Thanks to a weak yen and strong demand in the U.S. for hybrids, Honda Motor Co (NYSE:HMC) reported a 77% increase in its operating profits for the most recent year-end as sales were up 21% to ¥20.429 trillion. The company sold nearly 3 million vehicles globally, up from 2.3 million a year ago as strong demand for hybrids offset sluggish sales for electric vehicles as well as a 6% drop in sales in China.
“Hybrids are our weapon,” CEO Toshihiro Mibe said, according to Bloomberg, adding that the company plans to produce 2 million hybrids by 2030 and use the profits towards electrification. This includes an $11B investment in an EV and EV battery plant in Canada, and plans to build its first fully-electric, U.S.-made vehicle in Marysville, Ohio. The company also plans to increase R&D spending by nearly a quarter of its current budget.
Additionally, Honda (HMC) will also buy back ¥300 billion shares in FY25 to accommodate calls by the Japanese government for its automakers to return some of their profits to shareholders.
But despite the bullish FY24 results, shares are only modestly higher in Friday’s premarket trading as projections for FY25 left Wall Street underwhelmed. Sales are expected to decline 0.6% to ¥20.3 trillion, shy of the consensus estimate of ¥20.88 trillion, while a 2.8% improvement in profits to ¥210.23 is below estimates of ¥214.5.
