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Honda reports 16 percent lower profit before tax as US sales drop

Honda's factory in Japan
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Date: 2nd August 2019

Honda Motor Corp’s operating profit for the first quarter of the year declined by 16 percent, the company reported on Friday. This comes as yen gets stronger caused earnings overseas to reduce and sales in the United States dropped.

The Japanese automaker’s operating profit for the quarter ending June was 252.4 billion yen, which was higher than the average estimate by analysts of 246.9 billion yen. However, it was lower than the operating income of the company last year in the same period which was 299.3 billion yen.

Sales volume amounted to 407,000 units in the first quarter compared with the 425,000 units last year during the same period.

After reporting the lower sales in the first quarter, the automaker reduced its forecasted global sales volume to 5.11 million units from 5.16 million units for the year ending March 2020. The company posted sales of 5.323 million units last year which was one of the highest figures.

Honda said in a statement that it will stick to its predicted 6 percent rise in operating income for the current year. It has forecasted operating income for the fiscal year to be 770 billion yen.

The Japanese automaker said in a statement back in May that it is planning to cut costs by 10 percent by the year 2025. Furthermore, it is aiming to invest more funds into research and development through the savings from cost-cutting.

The company has also joined hands with Toyota Motor Corp and SoftBank Group Corp for its mobility project. Besides that, it is also putting funds into General Motors Co’s self-driving vehicle division. The company, like many others in the auto industry, is trying to adjust to the highly anticipated electric and autonomous vehicles of the future.

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