Honda Expects Sharp Drop in Annual Operating Profit
(MENAFN) Japanese car manufacturer Honda Motor announced on Tuesday that it anticipates a substantial 58.8 percent decrease in operating income for the ongoing fiscal year.
The decline is largely attributed to the financial burden of tariff-related expenses, according to the company.
Honda now estimates its annual operating earnings will reach 500 billion yen (equivalent to USD3.38 billion) by the fiscal year ending March 31, 2026.
This marks a significant drop from the 1.21 trillion yen (USD8.17 billion) it earned in the prior financial year, the automaker revealed in an official statement.
The company attributed a 450 billion yen (USD3 billion) setback in its earnings projection to “tariff impact and recovery efforts for tariff impact”, underlining the heavy toll such trade measures are having on its business performance.
In the financial year that concluded in March, Honda recorded revenue of 21.69 trillion yen (USD146.63 billion), representing a 6.2 percent increase compared to the previous year.
However, its operating income experienced a 12.2 percent decline, landing at 1.21 trillion yen (USD8.18 billion).
Additionally, net earnings dropped by 24.5 percent, settling at 835.84 billion yen (USD5.65 billion).
This subdued outlook comes at a time when the global auto sector is under mounting strain due to the rise of Chinese electric vehicle manufacturers and increased tariffs linked to trade policies initiated during the administration of U.S. Leader Donald Trump.
The U.S. government has implemented a 25 percent duty on imported vehicles, injecting further unpredictability into the automotive market.
In a related development, Honda and fellow Japanese automaker Nissan terminated merger discussions earlier in the year.
The planned USD60 billion agreement would have established the third-largest automobile producer worldwide based on sales figures.
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