Honda Motor’s shares have experienced a sharp decline due to the company’s operating and net profits for the first half of the fiscal year falling short of analysts’ expectations.
The stock was recently down 6.0% at 1,555.5 yen ($10.28), after a slide of as much as 7.2% earlier on Friday morning. According to FactSet, this represents the largest daily decline since March 2020.
In a statement released after the market closed on Thursday, the Japanese automaker announced that its operating profit for the April-September period had increased by 54% to Y696.57 billion, falling short of the Y744.49 billion estimate from a poll of analysts conducted by Quick. Similarly, its net profit for the first half of the year rose by 82% to Y616.30 billion, but still fell below the Y628.92 billion estimate from the Quick poll.
Nomura analyst Masataka Kunugimoto mentioned in a research report that Honda Motor’s unexpected warranty costs for the July-September quarter were related to automobile engine parts in North America. Although these costs were on the higher side, they are believed to be a one-time event and should not be a cause for excessive concern.
It remains to be seen how Honda Motor will navigate these challenges moving forward.