Honda Motor Co., Ltd. (HMC) Stock: Sinks on 76% Profit Drop and $15B EV Project Delay

TLDR

Honda stock trades at $29.60 after a sharp drop in quarterly profits Q4 operating profit plunged 76%, far below analyst estimates Full-year net profit declined 24.5%; operating profit dropped 12.2% Honda delayed its $15B EV project in Canada due to soft demand and tariffs FY2026 forecast slashed, citing a projected 59% fall in operating profit

Honda Motor Co. (NYSE: HMC) stock was trading at $29.60, down 0.10%, as of writing, after the company reported a major earnings miss for the fiscal fourth quarter ended March 31.

Honda Motor Co., Ltd. (HMC) Stock

While revenue came in at ¥5.36 trillion ($47.26 billion), matching LSEG estimates, operating profit plummeted 76% to ¥73.5 billion, significantly below the ¥275.52 billion consensus.

NEWS: Honda reported a 76% plunge in operating profit in huge earnings miss in their fourth quarter results.

Honda's fourth quarter ends March 31. https://t.co/piwmORhcky

— Sawyer Merritt (@SawyerMerritt) May 13, 2025

Full-year revenue rose 6.2% year over year to ¥21.69 trillion, slightly beating estimates. However, operating profit for the year declined 12.2% to ¥1.21 trillion, missing the ¥1.41 trillion forecast. Net profit was down 24.5% to ¥835.84 billion. The earnings date is expected between August 5 and August 11, 2025.

Tariffs Hit Outlook Hard

Honda cited U.S. tariffs as a key reason for the dramatic profit decline and bleak outlook. The company said tariffs are expected to shave $4.4 billion off its operating profit this fiscal year. Due to these trade headwinds and frequent policy revisions, Honda now expects FY2026 operating profit to fall nearly 59% to ¥500 billion and net profit to plunge 70.1% to ¥250 billion. Revenue is projected to drop 6.4% to ¥20.3 trillion.

EV Plans Delayed in Canada

Alongside weak earnings, Honda postponed its massive $15-billion electric vehicle project in Ontario. Initially announced in April 2024, the plan included a battery plant and retooled production lines. CEO Toshihiro Mibe attributed the delay to weaker-than-expected EV demand and U.S. tariff uncertainty.

Honda Canada postpones $15-billion EV investment project in Ontario due to slowdown in EV sales
Ottawa was set to give Honda $2.5 billion through tax credits, while Ontario was to commit up to $2.5 billion in direct and indirect support https://t.co/UHiE09c2Z0

— Lorrie Goldstein (@sunlorrie) May 13, 2025

To mitigate the impact of tariffs, Honda is shifting CR-V production to Ohio instead of Canada. The company clarified it would not reduce jobs at its Canadian facilities, but is reallocating export destinations based on cost pressures.

Mixed Signals in Core Business

Honda’s motorcycle segment performed well, achieving record sales and operating profit. On the other hand, its automobile division struggled with declining sales in China and Southeast Asia. Hybrid vehicle sales grew in North America, aided by regional incentives.

Dividend Policy Shift

In response to changing financial dynamics, Honda revised its dividend policy. It now uses a dividend-on-equity model and expects to increase its dividend by ¥2 per share, reaching ¥70 per share for the current fiscal year.

Despite short-term challenges, Honda maintains a “buy” rating among analysts, with 15 out of 21 analysts maintaining a bullish outlook. The average 12-month target price stands at JPY 1,775.00.

 

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