TOKYO (Reuters) -Honda Motor reported a 50% drop in first-quarter operating profit on Wednesday, as a stronger yen and the impact of U.S. President Donald Trump’s tariffs took its toll, but the company raised its full-year forecast.
Japan’s second-biggest car maker said quarterly operating profit was 244.2 billion yen ($1.66 billion) in the April-June period, more than a fifth below the average estimate of 311.7 billion yen in a survey of seven analysts by LSEG.
Honda said the steep 27.5% tariffs on auto imports by the U.S. – comprised a previous 2.5% rate and a 25% levy imposed by Trump in April – pulled down its operating profit for the quarter by about 125 billion yen.
But the automaker said the impact from the tariffs on its full-year operating profit was smaller than it had estimated in May. It now expects a 450 billion yen hit for the year, compared to 650 billion yen forecast previously.
The company raised its full-year operating profit forecast to 700 billion yen from 500 billion yen, and said it expected the yen to trade at an average rate of 140 per dollar, five yen weaker than it had previously estimated.
Honda’s reliance on the U.S. has deepened significantly in recent years, with the market making up 41% of its global sales in the first half of the year, up from 37% for the whole of 2024 and 26% for 2022.
The company calculated its forecast for the full-year tariff impact assuming that a reduced 15% U.S. rate on Japanese auto exports as agreed under a bilateral trade deal last month would come into effect in September.
Honda builds most of its cars for the U.S. in Canada and Mexico, while also shipping a few thousand a month to the U.S. from Japan. It expected to benefit more from U.S. tax exemptions under the United States-Mexico-Canada (USMCA) trade agreement than estimated previously.
It said it recorded a one-time expense of about 113 billion yen related to electric vehicles.
($1 = 147.4600 yen)
(Reporting by Daniel Leussink; Editing by Tom Hogue, Jamie Freed and Muralikumar Anantharaman)
