Friday 8 November 2019 12:31 pm

Honda cuts operating profit outlook by 10 per cent due to strong yen and falling motorcycle sales

Honda has cut its annual profit expectations by 10 per cent and said it would buy back $915m shares over the rest of the financial year.

Japan’s third biggest car maker is now predicting an operating income of ¥690bn for the year ending March 2020.

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It’s down from ¥770bn and the lowest since 2016.

It comes after the yen has performed better than expected with Honda now expecting it to average 107 against the dollar instead of the previously expected 110.

It means Honda’s exports will be more expensive and the value of the company’s earnings overseas decreases.

Honda has also been hit by a decrease in motorcycle sales in India over the six months to September.

“The Indian market is contracting at a very rapid rate,” said Honda executive vice-president Seiji Kuraishi. “I must say, we are struggling there.”

Honda joins fellow Japanese automakers Suzuki, Subaru, Mazda and Mitsubishi in cutting profit outlooks this week.

Toyota was the only major carmaker to maintain its forecast after a a prbucked the trend and retained its forecast on Thursday. Flush with cash after a stellar second quarter, it even announced a $1.8 billion share buyback.

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Honda has said it will buy back up to 33 million shares worth up to 100 billion yen over the rest of the fiscal year.

Nissan Motor (7201.T) is due to report results on Tuesday.