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HONDA: SOME DIFFICULT TIMES

Being the biggest also means being hit the hardest when trading headwinds increase. So Honda’s fiscal year in its motorcycle business isn’t meeting aspirations. BDN financial editor Roger Willis reports.

On the face of it, half-yearly results to the end of September look sound. Global Honda motorcycle revenue rose by 11.3% to £8.462bn. Associated operating profit was 12.7% up to £1.363bn. Operating margin improved from 15.6% to 16.1%. However, worldwide unit sales only grew by 0.7% to 9.266 million. The results presentation glossed this over by saying sales had “exceeded the same period last year, mainly due to firm demand in Indonesia and Europe”.

Data covering six-month performance in Honda’s five largest markets painted a more complex picture. Indeed, Indonesian sales from its Astra Honda joint venture enterprise with British-owned conglomerate Jardine Matheson surged by 33.1% to 2.307 million. Thailand added 6.9% to 751,000 and output from Honda’s wholly-owned Brazilian hub at Manaus was 5.2% up to to 597,000. But Indian volume from its huge HMSI subsidiary’s plants declined by 4.5% to 2.206 million and Vietnam was 13% down to 999,000.

Overall, Asian half-yearly unit sales had fallen by 0.3% to 7.874 million and other emerging regions were 4.6% lower at 786,000. The developed world was much brighter. Europe stacked on a muscular 59% to 229,000. North America was 15.9% up to 255,000. Japanese domestic sales increased by 7% to 122,000.

Numbers crunched in the three months of Q2 were considerably less inviting. Although the quarterly revenue portion was 10.7% up to £4.389bn, that was where good news stopped. Operating profit had shrunk by 13.5% to £509.9m and operating margin had dived from 17.2% to 13.5%.

Global Q2 unit sales had fallen by 5.3% to 6.006 million. Among the key five largest markets, Indonesia and Brazil were still safely ahead, respectively 13.6% up to 1.192 million and 11.5% up to 326,000. But India was 4.6% down to 1.254 million, Vietnam 20% in arrears at 493,000 and Thailand turned negative, losing 3.4% on 356,000. The presentation commentary stressed decreases in Vietnam and China, due to economic slowdowns, which would carry through into the full-year outlook.

That annual forecast has now been amended downwards. An estimate of total unit sales in the fiscal year to 31 March 2024, reaching 19.18 million, has been reduced to 18.8 million, only 0.2% higher than the actual 12-month result in Honda’s previous fiscal year. The primary culprit is Asia, where an original target has been slashed by 2.6% to 15.945 million — 430,000 fewer bikes.

How that will translate into impact on revenue and profit is unclear, particularly as main developed-world forecasts remain robust. The European estimate of unit sales has been uprated by 6.9% to 465,000. North America is now jacked 6.4% higher to 500,000. Japan’s prospects have been cut by 5.6% to 255,000. Other emerging regions beyond Asia are expected to flatline on 1.635 million.

Yen-Sterling currency translation at forex rates applicable on 13 November 

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