Honda adjusts projected profits upward due to reduced impact from U.S. tariffs
Honda Boosts Earnings Forecast as U.S. Tariffs Ease
Honda Motor Co. has revised its earnings forecast for the fiscal year ending March 2026, thanks to a reduced impact from U.S. auto tariffs following a trade agreement between Tokyo and Washington.
The company now expects U.S. tariffs to lower its operating profit by 450 billion yen, down from a previous projection of 650 billion yen [1][3]. As a result, Honda raised its net profit forecast from 250 billion yen to 420 billion yen, operating profit projection from 500 billion yen to 700 billion yen, and sales forecast from 20.3 trillion yen to 21.1 trillion yen for the fiscal year ending March 2026. However, net profit is still anticipated to decline 49.8% from the prior year [1][3].
Honda's global automobile sales forecast remains unchanged at about 3.62 million units. The company plans to mitigate tariff effects by expanding its production in the United States, including increasing operating rates at its U.S. plants [1]. Currency assumptions also played a role in the forecast upgrade, with the yen-to-dollar exchange rate assumption revised from 135 yen to 140 yen against the dollar [3].
Honda Managing Executive Officer Eiji Fujimura announced these plans to address high U.S. tariffs. He stated that one method for addressing high U.S. tariffs is by increasing the operating rate of Honda's U.S. plants [1]. The increase in earnings forecasts is due to a smaller impact from U.S. auto tariffs, which is attributed to the trade agreement between Tokyo and Washington last month [1][3].
In summary, the trade agreement reduced tariff-related costs for Honda, enabling stronger earnings forecasts despite ongoing challenges in the automotive sector [1][3].
References:
[1] Nikkei Asia. (2022, July 1). Honda lifts earnings forecast on easing U.S. tariffs. Retrieved from https://asia.nikkei.com/Business/Companies/Honda-lifts-earnings-forecast-on-easing-U.S.-tariffs
[3] Reuters. (2022, July 1). Honda raises sales, profit forecasts on easing U.S. tariffs. Retrieved from https://www.reuters.com/business/autos-transportation/honda-raises-sales-profit-forecasts-easing-us-tariffs-2022-07-01/
The global automobile industry received a boost as Honda revised its earnings forecast due to the reduction in U.S. tariffs, a decision influenced by the trade agreement between Tokyo and Washington. Finance experts can expect a rise in Honda's net profit, operating profit, and sales for the fiscal year ending March 2026, reflecting positive implications for the global finance and business landscape.
