Honda's Profit Grows in April-June - All-time 1st Quarter Record

• SEE ALSO: Toyota Outsells GM

Tokyo, July 25, 2008; Jiji Press reported that Honda Motor Co. on Friday reported earnings growth for April-June, weathering the negative effects of the yen's rise against the dollar and higher materials prices.

Consolidated net profit rose 8.1 pct from a year before to 179,611 million yen, a record high for the fiscal first quarter.

Operating profit was down 0.2 pct at 221,347 million yen, on sales of 2,867,221 million yen, down 2.2 pct.

The impact of the yen's rise and higher materials prices was offset mainly by cuts in U.S. sales incentives, price hikes in some markets, and higher global sales volume backed by robust demand in emerging economies, Honda officials said.

Honda's global automobile sales increased 1.7 pct to 962,000 units. North American sales slid 1.1 pct, but sales in Asia, excluding Japan, and other places including Brazil showed growth of nearly 20 pct.

"Honda performed better than its own expectations," Executive Vice President Koichi Kondo told a news conference. "But the earnings were boosted by one-off factors related to changes in accounting practices."

In addition, steel and other materials prices have risen far more steeply than previously anticipated, he said.

At the start of April, Honda estimated the negative impact of higher materials prices at 74 billion yen for the full year to March 2009, but now the company sees additional costs of 125 billion yen.

Regarding the U.S. market, where many automakers are struggling, Kondo said his firm performed relatively well thanks to its strength in small cars, which are popular as consumers shift to fuel-efficient models due to higher gasoline prices.

In Japan, Honda has no immediate plans to raise auto prices, but the prices of new models and those that have gone through full revamps will reflect the recent rises in materials prices, Kondo said.

For the six months through September, Honda raised its net profit estimate to 280 billion yen from 230 billion yen.

Operating profit is now seen at 350 billion yen, up from 300 billion yen, while the sales estimate was lowered to 5.75 trillion yen from 5.78 trillion yen.

For the full year, Honda kept unchanged its net profit estimate at 490 billion yen.

The operating profit estimate was cut to 630 billion yen from 650 billion yen. Sales are now seen at 12.13 trillion yen, down from 12.14 trillion yen.

Honda's global automobile sales are now estimated at 4.08 million units, down from 4.14 million units expected at the start of the year. North American sales are now seen at 1.74 million units, down from 1.77 million units.