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Honda (HMC) Q1 Loss Narrower Than Expected, Sales Lag Estimates

Zacks Equity Research
·4-min read

Honda Motor Co., Ltd. HMC reported a loss of 44 cents per ADR in first-quarter fiscal 2021, much narrower than the Zacks Consensus Estimate of loss of 70 cents. The company had reported earnings of 89 cents per share in the year-ago quarter.

Depressed demand for vehicles and sinking consumer sentiment amid the coronavirus crisis resulted in this underperformance. Quarterly revenues plunged 45.7% year over year to $19,747 million, missing the Zacks Consensus Estimate of $20,114 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 and EPS Surprise

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

Segmental Highlights

For the three-month period ended Jun 30, 2021, revenues from the Automobile segment plummeted 53.4% year over year to ¥1.26 trillion ($11.7 billion) amid lower sales in India, the United States and China. Consequently, the segment incurred operating loss of ¥195 billion ($1.82 billion), as against income of ¥120.4 billion in the year-ago quarter. Lower sales and negative foreign-currency translation impact offset the benefits of cost-cutting initiatives to a large extent.

Revenues from the Motorcycle segment came in at ¥274.2 billion ($2.55 billion), significantly down 48.6% year over year on soft unit sales in Indonesia and Thailand. The unit’s operating profit slumped 84% from the year-ago period to ¥11.2 billion ($104 million) due to cost reduction, and decrease in selling, general and administrative expenses.

Revenues from the Financial Services segment totaled ¥579 billion ($5.4 billion), down 16.3% year on year. However, the unit’s operating profit increased 8.8% year over year to ¥71.6 billion ($666 million).

Revenues from Life Creation and Other Business came in at ¥68.2 billion (633.4 million), down 20% year over year. The segment incurred an operating loss of ¥573 million ($5.33 million), which narrowed from the loss of ¥3.57 billion posted in the corresponding period of the prior year.

Dividend & Financial Position

The company announced a quarterly dividend of ¥11 per share for shareholders. Total annual dividend per share to be paid for fiscal 2021 will be ¥44 per share.

Consolidated cash and cash equivalents were ¥2.61 trillion ($24.2 billion) as of Jun 30, 2021. Long-term debt was ¥4.31 trillion ($39.9 billion).

2021 Outlook

For fiscal 2021, the company expects sales and operating profit of ¥12.8 trillion and ¥200 billion, respectively. Further, it anticipates earnings per share of ¥95.56 per share in the fiscal year.

Zacks Rank & Stocks to Consider

Honda currently carries a Zacks Rank of 4 (Sell).

Some better-ranked stocks in the auto sector include AutoNation AN, LCI Industries LCII and Geely Automobile Holdings Ltd. GELYY. While AutoNation and LCI Industries sport a ZacksRank of 1, Geely Automobile carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of AutoNation have rallied 9.6%, year to date, compared with the industry’s gain of 7.8%.

Shares of LCI Industries have appreciated 19.6%, year to date, as against the industry’s decline of 6.1%.

Shares of Geely Automobile have gained 13%, year to date, as against the industry’s decline of 11.6%.

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Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report
 
AutoNation, Inc. (AN) : Free Stock Analysis Report
 
Geely Automobile Holdings Ltd. (GELYY) : Free Stock Analysis Report
 
LCI Industries (LCII) : Free Stock Analysis Report
 
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