Automotive

Published on August 5th, 2021 | by Subhash Nair

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Honda Motor Company’s Global Profits Soar Beyond Expectation

Honda Global profits are a lot higher than previously forecasted for 2021.

Honda Malaysia may be suffering, but globally, Honda Motor Company is soaring! Their first quarter of the fiscal year saw their operating profit rise substantially, from 243.2 billion yen to 356.9 billion yen compared to the same period last year.

As a result, the automaker is revising its forecast for sales revenue and profit for the current fiscal year (1 April 2021- 31 March 2022). Toyota also saw unexpectedly high profit, but refused to revise their forecast.

Honda Motor now forecasts that operating profit for this fiscal year will be 780 billion yen (up by 120 billion). Honda also plans to acquire its own shares to improve the efficiency of its capital structure and to implement a flexible capital strategy.

Here’s the Official report

I. Consolidated financial summary and business-by-business results for the fiscal first quarter (3 months) ended June 30, 2021

Sales revenue: 3,583.8 billion yen (a year-on-year increase of 68.7%)
The increase was due to higher sales revenue from all businesses.

Operating profit: 243.2 billion yen (a year-on-year increase of 356.9 billion yen)
The increase was due primarily to higher profit related to changes in sales volume and model mix and favorable currency effects.

Profit for the period attributable to owners of the parent: 222.5 billion yen, a year-on-year increase of 303.3 billion yen.
The increase was due also to an increase in the share of profit of investments accounted for using the equity method.

1) Motorcycle business 

Sales revenue: 518.2 billion yen (a year-on-year increase of 243.9 billion yen)
The increase was due to the recovery of sales mainly in Asia.  

Operating profit: 80.6 billion yen (a year-on-year increase of 69.4 billion yen).
The increase was due primarily to higher profit related to changes in sales volume and model mix. 

2) Automobile business

Sales revenue: 2,252.4 billion yen (a year-on-year increase of 996.7 billion yen)
The increase was due primarily to the recovery of sales mainly in North America. 

Operating profit: 70.6 billion yen (a year-on-year increase of 266.5 billion yen)

The increase was due primarily to higher profit related to changes in sales volume and model mix.

Combined with operating profit from financial services business related to automobile sales, the estimated operating profit for automobile business is 159.2 billion yen.

3) Financial Services business

Operating profit: 92.2 billion yen (a year-on-year increase of 20.6 billion yen)
The increase was due primarily to higher prices for used vehicles. 

4) Life Creation (power products) and Other businesses

Operating loss: 0.3 billion yen (a year-on-year improvement of 0.1 billion yen)
Aircraft/aircraft engine business, which is included in “Other businesses,” accounted for an operating loss of 8.3 billion yen. 

II. Forecasts for the Fiscal Year Ending March 31, 2022(FY22)

• Honda is forecasting a year-on-year increase in both sales revenue and profit for the current fiscal year due primarily to an increase in unit sales and the positive effect of the company’s ongoing initiatives to solidify its existing businesses. 
• The previously announced forecast for operating profit for this fiscal year was revised upward by 120.0 billion yen to 780.0 billion yen. This is based on the forecast that further control of selling, general and administrative (SG&A) expenses and cost reduction efforts will offset the impact of unfavorable factors such as the semiconductor supply shortage and the resurgence of the COVID-19 pandemic mainly in Asia.  
• The previously announced forecast for profit for the year attributable to owners of the parent was revised upward by 80.0 billion yen to 670.0 billion yen, due primarily to an increase in operating profit. 

III. Acquisition of the Companyʼs Own Shares 

For the purpose of improving efficiency of its capital structure and implementing a flexible capital strategy, among others, Honda resolved the following details regarding the acquisition of its own shares at the Board of Directors meeting held today.

・Total number of shares to be acquired (maximum): 18 million shares (common shares) 
・Total amount of acquisition (maximum): 70 billion yen
・Period of acquisition: From August 5, 2021 through December 31, 2021

Consolidated Financial Results for the Fiscal 1st Quarter ended June 30, 2021

Forecasts for the Fiscal Year Ending March 31, 2022 (FY22)

About the Author

Subhash Nair Written work on dsf.my. @subhashtag on instagram. Autophiles Malaysia on Youtube.

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