Honda Raises Operating Profit Forecast 20% to ¥780 Billion Despite EV Losses
Key Facts
Honda on November 10 raised its operating profit forecast for the fiscal year ending March 31, 2027, to ¥780 billion from ¥650 billion, an increase of 20%, according to Reuters. The update came after the company recorded $3 billion in costs related to restructuring its electric vehicle business in the second quarter. At the same time, operating profit in the July-to-September 2026 quarter fell 39% year over year to ¥118 billion. The figure was below the average forecast of ¥250 billion in an LSEG survey of 9 analysts. That puts the annual forecast increase against a quarter that was weaker than market estimates, as the impact of restructuring the electric vehicle business continues.
According to Reuters, Honda’s revised outlook is based on strong demand for hybrid vehicles and a weaker yen, two factors that help offset declining sales in China. The company’s U.S. sales rose 9% in the second quarter of fiscal 2027. The U.S. market accounted for half of global retail sales of 823,000 vehicles during the same quarter. These figures underscore the weight of the United States in the company’s sales mix, alongside its shift toward hybrid vehicles. They also make the weaker Japanese currency one of the factors supporting the annual forecast, while China remains a source of sales pressure.
The revision follows a previous fiscal year that ended with an annual loss of ¥423.9 billion, the first in Honda’s history, according to the Associated Press. Before the update, the company had forecast a return to profitability in the current fiscal year, at ¥260 billion. It then raised its operating profit forecast to ¥650 billion before the November results, before announcing the new level of ¥780 billion. The sequence of estimates reflects the company’s move from forecasting a limited return to a higher annual operating profit, despite costs from restructuring its electric vehicle business. That does not change the fact that the latest quarter’s results came in below the analyst average.
As part of its shift in production toward hybrids, Honda plans to build a new factory in Ohio with annual capacity of 240,000 vehicles, with production expected to begin in 2029. JobsOhio said the facility will support demand for hybrid vehicles. The plan links expanded production capacity in the United States with the market where Honda’s sales rose 9% in the second quarter and which accounted for half of global retail sales. The planned production start comes after a period of restructuring the electric vehicle business, which incurred related costs in the second quarter. The planned factory gives the shift toward hybrids a long-term production dimension within the company’s strategy.
In trading, Honda’s U.S.-listed shares closed at $35.84 on November 9, 2026, according to EL7 data. The closing price was from the day before the results and forecast announcement on November 10, so it does not reflect the market’s response to the announcement. The company’s financial picture combines a higher annual profit estimate with a decline in second-quarter profit from its year-earlier level and from the analyst average forecast. Costs from the electric vehicle business also coincided with forecasts based on sales, cost reductions, price and currency adjustments, according to the company’s official presentation. The Ohio factory plan remains tied to an expected production start in 2029, according to the announcing body.