Japanese automaker Honda have announced an increase of 74% in annual profits in its 2012 tax year (March, 2012-March, 2013).
In the financial year of 2012, which has just recently came to an end, Honda recorded an annual profit of 367.2 billion Yen, which can be exchanged to an estimated £2.4 billion. This is compared to the financial year of 2011, when Honda recorded an annual profit of 211.4 billion Yen.
Honda’s rise in profits is a result of a recovery in major markets
The rise in profits is seen to be as a result of a recovery in its major markets, in particular in its own domestic market of Japan, which was devastated as a result of the 2011 Japanese earthquake. The weak Japanese Yen is also seen to be a key factor in the company’s rise in profits. In the past, Honda and other Japanese automakers including Toyota and Nissan have suffered from a strong standing of Japan’s currency, the Japanese Yen against the United States Dollar. This meant that when Honda and its two fellow automakers attempted to bring their overseas profits back into Japan, their profits were significantly reduced when it is exchanged from the US Dollar to the Japanese Yen. The big three Japanese automakers heavily rely on their overseas sales.
The now low standing of the Japanese Yen is as a result of the aggressive monterey policies on behalf of the newly elected Japanese government, who have adopted a set of aggressive steps to reduce the Yen by 20% against the US dollar.
According to Honda, the company sold 3.45 million vehicles in the period between March 2012 to 2013, a 40% rise from the previous year.
A spokesperson for Honda has welcome the figures and has said that the growth was driven primarily by a “significant increase in automobile sales mostly in North America, Asia and Japan”.
Industry experts think that the markets are expected to continue to rise
Industry experts argue that these markets are expected to continue to rise, and they also predict that the Japanese Yen will remain low for the forthcoming years. This has allowed Honda to predict its global car sales to rise by 7.7% to 3.67 million vehicles in the current financial year, due to end in March, 2014. The company has also predicted a net profit of 580 billon Yen for the financial year to March, 2014.