Honda Motor raised its full-year operating profit forecast by 130 billion yen, or 20%, to 780 billion yen on Tuesday, after record motorcycle sales in India and Brazil and stronger demand for hybrid and compact cars in North America lifted first-half earnings.

The upgrade matters well beyond Tokyo. Asia accounts for more than 10 million of the 11.9 million motorcycles Honda sold in the half. Its car business, by contrast, keeps shrinking in China. The results show a company leaning harder on emerging-market motorcycles and the U.S. hybrid buyer while it absorbs heavy write-downs from an earlier push into electric vehicles.

Honda first-half profit rises 48% despite EV losses

Operating profit for the six months to Sept. 30 rose 48.1% from a year earlier to 648.7 billion yen, on sales revenue up 13.2% to 12.04 trillion yen, according to Honda's results filing. Net profit attributable to shareholders climbed 65.7% to 516.8 billion yen.

Those figures absorbed 484.8 billion yen of EV-related losses booked in operating profit, more than double the 223.7 billion yen a year earlier. Stripping those out, adjusted operating profit rose 71.3% to 1.13 trillion yen, and the adjusted margin widened to 9.4% from 6.2%.

Several tailwinds helped. A weaker yen added 148.3 billion yen to adjusted operating profit compared with a year earlier; the dollar averaged 159 yen in the half, against 146 yen a year before. Tariffs, a drag through much of last year, added 97 billion yen because of one-time factors including refunds, the company said. Higher raw material costs offset most of the gain from price increases.

The motorcycle unit did most of the work. Group motorcycle sales rose 10.6% to 11.9 million units, a first-half record, and segment operating profit rose to 439 billion yen at a 19.3% margin. Sales in Asia alone rose by more than a million units.

Cars were weaker. Group automobile sales fell 6.6% to 1.57 million units, with China down 152,000 units. North American sales rose to 897,000 from 856,000 as buyers, facing higher gasoline prices, chose compact and fuel-efficient models, Honda said. The automobile segment posted an operating loss of 5.7 billion yen, narrower than a loss of 73 billion yen a year earlier, and an adjusted profit of 479 billion yen before EV charges.

Full-year forecast lifted, but the second half will be softer

For the year ending March 2027, Honda now expects operating profit of 780 billion yen, compared with an operating loss of 414.3 billion yen last year, and net profit of 500 billion yen, up 100 billion yen from its August forecast. Sales revenue is forecast at 24.4 trillion yen. The company kept its EV-related loss estimate at 520 billion yen and its dividend forecast at 70 yen a share.

The math implies a much slower second half. Honda has already booked 648.7 billion yen of the 780 billion yen it expects for the full year, and management said the one-time gains from the first half would not repeat. The forecast assumes a rate of 156 yen to the dollar for the full year, a little stronger for the yen than first-half levels, so any further move in the currency would swing the outcome.

Honda cut its car sales forecast for China while raising its North American target, leaving full-year automobile sales at 3.16 million units. It now expects to sell 23.3 million motorcycles.

A $3 billion bet on U.S. hybrids in Ohio

Alongside the results, Honda said it will build a fourth car plant in Ohio, a $3 billion facility in the center of the state between its East Liberty and Marysville factories. The plant will be able to build 240,000 vehicles a year and switch among hybrid, gasoline and battery-electric models, with production expected to start in 2029, pending final government approvals. It is expected to create more than 2,000 jobs.

Bob Nelson, executive vice president of American Honda Motor, called the package "one of the most significant commitments in our history." It also includes new hybrid engine and transmission lines in Alabama, Ohio and Georgia and the return of engine making at its Alliston, Ontario, factory. Hybrid system capacity at its Ohio transmission plant will rise 250%. Honda said its North American capacity will grow to about 1.91 million vehicles from 1.67 million, and that it will introduce several large hybrid models from 2029.

Producing engines and hybrid systems locally could help Honda with U.S. tariffs and North American rules of origin, Automotive World noted. Ohio Governor Mike DeWine said the company could have built the plant anywhere.

Honda is also spending in its motorcycle heartland. It will raise capacity at its factory in Manaus, Brazil, to 2.3 million units from 1.6 million by 2029; Honda holds about 70% of the Brazilian motorcycle market, according to its presentation.

The interim dividend of 35 yen a share is scheduled to be paid on Dec. 8.