Key Takeaways From Honda Motors’ Q4 2018 Results

by Trefis Team
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Honda Motors (NYSE: HMC) announced its Q4 and full-year 2018 results (fiscal year Apr-Mar) on April 27. The company reported strong results with its full-year consolidated revenue increasing by almost 9% year-on-year (y-o-y) backed by increased sales revenue across segments and a favorable currency impact. However, the company’s operating profit declined slightly by 0.9% as a result of increased selling, general and administrative (SG&A) expenses and other one time expense impacts.

Honda’s motorcycle division continued to outperform in 2018 with a ~15% y-o-y increase in consolidated unit sales volume. The company saw strong sales in the Asian regions including India, Thailand, and Vietnam. The automobile segment, on the other hand, experienced a marginal consolidated growth of 0.2%, with lower sales in North America offsetting the increased sales volume in China and Japan. Total motorcycle sales and automobile sales are expected to increase by 5.1% and 3.4% respectively in the upcoming year per the company’s latest guidelines. The company’s suspension of sales of its popular vehicle, CR-V, in one of its prominent markets, China, is likely to negatively weigh on its sales volumes in the upcoming year.

However, despite the expected increase in volume sales, Honda expects its 2018 net profit margin to decline by ~3% y-o-y as a result of a stronger yen, which negatively impacts the revenue for Japanese exporters as it makes their products relatively more expensive. The company expects the yen to gain further strength in FY 2019, which is expected to have a detrimental impact on the company’s 2018 results.

The graph below represents the company’s expected performance in FY 2019. These have been created using our interactive dashboard. You can make changes to the modifiable figures to arrive at your own EPS estimate for the company.

 

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