Honda raises full-year outlook despite second-quarter profit slump

Honda Motor (TYO:7267) raised its full-year profit forecasts on Tuesday as stronger motorcycle sales and demand for hybrid vehicles in North America helped offset a sharp earnings hit from restructuring its electric-vehicle business.

Net profit attributable fell 42.8% to ¥65.8 billion in the three months ended September 30, while operating profit dropped 39% to ¥118 billion, missing the ¥250 billion median estimate in an LSEG poll of nine analysts cited by Reuters.

For the six months ended September 30, net profit attributable rose 65.7% to ¥516.8 billion, although it fell short of analysts’ estimate of ¥643.2 billion. Revenue increased 13.2% to ¥12.04 trillion, while operating profit climbed 48.1% to ¥648.7 billion.

Honda booked ¥484.8 billion in costs related to restructuring its electric-vehicle business during the second quarter. Excluding these charges, first-half adjusted operating profit rose 71.3% to ¥1.13 trillion.

Motorcycle sales provided the strongest support, with first-half volumes increasing 10.6% to a record 11.9 million units, driven by growth in India and Brazil.

Automotive sales, however, fell 6.6% to 1.57 million vehicles, reflecting weaker demand in China. Higher North American sales of compact cars and hybrids helped offset the decline.

Honda raised its full-year operating profit forecast by 20% to ¥780 billion from ¥650 billion, while lifting its net profit forecast by 25% to ¥500 billion from ¥400 billion. It also raised its revenue outlook to ¥24.4 trillion from ¥24.15 trillion, citing stronger motorcycle sales, higher North American vehicle volumes and favourable currency movements.

The company maintained its annual dividend forecast at ¥70 per share. It also raised its motorcycle sales outlook to 23.3 million units from 22.8 million, while cutting its automobile sales forecast to 3.16 million from 3.39 million.