Honda Earnings: Weak Yen Against the Dollar and Strong Auto Volumes Boost Third-Quarter Results

Honda’s fiscal 2024 third-quarter results gave us no reason to change our fair value estimate, but we slightly increase our fiscal 2024 profit forecast after management raised its operating income guidance by JPY 50 billion to JPY 1.25 trillion and EPS of JPY 195.83, up from JPY 189.64. The guidance increase comes mostly from an extra JPY 53-billion foreign currency benefit relative to prior guidance, with JPY 17.5 billion of that amount from a weaker yen against the U.S. dollar. We see good potential for Honda beating its guidance, given the yen remains at nearly JPY 150 to the dollar, which is weaker than management’s full-year assumption of JPY 142 (had been JPY 140), because U.S. demand for Honda’s vehicles remains very strong. Management is taking this extra JPY 50 billion of operating income to announce a new share repurchase program for March and April of up to JPY 50 billion and 34 million shares. The full-year fiscal 2024 split-adjusted dividend remains on track for JPY 58 per share.