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Honda Motor Co. forecast profit for the current fiscal year that slightly exceeded analyst projections thanks to a recovery in automobile production, drops in some material prices and robust sales of motorcycles in India and Southeast Asia.
The Japanese automaker also said in a statement Thursday that it plans to buy back as much as ¥200 billion ($1.5 billion) yen of its own shares.
Operating profit for the period through March 2024 will be ¥1 trillion, the company said. That compares with analysts’ average projection for ¥996 billion. Honda said net sales are on track to reach ¥18.2 trillion, in line with the ¥18.1 trillion the market is looking for.
Honda’s finances have been bolstered by its motorcycle division as it seeks secure supplies of semiconductors and other materials for automobiles. The company is aiming to only sell electric cars globally by 2040 and have EVs represent 100% of its sales in China by 2035. Despite that, Honda has yet to roll out a mass-market EV, although it is working with Sony Group Corp. to launch an electric vehicle under a different brand called Afeela.
For the fiscal year ended March, Honda reported an operating profit of ¥839 billion, falling short of analysts’ projection for ¥892.5 billion and its own forecast of ¥870 billion. Sales rose 16% to ¥16.9 trillion, compared with analysts’ prediction for ¥17 trillion.
Pandemic-induced chip snarls in China also meant that Honda failed to achieve its sales target of 3.85 million units for the latest fiscal year for four wheelers.
The company is aiming to stabilize its “semiconductors supply chain and improve operations of our factories to sell as much as 4.35 million units of four wheelers in the financial year through March,” Honda Executive Vice President Shinji Aoyama said at a virtual press conference on Thursday.
Aoyama also said the price war in China was impacting the company’s financials.
Shares in Honda slipped 1.9%. They’re up 18% this year.
“The company has set a sales target of 4.35 million units, but it’s been revising the volume plan downward for some time, and at this point we cannot be 100% certain that it will achieve this target,”said Bloomberg Intelligence analyst Tatsuyo Yoshida.
In April, Honda Chief Executive Officer Toshihiro Mibe said the company will collaborate with Taiwan Semiconductor Manufacturing Co. on the procurement of chips in order to smooth over any supply disruptions. The Japanese company is also in talks with other chipmakers.
Honda also said it signed an agreement with GS Yuasa Corp. to start a joint venture to develop lithium-ion batteries.
The company on Thursday declared a record high dividend of ¥150, up from ¥30 yen from last fiscal year.
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