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Japan’s Honda’s Prospects are Weak as Costs Rise

Honda warns of rising costs and weak annual profits

Japan’s Honda Motor Co. expects annual profits to decline by 7% instead of the expected rise, and warned that profits would be affected by the ongoing chip crisis and rising raw material costs, repeating what its competitors Toyota and Nissan published. Read more [Honda Lowers Its Aspirations For The Second Time].

Global automakers, including Honda, have reduced production due to acute shortages of semiconductors and rising costs, as coronavirus restrictions in China have led to factory closures, and the war on Ukraine has caused mounting pressures on supply chains, and the company is seeing an improvement in the quarantine situation in Shanghai, and that the country’s supply chains and logistics are beginning to recover by more than 80%.

Automaker Honda, which is the second-largest car sales company in Japan, is forecasting a drop in profit to 810 billion yen ($6.29 billion) in the current fiscal year that began in April, while analysts expected a growth of 6.3% to 926.3 billion. yen.

The company sees it selling 4.2 million vehicles worldwide this year, beating last year’s sales by 3.1%, and Honda believes that costs will reach about 300 billion yen to cover the higher cost of materials, labor and logistics, which represents costs about 11% higher than last fiscal year. Read more [Honda is Investing $64 Billion in Electric Cars].

Honda’s operating profit fell 6% to 199.5 billion yen in the quarter ended March 31, but it was higher than analysts’ average estimate of 152.2 billion yen.

Honda shares have risen by 1% since the beginning of the year so far, knowing that it closed the trading round on Friday, up by 2.2%, coinciding with the rise of the broader market by 2.6%.

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