Honda reported a steep decline in its fourth-quarter operating profit, missing analyst expectations as the Japanese automaker braces for the continued impact of U.S. tariffs. Operating profit for the quarter fell 76% to 73.5 billion yen, well below the 275.52 billion yen forecast. Revenue, however, matched expectations at 5.36 trillion yen ($47.26 billion). The company’s fiscal year ended on March 31.
For the full financial year, Honda recorded revenue of 21.69 trillion yen, slightly above estimates and reflecting a 6.2% increase year-over-year. Despite the revenue growth, operating profit for the year declined by 12.2% to 1.21 trillion yen, missing the consensus estimate of 1.41 trillion yen. Net profit dropped sharply, falling 24.5% to 835.84 billion yen.
The downturn comes amid escalating trade tensions with the United States, where a 25% tariff has been imposed on foreign automobile imports. In response to these tariffs, Honda has adjusted its production strategy. In March, the automaker announced plans to manufacture its next-generation Civic hybrid in Indiana instead of Mexico, aiming to sidestep potential tariff-related costs on one of its best-selling models.
Honda, which ranked fourth in U.S. auto sales in 2024 according to Carpro, now faces a challenging financial outlook. In its latest earnings release, the company downgraded nearly all financial targets for the current fiscal year ending March 2026. It now projects full-year operating profit to fall nearly 59% to 500 billion yen, and net profit to plunge 70.1% to 250 billion yen. Revenue is expected to decrease by 6.4% to 20.3 trillion yen.
The automaker acknowledged that fluctuating global tariff policies are creating significant uncertainty, complicating efforts to provide accurate forecasts. Honda stated that it will continue to evaluate the impact of these trade measures and implement recovery strategies while seeking to improve its operating performance.
In terms of shareholder returns, Honda has revised its dividend policy. It will now base dividends on equity rather than payout ratio, with a forecasted increase of 2 yen per share, bringing the annual dividend to 70 yen per share.
Earlier this year, in February, Honda and Nissan ended discussions on a potential $60 billion merger that would have positioned them as the world’s third-largest carmaker by sales volume.
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