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Honda (HMC) Operating Profit Decreases Roughly 67% Y/Y in Q4

Zacks Equity Research

Honda Motor Co., Ltd. HMC has reported operating profit of ¥42.4 billion in the fourth quarter of fiscal 2019, down 66.6% from the year-ago period. This decrease in operating profit can be attributed to the adverse foreign currency effects and impact of changes in the global automobile production network and capability on Europe. These negative factors were partly offset by continuous cost-reduction efforts.

In the reported quarter, profit before income taxes decreased by 41.7% to ¥111.1 billion. Loss per share attributable to owners of the parent was ¥7.4, marking a decline of ¥67.99 from the year-ago figure.

Revenues increased 3.4% year over year to ¥4.05 trillion. This rise can be attributed to higher sales revenues at automobile and financial services businesses.

Honda Motor Co., Ltd. Price, Consensus and EPS Surprise

 

Honda Motor Co., Ltd. Price, Consensus and EPS Surprise | Honda Motor Co., Ltd. Quote

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Segmental Performance

For the three months ended Mar 31, 2019, revenues from the Automobile segment increased 2.9% to ¥2.84 trillion. During the reported quarter, consolidated units sold increased 3.1% year over year to 0.98 million.

The Motorcycle segment’s revenues decreased 6.1% to ¥489.4 billion and consolidated units sold increased 10.4% year over year to 2.84 million.

During the reported quarter, the Life Creation segment’s consolidated units sold decreased 5.2% year over year to 2.34 million.

Financial Position

Consolidated cash and cash equivalents were ¥2.49 trillion as of Mar 31, 2019, up from ¥2.26 trillion as of Mar 31, 2018.

As of Mar 31, 2019, Honda’s net cash from operating activities amounted to ¥776 billion compared with the year-ago figure of ¥987.7 billion. This decline in the number was due to increased expenses for parts and raw materials, partly offset by cash received from customers.

Dividend Payment

The company announced a quarterly dividend of ¥28 per share for shareholders. For fiscal 2019, the total annual dividend payment per share is ¥111.

Guidance

Honda provided financial estimates for fiscal 2020 (ending Mar 31, 2020). At the end of fiscal 2020, this Japanese automaker expects revenues to decline 1.2% year over year to ¥15.7 trillion. Further, operating income is likely to increase 6% to ¥770 billion. Earnings per share at the end of fiscal 2020 are expected to be ¥377.94.

Zacks Rank & Stocks to Consider

Honda currently has a Zacks Rank #4 (Sell). A few better-ranked stocks in the auto space are AB Volvo VLVLY, Fox Factory Holding Corp. FOXF and Geely Automobile Holdings Ltd. GELYY. While Volvo currently sports a Zacks Rank #1 (Strong Buy), Fox Factory and Geely carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Volvo has an expected long-term growth rate of 5%. Over the past three months, shares of the company have gained 4.7%.

Fox Factory has an expected long-term growth rate of 16.4%. Over the past three months, shares of the company have gained 21.1%.

Geely Automobile has an expected long-term growth rate of 7%. Share price of the company has increased 3.5% in the past three months.

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Fox Factory Holding Corp. (FOXF) : Free Stock Analysis Report
 
Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report
 
Geely Automobile Holdings Ltd. (GELYY) : Free Stock Analysis Report
 
AB Volvo (VLVLY) : Free Stock Analysis Report
 
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