Honda warns of tougher year ahead after third quarter profit slide

Honda Motor Co., Ltd has flagged a more challenging financial year ahead after reporting a sharp fall in profit in its consolidated results for the fiscal third quarter ended December 31, 2025.

The figures, released on February 10, cover the nine months from April to December and point to sustained pressure on earnings despite still sizeable revenue.

For the nine months, Honda posted consolidated sales revenue of about $107 billion, down 2.2% from the same period a year earlier.

While the decline in revenue was modest, profitability weakened much more sharply, underscoring the strain on margins across the group’s operations.

Profits fall sharply despite steady revenue

Operating profit for the nine months slid 48.1% year on year to roughly $4.0 billion. Profit before income taxes fell 37.0% to about $5.2 billion, while profit attributable to owners of the parent dropped 42.2% to around $3.1 billion.

Earnings per share attributable to owners of the parent declined to approximately $0.78, compared with about $1.14 in the prior year period.

The figures show that cost pressures and market headwinds had a disproportionate impact on earnings compared with revenue over the period.

Financial position and balance sheet shifts

Honda’s balance sheet expanded during the nine months, with total assets rising to about $219 billion as of December 31, 2025, up from roughly $205 billion at the end of the previous fiscal year in March.

The increase was supported by higher operating lease equipment and the effect of foreign currency translation.

Total equity stood at around $85 billion at the end of December.

The equity ratio attributable to owners of the parent slipped to 37.9% from 40.1% at the previous fiscal year end, indicating a weaker capital ratio even as overall asset levels grew.

Honda kept its shareholder return policy steady. The company plans an annual dividend of about $0.47 per share for the fiscal year ending March 31, 2026.

This includes a second-quarter-end dividend equivalent to around $0.24 per share.

No additional dividend payments are scheduled after the third quarter-end.

Full-year forecast points to further pressure

Alongside the third quarter results, Honda revised its projections for the full fiscal year ending March 31, 2026.

The company now expects full-year sales revenue of about $141 billion, representing a 2.7% decline from the previous year.

Operating profit for the full year is forecast at roughly $3.7 billion, down 54.7% year on year.

Profit before income taxes is expected to fall 52.9% to about $4.1 billion, while profit attributable to owners of the parent is projected at around $2.0 billion.

Full-year earnings per share are forecast at approximately $0.51.

Taken together, the third quarter results and updated projections suggest that Honda is entering the final stretch of the fiscal year facing continued earnings pressure, with profitability expected to remain under strain even as revenue holds at a high level.

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