Business
Honda posts 15% fall in Q2 operating profit, missing forecasts
Global Banking & Finance Review®
Company
TOKYO (Reuters) -Japan’s Honda Motor reported a surprise 15% drop in second-quarter operating profit on Wednesday, missing analysts’ expectations as it suffered a heavy sales decline in China.
TOKYO (Reuters) -Japan’s Honda Motor reported a surprise 15% drop in second-quarter operating profit on Wednesday, missing analysts’ expectations as it suffered a heavy sales decline in China.
Japan’s second-largest automaker said operating profit was 257.9 billion yen ($1.68 billion) in the July-September quarter, marking the company’s first year-on-year profit decline in seven quarters.
The profit compared to 302.1 billion yen in the same period last year, and the 427.2 billion yen average of seven analyst estimates in an LSEG survey.
The company maintained its full-year operating profit forecast of 1.42 trillion yen.
It said in presentation materials that its April-September sales result was lower than that of last year mainly due to pressures in China that offset higher vehicle sales in the U.S. and Japan.
Honda said last week its global vehicle sales shrank 1.5% to 2.8 million over the first nine months of the year, as a hefty 29% drop in China and a 6% fall in Asia and Oceania outpaced a stronger performance in its major U.S. and Japan markets.
Honda is especially losing ground in China, the world’s top auto market, which was its biggest sales and production market from 2020 until 2022.
The company suffers from a rapid shift by consumers to electric vehicles, hybrids and plug-in hybrids made by Chinese brands. These brands have attracted local consumers with low prices and software-loaded vehicles.
Honda has been scaling back its workforce at joint ventures with Dongfeng Motor and Guangzhou Automobile Group this year and has halted production at some of its plants in a bid to make its operations more efficient.
The company has fared better in the U.S., reporting a 9% rise in vehicle sales over the first nine months of 2024.
($1 = 153.9000 yen)
(Reporting by Daniel Leussink; Editing by David Dolan and Muralikumar Anantharaman)
Operating profit is the amount of money a company makes from its core business operations, excluding any income derived from non-operational activities like investments or sales of assets.
A sales decline refers to a decrease in the revenue generated from selling goods or services over a specific period, indicating potential issues in market demand or competition.
Analyst estimates are projections made by financial analysts regarding a company's future earnings, revenue, or other financial metrics, based on their research and analysis.
The shift towards electric vehicles is changing consumer preferences and market dynamics, leading traditional automakers to adapt their strategies to remain competitive against new entrants.
Explore more articles in the Business category
