Tokyo Based Company Honda Has Increased Its Profit

Feb 05, 2017 06:10 AM EST | Joyce Vega

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Due to the difference between the Yen and the US Dollar and huge recall costs, Honda’s revenue dropped 3.2% year after year despite gains in auto, motorcycle sales, and other financial services. In 2017, Honda managed to get a 3.5%increase since the start of the year.

Nasdaq reported that Honda sold more Civics in the US than ever in 2016. Year after year Honda’s sales of cars grew by 6.8% while the sales of motorcycles grew by 2.6%. Honda’s revamped Civic sedan, Ridgeline pickup, and the CR-V all saw huge success in North America. The sales they made were more profitable than the vehicles they replaced.

After getting hit by the Takata airbag inflator scandal, Honda had to make some sacrifices. Part of the increased profit is made by trimming down some costs from the new product launches. They postponed or used less advertising and also used common parts for the cars.

Honda was also struck when the value of US dollar in yen shifted. On average, for the quarter, a dollar earned by Honda in the US was worth 109 yen at home. That’s a big increase in the value of the yen compared to the year-ago quarter when a dollar earned in the US was worth an average of 122 yen at home. The shift explains why Honda’s revenue dropped every year despite having gained in auto and motorcycle sales.

On top of that Honda has suffered major losses in Japan due to weak demand and sales tax increases. Honda now expects full-year revenue of 13,8 trillion yen ($118,2 billion), net income of 545 billion yen ($4,67 billion), and rise in vehicle sales by 5.5% or up to 5.0 million vehicles for the full fiscal year.

Honda shares have increased 3.5 percent since the beginning of the year, Yahoo reported. The stock has risen slightly more than 9 percent in the last 12 months. They also said that they had a profit of 80 percent per share.

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