Honda Motor has forecasted a decrease in net profit for the current fiscal year, while simultaneously announcing a stock buyback. This follows a sharp increase in annual profit, driven by a recovery in the automotive business.
The Japanese automaker expects net profit to fall by 9.7% to 1 trillion yen (approx. 6.43 billion US dollars) in the fiscal year that began in April, while sales are anticipated to decline by 0.6% to 20.3 trillion yen. Higher research and development expenses as well as a stronger yen, which reduces the value of profits made abroad in yen, are weighing on the forecast.
In the last fiscal year, which ended in March, net profit increased by 70%, while revenue grew by 21%, attributable to the recovery in the automotive business. Honda recorded an operating profit in its automobile segment, after reporting losses the previous year. Sales particularly surged in the US, although they declined in China.
CEO Toshihiro Mibe emphasized that hybrid vehicles with gasoline-electric drive sell well and that the company is working with suppliers to increase production. In addition, Honda is increasing spending on capital expenditures and research and development to expand its electric vehicle business.
Honda announced in April its plans to invest approximately 11 billion US dollars in the construction of an electric vehicle plant and an EV battery factory in Canada.
For the current fiscal year, the automaker forecasts a slight increase in group car sales by 0.3% to 4.12 million units, with gains in North America and Japan expected to offset a decline in the rest of Asia. Group motorcycle sales are projected to rise by 5.2% to 19.8 million units, driven by growth in Asia excluding Japan.
Honda to buy back shares worth up to 300.0 billion yen by the end of March 2025 to support the stock price, which is currently below book value. The company may repurchase up to 3.7% of its outstanding shares.
Honda's Forecast of Profit Decline Follows Similar Predictions by Its Competitors at the Start of This Week. Toyota Motor also forecasted a decrease in net profit for the new fiscal year, partly due to higher material and labor costs as well as research and development expenses. Despite an expected revenue growth, Nissan Motor also predicted a lower annual net profit, due to increased competition and high inflation.
