Tokyo - Honda's quarterly profit soared sixfold on cost cuts and strong sales of green vehicles, boosting the Japanese automaker's full year forecast as the global car market gradually recovers.
Tokyo-based Honda said on Wednesday it booked net profit of ¥134.6bn for the October-December quarter and predicted its first increase in full year profit in two years, underlining a recovery in world auto sales.
The results were better than the ¥74bn profit forecast by analysts surveyed by Thomson Reuters.
The Japanese automaker, known for the Insight hybrid, Accord sedan and Odyssey minivan, reported an 11.5% drop in sales for the quarter at ¥2.24 trillion, partly because of the strong yen.
Honda has weathered the auto slump better than some of its bigger rivals because of its strength in emerging markets and its solid motorcycle division.
Honda managed to stay in the black for the quarter ended December 31, 2008, when other Japanese automakers, such as Toyota, sank into losses. Honda eked out a ¥20.2bn profit for that period.
In months ahead, Honda could stand to benefit from the woes of Toyota, which has recalled 4.5 million vehicles globally - more than half of them in North America - for problems with accelerator pedals that can stick, possibly causing crashes.
Accord dethrones Camry
Honda is not offering the incentives in the US that General Motors, Hyundai and Ford are using to woo Toyota owners to buy their cars. But Honda's Accord dethroned the Toyota Camry as the best-selling car in the US for January.
The Camry, the top-seller in the US for the last eight years, is among the eight models that Toyota has recalled and stopped selling and producing because of gas-pedal problems.
Honda has also announced a fairly large recall of its own, covering 646 000 Fit hatchbacks because of a glitch that could cause water to enter the power window mechanism, causing components to overheat.
The recall, announced last week, covers North America, Asia, Latin America, Europe and South Africa. In some countries, the Fit was sold as the Jazz and City.
The company raised its profit forecast for the fiscal year through March 2010 for the third time to ¥265bn, almost double the ¥137bn profit it had posted the previous year, and its first annual profit rise in two years.
In October, Japan's No. 2 automaker had raised its profit forecast to ¥155bn, nearly four times its initial outlook, citing sales boosts from government-backed green incentive programmes and strong China sales.
Strong yen erases gains
On Wednesday, it stuck to its full-year global sales projection of 3.4 million vehicles, down 3.3% from 3.5 million for the fiscal year ended March 2009.
But it now expects slightly better sales at ¥8.53 trillion, compared to its earlier forecast of ¥8.45 trillion.
For the quarter ended December 31, Honda sold 914 000 vehicles around the world, down 2.8% from 940 000 vehicles a year earlier, as sales dropped in North America and Europe, in contrast to strong sales in Japan and other parts of Asia such as China and India.
Quarterly sales in Japan surged 31% to 177 000 vehicles, led by the Insight and Fit. Such fuel-efficient models are a hit in Japan, where the government is offering incentives for green vehicles, including making hybrids tax-free.
Honda said a strong yen erased ¥57bn in quarterly income.
For the nine months through December, Honda's profit slipped 38.1% from the same period the previous year to ¥196.2bn on ¥6.3 trillion sales, down 23.4%.
Other Japanese automakers are also likely to report rosier numbers compared to the doldrums of the previous year.
Mitsubishi Motors on Wednesday posted its first quarterly profit since July-September 2008. It earned ¥10.7bn in October-December, a turnaround from a loss of ¥17.5bn a year earlier.
Toyota reports earnings on Thursday, Mazda on Friday and Nissan on Tuesday.
Honda shares jumped 2.3% to ¥3 140 in Tokyo.
- AP