Honda (HMC) Incurs Q4 Loss Amid Coronavirus-Led Low Sales

Honda Motor HMC incurred fiscal fourth-quarter 2020 loss of 16 cents per ADR against the Zacks Consensus Estimate of earnings of 28 cents. The reported figure also widened from the year-ago quarter’s loss of 7 cents per share. Factory shutdowns, depressed demand for vehicles and weak consumer sentiment led to the underperformance. The firm’s revenues declined 13.6% year over year to $31,752 million, which surpassed the Zacks Consensus Estimate of $31,727 million.

Honda Motor Co Ltd Price, Consensus and EPS Surprise

 

Honda Motor Co Ltd Price, Consensus and EPS Surprise

Honda Motor Co Ltd price-consensus-eps-surprise-chart | Honda Motor Co Ltd Quote

Segmental Highlights

For the three months ended Mar 31, 2020, revenues from the Automobile segment declined 19.7% year over year to ¥2.3 trillion ($21.4 billion) amid lower sales in India, the United States and China. Consequently, the unit’s operating loss widened from the corresponding period of 2019 to ¥75.7 billion ($694 million). Lower sales and negative foreign currency translations more than offset the benefits of cost-cut initiatives.

Revenues from the Motorcycle segment came in at ¥473.5 billion ($4.3 billion), down 3.2% year over year amid lower unit sales in India, Indonesia and Thailand. However, the unit’s operating profit increased 41.2% from the comparable year-ago period to ¥63.5 billion ($582 million) due to cost reduction.

Revenues from the Financial Services segment totaled ¥628.4 billion ($5.7 billion), up 0.9% year over year. The unit’s operating profit decreased 61.2% year over year to ¥22.9 billion ($210 million).

Revenues from Life Creation and Other Business came in at ¥97.2 billion (892.4 million), down 5.6% year over year. The segment incurred operating loss of ¥16.3 billion ($150 million), which widened from the loss of ¥8.7 billion in the corresponding period of the prior year amid weaker sales of products in North America, Europe and Asia.

Dividend & Financial Position

The company announced a quarterly dividend of ¥28 per share for shareholders. Total annual dividend per share to be paid for fiscal 2020 will be ¥112. Amid coronavirus-induced uncertainty and financial crisis, Honda refrained from providing any dividend forecast and financial outlook for fiscal 2021.

Consolidated cash and cash equivalents were ¥2.67 trillion ($24.8 billion) as of Mar 31, 2020. Long-term debt was ¥4.22 trillion ($39.2 billion). The long-term debt was 33.7% of the total capital.

Zacks Rank & Stocks to Consider

Honda currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same sector are Veoneer, Inc. VNE, Unique Fabricating, Inc. UFAB and Modine Manufacturing Company MOD, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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