Honda projects 70 % drop in FY 2025 net profit

Honda Motor Co. said Tuesday that its group net profit in the current fiscal year through next March is forecast to plunge 70.1 % from the previous year to 250 billion yen.

The major Japanese automaker expects its fiscal 2025 operating profit to be dragged down by 650 billion yen due to the effects of the high tariff policy of the administration of US President Donald Trump. It also views the appreciation of the yen as a damper on its earnings.

The company projects that the impact of the US tariffs could be reduced by 200 billion yen through a shift in production of some vehicle models to the United States and cost cuts. It will also consider raising its vehicle prices and boosting production capacity in the United States.Honda President Toshihiro Mibe told an online press conference that the firm will "carefully consider" a possible partial production shift as the step is expected to have "a major impact on employment and supply chains."

Honda has decided to postpone by about two years its plan to start operating a new electric vehicle factory in Canada because of a slowdown in EV demand. It previously planned to launch the factory in 2028.The continuation of USMCA, a free trade agreement among the United States, Mexico and Canada, is a prerequisite for going ahead with the new factory plan, Mibe said, adding that the plan "would need to be reconsidered if conditions change" as a result of trade negotiations.

In fiscal 2024, which ended in March this year, Honda's consolidated net profit shrank 24.5 % from the preceding year to 835.8 billion yen. Its sales inched up 6.2 % to 21,688.7 billion yen, while its operating profit retreated 12.2 % to 1,213.4 billion yen.

Although Honda's motorcycle business was robust, its automobile operations saw profits squeezed by growth in payments of sales incentives in the increasingly competitive North American market.

[Copyright The Jiji Press, Ltd.]

(2025/05/13-00:00)