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HEADWINDS HIT HONDA

Half-yearly results spanning April to September for Honda’s motorcycle business were a tale of impressive recovery. But pressures from pandemic resurgence in Asian markets, abetted by microchip shortages and rising input prices for steel and other raw materials, progressively took the edge off its advance. BDN financial editor Roger Willis reports.

Global revenue from bikes flaunted a 33.4% boost to £6.675bn. Operating profit rocketed upwards by 86.1% to £966m. Operating margin grew to 14.5% from 10.4%. Worldwide wholesale shipment volume of Honda-branded machines was 29.3% higher at 8.173 million.

Within that, more lucrative developed markets made the biggest gains. North American volume was 51.8% up to 214,000 and Europe put on 48.4% to 184,000. Japanese sales were somewhat tempered, rising by 15.6% to 126,000. 

In the emerging world, Asia added 25.7% to 6.915 million. Other regions, predominantly Latin America, did best, 64.6% higher at 734,000. Brazil, where Honda has a major bike manufacturing hub at Manaus, stood out — 67.9% up to 506,000.

However, problems were evident in the July-September quarter. Versus Q1, motorcycle revenue fell slightly by 2.5% to £3.303bn in Q2. But on a similar basis, the Q2 operating profit contribution sank by a firmer 16.3% to £440m. According to Honda, Covid resurgence in some key Asian countries was the primary culprit, despite strong demand elsewhere. 

Although, for the fiscal year to date, Indonesia’s volume was 74.5% up to 1.906 million bikes and India has recovered by 13.5% to 1.698 million, Vietnam and Thailand were struggling against renewed mass infection rates. The former is now 8.2% down to 916,000 YTD. And only 326,000 of them were delivered to dealers, a 44% shortfall, in Q2. While the latter was still ahead by 11.6% at 485,000 YTD, its Q2 deliveries had plunged by 50.6% to 148,000. Indian figures also turned negative by 2.6% in Q2.

In response to these concerns and chronic semiconductor shortages inhibiting its ability to satisfy demand, Honda Group has cut its full-year profit forecast for a second time.

Yen-sterling currency translation at forex rates on 9 November    

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