#Honda Reports Significant Operating Loss for Fiscal Year 2026
Honda Motor Co., Ltd. (NYSE: HMC) reported a consolidated operating loss of JPY 414.3 billion for fiscal 2026 after recording total EV-related losses of JPY 1,577.8 billion, including JPY 124.1 billion in equity-method losses tied to its electrification strategy reset.
Sales revenue rose 0.5% to JPY 21,796.6 billion. Loss before income taxes was JPY 403.3 billion, compared with profit of JPY 1,317.6 billion in fiscal 2025. Loss attributable to owners of the parent was JPY 423.9 billion, against a profit of JPY 835.8 billion a year earlier. Basic loss per share was JPY 106.06.
The full-year results were materially shaped by an automobile electrification strategy reset announced on March 12, 2026. Cumulative EV-related losses through the third quarter stood at JPY 267.1 billion, with an additional JPY 1,186.4 billion recognized in the fourth quarter, including JPY 124.1 billion booked through share of loss of equity-method investments.
#Honda Resets EV Strategy in North America and China
The company stated it cancelled the development and market launch of certain EV models planned for production in North America, and discontinued or reduced volumes for jointly developed EV models under an alliance agreement. Honda said the strategy revision reflected changing EV market conditions and revisions to incentives in the US.
Honda recognized impairment losses of JPY 521.4 billion on property, plant, equipment, and intangible development assets tied to discontinued EV programs in North America and certain models in China. Disposal losses on capitalized development costs totalled JPY 331.4 billion. The company assessed the fair value less costs of disposal of the affected non-financial assets as zero.
Honda recorded approximately JPY 667.4 billion in provisions related to EV contractual obligations as part of broader EV-related losses. This included JPY 106.3 billion for an onerous contract under an alliance agreement and JPY 561.1 billion covering compensation, parts supply, and procurement commitments.
"Despite a challenging business environment, including higher tariff costs and lower unit sales due to factors such as semiconductor shortages, company-wide cost reductions were implemented and profitability was maintained, excluding EV-related losses," Honda said in regards to the Automobile business in its financial results presentation.
#Motorcycle Business Posts Record Volumes and Profit
Excluding EV-related charges, Honda's adjusted operating profit was JPY 1,039.3 billion, with an adjusted operating margin of 4.8%. The motorcycle segment delivered Honda Group unit sales of 22.1 million units, up 7.4% year on year, which the company described as record-high volumes driven primarily by India and Brazil.
Motorcycle segment operating profit rose 10.3% to JPY 731.9 billion, with an operating margin of 18.2%. Automobile segment operating profit was a loss of JPY 1,411.1 billion, compared with a profit of JPY 243.8 billion a year earlier; excluding EV-related losses, automobile adjusted operating profit was JPY 42.5 billion. Automobile unit sales fell 8.9% to 3.39 million units, with Asia volumes down 253,000 units including a 199,000-unit decline in China.
Tariff impacts reduced consolidated operating profit by JPY 346.9 billion. Foreign currency effects were a negative JPY 77.0 billion. The market average rate was JPY 151 to the US dollar, compared with JPY 153 the prior year.
#Honda Forecasts Return to Profit With JPY 500 Billion Operating Profit Target
For the fiscal year ending March 31, 2027, Honda forecasts operating profit of JPY 500.0 billion on sales revenue of JPY 23,150.0 billion, up 6.2%. The forecast assumes additional EV-related losses of JPY 500.0 billion and an average exchange rate of JPY 145 per US dollar. Adjusted operating profit, excluding EV-related losses, is forecast at JPY 1,000.0 billion.
Honda projects motorcycle unit sales of 22.8 million, which it described as a record-high target supported by expanded production capacity in India. Automobile Honda Group unit sales are forecast at 3.39 million units. In North America, the company stated it will primarily strengthen ICE and HEV sales to increase volumes.
The fiscal 2027 dividend forecast is JPY 70 per share, unchanged from fiscal 2026, with an interim and year-end dividend of JPY 35 each. Honda introduced a dividend on equity target of 3.0% from fiscal 2026 onward as its return indicator.
Operating cash flows after R&D adjustment were JPY 2,657.9 billion for fiscal 2026, compared with JPY 2,806.6 billion the prior year. Capital expenditures are forecast to rise to JPY 1,250.0 billion in fiscal 2027 from JPY 751.3 billion. Risks to the outlook flagged by the company include the situation in the Middle East, higher material costs, tariff impacts, and foreign exchange volatility.