Key Points
- Honda’s first-quarter operating profit fell by 50%. The drop was caused mainly by U.S. tariffs and a strong Japanese yen.
- The tariffs alone cost the company 125 billion yen in the first quarter.
- Despite the bad quarter, Honda raised its full-year profit forecast.
- The company now expects the total impact from tariffs to be less than originally feared.
Honda’s first-quarter profits were cut in half, hit hard by a stronger yen and new U.S. tariffs imposed by President Donald Trump. Despite the dismal results, the automaker surprised investors by raising its profit forecast for the rest of the year.
The Japanese carmaker reported an operating profit of 244.2 billion yen for the April-to-June period. This figure fell well short of what analysts had predicted, marking a significant miss. The company said the new 27.5% U.S. tariff on auto imports was a major blow, costing it about 125 billion yen in profit for the quarter alone.
However, Honda now believes the total damage from the tariffs for the entire year will be smaller than it first estimated. The company now projects a 450 billion yen hit for the year, a significant improvement from its earlier forecast of a 650 billion yen loss from the tariffs.
This more optimistic outlook on tariffs, combined with an expectation that the Japanese yen will weaken, prompted Honda to raise its financial goals. A weaker yen benefits Japanese exporters like Honda by increasing the value of money earned overseas when it’s brought back to Japan.
As a result, the company raised its full-year operating profit forecast from 500 billion yen to a much stronger 700 billion yen.
(1 USD = 147.66 Yen)
