Honda Raises Operating Profit Forecast by 21% on Weaker Yenby and
Yen has weakened about 7% since Trump elected U.S. president
Trump has critized Japan for being a closed autos market
Honda Motor Co. raised its forecast for full-year operating profit for a second time this fiscal year, citing the impact of favorable foreign exchange rates after the yen weakened with the election of U.S. President Donald Trump.
Operating profit will probably rise to 785 billion yen ($6.9 billion) in the fiscal year ending in March, up from 650 billion yen it forecast in October, the Tokyo-based automaker said in a statement. That compares with the 770.4 billion yen average of 19 analysts’ estimates compiled by Bloomberg.
The yen has weakened about 7 percent against the U.S. dollar after Trump swept to victory in the U.S. presidential elections. Trump this week lashed out at China and Japan for taking advantage by devaluing their currencies, an accusation Japan has denied. A reduction in selling expenses also contributed to the lifting of the full-year profit forecast, Honda said.
The automaker based the full-year earnings forecasts on 107 yen per dollar, compared with 103 yen per dollar for its previous forecast made in October. The yen traded at 113 yen against the dollar Friday.
Honda sold a record number of vehicles in the U.S. and China last year, helped by demand for its Vezel crossover and the new Civic sedan. The Tokyo-based carmaker is projecting an increase in global sales in the fiscal year starting April on demand in the two markets, according to a person familiar with the plans.
The automaker posted third-quarter net income of 168.8 billion yen, beating the analysts’ estimates for 118.4 billion yen.
Japanese Prime Minister Shinzo Abe is set to meet Trump next week in Washington after pushing back on the latter’s characterization of the U.S.-Japan car trade as “unfair.”
Honda Executive Vice President Seiji Kuraishi said Friday he hopes the meeting will “remove misunderstanding.” Honda makes about 70 percent of the vehicles sold in the U.S. in domestic plants, the highest localization ratio after Ford Motor Co., he said.
Honda will respond to any U.S. policy changes under Trump, said Kuraishi, without elaborating. The carmaker will probably maintain U.S. sales volume this year, even as industrywide sales may slide from last year’s record, he said.
Honda’s shares rose 0.2 percent to 3,423 yen at the close of trading in Tokyo on Friday, before the earnings results.