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Honda (HMC) Sees 16% Y/Y Decline in Q1 Operating Profit

Zacks Equity Research

Honda Motor Co., Ltd. HMC has reported operating profit of ¥252.4 billion in the first quarter of fiscal 2020, down 15.7% from the year-ago period. This decline in operating profit can be attributed to high selling, general and administrative expenses, adverse impacts of foreign currency, and decreased sales revenues. The negative factors were partly offset by continuous cost-reduction efforts.

In the reported quarter, profit before income taxes declined 19.1% to ¥289.8 billion. Profit per share attributable to owners of the parent was ¥172.3 billion, marking a 29.5% decline from the year-ago figure.

Revenues declined 0.7% year over year to ¥4 trillion. The decline can be attributed to lower sales revenues at Automobile, Motorcycle, Life creation and other businesses, and negative currency translation impacts. The negative factors were partly offset by high sales revenues in the Financial services business.

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 Performance

For the three months ended Jun 30, 2019, revenues from the Automobile segment declined 3.7% to ¥2.69 trillion. During the reported quarter, consolidated units sold grew 1.2% year over year to 1.32 million.

The Motorcycle segment’s revenues declined 3.9% to ¥533 billion and consolidated units sold moved down 8.1% year over year to 4.92 million.

During the reported quarter, the Life Creation segment’s consolidated units sold declined 4.5% year over year to 1.28 million.

Financial Position

Consolidated cash and cash equivalents were ¥2.39 trillion as of Jun 30, 2019, down from ¥2.49 trillion as of Mar 31, 2018.

As of Mar 31, 2019, Honda’s net cash from operating activities amounted to ¥195.6 billion compared with the year-ago figure of ¥214.4 billion. The decline in the number was due to increased expenses for parts and raw materials, partly offset by decreased income tax payment.

Dividend Payment

The company announced a quarterly dividend of ¥28 per share for its shareholders. For fiscal 2020, the total annual dividend payment per share is ¥112.


Honda provided financial estimates for fiscal 2020 (ending Mar 31, 2020). At the end of fiscal 2020, this Japanese automaker expects revenues to decline 1.5% year over year to ¥15.7 trillion. Further, operating income is likely to grow 6% to ¥770 billion. Earnings per share for the company at the end of fiscal 2020 are expected to be ¥366.57.

Zacks Rank & Stocks to Consider

Honda currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the auto space are Copart, Inc. CPRT, CarMax, Inc. KMX and Gentex Corporation GNTX. While Copart currently sports a Zacks Rank #1 (Strong Buy), CarMax and Gentex carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Copart has an expected long-term growth rate of 20%. In the past year, shares of the company have rallied 33.3%.

CarMax has an expected long-term growth rate of 12.6%. In the past year, shares of the company have moved up 17.9%.

Gentex has an expected long-term growth rate of 5%. In the past year, shares of the company have returned 18.7%.

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