By Daniel Leussink
TOKYO, May 14 (Reuters) – Honda Motor posted its first annual loss in nearly 70 years as a listed company on Thursday, hit by more than $9 billion in costs to restructure its electric-vehicle business, and the firm scrapped its long-term EV sales target.
Revealing its worst financial report since Honda listed on the stock market in 1957 underscores how risky an aggressive bet on EVs can be for a legacy automaker when it slams into weaker-than-expected demand.
Toshihiro Mibe, CEO of Japan’s second-largest automaker, on Thursday said Honda is scrapping its goal of having EVs make up a fifth of its new car sales in 2030 as well as a target of a full shift to electric or fuel-cell vehicle sales by 2040.
Mibe said Honda will also indefinitely suspend its Canada EV project, an $11 billion investment plan to produce EVs and batteries in what would have been the Japanese firm’s largest ever investment in the country.
Its operating loss totalled 414.3 billion yen ($2.63 billion) for the year ended March, compared with a median estimate of a 315.6 billion yen loss in a poll of 22 analysts by LSEG and a 1.2 trillion yen profit a year earlier.
Honda booked total EV-related losses of 1.45 trillion yen for the business year ended March and expected to face additional costs of 500 billion yen for the year just started.
The company still expects to return to profitability this year, forecasting a 500 billion yen profit on cost-reduction measures and its profitable motorcycle business.
“The motorcycle business will expand production capacity in India … and aim for record-high sales of 22.8 million units,” Honda said in an earnings statement.
Strong sales in India and Brazil enabled its motorcycle business to achieve record-high sales volume and operating profit in the fiscal year ended in March, helping the firm cushion the impact of a bruising EV business writedown as well as sliding car sales in key markets including China.
The company expected rising material prices, including the impact of the Middle East conflict, would cause a 313 billion yen hit to its operating profit in the current fiscal year.
($1 = 157.8300 yen)
(Reporting by Daniel Leussink; Writing by Miyoung Kim; Editing by Jacqueline Wong and Muralikumar Anantharaman)
