Honda Raises Full-Year Profit Outlook Despite Auto Chip Shortage

(Bloomberg) -- Honda Motor Co. boosted its operating profit outlook for the current fiscal year, a sign sales are tracking well despite the global chip shortage that’s disrupting the auto industry’s supply chain.

The Japanese automaker is targeting an operating profit of 520 billion yen ($5 billion) for the 12 months through March, compared with a prior forecast for 420 billion yen, it said in an exchange filing Tuesday. That compares with analysts’ average projection for 469 billion yen, according to data compiled by Bloomberg.

The rosier-than-expected outlook comes as a global chip shortage is straining many automakers. Housebound consumers have ramped up purchases of personal computers, tablets and video games, depleting semiconductor supplies that are essential to the technology needed in modern-day cars. That risks slowing a healthy rebound in car sales after automakers faced a coronavirus-induced slump.

Whether the chip shortage will affect sales of Honda’s new models, such as Vezel, Civic and MDX is key, said Tatsuo Yoshida, an analyst at Bloomberg Intelligence. “Risks beyond the third quarter include virus outbreaks that restrict economic activity and logistics issues such as parts shortages, both internally and at auto-parts suppliers,” Yoshida added.

Honda’s sales revenue for the third quarter rose just 0.6% to 3.8 trillion yen while operating profit increased 67% to 277.7 billion yen. That was mainly due to greater efficiency in R&D expenditure and cost control, and came despite unfavorable currency moves, Honda said.

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