Honda climbs after profit outlook tops estimates

BLOOMBERG

Honda Motor Co shares rose the most in seven weeks after the Japanese automaker forecast profit for the current fiscal year that slightly exceeded analysts’ projections and a buy back of as much as ¥200 billion ($1.5 billion) of its own shares.
Operating profit for the period through March 2024 will be ¥1 trillion, the company said. That compares with analysts’ average projection for ¥996 billion. Honda said net sales are on track to reach ¥18.2 trillion, in line with the ¥18.1 trillion the market is looking for.
Honda’s finances have been bolstered by its motorcycle division as it seeks secure supplies of semiconductors and other materials for automobiles. The company is aiming to only sell electric cars globally by 2040 and have EVs represent 100% of its sales in China by 2035. Despite that, Honda has yet to roll out a mass-market EV, although it is working with Sony Group Corp to launch an electric vehicle under a different brand called Afeela.
For the fiscal year ended March, Honda reported an operating profit of ¥839 billion, falling short of analysts’ projection for ¥892.5 billion and its own forecast of ¥870 billion. Sales rose 16% to ¥16.9 trillion, compared with analysts’ prediction for ¥17 trillion.
Pandemic-induced chip snarls in China also meant that Honda failed to achieve its sales target of 3.85 million units for the latest fiscal year for four wheelers. The company is aiming to stabilise its “semiconductors supply chain and improve operations of our factories to sell as much as 4.35 million units of four wheelers in the financial year through March,” Honda Executive Vice President Shinji Aoyama said at a virtual press conference.
Aoyama also said the price war in China was impacting the company’s financials. “The company has set a sales target of 4.35 million units, but it’s been revising the volume plan downward for some time, and at this point we cannot be 100% certain that it will achieve this target,”said Bloomberg Intelligence analyst Tatsuyo Yoshida.
In April, Honda Chief Executive Officer Toshihiro Mibe said the company will collaborate with Taiwan Semiconductor Manufacturing Co on the procurement of chips in order to smooth over any supply disruptions.