Honda Boosts Projections Following Earnings Gain

Honda raised its financial forecasts for the current business year after posting its first increase in operating profit in six quarters in the second quarter, as reported by Reuters. The Japanese automaker said the results improved primarily due to a weaker yen, which mitigated the effect of lower vehicle sales and higher material costs.

Japan’s second-largest automaker raised its estimate of annual operating profit by 30 percent, from a previously expected ¥500 billion to ¥650 billion. At the same time, the forecasts of income and net profit were also increased. At the same time, Honda cited the changed assumption about the Japanese currency exchange rate as the main reason.

In the period from April to June, operating profit was 530.8 billion yen, more than double the 244.2 billion yen from the same period last year. The achieved result was significantly above the expectations of analysts, who on average forecast 302.1 billion yen.

Honda now expects an average exchange rate of 155 yen to the US dollar during the business year, up from a previous estimate of 145 yen to the dollar.

The release of the results comes months after Honda reported its first annual loss in nearly 70 years of business in May. The result was strongly influenced by the costs of restructuring the business related to electric vehicles, which exceeded US$9 billion.

At the annual shareholders’ meeting in June, CEO Toshihiro Mibe apologised for the company’s business results but also received support for a new mandate on the board of directors.

Honda previously announced that in the first quarter, global car sales fell four percent to 838,000 vehicles. The biggest decline was in China, where sales were almost halved, while declines in other Asian markets outpaced sales growth in the United States and Japan. The US market accounted for approximately half of Honda’s total vehicle sales during that period.

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