Honda raises its annual earnings forecast after returning to quarterly profit growth, buoyed by a weaker yen and stronger financial performance.
Honda Motor has raised its full year financial forecasts after reporting its first quarterly profit increase in six quarters, as a weaker yen and the absence of US tariff-related costs strengthened its first-quarter performance.
Japan’s second-largest automaker increased its operating profit forecast for the financial year by 30% to 650 billion yen ($4.1 billion), up from an earlier estimate of 500 billion yen. The company also lifted its revenue and net profit projections, citing more favourable foreign exchange assumptions.
The improved outlook follows a difficult period for the automaker, which reported its first annual loss in nearly 70 years in May after absorbing more than $9 billion in costs linked to the restructuring of its electric vehicle business.
Honda said it did not record restructuring-related charges during the first quarter, although discussions with suppliers affected by the overhaul, many of them based in North America, are still underway.
Despite the stronger start to the year, the company expects restructuring expenses to reach 520 billion yen during the current financial year, slightly above its previous estimate of 500 billion yen.
Chief Executive Officer Toshihiro Mibe, who apologised to shareholders over the company’s financial performance at its annual meeting in June, secured support for his reappointment to Honda’s board.
The automaker had earlier disclosed that global vehicle sales fell 4% year-on-year to 838,000 units in the first quarter.
Demand weakened sharply in China, where sales plunged by nearly 50%, while other Asian markets also recorded declines as consumers increasingly shifted towards electric vehicles amid persistently high fuel prices. However, stronger sales in the United States and Japan helped cushion the impact, with the U.S. accounting for about half of Honda’s global vehicle sales during the quarter.
Chief Financial Officer Masao Kawaguchi said higher fuel prices in North America were encouraging more consumers to choose Honda’s fuel-efficient hybrid and gasoline-powered vehicles, providing additional support for the company’s earnings recovery.
