In major news on Japanese stocks, Honda Motor Co. Ltd. (JP:7267) shares declined 1.45% following reports that four insurers and other financial firms are planning approximately ¥500 billion ($3.1 billion) worth of share disposal in the company. According to Reuters, Japan-based Tokio Marine Holdings (JP:8766), Sompo Holdings (JP:8630), and two units of MS&AD Insurance Group (JP:8725) will collectively sell shares in Honda.
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Honda Motor is a Japanese conglomerate group and a leading manufacturer of automobiles worldwide.
More Details on Honda’s Share Sell-Off
The sale of shares in Honda is the latest indication to curb cross-shareholding practices. Cross shareholding is when a publicly traded company holds shares in another publicly traded company. Honda is among the top five companies in terms of cross-shareholdings among insurers in Japan.
According to Reuters, in addition to the four aforementioned insurers, some other financial institutions will also reduce their holdings in Honda. The company is expected to announce a formal greenlight for these sales soon.
Honda’s FY24 Performance and Buyback
Earlier in May, Honda released its annual results for FY24, highlighting solid growth in revenues and profits. The company’s revenue grew by 21% year-over-year, while its net profit increased by 70%. The solid growth was driven by higher sales in the company’s Automobile segment and favourable currency translation effects.
Alongside the results, Honda announced plans to repurchase up to ¥300.0 billion of its shares by March 2025, aiming to bolster its share price. The buyback will also help the company mitigate some of the pressure resulting from the sell-offs by the insurers.
Regarding its outlook, Honda projects a 9.7% drop in net profit and a 0.6% decrease in revenue for FY25 due to higher research and development costs and the impact of currency movements.
Year-to-date, Honda Motor stock has gained nearly 23% in trading.
