August 2 2006.
Honda has reported a group operating profit of 203.5 billion yen for the April-June quarter, up 19% from a year earlier, as its robust sales in North America and the effect of a weaker yen more than offset its domestic sales decline.
Sales rose 15% to 2.59 trillion yen, while net profit soared 30% to 143.4 billion yen. Both figures were more than the firm initially expected and records for a April-June quarter.
Global auto sales increased 7% to 896,000 units, with North America gaining 9% to 456,000. Although overall demand in the latter market did not expand much, Honda's sales of such major passenger cars as the Civic and the Accord increased thanks to the growing consumer preference for fuel efficiency. Helped by strong demand in China, Asian sales jumped 15% to around the same level as domestic sales, which declined 7%, to 156,000 units.
Honda's profit based on its investments in affiliated companies surged 43% to a quarterly record of 30.1 billion yen, as it expanded its Chinese operations via joint ventures.
The firm's worldwide motorcycle sales fell 8% to 2.38 million units, hit by sluggish sales in Asia, particularly Indonesia.
A weaker yen against the dollar and euro contributed 47.7 billion yen to operating profit, far exceeding the 5.5 billion yen erosion in earnings by higher raw materials costs.
Honda expects the U.S. and other overseas markets to drive its earnings growth through the rest of the fiscal year. Honda now expects to sell 1.77 million automobiles in North America in fiscal 2006, up 5% on the year and 10,000 more than initially projected.
But rising gasoline prices make future prospects uncertain, with conditions deteriorating for light-truck sales in particular. "Sales incentives would be increased," Vice President Satoshi Aoki said.
Honda has upgraded its full-year sales forecast to 10.7 trillion yen, up 8% on the year and 100 billion yen more than previously anticipated. But considering uncertainty abroad and higher materials costs, it has kept its profit projection intact, expecting a 14% decline in operating profit to 750 billion yen and a 8% drop in net profit to 550 billion yen.

Source: The Nihon Keizai Shimbun