Honda forecasts 2.8% increase in full-year profit

Honda Motor Co., Japan's second-largest automaker, has projected a 2.8 per cent uptick in operating profit for the current financial year. The optimistic outlook follows a fourth-quarter performance that surpassed analysts' expectations, fuelled by robust sales growth in the United States which offset a decline in the Chinese market.

For the full financial year, Honda expects its operating profit to climb to 1.42 trillion yen ($9.13 billion). This forecast exceeds the average profit estimate of 1.39 trillion yen based on a poll of 22 analysts conducted by LSEG.

In the three months ending March 31, the company's operating profit surged more than six-fold from the previous year to reach 305.6 billion yen, significantly surpassing the average expectation of 248.3 billion yen from nine analysts.

Key to this growth was a 17 per cent increase in sales in the United States, Honda's largest overseas market, with approximately 378,000 vehicles sold during the period. However, the company experienced a setback in China, where sales declined by over 6 per cent to about 207,000 vehicles from January to March.

In China, which stands as the world's largest auto market, Honda faces stiff competition from local rivals who have swiftly captured market share with competitively priced, technology-laden electric vehicles (EVs). Acknowledging this challenge, Honda, although a relative latecomer to the EV scene, disclosed plans last month to establish an EV production hub in Ontario, Canada. Additionally, the company aims to introduce six EV models under the brand "Ye" in China by 2027.

(With Reuters inputs)