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Financial

11/11/2019

India’s economic downturn and weakness in other major Asian markets have had a deleterious effect on mighty Honda’s motorcycle business, as revealed by half-yearly results to 30 September. BDN financial editor Roger Willis reports.

Global revenue from the sector during this six-month period was 3.5% down to £7.565bn. Associated operating profit sank by 16.7% to £1.058bn. Operating margin declined to 14% from 16.2%. Wholesale shipment volume dropped by 6.1% to 10.019 million bikes — a shortfall of 648,000.

Primary culprit was falling Indian sales, which were 18.7% lower at 2.68 million. Honda attributed this to obviously shrinking demand, exacerbated by more onerous consumer credit restrictions. But other key Asian countries were negative too. Thailand lost 9.6% to 669,000. Indonesia was 1.3% down to 2.437 million and Vietnam dropped by a relatively marginal 0.5% to 1.311 million. Overall sales across Asia decreased by 7.4% to 8.953 million.

The picture was brighter elsewhere. Other unspecified regions — mainly encompassing Latin America — were 9.2% up to 664,000. European sales held station on 141,000 and Honda’s domestic market in Japan grew by 7.7% to 112,000. But North America slipped slightly by 0.7% to 149,000.

Revision of forecasts for the full fiscal year to 31 March 2020 have had an embarrassing consequence. During the previous 12 months, Honda finally crossed the 20 million barrier, selling 20.238 million bikes, and predicted 20.35 million this time round. Its objective has now been slashed to 19.9 million.

Within that, Europe is expected to retreat by 1.6% to 245,000 and Japan by 1% to 205,000. The original assumption of a very slight 0.2% increase to 18.265 million in Asia has been abandoned in favour of a 2.4% fall to 17,785 million. On a brighter note, North America should be 4.7% up to 315,000 and other regions will hopefully improve by 7.4% to 1.35 million.