Honda Beats Out Analyst Expectations as Company Closes Out Fiscal Year With Profit

By Thomas Price Friday, May 14, 2021

As the COVID-19 pandemic finally begins to recede following mass vaccination efforts around the globe, sales for many business types have rebounded well in 2021. This is certainly true for car company Honda, which recently released its Q4 and annual earnings report for the fiscal year. The company beat out analyst expectations for earnings despite a drop in overall sales on the year. As a result, the car company stock is up in early pre-market trading as many investors project strong business potential moving into the rest of 2021.

Honda dealership.

Honda Earnings vs. Expectations

In the Q4 earnings report from car company Honda, the business generated $33 billion in total revenue. In comparison to the same quarter a year ago, this represents a 5% increase in overall sales as consumers once again are buying cars after a down year during the pandemic. More importantly, this bump in revenue for the quarter helped the car company to post a net profit of $2 billion as Honda found ways to cut costs and increase total revenue in the final quarter of its fiscal year.

These results translated to strong earnings of $1.13 per share. Compared to the same quarter last year, where the business reported a loss of $0.16 per share, the turnaround in 2021 has been incredibly strong. The earnings per share also beat out analyst expectations which had projected the car company to only generate earnings of $0.43 per share.

Revenue for the company rebounded in every area of business, with motorcycle and automobile sales leading the field. While sales fell in North America and remained largely flat in Europe, strong gains in Asia and Japan in particular helped carry Q4 to increase revenue.

In the year, Honda saw total revenues fall by 12%. However, due to strong restructuring of the business strategy, profits exploded by 44% to $6 billion over the course of the fiscal year.

Future Outlook and Stock Market Reaction for Honda

Despite a relatively strong year considering the effect of the COVID-19 pandemic on business, Honda remained conservative in its 2022 fiscal year guidance. In fact, the company only projects an annual profit of $5.4 billion after generating $6 billion in this past fiscal year.

This conservatism for the next fiscal year has not deterred investors at the stock market, with company shares up to nearly 1% in early pre-market trading. Honda stock is now worth around $30.80 per share after closing nearly $0.30 below that figure last night. The car company hopes this rally can bring shares up to 2021 highs of over $31 per share.

In a message to investors, the new president and CEO of Honda, Toshihiro Mibe, said, “As a result of various efforts we have been undertaking with such passion, in 2020, Honda delivered attractive products and services, pleasing a total of approximately 25 million customers around the world, combining all of our businesses including motorcycles, automobiles, life creation (power products), aircraft and aircraft engines.”

He went on to later add, “Honda will continue taking on new challenges to serve as a source of power for people who are trying to do things based on their own initiative and to continue to be a company people and society want to exist into the future.”

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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