Honda on Friday revised up its full-year outlook thanks to a weaker yen but it analysts warned of an uncertain outlook for the auto industry following Donald Trump's drive to support US firms over foreign imports. The company forecast net profit to hit 545 billion yen ($4.8 billion) for the fiscal year through March, up from its earlier estimate of 415 billion yen.
It also tipped sales to reach 13.8 trillion yen, up from 13.4 trillion yen projected earlier.
The upward revisions came as the yen has weakened against the dollar on bets Trump's promises to boost spending and cut taxes will fire the US economy, stoke inflation and lead to higher interest rates.
The improved currency conditions offset an expected fall in sales, Honda said.
"The weak yen trend has prevailed in the third quarter, which is a major factor behind recovery in the Japanese auto industry," Shigeru Matsumura, analyst at SMBC Friend Research Center, said before the announcement.
A weaker yen boosts exporters' bottom lines by making their products relatively less expensive overseas, while inflating the value of their earnings abroad when repatriated.
"But the outlook for the Japanese auto industry is quite unclear because of political risks of the Trump administration," Matsumura said.
Last month, Trump threatened punitive tariffs on imports of Japanese cars into the United States in a bid to force them to manufacture and hire there.
He targeted Toyota in one his fiery tweets, criticising its ongoing project to build a new factory in Mexico and threatening it with painful tariffs.
The industry is also concerned about the impact of Trump's foreign exchange policy, "which is unpredictable and potentially the biggest risk", Matsumura said.
In a speech to business executives, Trump this week accused Tokyo of keeping its currency undervalued to give it an unfair trade advantage.
Comments
Comments are closed for this article.