Honda's profits surge on solid sales in United States, home markets

April 29, 2002 AP is reporting that Honda Motor Co. said its profit surged 69 percent in the latest quarter on strong sales both in Japan and the United States. Japan's second biggest automaker expects to do even better this year.

Honda announced Friday a group net profit of 106.7 billion yen ($830 million) for the January-March quarter from 63.1 billion yen a year earlier. Sales rose to 2.1 trillion yen ($16 billion) from1.8 trillion yen a year ago.

Honda sold 5 percent more autos worldwide at 726,000 vehicles in the quarter on the popularity of the Fit compact and Mobilio minivan in Japan and the Accord sedan and Odyssey minivan in the United States. The only region where Honda is still struggling is Europe.

Honda executive vice president Koichi Amemiya said the feared backlash of diving U.S. sales never followed the buying binge driven by incentives introduced after the Sept. 11 terrorist attacks.

For the fiscal year ended in March, Honda earned a record 362.7 billion yen ($2.8 billion), up 56 percent from 232.2 billion yen a year earlier. Its previous record profit was 305 billion yen for the year ended March 1999.

Honda sales rose to 7.36 trillion yen ($57 billion) for the latest year, up from 6.5 trillion yen a year ago. It sold 2.67 million vehicles worldwide for the year, up 3.3 percent.

Honda sold about 1.37 million vehicles in North America for the fiscal year ended in March, up 1.6 percent from 1.35 million a year ago. Japan sales rose 13 percent to 878,000 from 776,000.

Honda is counting on even more growth ahead. It is forecasting net income of 460 billion yen ($3.6 billion) in fiscal 2002 on sales of 8.1 trillion yen ($63 billion).

Crucial in the plans for growth in the coming months is the new Honda plant in Lincoln, Ala., where production has already begun to make more than 120,000 vehicles a year, mostly Odysseys, Honda said.

A favorable currency rate also helped Honda's results.

Honda calculated the exchange rate at about 107 yen to the U.S. dollar a year ago but the dollar has cost about 125 yen lately, it said. A cheaper yen helps exporters like Honda by lifting the value of their overseas earnings.

Shotaro Noguchi, auto analyst with Nikko Salomon Smith Barney in Tokyo, said that Honda's performance has been so fantastic it's hard to imagine any lurking stumbling blocks.

But one is ensuring efficient global production, he said. Another may be trying to sell more expensive models in Japan, where the nation's slump has many drivers turning to cheaper cars, he said.

"Honda remains extremely competitive, and we are giving a positive assessment to the company," Noguchi said.

Honda officials denied they were worried about possible trade friction with the United States. Honda and Toyota Motor Corp., Japan's top automaker, are recently increasing market share in the United States, but their cars are mostly produced at American plants, Amemiya said.

"I don't feel that's going to grow into a big issue," he said. "We are making our plans with all that in mind."