TOKYO: Honda Motor Co. today slightly lifted its full-year revenue forecast after quarterly net profit rose 6.9 percent. Honda raised its revenue forecast to 14.6 trillion yen ($120.6 billion), from a previous forecast of 14.5 trillion yen, saying it anticipated a positive impact from a weaker yen. The automaker maintained its full-year profit forecast at 525 billion yen.
Sales gains in China and North America are offsetting higher quality-related expenses and weakness in the home Japanese market, the company said in a statement today. Net profit, which includes earnings made in China, during the July-September quarter at Japan’s third-biggest automaker rose to 127.7 billion yen from 119.5 billion a year earlier. That was lower than an average estimate for 129.12 billion yen drawn from forecasts by 11 analysts according to Thomson Reuters data.
Operating profit for the second quarter fell 2.5 percent to 164.84 billion yen ($1.36 billion). From this fiscal year, Honda is reporting results under international accounting standards for the first time. Honda, which sells the most vehicles in Japan after Toyota Motor Corp., has posted 12 straight months of declining deliveries at home as demand wanes after a sales-tax increase last year.
Operating profit in Japan fell to 26.2 billion yen in the quarter, from 63 billion yen a year earlier. Deliveries in Japan during the first half of its fiscal year fell 14 percent to 330,775 units.
Weak demand in Japan has offset gains for Honda in China, where sales have been boosted by its crossover models, and in the U.S. auto market, which has registered the best two- month stretch of sales in 15 years.
“Honda has been the most aggressive Japanese carmaker to produce locally in markets overseas, so it’s not benefiting a lot from a weaker yen this year,” Seiji Sugiura, an analyst at Tokai Tokyo Research Center, said before the earnings announcement. “In the meantime it’s suffering from a slump in the domestic market.”
Honda on Tuesday said it’s aware of evidence suggesting Takata Corp. manipulated airbag inflator test data and will no longer use the components in its new models under development. Takata, which has agreed to pay a record U.S. civil penalty of at least $70 million, or as much as $200 million, over faulty airbags, said it omitted information from reports to carmakers.
Honda expects sales in the U.S. will reach 1.6 million vehicles this year, Tetsuo Iwamura, the company’s executive vice president, said today. Industrywide deliveries probably will exceed 17 million vehicles in the 12 months through March 2017, he said.
Honda reaped 37.5 billion yen ($309 million) in operating profit in North America in the quarter, compared with 42.6 billion yen a year earlier. Honda’s sales in the U.S., its largest market, climbed 3 percent to 1.3 million vehicles in the 10 months through October, boosted by demand for its crossover and SUV models including the Pilot, according to the Automotive News data center.
The overall U.S. market has risen 6 percent so far this year. Auto sales in the U.S. are surging as job growth, available credit and affordable fuel encourage shoppers to replace aging models, especially with SUVs. The monthly selling rate, adjusted for seasonal trends, was 18.23 million vehicles in October, up slightly from 18.17 million the month earlier, according to the Automotive News data center. The pace exceeded 18 million in back-to-back months for the first time since February 2000.
In China, Honda sales jumped 33 percent this year through October, as consumers shopped for small SUVs including its Vezel and XR-V. Strong sales of those models have helped make Honda the fastest-rising major auto brand this year in the country.
Honda has said it will be able to achieve full-year target of selling a record 950,000 cars in China, bucking an industrywide slowdown.
