Honda (NYSE:HMC) reported a steep 50% drop in net profit for the first quarter on Wednesday, as increased U.S. tariffs and one-time electric vehicle-related costs weighed heavily on its earnings. Nonetheless, the automaker raised its full-year outlook, citing a lighter tariff impact and a softer yen currency.
For the April to June period, net profit fell sharply to 196.67 billion yen ($1.33 billion), missing the analyst consensus of 248.17 billion yen, according to LSEG data. Operating profit also lagged expectations, coming in at 244.2 billion yen ($1.66 billion), over 20% below the forecasted 311.7 billion yen.
Ahead of the earnings release, Honda’s shares in Tokyo ended 1.5% higher.
The company highlighted that the combined U.S. tariff on auto imports — the original 2.5% rate plus the 25% tariff imposed by President Trump in April — sliced around 125 billion yen from its quarterly operating profit.
Quarterly revenue slipped 1.2% year-on-year to 5.34 trillion yen.
Despite the challenging Q1 results, Honda lifted its full-year operating profit guidance from 500 billion yen to 700 billion yen, reflecting a lowered tariff impact now estimated at 450 billion yen versus the prior 650 billion yen forecast.
For the fiscal year ending March 2026, the company expects revenue to decline 2.7% to 21.1 trillion yen, with net profit forecast to drop 50% to 420 billion yen. This contrasts with earlier projections of 20.3 trillion yen in revenue and 250 billion yen in net profit.
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