Honda Earnings: Chip Shortage Recovery and Weak Yen Drive Guidance and Dividend Increases

We are not changing our Honda fair value estimates after the firm reported second-quarter fiscal 2024 results that saw significant growth in the auto business as it recovers from the chip shortage. The company also raised its fiscal 2024 full-year dividend expectation to a split adjusted JPY 58 per share from JPY 50 and raised fiscal 2024 guidance as the weak yen to the dollar continues to be a large profit contributor for Japanese automakers selling in the U.S. Total company operating profit increased 30.7% year over year while operating margin rose by 70 basis points to 6.1%. EPS grew 39.4% to JPY 51.49 but market expectations may have been too high going into earnings, as EPS still missed the Refinitiv consensus of JPY 53.36, sending the stock down by over 2% during Nov. 9 New York trading.