Japanese automaker Honda Motor Co. (HMC) has reported a 70% increase in its net profit for its most recent fiscal year as the company’s vehicle sales continue to surge.
Honda’s annual profit totaled $7 billion U.S. as sales rose nearly 21% during the fiscal year ended March 31. The company said weak sales in China were offset by strong sales in America.
Honda sold 2.8 million vehicles globally over the last year, up from 2.3 million in the previous fiscal year, with sales growing in Japan, the U.S. and throughout Europe.
Despite the strong results, Honda provided a glum outlook for the current fiscal year that began on April 1, saying that it expects its profit to decline nearly 10% to $6.4 billion U.S.
However, the company said that the decline in profit will not be due to slower vehicle sales but rather an increase in its research and development (R&D) spending to $7.7 billion U.S.
Honda said it is ramping up R&D spending focused on electric vehicles, using its profits to invest in the company’s future push into electrification, which also includes gas-electric hybrid vehicles.
During an earnings call, Honda chief executive officer (CEO) Toshihiro Mibe said that there has been “anxiety” at the company over electrification despite the strong profits.
Honda and other Japanese automakers have had success with their hybrid vehicles, which are gaining popularity among consumers who have grown weary of fully electric vehicles.
Honda CEO Mibe said the current fiscal year will focus on electrification to ensure future growth at the automaker.
The stock of Honda has risen 26% over the last 12 months and currently trades at $33.94 U.S. per share.