Honda has posted a 4.1% decline to operating income in the quarter through to September 30 citing softer demand in North America and Japan as factors that weighed down on profitability.

The company said that the result came in spite of profit increasing factors such as favourable model introductions in Asia and efforts to reduce cost.

Honda also said that the previously announced forecast for consolidated net sales and other operating revenue was revised down from 12.8 trillion yen to 12.75 trillion yen due to lower sales in in Japan and China "due to the difficult business environment".

However, consolidated income before income taxes for the fiscal second quarter amounted to 179.8 billion yen, an increase of 8.6% compared to the same period last year. Consolidated net income for the fiscal second quarter amounted to 141.8 billion yen, an increase of 17.9% compared to the same period last year.

Over the past year, Honda's bottom line has been shored up by cost cuts and a weaker yen. However, a recent rise in the consumption tax in Japan has hit sales in the domestic market.

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Consolidated Financial Summary for the Fiscal 2nd Quarter ended September 30, 2014

TOKYO, Japan, October 28, 2014 - Honda Motor Co., Ltd. announced its consolidated financial results for the fiscal second quarter and the fiscal first half ended September 30, 2014.

Consolidated operating income for the fiscal second quarter (July 1, 2014 through September 30, 2014) amounted to 164.4 billion yen, a decrease of 4.1% compared to the same period last year, due to profit-reducing factors such as a decrease in automobile unit sales in North America and Japan due to changes in the business environment. This was despite profit-increasing factors such as the introduction of new automobile products in Asia and the positive effect of cost reduction efforts. Consolidated income before income taxes for the fiscal second quarter amounted to 179.8 billion yen, an increase of 8.6% compared to the same period last year. Consolidated net income*1 for the fiscal second quarter amounted to 141.8 billion yen, an increase of 17.9% compared to the same period last year.

Consolidated operating income for the fiscal first half (April 1, 2014 through September 30, 2014) amounted to 362.4 billion yen, an increase of 1.7% compared to the same period last year, and consolidated net income*1 for the fiscal first half amounted to 288.4 billion yen, an increase of 18.8% compared to the same period last year.

Reflecting the fiscal first half results as well as the forecasted favorable effect of yen depreciation and the forecasted decline in unit sales in Japan and China due to the difficult business environment, Honda made some revisions to the previously announced forecasts for the current fiscal year (April 1, 2014 through March 31, 2015). The previously announced forecast for consolidated net sales and other operating revenue was revised downward from 12.8 trillion yen to 12.75 trillion yen, whereas the forecast for consolidated operating income will remain unchanged from the previous 770.0 billion yen. The forecast for consolidated net income*1 for the current fiscal year was also revised downward from the previous 600.0 billion yen to 565.0 billion yen.

The quarterly dividend for the fiscal second quarter will be 22 yen per share, a 2 yen increase compared to the quarterly dividend for the same period last year. The total cash dividend to be paid for the fiscal year ending March 31, 2015 is expected to be 88 yen per share, an increase of 6 yen per share from the previous fiscal year.

Consolidated Financial Results for the Fiscal 2nd Quarter and the Fiscal First Half

Consolidated Financial Results for the Fiscal 2nd Quarter and the Fiscal First Half

Forecasts for the Fiscal Year ending March 31, 2015 (FY15)

Forecasts for the Fiscal Year ending March 31, 2015 (FY15)

*1
Net income attributable to Honda Motor Co., Ltd. based on U.S. generally accepted accounting principles.
*2
Honda Group Unit Sales is the total unit sales of completed products (motorcycles, ATVs, automobiles, power products) of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method.
*3
Consolidated Unit Sales is the total unit sales of completed products (motorcycles, ATVs, automobiles, power products) corresponding to consolidated net sales, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.
*4
Honda Group Unit Sales and Consolidated Unit Sales of ATVs included in motorcycle business for the fiscal 2nd quarter ended September 30, 2013 and 2014 are 28 thousand units and 31 thousand units, respectively. Honda Group Unit Sales and Consolidated Unit Sales of ATVs included in motorcycle business for the fiscal first half ended September 30, 2013 and 2014 are 49 thousand units and 53 thousand units, respectively.
*5
Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles and are not included in consolidated net sales to the external customers in our automobile business. As a result, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our automobile business.

Original source: Honda