Honda raised its operating profit forecast for the full fiscal year (March 2017- March 2018) by 4% . Reasons for such an increase: the automaker anticipates a rise in sales in Asia, while maintaining its policy of cost reduction.
Honda now expects operating profit of 775 billion yen (about 5.64 billion euros) in the fiscal year ending at the end of March, when an amount of 109 yen was initially forecast.
In the October-December period alone, earnings soared 37 percent to 284.5 billion yen, exceeding analysts’ average estimate of 281.6 billion yen.
Be careful, do not read a little too fast! Who says rising expectations does not say rising profits! On the contrary. If the announcement of the manufacturer could be a confusing time, in the end, Honda expects on the contrary a decline in its results.
While the third-largest Japanese automaker is seeing strong growth in sales of its vehicles – both cars and motorcycles – it is still forecasting a 7.8% drop in operating income over the previous year. Arguments invoked: an increase in costs related to quality problems, resulting in the end by reminders.
The investment in research and development as well as the financial consequences of the mode of changes in pension accounting also overcame the beneficial aspects generated by higher sales and cost-cutting strategy.
Between March 2017 and March 2018, Honda plans to sell 5.23 million vehicles worldwide. Up 3.9% from its previous forecast, due to the recovery of its sales prospects in Asia. A situation largely due to China, where the development of the middle class allows consumers to equip themselves. Now, the manufacturer expects Asia to pass North America in terms of market this year.
At the same time, Honda has increased production in China and other Asian countries, including Thailand. However, it will have fallen in Japan due to the contraction of the domestic market. The manufacturer has even decided to close one of its Japanese plants by 2022.
Honda plans to launch an all-electric compact car in China in 2018.