TOKYO — Honda has reported a nearly 20% decline in profits during the first half of the fiscal year compared to the same timeframe last year. The Japanese car manufacturer revealed this information on Wednesday, attributing the drop to weaker sales in China.
In the period from April to September, Honda Motor Co. achieved profits of 494.68 billion yen ($3.2 billion), a decrease from 616 billion yen noted for the same period last year. Sales during this timeframe rose to 10.8 trillion yen ($70.5 billion), up from 9.6 trillion yen.
The company did experience an uptick in global motorcycle sales, driven largely by robust demand in Asia; however, sales of automobiles saw a downturn, primarily in the Chinese market, as reported by company officials during a press conference.
Honda’s profits were also impacted by warranty-related expenses, issues regarding quality control, and increased incentives offered to entice buyers. Additionally, fluctuations in foreign exchange rates contributed to the company’s financial challenges, though Honda did not disclose a breakdown of its quarterly earnings.
As a result of these disappointing figures, Honda has revised its profit projection for the fiscal year ending in March downward by 50 billion yen ($330 million), now forecasting profits of 950 billion yen ($6.2 billion). This anticipated profit falls short of the 1.1 trillion yen ($7.2 billion) the company earned during the previous fiscal year.
In a related development, rival automaker Toyota Motor Corp. also reported a profit decline earlier the same day. Meanwhile, Nissan Motor Co. is set to announce its earnings on Thursday.
Following the news, Honda’s stock price fell by 6.5%, whereas shares of Toyota rose by 1.7%.