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01/11 11:27
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings report indicates significant challenges: a decline in net profit and operating profit due to various factors, including sales decline in China, increased R&D expenses, and foreign exchange impacts. Despite a dividend increase and share buyback, the postponement of electrification strategies and unclear management responses in the Q&A add to the negative sentiment. The market may react negatively to these uncertainties and the lack of strong positive catalysts, leading to a potential stock price decline in the short term.
Operating Profit JPY 1.2134 trillion, down JPY 168.4 billion year-over-year due to a one-time expense from a change in accounting method for automobile product warranty provisions.
Operating Profit (excluding one-time expense) JPY 1.341 trillion, down JPY 40.8 billion year-over-year, impacted by a JPY 233.6 billion decline in profit due to sales impact, JPY 525 billion increase due to price and cost impact, and declines from miscellaneous expenses, R&D expenses, and Forex.
Net Profit JPY 835.8 billion, down JPY 271.3 billion year-over-year, primarily due to the decline in sales volume in China.
Motorcycle Operating Profit JPY 663.4 billion, up JPY 107.2 billion year-over-year, driven by increased sales volume and improved product value.
Automobile Operating Profit JPY 243.8 billion, down JPY 189.1 billion year-over-year, due to a decline in sales volume and increased incentives for EV sales.
Free Cash Flow JPY 665.8 billion for operating companies, excluding financial services.
Net Cash Balance JPY 3.2157 trillion at the end of the period.
Operating Cash Flow (post R&D adjustment) JPY 2.8066 trillion, remaining high compared to the previous fiscal year.
Dividend per Share JPY 70, up JPY 2 from JPY 68 per share year-over-year, reflecting a change in dividend policy to improve capital efficiency.
Share Buyback JPY 1.1 trillion authorized, with JPY 589.5 billion worth of shares acquired as of April 30, 2025.
Hybrid EV Sales Expansion: Hybrid EV sales expanded, particularly in North America, despite a decline in overall automobile unit sales.
Next Generation HEV Models: Plans to introduce next generation HEV models in the latter half of the decade to enhance performance and cost efficiency.
Motorcycle Sales Volume: Plans to sell 21.3 million motorcycle units in the upcoming fiscal year, an increase year-on-year.
Automobile Sales Volume Outlook: Projected automobile sales volume of 3.62 million units for FYE March 2026, reflecting a decrease mainly in Asia.
Operating Profit: Operating profit for FYE March 2025 was JPY 1.2134 trillion, with a forecast of JPY 500 billion for FYE March 2026.
Cash Flow: Operating cash flow after R&D adjustments remained high at JPY 2.800 trillion.
Dividend Policy Change: Changed dividend policy to DOE, increasing annual dividend from JPY 68 to JPY 70 per share.
Share Buyback: Completed share buyback of JPY 1.1 trillion, with JPY 589.5 billion worth of shares acquired as of April 30, 2025.
Tariff Policies: The impact of tariff policies is significant and combined with frequent revisions, making it difficult to formulate an outlook for future profits.
Sales Decline in Key Markets: The automobile business experienced a decline in unit sales, particularly in China and ASEAN, which negatively affected overall profitability.
Increased EV Incentives: Increased incentives for electric vehicles in North America have impacted the automobile business's profitability.
Foreign Exchange Impact: The forecast anticipates a decline in profit due to foreign exchange rates, particularly with emerging market currencies depreciating against the U.S. dollar.
Electrification Strategy Delays: The growth of the electric vehicle market has slowed more than expected, leading to a postponement of large-scale investments in electrification strategies.
R&D Expenses: Increased research and development expenses are expected to decrease profit margins, as more resources are allocated to electric vehicle development.
Motorcycle Business Initiatives: Plans to sell 21.3 million units, an increase year-on-year, maintaining world number one market share.
Automobile Business Initiatives: Hybrid EV sales will be boosted mainly in North America despite significant tariff impacts.
Electrification Strategy: Reviewing trade timing of comprehensive value change project in Canada, postponing large scale investments.
Shareholder Returns: Dividend policy change to DOE, increasing annual dividend from JPY 68 to JPY 70 per share.
Capital Optimization: Share repurchase of JPY 1.1 trillion to enhance capital efficiency.
Operating Profit Guidance: Minimum operating profit set at JPY 500 billion for FYE March 2026.
Net Profit Guidance: Net profit projected at JPY 250 billion for FYE March 2026.
Sales Volume Outlook: Motorcycle business expects 21.3 million units; automobile business expects 3.62 million units.
Operating Cash Flow: Operating cash flow post R&D adjustment expected to remain stable at JPY 2.8 trillion.
Capital Investments: Forecast for capital investments and R&D spending for FY '26 to be detailed in the slide.
Annual Dividend Increase: The annual dividend will increase from JPY 68 to JPY 70 per share.
Year-End Dividend: The year-end dividend for FYE March '25 is determined at JPY 34 per share.
Dividend Policy Change: Honda will switch from the conventional payout ratio to DOE (Dividend on Equity) to improve capital efficiency.
Expected Dividend for FYE March '26: Expected dividend is JPY 70 per share, up by JPY 2 from the previous year.
Share Buyback Program: A share buyback program of JPY 1.1 trillion was initiated, with approximately JPY 589.5 billion worth of shares acquired as of April 30, 2025.
The earnings call reflects a mixed outlook. Positive aspects include strong motorcycle business performance and a slight dividend increase. However, challenges such as operating losses in the automobile segment, significant EV-related losses, and declining sales in key markets like Asia and China temper the positive sentiment. The market's uncertainty regarding tariffs and unclear management responses further contribute to a neutral sentiment. Given these factors, the stock price is likely to remain stable within the next two weeks, resulting in a neutral prediction.
The earnings report indicates significant challenges: a decline in net profit and operating profit due to various factors, including sales decline in China, increased R&D expenses, and foreign exchange impacts. Despite a dividend increase and share buyback, the postponement of electrification strategies and unclear management responses in the Q&A add to the negative sentiment. The market may react negatively to these uncertainties and the lack of strong positive catalysts, leading to a potential stock price decline in the short term.
The earnings call presents a mixed picture. While there are positive aspects like increased motorcycle sales and share repurchase plans, there are significant concerns such as declining automobile sales, increased R&D costs, and currency impacts. The Q&A section reveals some uncertainties, particularly regarding the Chinese market and EV incentives. Despite optimistic guidance on future models and market strategies, the lack of clarity in management's responses tempers enthusiasm. Given these factors, the overall sentiment is neutral, with no strong catalysts to drive significant stock price movement in either direction.
The earnings call summary indicates several negative factors: profit decline from domestic affiliates, negative equity method profit, and reduced unit sales in China. Despite increased operating profit, the overall sentiment is negative due to high warranty costs, forex fluctuations, and unclear management responses. The Q&A section highlights concerns about EV incentives and collaboration with Nissan and Mitsubishi. The dividend and share buyback plans provide some positive sentiment, but the overall impact is likely negative due to significant financial challenges and uncertainties.
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