Honda Motor Co. said Friday its net profit for the previous fiscal year rose 7.6 percent from a year earlier to 707.07 billion yen ($5.5 billion), helped by the depreciation of the yen against the U.S. dollar.
The Japanese automaker said it forecasts a 0.4 percent rise in net profit to 710 billion yen in the current business year through March 2023 amid uncertainty over the outlook for the global semiconductor shortage and the impact of coronavirus lockdowns in China.
Honda expects its sales to increase 11.7 percent to 16.25 trillion yen but operating profit to fall 7.0 percent to 810 billion yen.
The company expects to sell 4.20 million cars worldwide, up 126,000 units from a year earlier, and 18.56 million motorcycles, an increase of 1.5 million units.
In fiscal 2021 ended March 31, Honda saw its operating profit grow 32.0 percent from a year earlier to 871.23 billion yen and sales climb 10.5 percent to 14.55 trillion yen.
"These earnings come at a time when we were unable to increase our output as much due to the semiconductor shortage," Executive Vice President Kohei Takeuchi said at a press briefing.
"But a surge in raw material costs, notably those of precious metals, had a larger impact on our earnings than a limit in output due to the chip crunch," he said.
But the weakening of the yen against the U.S. dollar, a drop in sales incentives and a reduction in costs, among other factors, helped the company increase its net profit.
A weaker yen has been proving a boon to Japanese automakers as their overseas profits are boosted when repatriated. Honda put its assumed exchange rate for the dollar at 120.0 yen for the current fiscal year, compared with 112.0 yen in fiscal 2021.
However, Takeuchi said the rapid movement in the currency market, which recently saw the yen fall to a 20-year low in the lower 130 level against the dollar, is "not something that Honda simply welcomes."
"When we look at corporate earnings, we welcome it because it inflates our profit," he said. "As a company, it is difficult to deal with currency volatilities. What we want is for the currency to be stable for the long term."