Honda Q2 Profit More than Doubles to $1.7 Billion

The company said the brisk performance was mainly due to Japanese government incentives for energy efficient cars and its own cost-cutting efforts, which offset the negative impact of a strong yen.

Honda, which is vying with Nissan to be the nation's number two automaker, said its net profit came to 135.9 billion yen (US$1.7 billion for the fiscal second quarter, up from 54.0 billion yen a year earlier.

The company said the brisk performance was mainly due to Japanese government incentives for energy efficient cars and its own cost-cutting efforts, which offset the negative impact of a strong yen.

The yen has been trading at 15-year-highs, hammering Japanese exporters by making their products less competitive abroad while also reducing their repatriated earnings when they are converted back into yen.

Despite such currency woes, Honda's sales rose 9.5% to 2.25 trillion yen and its operating profit soared to 163.4 billion yen from 65.5 billion yen for the quarter.

Honda raised its net profit forecast for the financial year to March 2011 to 500 billion yen from the 455 billion yen projected earlier. The firm is now forecasting full-year operating profit of 500 billion yen, up from 450 billion yen foreseen earlier. However it downgraded its annual sales forecast to 9.0 trillion yen from an earlier estimate of 9.1 trillion yen.

Honda's global vehicle sales were up 7.2% from a year earlier thanks to increased demand in the large emerging markets of India and China, as well as moderate recoveries in Japan and North America.

Motorcycle sales jumped 13.4%, the company said, due to robust sales in Asia and South America, although sales in North America remained in a slump.

New vehicle sales in Japan fell 4.1% in September from a year earlier, the first drop in 14 months, as most subsidies for green cars ended earlier. Honda saw sales tumble 11.6% to 42,653 in September.

Separately, Mazda Motor Corp. said it posted a net profit of 7.6 billion yen in the quarter, up from 700 million yen a year earlier, thanks to brisk sales in Japan, China and North America, along with cost reductions.

Mazda raised its full-year net profit outlook to six billion yen from five billion yen.

Copyright Agence France-Presse, 2010

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