February 2 2009.

Honda Motor Co. has downgraded its earnings forecast, but still expects to report an 80 billion yen group net profit for the year ending March 31.

Stalled sales in Japan, the U.S. and Europe, as well as the stronger yen, led the automaker to lower its projected profit by 105 billion yen. Although the figure represents an 87% decline from fiscal 2007, strong motorcycle sales in Asia are likely to help Honda skirt the losses seen for such industry rivals as Toyota Motor Corp. and Nissan Motor Co..

Honda projects a 16% drop in sales to 10.1 trillion yen and a 85% plunge in operating profit to 140 billion yen, 40 billion yen less that forecast earlier.

The company expects to sell just over 3.52 million automobiles, 120,000 fewer than planned and 10% less than the prior year. The lighter sales volume will erode profit by 216 billion yen, with the strong yen taking out another 282 billion yen.

By contrast, Honda forecasts motorcycle sales to rise 9% to 10.17 million units. Despite double-digit declines at home and in the U.S. and European markets, sales in Asia, which account for more than 70% of all bike sales, are projected to grow 14%.

The motorcycle segment is likely to account for about half of Honda's group operating profit, compared with slightly more than 10% the previous year.

"We expect conditions to remain harsh through the first half" of fiscal 2009, says Executive Vice President Koichi Kondo. He predicts that the North American auto market will contract this year to just under 12 million vehicles, compared with 13.24 million in 2008.

Dividends for the October-December quarter were halved from a year earlier to 11 yen a share. Full-year payouts are expected to fall short of the 86 yen distributed in fiscal 2007.

Source - Nikkei Daily.