By Kosaku Narioka
Honda Motor cut its annual earnings forecasts after a weak first half, flagging slumping car sales in China and Southeast Asia and a nearly $1 billion drag due to a shortage of chips from Dutch supplier Nexperia.
Executive Vice President Noriya Kaihara said the semiconductor crunch had affected production in North America since last Monday. He said the carmaker is working to restore production in the week of Nov. 21, as shipments of Nexperia chips from China appear to be resuming. China's Commerce Ministry said earlier this month that the country would permit exports of Nexperia chips in eligible cases, without specifying the criteria.
The Japanese automaker on Friday estimated an operating profit hit of 150.0 billion yen, equivalent to $980 million, from the chip shortage for the year through March.
Honda also lowered its car sales forecast, blaming weaker sales in Asia and the chip crunch amid a dispute between the Dutch and Chinese governments over control of the semiconductor maker.
Kaihara said that demand is weaker in some Southeast Asian nations and that competition is intensifying in countries like Thailand as rival carmakers offer sales incentives and cut auto prices to compete with emerging Chinese players. The company needs to make drastic changes in Asia to address weak sales, he said.
Honda now expects group car sales of 3.34 million units this fiscal year, down from 3.62 million forecast previously. First-half sales dropped 5.6% to 1.68 million vehicles.
Tariffs remained a drag on results, with U.S. duties reducing operating profit by Y164.3 billion for the six months ended September, the company said. However, it projected a smaller tariff burden of Y385.0 billion for the fiscal year versus a previous estimate of Y450.0 billion.
Honda's stock has lagged behind the broader market as U.S. tariffs clouded its earnings outlook. Its shares are up about 3% this year compared with the benchmark Nikkei Stock Average's roughly 26% gain.
The automaker said Friday that first-half net profit fell 37% from a year earlier to Y311.83 billion. That missed the Y342.97 billion estimate of analysts in a poll by data provider Quick. Revenue declined 1.5% to Y10.633 trillion.
Its motorcycle business fared better, with operating profit increasing 13% to Y368.2 billion as higher sales in Brazil and the Philippines offset a decline in Vietnam.
The company also booked Y223.7 billion in one-time electric vehicle-related expenses as it provided for losses and impairment on EVs sold in the U.S. and wrote down EV development assets due to lineup changes.
Honda said in May that it planned to cut its EV investment by some $20 billion in the coming years as the demand growth slows. The automaker said it would improve its lineup of hybrid models. That came as some consumers in the U.S. and other markets have shifted to hybrids from pure EVs amid concerns about charging problems and higher prices associated with fully electric cars.
For the year ending March, the company projected revenue to decline 4.6% to Y20.700 trillion and net profit to drop 64% to Y300.00 billion. It previously projected revenue of Y21.100 trillion and net profit of Y420.00 billion.
Honda was the last of Japan's biggest automakers to report earnings. Earlier this week, Toyota Motor posted stronger second-quarter net profit and raised its full-year sales and earnings guidance despite an expected $9 billion blow from U.S. tariffs. On Thursday, Nissan Motor booked its fifth straight quarterly net loss, driven in part by a tariff hit of more than half a billion dollars.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
November 07, 2025 08:24 ET (13:24 GMT)
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