Honda Motor (NYSE:HMC) outlined a mixed set of third-quarter results for the fiscal year ending March 2026, highlighting record performance through the first nine months in its motorcycle business while flagging significant pressure on automobile profitability from one-time EV-related expenses and tariffs.
Third-quarter results: motorcycles offset by auto and tariff headwinds
Executive Vice President Noriya Kaihara reported third-quarter operating profit of JPY 591.5 billion. He said the company achieved record-high unit sales, operating profit, and operating margin on a year-to-date basis through the third quarter, supported by solid motorcycle demand led by India and Brazil.
For the quarter, Honda reported:
- Operating profit: JPY 591.0 billion, down JPY 548.4 billion year over year
- Investment income (equity method): JPY 24.0 billion, up JPY 51.3 billion
- Profit attributable to owners of parent: JPY 465.4 billion, down JPY 339.8 billion
Unit sales through nine months: motorcycles up, autos pressured in Asia
Honda’s cumulative unit sales through the third quarter were:
- Motorcycles: 16.44 million units, driven by increases in India, Pakistan, and Brazil
- Automobiles: 2.561 million units, reflecting declines in Asia, mainly China
- Power products: 2.507 million units, with increased sales in Europe and declines mainly in Asia
Kaihara said automobile unit sales were also affected by semiconductor supply shortages during the third quarter, though Honda said it sees improved prospects for preventing a recurrence of that specific shortage. At the same time, management said it is beginning to see potential supply risks emerging in other areas, including rare earth metals and memory-related components.
Profit bridge: EV-related one-time costs and tariffs weighed heavily
Honda broke down the year-over-year change in third-quarter operating profit, which fell by JPY 548.4 billion. The company cited positive contributions from price revisions and sales mix, but said those were more than offset by one-time EV costs and tariffs.
- Sales impact: +JPY 38.1 billion (motorcycle unit sales increase and financial business profit, offset by lower auto sales due to semiconductors)
- Price/cost impact: +JPY 225.9 billion (effective price revisions)
- Expenses impact: -JPY 108.6 billion
- R&D impact: -JPY 35.7 billion
- Foreign exchange impact: -JPY 111.0 billion
- One-time EV-related expenses: -JPY 267.1 billion
- Tariff impact: -JPY 289.8 billion
Honda said that excluding the one-time EV-related expenses and tariff impacts, operating profit would have been JPY 1,148.5 billion.
By segment, Honda reported third-quarter operating profit of JPY 446.5 billion in motorcycles, while the automobile business posted an operating loss of JPY 166.4 billion. Financial services contributed JPY 218.0 billion of operating profit, and power products and other businesses posted an operating loss of JPY 6.5 billion.
For motorcycles, operating profit increased year over year by JPY 44.8 billion, helped by sales volume and price revisions but pressured by foreign exchange and tariffs. For automobiles, Honda said operating profit declined by JPY 569.0 billion year over year, driven by lower sales, EV-related one-time costs, and tariff impacts, partially offset by price revisions.
Cash flow and balance sheet
Honda said operating cash flow after an R&D adjustment—described as indicating resources available for future investment—was JPY 1,855.8 billion, roughly in line with the prior year’s level. Free cash flow excluding financial services was JPY 917.4 billion, and net cash at the end of the third quarter was JPY 3,170.7 billion.
Full-year outlook maintained; tariff impact reduced; dividend unchanged
Honda maintained its forecast for the fiscal year ending March 2026, keeping guidance unchanged at JPY 550 billion in operating profit and JPY 300 billion in profit attributable to owners of the parent. The company said it is keeping the outlook steady given uncertainty, including expectations that competition in Asia’s automobile market will intensify and require incentives.
Honda said its assumed U.S. dollar exchange rate for the full-year period is JPY 140 per dollar. During the Q&A, management also discussed sensitivity to currency moves, indicating that a 1-yen move against the dollar can affect earnings by around JPY 10 billion for the year, with a proportional effect per quarter.
On tariffs, Kaihara said the impact was initially forecast at JPY 450 billion at the start of the fiscal year but is now expected to be JPY 310 billion. Fujimura said the company had incorporated recovery measures—citing logistics adjustments, progress in additional local procurement to support USMCA compliance, and credit utilization—which contributed to the updated net impact.
For unit sales guidance, Honda maintained targets of:
- Motorcycles: 21.3 million units (which Honda described as aiming for record sales)
- Automobiles: 3.34 million units
- Power products: 3.67 million units
For shareholder returns, Honda kept its full-year dividend forecast at JPY 70 per share. The company also said its board resolved to cancel 747 million treasury shares.
Management spent part of the briefing describing a broader strategic reassessment amid what it called a changing environment for EVs and global trade. Executives cited EV market stagnation, shifting regulatory stringency, protectionism, heightened supply chain risks, and intensifying competition from emerging automakers. Honda said it aims to settle losses related to EVs currently sold in North America within the current fiscal year, control expenditures in line with EV market conditions, and strengthen the earning capability of hybrids with next-generation hybrid systems and next-generation ADAS on hybrid models. The company said it plans to communicate updates to its medium- to long-term strategy at an appropriate time during the coming fiscal year.
About Honda Motor (NYSE:HMC)
Honda Motor Co, Ltd. is a global manufacturer and mobility company headquartered in Minato, Tokyo, Japan, founded in 1948 by Soichiro Honda and Takeo Fujisawa. The company’s core businesses include the design, manufacture and sale of automobiles and motorcycles, along with a diverse portfolio of power products, engines and related components. Honda also operates in aviation through Honda Aircraft Company and offers financial services that support vehicle sales and leasing.
In automobiles, Honda is known for a range of passenger cars, crossovers and light trucks, and in motorcycles it is one of the world’s leading producers by volume and model breadth.
