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.
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