Honda Motor (HMC +0.71%) said that its operating profit for the fiscal year ended March 31 was 634 billion yen ($5.9 billion), down 13% from the prior fiscal year, as the effects of the coronavirus pandemic hammered its results for the January-March quarter.
For the quarter that ended on March 31, Honda reported an operating loss of 5.2 billion yen ($48.5 million), down from a profit of 42.3 billion yen in the year-ago period on a 28% decline in automobile sales.
Honda's full-fiscal-year result was its lowest in four years.
Image source: Honda.
The raw numbers
Here are the key quarterly and full-fiscal-year numbers from Honda's report. Note that Honda, like many Japanese companies, uses a fiscal year that begins on April 1. The quarter that ended on March 31, 2020, was the fourth quarter of Honda's 2020 fiscal year.
| Metric | Q4 FY2020 | Change vs. Q4 FY2019 | FY2020 | Change vs. FY2019 |
|---|---|---|---|---|
| Revenue | 3.458 trillion yen | (14.6%) | 14.931 trillion yen | (6%) |
| Automobiles sold | 981,000 | (28.1%) | 4,790,000 | (10%) |
| Operating profit (loss) | (5.6 billion yen) | 47.9 billion yen lower | 633.6 billion yen | (12.8%) |
| Operating profit margin (negative) | (0.2%) | (1.2 pp) | 4.2% | (0.4 pp) |
| Net profit (loss) | (29.5 billion yen) | 16.5 billion yen lower | 455.7 billion yen | (25.3%) |
| Yen per U.S. dollar, average during period | 109 | 1 fewer yen per dollar | 109 | 2 fewer yen per dollar |
Data source: Honda Motor Company. Automobile sales are rounded to the nearest thousand. Pp = percentage points.
What happened at Honda in the quarter
Honda reports operating results for four business units: automobiles, motorcycles, financial services, and an everything-else unit called "life creation and other businesses," which includes power products, aircraft, and Honda's emerging mobility-related businesses.
- Automobiles: Operating loss widened to 75.6 billion yen from 53 billion yen in the year-ago quarter, on a 28% decline in sales amid the coronavirus pandemic. Automobiles' operating margin was negative 3.2%, versus negative 1.8% a year ago.
- Motorcycles: Operating profit rose 41% from a year ago, to 63.4 billion yen. Operating margin rose to 13.4% from 9.2% a year ago, as cost cuts drove profitability improvements despite a 5.6% decline in sales.
- Financial services: Operating profit fell to 22.9 billion yen from 59.1 billion yen a year ago, on increases in provisions for credit losses. Operating margin fell to 3.7% from 9.5% a year ago.
- Life creation and other businesses: Operating loss widened to 16.3 billion yen from 8.7 billion yen a year ago, primarily due to lower sales of power products in the U.S. and Thailand. Operating margin fell to negative 16.8% from negative 8.5% in the year-ago period.
Looking ahead: No guidance for now
Honda said that it will wait to provide auto investors with earnings guidance for the upcoming fiscal year until it has a clearer read on global vehicle demand amid the pandemic.
"It is difficult to reasonably calculate the impact of COVID-19," chief operating officer Seiji Kuraishi said during the company's earnings call. "We will release a forecast when we can."
