Honda Forecasts ¥1.42T Profit, Plans 300B Yen Buyback

Key Takeaway

• Honda forecasts a significant operating profit increase to ¥1.42 trillion by March 2025, driven by strong hybrid and two-wheeler demand.
• Announces a 300 billion yen share repurchase program, showcasing confidence in its financial health and future growth.
• Amid industry challenges, Honda invests C$15 billion in EV supply chain enhancements and plans for electrified cars to be 100% of sales by 2040.

Honda's Profit Forecast and Share Buyback

Honda Motor Co., Japan's second-largest automaker, has projected a significant increase in operating profit for the fiscal year ending March 2025, with expectations set at ¥1.42 trillion ($9.1 billion). This forecast aligns closely with market consensus estimates of ¥1.43 trillion and surpasses the company's previous forecast in February of ¥1.25 trillion. The anticipated growth is attributed to robust demand for hybrid vehicles and two-wheelers. In addition to its financial outlook, Honda announced a share repurchase program valued at up to 300 billion yen, equivalent to 3.7% of its outstanding shares, signaling confidence in its financial health and future prospects.

Strategic Moves Towards Electrification

Amid the automotive industry's accelerating shift towards electric vehicles (EVs), Honda is intensifying its efforts to catch up with competitors. The company has outlined a C$15 billion investment plan to enhance its electric-vehicle supply chain in Canada. Furthermore, Honda is preparing to manufacture its first U.S.-made fully electric vehicles in Marysville, Ohio, starting next year. With a long-term vision, Honda aims for electrified cars to constitute 100% of its sales by 2040, underscoring its commitment to sustainability and innovation in the face of evolving market demands and environmental considerations.

Global Auto Industry Challenges

The broader automotive sector, however, faces challenges as highlighted in recent market analyses. Carmakers across Europe and Asia have reported subdued outlooks, attributed to rising costs, diminishing demand for electric vehicles, inflationary pressures, and a slow economic recovery in Europe. Notably, BMW has indicated that its automaking margin fell slightly short of expectations due to escalating manufacturing costs. Despite these hurdles, most companies within the auto industry have maintained their full-year guidance, though the sector has lagged behind in earnings beats compared to more defensive market segments in the first quarter.