tl;dr
Honda missed Q4 earnings estimates with a 76% drop in operating profit despite matching revenue expectations. Full-year revenue rose 6.2%, but operating and net profits fell 12.2% and 24.5%, respectively. Motorcycle sales and hybrid EV growth in North America offset declines in auto sales, mainly in...
Japanese auto giant Honda missed fourth-quarter earnings estimates as operating profit plunged 76%, with the company bracing for the full impact of U.S. tariffs.
Honda reported revenue of 5.36 trillion yen ($47.26 billion), matching mean estimates, but operating profit sharply declined to 73.5 billion yen versus an expected 275.52 billion yen. The quarter ended March 31. For the financial year ended March, Honda posted revenue of 21.69 trillion yen, a 6.2% increase year on year and slightly above estimates, while operating profit decreased 12.2% to 1.21 trillion yen, below the expected 1.41 trillion yen. Net profit also fell 24.5% to 835.84 billion yen.
Honda's motorcycle segment achieved record sales volume and operating profit, offsetting a drop in automobile sales primarily in China and Southeast Asia. Hybrid electric vehicle sales in North America expanded, aided by increased EV incentives.
Trade tensions and U.S. tariffs remain a significant challenge. Honda decided to manufacture its next-generation Civic hybrid in Indiana, U.S., rather than Mexico, to mitigate tariff exposure.
In 2024, Honda ranked fourth in U.S. sales volume among Asian automakers. However, the company has downgraded its financial outlook for the fiscal year ending March 2026: operating profit is projected to fall by nearly 59% to 500 billion yen, net profit is expected to decrease 70.1% to 250 billion yen, and revenue is forecast to decline 6.4% to 20.3 trillion yen.
Honda highlighted the significant impact of global tariff policies and frequent revisions complicating its outlook. The company plans to carefully assess tariff impacts and implement recovery measures to foster operating profit growth. It also updated its dividend policy, moving from a payout ratio to a dividend on equity, forecasting a 2 yen per share increase to 70 yen per share for the current fiscal year.
In a related development, Honda and Nissan ended merger talks that could have created the world's third-largest automaker by sales volume.
Nissan reported a nearly 94% plunge in fourth-quarter operating profit to 5.8 billion yen, with revenue flat. The company swung to a net loss of 676 billion yen ($4.5 billion) in the quarter, compared with a net profit of 101.3 billion yen a year prior. Full-year operating profit fell 88% to 69.8 billion yen due to decreased sales volume, elevated sales incentives, and inflation, while revenue remained flat.
Nissan announced plans to save 500 billion yen over the next few years, including cutting 20,000 jobs and reducing production plants from 17 to 10 by March 2028.