Amid all these uncertainties too, Honda is forecasting for greater profits during this fiscal year.
Despite suffering a staggering loss of ¥113.7 billion (RM 4.4 billion) during the pandemic-riddled second quarter of last year, 12 month later however and Honda is resolutely back in the black again, with the automaker recently announcing that its global operating profits from April to June of 2021 stand at ¥243.2 billion (RM 9.4 billion).
Buoyed by strong sales demand for motorcycles and cars mainly in Asia and North America respectively, the Japanese auto conglomerate has saw its quarterly revenue rise by 67.8% year-on-year to ¥3.583 trillion (RM 138 billion) in the quarter ending on the 30th of June. The firm’s stellar financial figures were also bolstered by the higher prices of used vehicles, with even its aircraft division having made a smaller loss this time round too.
All this good news however might look to be short lived, as Honda has recently revised its car sales outlook down by 150,000 units to 4.85 million for the fiscal year ending in March 2022. This is mainly because the automaker is bracing for the ongoing semiconductor shortage that has caused production woes across the auto industry to be a bigger problem for them moving forward, with the Delta variant Covid-19 outbreak that has forced production stoppages in many of its plants just adding fuel to the fire.
Rather interestingly though, Honda has not decided to revise down its operating profit forecast for this fiscal year. Instead, the Japanese automaker is now forecasting for its full-year profits to go up by 18% from its previous forecast to ¥780 billion (RM 30 billion).
There is some reason to this madness of course, as Honda is targeting that further control of its selling, general and administrative (SG&A) expenses and cost reduction efforts will be sufficient to offset the impact of that aforementioned unfavourable factors affecting its core business. The automaker is also hoping that the current favourable exchange rates will continue working to be in its favour in the future.
In other news meanwhile, Honda has recently announced a share buyback plan in a bid to further improve the efficiency of its capital structure and to implement a flexible capital strategy. The auto conglomerate has set aside ¥70 billion (RM 2.7 billion) to purchase up to 18 million publicly-traded shares from between the 5th of August and 31st December.
PRESS RELEASE: Despite some unfavorable factors such as the semiconductor supply shortage and an increase in raw material costs, consolidated operating profit for the fiscal first quarter ended June 30, 2021 amounted to 243.2 billion yen, a year-on-year increase by 356.9 billion yen. This was due primarily to a positive effect of the company’s ongoing initiatives to solidify its existing businesses as well as an increase in unit sales compared to the same period last year which was heavily impacted by the COVID-19 pandemic.
Consolidated profit for the fiscal first quarter attributable to owners of the parent amounted to 222.5 billion yen, a year-on-year increase by 303.3 billion yen, due also to an increase in the share of profit of investments accounted for using the equity method.
Based on the forecast of a year-on-year increase in both sales revenue and profit for the current fiscal year (April 1, 2021 through March 31, 2022), the previously announced forecast for operating profit for this fiscal year was revised upward by 120.0 billion yen to 780.0 billion yen, and the previously announced forecast for profit for the fiscal year attributable to owners of the parent was revised upward by 80.0 billion yen to 670.0 billion yen.
Honda will acquire its own shares for the purpose, among others, of improving efficiency of its capital structure and implementing a flexible capital strategy.
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
