion yen ($4.94 billion), up from 650 billion yen, even after booking 484.8 billion yen in electric-vehicle restructuring costs in its second quarter, Reuters reported.

The Japanese automaker pointed to strong demand for hybrid vehicles and a weaker yen, according to Reuters, while Investing.com said the motorcycle business also supported the upgrade.

EV charges hit quarterly profit

Operating profit for the July–September quarter fell 39% from a year earlier to 118 billion yen, according to Reuters. That was well short of the 250 billion yen median estimate in an LSEG poll of nine analysts.

Net profit attributable to owners for the quarter dropped 42.8% to 65.8 billion yen, Investing.com reported.

Reuters said Honda recorded more than $9 billion in EV restructuring charges in the previous financial year, which pushed the company into its first annual loss in nearly 70 years when it reported in May.

For the six months to Sept. 30, revenue climbed 13.2% to 12.04 trillion yen and operating profit rose 48.1% to 648.7 billion yen, Investing.com said. Net profit attributable to owners rose 65.7% to 516.8 billion yen, below the 643.2 billion yen analysts had expected. Stripping out the EV restructuring costs, adjusted operating profit for the half rose 71.3% to 1.13 trillion yen.

Motorcycles and hybrids lift outlook

Honda sold a record 11.9 million motorcycles in the first half, up 10.6%, led by India and Brazil, according to Investing.com. The company lifted its full-year motorcycle sales outlook to 23.3 million units from 22.8 million.

The car business was weaker. Automobile sales fell 6.6% to 1.57 million units in the half on softer demand in China, partly offset by higher North American sales of compact cars and hybrids, Investing.com reported. Honda cut its full-year vehicle sales forecast to 3.16 million from 3.39 million.

CBT News said the lower vehicle forecast reflected China and a tougher second half in North America, where higher interest rates and incentives are weighing. Honda’s US sales rose 9% in the quarter and accounted for about half of its 823,000 global retail sales, Reuters said.

Honda also raised its full-year net profit forecast by 25% to 500 billion yen from 400 billion yen and its revenue forecast to 24.4 trillion yen from 24.15 trillion yen, while keeping its dividend forecast at 70 yen per share, according to Investing.com.

What’s next

Honda kept its full-year estimate for EV restructuring costs at 520 billion yen, which includes the amount booked in the second quarter, CBT News reported. Chief Financial Officer Masao Kawaguchi said progress had been made with suppliers on settling costs and that the company aims to resolve them within the current financial year, according to the outlet.

Separately, Honda announced on Monday a $3 billion plant in Ohio to build 240,000 hybrid cars a year, with production due to start in 2029, Reuters reported. CBT News said the project is pending final government approvals.

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