Honda Motor Co Ltd Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Byline: The Q2 2026 earnings call for Honda Motor Co., Ltd., held on November 7, 2025, covered key financial results, business segment performance, capital allocation, industry trends, the competitive landscape, macroeconomic factors, growth strategies, and financial guidance. The call highlighted record high motorcycle sales and profit, challenges in the automobile sector due to tariffs and EV-related expenses, and a revised financial outlook considering semiconductor shortages and currency depreciation.
Key Financial Results:
Operating profit for the second quarter of the year to March 2026 was JPY 438.1 billion.
Operating cash flow after R&D adjustment was JPY 1,281.3 billion, on par with the same period last year.
The half year profit attributable to the owner of the parent was JPY 311.8 billion, lower by JPY 182.8 billion.
Business Segment Results:
Motorcycle operations saw unit sales decline in Vietnam, but global sales trended strongly, led by Brazil.
Motorcycles achieved record high unit sales, operating profit, and operating margin up to the second quarter.
Automobile operations experienced a profit decline due to tariffs and one-time expenses related to EV, despite positive profit impact from price revisions.
Motorcycles operating profit was JPY 368.2 billion, up by JPY 42.4 billion year-on-year.
Automobiles resulted in JPY 73 billion operating losses, a decline of JPY 331 billion year-on-year.
Financial services profits were JPY 143.2 billion.
Capital Allocation:
The forecast for the full-year dividend for the fiscal year ending in March 2026 is JPY 70 per share, unchanged from the previously published forecast.
Industry Trends and Dynamics:
The automobile business environment is changing dramatically due to tariffs and changes in environmental regulations.
There is a potential decrease in production volume due to semiconductor supply shortages.
In the Chinese market, the total market has been declining slightly due to reduced incentives.
Competitive Landscape:
Honda is behind others in terms of value for money in the Chinese market.
Other OEM incentives have been getting higher, so the actual market selling price has not gone up in real terms in North America.
Macroeconomic Environment:
Yen depreciation is expected to contribute to profit growth.
The exchange rate against the US dollar is assumed at JPY 145 for the full-year period.
Tariffs are considered a new normal that will continue for some time in the future.
Growth Opportunities and Strategies:
Honda needs fundamental changes and actions in Asia, where the profitability for HEV and ICE vehicles will worsen.
Future actions include maintaining/building a world profitability structure in Asia and Oceania to gain from ICE and HEV.
Rationalizing fixed expenses is necessary.
Shifting over to Honda's own BEV production to achieve break-even.
Adopting a policy of producing where there is demand to combat the impact from tariffs.
Financial Guidance and Outlook:
The forecast for the consolidated results for the term ending March 2026 is operating profit of JPY 550 billion and profit for the year of JPY 300 billion.
Compared to the previous forecast, the operating profit is down by JPY 150 billion, and the profit for the year attributable to the owner of the parent is down by JPY 120 billion.
Automobile unit sales are revised down from 3.62 million to 3.34 million units.
Motorcycle unit sales are maintained at 21.3 million units.
The impact of semiconductor shortages is expected to negatively impact profits by JPY 150 billion.
