Honda profits hit four-year low

Honda plans $915 million buyback despite slow sales

                                

Honda plans to buy back $915 million in shares despite annual profits hitting a four-year low.

The company’s revenue for the three months to September 30 decreased by 2.9 per cent to 3.7bn yen (£26bn, $33bn, €30bn). Profit was down by 6.7 per cent, to 196.5bn yen from the same period last year.

Honda blamed the poor performance on a strong yen, slow sales and high taxes.

As a result the automaker predicts an operating profit of 690bn yen for the fiscal year to March 2020, the lowest since 2016, from 770bn yen previously.

The forecast is based on average exchange rates for the yen being 107 against the US dollar, instead of the previously expected 110. According to Honda this means the cost of exports will go up, while the value of overseas earnings will go down.

In addition to an unfavourable exchange rate, sales have declined in the US, Japan, Asia and Europe. They have been particularly slow in India, where motorcycle sales dropped almost 20 per cent over the six months to September.

“The Indian market is contracting at a very rapid rate,” said Seiji Kuraishi, Honda executive vice president. “We are struggling there.”

Honda said its decreased sales revenue was partially offset by increased sales in its financial services.

Despite the drop in profits, Honda said it will buy back up to 33 million shares worth around 100bn yen over the rest of the fiscal year.

Earlier this week, Honda’s Japanese rival Toyota reported a growth in sales and increase in quarterly net profit, despite a strong yen.

Nissan Motor is due to report its results on Tuesday.

FURTHER READING: Japan-US trade deal to boost Japan’s economy by 0.8 per cent

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image