Honda Motor reports 76% plunge in operating profit in huge earnings miss

Japanese auto giant Honda missed fiscal fourth-quarter earnings estimates as operating profit plunged 76%, with the company bracing for the full impact of U.S. tariffs.

Here are Honda's results compared with mean estimates from LSEG:

Honda's fourth quarter ends March 31.

For its financial year ended in March, revenue came in at 21.69 trillion yen, compared with the average estimate of 21.63 trillion yen from LSEG and marking a 6.2% rise year on year.

Operating profit fell 12.2% to 1.21 trillion yen, against the average LSEG estimate of 1.41 trillion yen.

Net profit for its full year declined 24.5% to 835.84 billion.

While its motorcycle business achieved record high sales volume and operating profit, Honda's automobile business saw a drop in sales, mainly in China and Southeast Asia.

Hybrid electric vehicle sales in North America, however, expanded due to higher EV incentives in the region.

Honda's results come amid trade tensions with the U.S., which has slapped a 25% tariff on foreign automobile imports.

In March, Honda had reportedly decided to produce its next-generation Civic hybrid in the U.S. state of Indiana, instead of Mexico, to avoid potential tariffs on one of its top-selling car models, Reuters reported.

According to U.S. car marketplace CarPro, Asian automakers made up six of the top eight automakers in the U.S. by sales volume in 2024, with Honda in fourth place.

In its earnings release, Honda had downgraded almost every financial metric for its current fiscal year ending in March 2026, compared with its latest full-year results. Its full-year operating profit is projected to fall almost 59% to 500 billion yen. Honda's projected net profit saw an even deeper cut at 70.1% lower, plunging to 250 billion yen, while revenue is expected to slip 6.4% to 20.3 trillion yen.

Japan's second-biggest automaker explained that the impact of tariff policies worldwide would be very significant on its business, with the frequent revisions making it difficult to formulate an outlook.

"Moving forward, we will carefully assess the impact of tariff policies and expand recovery measures while aiming for further growth in operating profit," the company said in its presentation.

Honda also changed its dividend policy from a dividend payout ratio to a "dividend on equity," forecasting an increase of 2 yen per share to 70 yen per share for its current fiscal year.

Back in February, Honda and rival Nissan terminated talks over a $60 billion merger, which would have created the world's third-largest automaker by sales volume.

Nissan also reported its fourth-quarter results, with operating profit plunging by nearly 94% to 5.8 billion yen, while revenue remained flat.

The company swung to a net loss of 676 billion yen ($4.5 billion) in the fourth quarter, compared with a 101.3 billion profit in the same period the year before.

For the full year, operating profit plummeted by almost 88% year on year to 69.8 billion yen, with the company attributing it to a decrease in sales volume, an increase in sales incentives and inflation. Revenue for the full year came in nearly flat.

Nissan also announced a plan to save 500 billion yen over the next few years. Among the measures undertaken would be a headcount reduction of 20,000 workers and consolidating its production plants to 10 from 17 by March 2028.