Honda Sees Profit Slide Despite Revenue Growth

Honda's recent fiscal report shows a notable decline in profit and earnings per share, raising concerns for investors. While sales revenue increased, projected operating profit for 2026 suggests ongoing challenges.

Date: 13-05-2025

AI Rating: 5

Profit and Earnings Per Share Impact
Honda Motor Co.'s reported profit attributable to owners decreased by 24.5%, which may raise red flags for investors regarding the company's profitability and operational efficiency. This significant decline in earnings per share from 225.88 yen to 178.93 yen indicates a troubling trend that potential investors should carefully consider.

Operating Profit Concerns
The drop in operating profit by 12.2% to 1.2 trillion yen suggests operational challenges, despite adjusting for warranty estimation models which shows a slight improvement to 1.3 trillion yen. This discrepancy raises questions about the sustainability of operating performance moving forward.

Revenue Growth Versus Profit Decline
On a more positive note, sales revenue grew by 6.2% to 21.7 trillion yen, which illustrates Honda's ability to increase sales. However, the projected revenue for the next fiscal year at 20.3 trillion yen comes as a concern, indicating a possible reversal or slow down in growth momentum amidst increasing competition and market pressures. This projection, combined with a sharp reduction in expected earnings per share to 62.84 yen and an anticipated operating profit of only 500 billion yen, paints a cautious outlook for investor sentiment.

Investment Rating
Overall, the financial results reveal a complex situation where Honda's revenue growth does not align with its profit decline. Investors may exercise caution given the disparity between rising revenue and falling profits. The outlook for the next fiscal year is concerning, indicating that Honda might face significant hurdles to achieve its previous financial performance.

Stocks: HMC