Key facts
- Honda reported a net loss of $2.7 billion for the fiscal year ending March 31.
- This marks the company's first annual loss since 1957.
- Restructuring costs for its electric vehicle business exceeded $9 billion.
- Honda CEO Toshihiro Mibe apologized for the financial results.
- Shareholders reappointed Mibe and approved 10 other board nominees.
Honda Motor has reported its first annual net loss in seven decades, amounting to $2.7 billion for the fiscal year ending March 31. The significant financial downturn was primarily driven by over $9 billion in restructuring costs related to its electric vehicle (EV) business and increased competition from Chinese automakers.
CEO Toshihiro Mibe issued a deep apology to shareholders for the concern and inconvenience caused by the results. Despite the loss, shareholders at the annual meeting on Friday supported Mibe's reappointment to the board, along with 10 other director nominees. This backing comes as Honda seeks to recover from costly strategic missteps.
The company has acknowledged that a major bet on electrification did not yield the expected results, leading to the abandonment of its goal for fully transitioning to electric and fuel-cell vehicles by 2040 and a revised target for EVs to constitute one-fifth of new-car sales by 2030. A $10.4 billion investment plan for EV and battery manufacturing in Canada has also been indefinitely postponed.
Changes in U.S. policy, including the removal of EV tax incentives and the introduction of tariffs, contributed to a sharp decline in Honda's EV sales, with the Honda Prologue seeing an 86% drop in the United States. In response, Honda is increasing its focus on hybrid technology, with plans to launch 15 new hybrid models by 2030.
Despite the substantial loss, Honda's stock saw a notable rise following the announcement, with shares climbing 7% on May 15. This positive market reaction is attributed to investors looking ahead, with a projected operating profit of $3.14 billion for the upcoming year, which exceeds consensus estimates. The market had largely anticipated significant EV-related expenses, with much of the shock already priced in following an earlier warning.