Honda Motor Co Ltd. (HMC) shares rose more than 5 percent in the pre-market trading Friday after the Japanese automaker announced better-than-expected earnings for the second quarter and raised its financial outlook for the full year. The company reported a profit of 240.92 billion yen for the three-month period ended September 30, up 23 percent from 196.55 billion yen in the comparable period last year. Analysts surveyed by FactSet were looking for earnings of 107.92 billion yen.
Honda was struggling to boost revenues earlier this year following the Covid-19 pandemic. However, improved sales in North America and China helped the company to beat consensus expectations for the latest quarter. Revenue for the second quarter came in at 3.651 trillion yen, down 2.1 percent from the same period last year. Operating earnings for North America climbed to 197.20 billion yen in the quarter, significantly higher than 197.20 billion yen in the year-ago quarter.
If we analyze the operational performance of key divisions, the company’s car segment posted operating earnings of 125.39 billion yen, representing a substantial surge of 67 percent from last year. On the other hand, operating profit from motorcycle segment declined in the second quarter. Looking forward, Honda raised its operating earnings guidance for the full year. It now expects an operating profit of 420 billion yen for the fiscal year ending March, as compared to its previous outlook of 200 billion yen
The company also revised its car sales guidance for the full year. It now expects to sell 4.6 million vehicles, versus its earlier projection of 4.5 million. Honda has been increasing its efforts to roll out more electric vehicles (EVs),to catch up with the rivals, as governments around the world focus on zero-emission cars and adoption of more clean energy sources. The company recently revealed “Honda e,” an all-battery car, as a part of those efforts. Separately, a couple of months ago, it partnered with General Motors for producing low-emission cars.
Like rival automakers, Honda shares also fell sharply following the coronavirus outbreak earlier this year. HMC share price touched a low of around $19.5 in March. However, the stock managed to recover most of the lost value in the subsequent months.
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