TOKYO -- Honda Motor Co. forecast a 19 percent rise in operating profit for this business year, after operating income slipped 3.7 percent for the previous fiscal year.
Japan's second-biggest automaker forecast full-year operating profit rising to 1.0 trillion yen ($7.40 billion) compared with a 985.62-billion-yen average profit expected by 21 analysts, the automaker said Thursday in a statement.
Honda said it expected higher sales volume and to benefit from a strengthening supply chain.
Operating profit for the three months to March 31 stood at 105.5 billion yen, compared to an average estimate of 164.78 billion yen in a poll by 11 analysts by Refinitiv.
The company said its net profit for the fiscal year fell 1.7 percent to 695.2 billion yen.
Honda’s finances have been bolstered by its motorcycle division as it seeks secure supplies of semiconductors and other materials for automobiles. The company is aiming to only sell electric cars globally by 2040 and have EVs represent 100 percent of its sales in China by 2035. Despite that, Honda has yet to roll out a mass-market EV, although it is working with Sony Group Corp. to launch an EV under a different brand called Afeela.
For the fiscal year ended March, Honda reported an operating profit of 839 billion yen, falling short of analysts’ projection for 892.5 billion yen and its own forecast of 870 billion yen. Sales rose 16 percent to 16.9 trillion yen, compared with analysts’ prediction for 17 trillion yen.
Pandemic-induced chip snarls in China also meant that Honda failed to achieve its sales target of 3.85 million units for the latest fiscal year for four wheelers.
The company is aiming to stabilize its “semiconductors supply chain and improve operations of our factories to sell as much as 4.35 million units of four wheelers in the financial year through March,” Honda Executive Vice President Shinji Aoyama said at a virtual press conference on Thursday.
Aoyama also said the price war in China was impacting the company’s financials.
“The company has set a sales target of 4.35 million units, but it’s been revising the volume plan downward for some time, and at this point we cannot be 100 percent certain that it will achieve this target,”said Bloomberg Intelligence analyst Tatsuyo Yoshida.
In April, Honda CEO Toshihiro Mibe said the company will collaborate with Taiwan Semiconductor Manufacturing Co. on the procurement of chips in order to smooth over any supply disruptions. The Japanese company is also in talks with other chipmakers.
Honda also said it signed an agreement with GS Yuasa Corp. to start a joint venture to develop lithium-ion batteries.
The company on Thursday declared a record high dividend of 150 yen, up from 30 yen from last fiscal year.
The Japanese automaker also said it plans to buy back as much as 200 billion yen ($1.5 billion) of its own shares.
Reuters and Bloomberg contributed to this report.