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Honda Holds Off on Guidance as Full-Year Earnings Slip 13%

By John Rosevear – May 12, 2020 at 7:04PM

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Honda will wait until it has a better read on new-car demand amid the COVID-19 pandemic.

Honda Motor (HMC -0.33%) 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.

A Honda sign on the outside of a factory

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."

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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