Honda cut its annual profit outlook by about 10% to a four-year low, citing a firmer yen, and said it would buy back $915 million shares over the rest of the financial year. Japan's No.3 automaker now expects an operating income of 690 billion yen for the year to March 2020, the lowest since the year-ended March 2016, from 770 billion yen previously. Honda expects the yen to average 107 versus the dollar over the period, from a previous assumption of 110 yen.
A stronger currency eats into profits because exports become more expensive and the value of overseas earnings decreases. Honda has also been hit by an almost 20% slide in motorcycle sales over the six months to September in India, as the world's No.4 auto market has gone into a tailspin this year amid tight liquidity, high taxes and a weak rural economy.
"The Indian market is contracting at a very rapid rate," said Honda Executive Vice President Seiji Kuraishi. "I must say, we are struggling there."
Honda joins compatriots Suzuki Motor Corp, Subaru Corp, Mazda Motor Corp and Mitsubishi Motors Corp in slashing profit projections in recent days. Toyota bucked the trend and retained its forecast on Thursday. Flush with cash after a stellar second quarter, it even announced a $1.8 billion share buyback. Honda has said it will buy back up to 33 million shares worth up to 100 billion yen over the rest of the fiscal year.
Nissan Motor is due to report results on Tuesday.
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