Honda Motor Co Ltd (7267.T) experienced a growth in operating profit during the first nine months of FY18 (April–December 2017) to JP¥706.7 billion (US$6.4 billion), a 0.6 percent increase compared to the same period in FY17. The main reason behind this growth were robust motorcycle sales across Asia, efforts to reduce costs and cuts to corporate taxes in the US.
A JP¥53.7 billion (US$483.52 million) litigation settlement related with the Takata air-bag scandal impacted Honda Motor Co’s profits during this period.
The company’s nine-month sales revenue amounted to JP¥11.4 trillion (US$103.81 billion), a growth of 11.8 percent from JP¥10.2 trillion (US$92.74 billion) in FY17.
Consolidated sales growth in terms of units was substantial for the motorcycle unit, flat for automobiles and negative for power products during the first nine months of FY18 compared to the same period in FY17. Honda Motor Co sold 9.78 million motorcycle units in the nine-month period, which amounts to a 14.49 percent growth. The automobile unit only managed to increase the number of vehicles by 4.2 percent to 2.74 million units compared to 2.72 million in the same period of FY17. Sales in power products sank by 3.02 percent after selling 118 fewer units in this period compared to the same period of FY17.
Despite the growth in sales by units of the motorcycles unit, the largest contributor to the company’s growth in revenue (excluding currency effects) during the first nine months of FY18 was the automotive business. This unit contributed with JP¥361.5 billion (US$3.27 billion) of the JP¥721.7 billion (US$6.53 billion) growth compared to the same period of FY17. This means the automotive business unit of Honda Motor Co effectively contributed with 50.09 percent of the revenue growth in this period.
Honda Motor Co’s sales in Japan grew 2.9 percent during the first nine months of FY18 compared with the same period of FY17. The company’s Kei N-Box vehicle was the best-selling model title in Japan during 2017 and received the highest security ratings from JNCAP. On the other hand, the STEP WGN sales reached 1.5 million units sold in Japan.
The automobile unit’s sales did not do so well in the largest Western market: the US. The company sold 0.3 percent fewer vehicles in the first nine months of FY18 (1.276 million units) compared to the same period in FY17 (1.8 million units). Despite this slump, Honda Motor Co had success in other aspects in this market. The company’s cumulative sales in the US surpassed 40 million units and the company reached a new record of 1.6 million sold vehicles in the January-December 2017 period. Additionally, the Honda Accord was named the 2018 North American Car of the Year and the Honda Clarity Series was recognized with the 2018 Green Car of the Year award.
The company’s automobile unit had a solid growth in sales in China during the first nine months of FY18 with a 15.7 percent boost in terms of units. The company sold 1.15 million cars in China between 1Q18 and 3Q18 compared to 993,000 in the same period of FY17. Another key market for Honda was India, where motorcycle sales grew 20.1 percent.
The company has adjusted its consolidated sales forecasts in motorcycles and automobiles for 2018. It now expects to sell 12.8 million motorcycles globally (1.6 percent more than previously forecasted). In the automotive unit, sales forecasts have been raised 0.1 percent to 3.7 million vehicles worldwide.
The company has adjusted its consolidated financial forecasts for FY18. It now expects a sales revenue of JP¥15.2 trillion (US$137.71 billion), which means a variation of 8.6 percent compared to FY17. While Honda Motor Co expects its FY18 EBITDA to rise 3.8 percent against FY17, the operating profit of the company is forecasted to suffer during this period. Honda Motor Co has forecasted its operating income to be reduced 7.8 percent in FY18 to JP¥775 billion (US$7.02 billion) from JP¥840.7 billion (US$7.61 billion) in FY17.
The data used in this article was sourced from Honda Motor Co. If you want to learn more about the automaker’s presence in Mexico, check out our feature analysis in Mexico Automotive Review 2017.