Honda is finally seeing brighter days after months of tough headlines. The Japanese carmaker has raised its full-year profit forecast by 30% after posting its first profit growth in six quarters. A weaker Japanese yen, strong motorcycle sales, and growing demand for hybrid vehicles in the United States helped drive the impressive result.
Honda now expects an operating profit of ¥650 billion ($4.1 billion) for the financial year ending March 2027. That is a huge jump from its earlier forecast of ¥500 billion. The company also increased its revenue outlook to ¥24.15 trillion from ¥23.2 trillion.
The latest numbers surprised many industry experts. Honda’s operating profit more than doubled to ¥530.8 billion between April and June. That is far above analysts’ expectations. The company also changed its exchange rate forecast. It now expects the yen to trade at 155 per US dollar instead of 145.
This weaker yen made Honda’s overseas earnings more valuable. Although vehicle sales dropped in some markets, the currency boost helped reduce the impact of rising material costs linked to the Iran war.
However, Honda is not completely out of trouble. Earlier this year, the company reported its first annual loss in almost 70 years. The loss came after spending more than $9 billion to restructure its electric vehicle business.
During the company’s annual shareholders’ meeting in June, CEO Toshihiro Mibe apologised for the disappointing performance. Despite that setback, shareholders still supported his return to the board. Meanwhile, Honda revealed that global vehicle sales fell four percent to 838,000 units in the first quarter.
Even with those challenges, the US market remains Honda’s biggest strength. Nearly half of the company’s vehicle sales came from the United States during the quarter. Sales also improved in Japan. On the other hand, China remained a major concern after sales crashed by almost 50 percent.
Even so, Honda believes better demand, a weaker yen, and steady hybrid sales will keep the company on track for a stronger financial year.
