Honda Motor Reports Higher Quarterly Profit Despite Weak Car Sales in China — Update

By Kosaku Narioka

Honda Motor reported a rise in first-quarter net profit, thanks to stronger earnings from its car and motorcycle businesses despite weak car sales in China.

The Japanese automaker said Wednesday that net profit increased 8.7% from a year earlier to 394.66 billion yen, equivalent to $2.73 billion, for the three months ended June. That beat the estimate of Y338.90 billion in a poll of analysts by data provider Quick.

Honda said product-price increases and a weaker yen contributed to its earnings growth.

First-quarter revenue climbed 17% to Y5.405 trillion.

Operating profit for its car business rose 26% to Y222.84 billion and that of its motorcycle business increased 24% to Y177.65 billion.

Honda cut its forecast for group car sales in the fiscal year ending March 2025, citing weaker sales in China. First-quarter sales in China dropped 32% from a year earlier.

The automaker now expects to sell 3.90 million cars this fiscal year, down from its previous view of 4.12 million units. It continues to expect group motorcycle sales at 19.80 million units for this fiscal year.

Rival carmaker Nissan Motor in July also lowered its annual vehicle-sales forecast due partly to projections for weaker sales in China amid intense competition and consumers' shift away from conventional gas-powered vehicles.

Honda maintained its revenue and net profit forecasts for the fiscal year ending March 2025. It continues to expect revenue to decline 0.6% to Y20.300 trillion and net profit to drop 9.7% to Y1.000 trillion.

A weak yen tends to increase the earnings of Japanese companies like Honda, as it makes exports more competitive overseas and boosts the value of profits earned abroad in yen terms.

But the prospects of a weak yen driving earnings growth are now murkier as the Japanese currency has been strengthening against other major currencies since early July. The yen was recently around 146 to the dollar, compared with about 161 per dollar in early July.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

August 07, 2024 04:03 ET (08:03 GMT)

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