Honda Motor Co.'s profit jumped 34% in July-September from a year earlier as a weak yen helped boost the Japanese automaker’s strong overseas earnings thanks to healthy demand, especially in the U.S.
Tokyo-based Honda’s profit rose to 254 billion yen ($1.7 billion) from 189 billion yen. Quarterly sales gained 17% to 4.9 trillion yen ($32 billion).
Production in North America continued to recover from the crunch caused by a shortage of computer chips and other supplies, contributing to a recovery in profitability, Honda Senior Executive Officer Shinji Aoyama told reporters.
Disruptions due to restrictions on business activity related to the COVID-19 pandemic had caused production delays for automakers around the world, but are gradually clearing up.
Aoyama said slowing economic growth in China and Vietnam hurt Honda’s motorcycle sales.
Surging demand for electric vehicles in China also hurt sales for Honda, which has fallen behind in the global shift toward battery electric vehicles, Aoyama said. He said Honda will begin offering BEVs from next year.
The dramatic shift in the auto industry toward BEVS has made winners out of U.S. automaker Tesla and BYD of China, while catching Japanese manufacturers such as Honda and Toyota Motor Corp. off guard with their hybrids and regular gasoline engines.
Honda, which makes the Fit subcompact and Gold Wing motorcycle, is projecting a 930 billion yen ($6 billion) profit for the fiscal year ending in March 2024, up from an earlier forecast of 800 billion yen ($5.3 billion) profit. That's better than the 651 billion yen earned in the previous fiscal year.
A weak yen is a boon for Japanese exporters because it boosts the value of their overseas earnings when they are converted into yen. Honda said it was calculating the U.S. dollar at about 140 yen for the latest quarter. The dollar has been trading at about 150 yen lately.
Aoyama said the latest profit surge is mostly a result of sales results, although a favorable currency added 26 billion yen ($172 million) in fiscal half operating profit, compared to the previous year. Cost cuts also helped.
In the first six months of the fiscal year, Honda sold more than 1.9 million vehicles around the world, up from nearly 1.8 million vehicles last year, with sales growing in Japan and North America. They fell in Europe and the Asian region excluding Japan. In the same period, Honda sold 9.26 million motorcycles worldwide, up from 9.2 million.
Honda shares rose 2.9% on the Tokyo Stock Exchange.
