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RECORD YEAR FOR HONDA

Full-year results to 31 March 2019 for Honda’s motorcycle business reached all required targets in fairly spectacular fashion. BDN financial editor Roger Willis reports.

Honda-branded sales volume roared through yet another barrier, 3.5% up to a staggering total of 20.238 million bikes. Some 13.215 million of these were made by wholly-owned subsidiaries, the rest by joint-venture affiliates.

Asia accounted for most of the headline tally, rising by 2.8% to 18.224 million. Within that, four countries — India, Indonesia, Thailand and Vietnam — were together responsible for 14.502 million, a 3.5% increase. Other emerging-market regions, led by Latin America and West Africa, put on 12.2% to 1.257 million.

In the more lucrative developed world, Europe stood out with a 6.4% volume improvement to 249,000. Japan’s domestic market grew even faster, adding 24% to 207,000. North America fell by 3.8% to 301,000.

Records were also broken in monetary terms. Revenue from motorcycles was 3% higher at £14.665bn, delivering a 9.2% rise in associated operating profit to £2.036bn. Operating margin was raised to 13.9% from 13.1%.

As BDN recently anticipated, the performance of Honda’s car operations proved to be lamentable by comparison, with operating profit plunging by 43.9% to £1.464bn — despite a vastly larger turnover of £78.819bn.

However, Honda is being extremely cautious about immediate prospects for its motorcycle division. The results statement noted that previously rampant sales in India’s enormous market had begun to slow, falling by 4.4% to 5.52 million, owing to an onerous revision of the Indian mandatory vehicle liability insurance requirement. And this is likely to have an impact going forward into the new fiscal year.

The introduction of stricter environmental regulations in most major Asian countries is also expected to cause a sales decrease until compliant models can be launched. And various problems are visible elsewhere.

In response, Honda is forecasting very marginal worldwide volume growth of 0.06% to 20.25 million units over the next 12 months. Asia could be 0.2% lower at 18.18 million. Europe and Japan respectively are predicted to lose 3.6% to 240,000 and 3.4% to 200,000. Countering these retreats, the company believes North America is due for a 6.3% recovery and Latin America will bounce back too.    

 
 

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