Honda swings to operating profit on COVID rebound

TOKYO — Honda swung to a quarterly profit as its vehicle sales recovered from the impact of the COVID-19 pandemic.

Operating profit in the latest quarter that ended June 30 was 243.21 billion yen (US$2.23 billion) compared with a 113.7 billion yen loss a year ago.

Strong sales in the U.S. in the quarter contributed to Honda’s improved profit, Kohei Takeuchi, the automaker’s senior managing director, said during an earnings briefing on Wednesday.

Canadian second-quarter sales were up 42.7 per cent to 42,500 vehicles.

Honda raised its full-year forecast by 18 per cent to an operating profit of 780 billion yen (US$7.1 billion). In May the automaker had forecast a 660 billion yen operating profit.

Honda doesn’t break out Canadian earnings separately. The automaker operates two assembly plants and an engine plant in Ontario, building the Honda Civic and CR-V in the province.

Honda cautioned that the global chip shortage and rising COVID-19 cases were weighing on the outlook, but it said it had boosted its forecast because of its cost-cutting efforts.

The company lowered its full-year auto sales forecast to 4.85 million vehicles from 5 million previously because of the chip shortage. It sold 4.55 million vehicles last year.

Honda said its China sales had risen only slightly in the quarter because of the impact of the chip shortage.

The automaker suspended production at its plant in Wuhan, China, on Aug. 3 because of a COVID-19 case cluster that developed at one of its parts suppliers, its executive vice president Seiji Kuraishi told reporters, though he said the stoppage was not expected to last long.

Honda has an ambitious plan to go all-electric by 2040 and make highly autonomous cars a reality.

Despite spending heavily on research and development, the automaker’s high-tech plans have not borne much fruit and the company has struggled to balance being financially savvy while still spending enough to realize its transformation goals.

The operating profit margin for its car unit has improved but is still relatively low at three per cent versus a margin of 15.6 per cent for its motorbike unit.

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