Honda raises FY2027 profit outlook despite EV restructuring costs and China weakness

Honda Motor has increased its profit outlook for the year, despite reporting a sharp drop in second-quarter earnings. The company cited stronger motorcycle sales and rising demand for hybrid vehicles in North America as key drivers in its revised financial projections. In the three months to September 30, net profit attributable fell by 42.8% to ¥65.8 billion, while operating profit declined by 39% to ¥118 billion, failing to meet analysts' median estimate of ¥250 billion.

However, for the six months ending September 30, net profit attributable rose by 65.7% to ¥516.8 billion, though it still lagged behind the analysts' estimate of ¥643.2 billion. Revenue grew by 13.2% to ¥12.04 trillion, and operating profit increased by 48.1% to ¥648.7 billion. During the second quarter, Honda incurred ¥484.8 billion in restructuring costs related to its electric-vehicle business.

Excluding these charges, first-half adjusted operating profit rose by 71.3% to ¥1.13 trillion. Motorcycle sales played a significant role in supporting the company's performance, with volumes increasing 10.6% to a record 11.9 million units, boosted by growth in India and Brazil. Automotive sales, however, declined by 6.6% to 1.57 million vehicles, driven by weaker demand in China.

Higher sales of compact cars and hybrids in North America helped offset this decline. Honda raised its full-year operating profit forecast by 20% to ¥780 billion, up from ¥650 billion, and increased its net profit forecast by 25% to ¥500 billion, up from ¥400 billion. The company also lifted its revenue outlook to ¥24.4 trillion, from ¥24.15 trillion, citing stronger motorcycle sales, higher North American vehicle volumes, and favorable currency movements.

The firm retained its annual dividend forecast at ¥70 per share. Additionally, Honda raised its motorcycle sales outlook to 23.3 million units, up from 22.8 million, while reducing its automobile sales forecast to 3.16 million, down from 3.39 million.