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Honda (HMC.US) misses Q2 operating profit, raises full-year sales guidance

AInvestWednesday, Nov 6, 2024 1:30 am ET
1min read

Despite Honda Motor (HMC.US) reporting second-quarter earnings below analyst expectations, the company raised its full-year guidance. The company reported an operating profit of ¥257.9bn for the three months ended September 30, far below the consensus estimate of ¥431.1bn, as its relatively strong sales in the U.S. and Japan markets failed to offset a decline in sales in Southeast Asia and China.

Honda said its passenger vehicle sales in China fell 43 per cent in the second quarter, due to the rapid growth of the country’s new energy vehicle market and the ongoing price war. At the same time, its sales in Japan and the US grew 22 per cent and 8 per cent respectively.

Tatsuo Yoshida, senior analyst at Bloomberg Intelligence, said: “People were generally expecting a rise in quarterly profits, so the result was disappointing.”

However, as one of the world’s largest motorcycle manufacturers, Honda’s two-wheeler business achieved growth in most major markets, especially in India and Vietnam, although sales in Thailand fell by about 7.4 per cent.

As with many traditional carmakers, Honda faces challenges in many areas, including a weakening demand for electric vehicles and competition from rivals. Mibe Toshihiro, chief executive, said in October that the company would consider lowering its EV targets if demand continued to waver, adding: “We have enough room to adjust the timetable for building EV factories globally and change our strategy when things go in an unexpected direction.” He added that this could include delaying some battery production lines.

Looking ahead, Honda expects full-year sales for the year ending March 2025 to be ¥2.1tn, up from the previous estimate of ¥2.03tn. The company also expects full-year operating profit to remain around ¥1.42tn, according to analysts, who said the company’s maintenance of its full-year operating profit guidance was a “conservative” move. Honda also announced plans to buy back ¥100bn of shares, equivalent to 1.5 per cent of its outstanding shares.

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