Honda (HMC) Beats on Q3 Earnings, Lifts FY24 Sales & Profit View
Honda HMC reported earnings of $1.06 per share for third-quarter fiscal 2024, surpassing the Zacks Consensus Estimate of 85 cents. The bottom line also grew from the year-ago profit of $1.02 per share. Quarterly revenues totaled $36.5 billion, missing the Zacks Consensus Estimate of $37.7 billion. The top line, however, increased from $31.5 billion recorded in the year-ago period.
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, which ended on Dec 31, 2023, revenues from the Automobile segment increased 32.2% year over year to ¥3.77 trillion ($25.53 billion) and outpaced our projection of ¥3.36 trillion. The segment registered an operating profit of ¥159 billion ($1.07 billion), jumping from ¥49.4 billion in the corresponding quarter of fiscal 2023. The results were primarily aided by strong sales in the United States and production recovery in Japan.
Revenues from the Motorcycle segment came in at ¥785.5 billion ($5.31 billion), inching down 0.5% year over year and lagging our estimate of ¥866.4 billion, amid a sluggish market in Vietnam, partially offset by firm demand in Indonesia and Brazil. However, the unit’s operating profit came in at ¥158.1 billion ($1.07 billion), up 4.2% year over year.
Revenues from the Financial Services segment totaled ¥810.2 billion ($5.48 billion), up 10.4% year on year. Revenues missed our prediction of ¥847.6 billion. The unit’s operating profit moved up 0.7% year over year to ¥67.8 billion ($459 million).
Revenues from Power Product and Other Businesses came in at ¥92.2 billion ($624 million), down 23.7% year over year and missing our forecast of ¥120.5 billion. The segment incurred an operating loss of ¥5.3 billion ($35.87 million) versus a profit of ¥12 billion generated in the year-ago period.
Financials & FY24 View
Consolidated cash and cash equivalents were ¥4.3 trillion ($30.64 billion) as of Dec 31, 2023. Long-term debt was ¥5.39 trillion ($38.23 billion) as of Dec 31, up from ¥4.37 trillion as of Mar 31, 2023.
Honda projects fiscal 2024 sales volumes from Motorcycle, Automobile and Power Products segments to be 18.8 million units, 4.1 million units and 3.85 million units, respectively, unchanged from the prior forecast. The forecast implies growth of 0.2% and 11.2% year over year in Motorcycles and Automobiles units, respectively. However, Power Product Unit sales are likely to decline 31.8% year over year in fiscal 2024.
For fiscal 2024, Honda forecasts revenues of ¥20.2 trillion, up from ¥20 trillion guided earlier. The revised estimate indicates an uptick of 19.5% year over year. Operating profit is envisioned at ¥1.25 trillion, up from the previous projection of ¥1.2 trillion and implying growth of 60.1% year over year. Pretax profit is forecast to be ¥1.44 trillion, up from the prior guidance of ¥1.39 trillion and suggesting an increase of 64.3% year over year.
Honda expects fiscal 2024 R&D expenses and capex to be $990 billion and $440 billion, respectively.
The interim dividend for fiscal 2024 was ¥87/share. The total annual dividend is expected to be ¥174/share.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quarterly Releases of Other Legacy Automakers
U.S. auto giant General Motors GM unveiled its fourth-quarter 2023 results on Jan 30. Fourth-quarter adjusted earnings of $1.24 per share surpassed the Zacks Consensus Estimate of $1.12. The bottom line, however, decreased from the year-ago quarter’s level of $2.12. Revenues of $42.98 billion beat the Zacks Consensus Estimate of $40.78 billion but decreased from $43.1 billion recorded in the year-ago period.
General Motors had cash and cash equivalents of $18.85 billion as of Dec 31, 2023, compared with $19.15 billion as of Dec 31, 2022. The long-term automotive debt at the end of the quarter was $15.98 billion compared with $15.88 billion as of Dec 31, 2022.
GM’s cross-town rival Ford F released its fourth-quarter 2023 results on Feb 6. The company reported adjusted earnings of 29 cents per share for fourth-quarter 2023, which beat the Zacks Consensus Estimate of 12 cents but fell from 51 cents recorded in the year-ago quarter. The company’s consolidated fourth-quarter revenues came in at $46 billion, up from $44 billion generated in the corresponding quarter of 2023.
Ford had cash and cash equivalents of $24.86 billion as of Dec 31, 2023. Long-term debt, excluding Ford Credit, totaled $19.2 billion at the end of the fourth quarter of 2023.
Toyota TM posted third-quarter fiscal 2024 results on Feb 6. Earnings of $6.81 per share surpassed the Zacks Consensus Estimate of $3.66 and surged from the year-ago earnings of $3.78 a share. Consolidated revenues came in at $81.5 billion, beating the consensus mark of $73.7 billion and rising from $69.16 billion in the year-ago quarter.
Toyota had cash and cash equivalents of ¥7.58 trillion ($53.77 billion) as of Dec 31, 2023. Long-term debt was ¥19.25 trillion ($136.6 billion), up from ¥17.1 trillion as of Mar 31, 2023.
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