Honda Motor Co. said Wednesday that second-quarter profit slipped 4.3%, but sales were strong especially in North America and Asia, where demand for fuel-efficient Japanese cars has been growing.
TOKYO (AP) — Honda Motor Co. said Wednesday that second-quarter profit slipped 4.3 percent, but sales were strong especially in North America and Asia, where demand for fuel-efficient Japanese cars has been growing.
Japan’s No. 3 automaker posted a group net profit of 127.9 billion yen ($1.1 billion) for the July-September period, down from 133.7 billion yen the same period a year ago.
Quarterly sales jumped 12.5 percent to 2.6 trillion yen ($21.8 billion) from 2.3 trillion yen, the Tokyo-based manufacturer said, helping make up for soaring raw material costs and research costs.
Honda—which makes robots and motorcyles as well as the Accord mid-size car, Odyssey minivan and Civic small car—said the slight profit drop was partly caused by expenses for hedging interest rates and foreign exchange, and that vehicle sales remained robust.
The company set a first-half record in auto sales at 1.78 million vehicles, up 6.3 percent from a year ago, mainly because of a surge in sales in North America and Asia, it said.
The good news from Honda comes at a time when American rivals General Motors Corp. and Ford Motor Co. are struggling and seeing market share eroded by Japanese car makers amid soaring gas prices.
Ford said Monday that it had lost $5.8 billion in the July-September quarter due to sagging North American sales and huge costs associated with a massive restructuring plan—the largest quarterly loss in more than 14 years for the nation’s second-biggest automaker.
GM, which reports earnings later Wednesday, is expected to fare slightly better as it tackles restructuring of its North American operations. The world’s largest automaker lost more than $10.6 billion last year and has been steadily ceding market share to Asian rivals. But it would have logged a profit in April-June quarter if it weren’t for restructuring charges.
Honda raised its earnings forecast for the full fiscal year, ending March 2007, to 555 billion yen ($4.65 billion). It had projected a 550 billion yen ($4.6 billion) profit in July.
The revised outlook is lower than the 597 billion yen profit that Honda had recorded during the fiscal year ending March 2006. But that included a special gain for returns on employee pension funds. Without that gain, Honda would have recorded 514 billion yen profit, it said.
Honda also raised its sales forecast for fiscal 2006 to 11 trillion yen ($92 billion), up 11 percent from 9.9 trillion yen in fiscal 2005. It had initially forecast 10.7 trillion yen ($89.7 billion) in sales.
Honda said it planned to sell 3.7 million vehicles during the full fiscal year, up 9 percent from 3.39 million vehicles sold in the fiscal year ended in March.
For the July-September period Honda sold 884,000 vehicles, up 6 percent from the corresponding period in 2005. Quarterly vehicle sales declined 6.6 percent in Japan, but overseas vehicle sales rose 9.5 percent from a year ago to 713,000 vehicles.
North American vehicle sales climbed 4.3 percent in the quarter to 411,000 vehicles, as drivers seeking good mileage snatched up small Honda models like the Fit and the Civic.
For the first six months of the fiscal year, Honda recorded 271.3 billion yen ($2.3 billion) in profit, up 11 percent from the same period in fiscal 2005, on 5.23 trillion yen ($43.8 billion) sales, up 13.7 percent from a year earlier.
Honda shares edged down nearly 1 percent to close in Tokyo at 4,070 yen ($34). They have gained by about a third in value over the past year.