Honda profit plunges in Q1 but raises forecasts

[July 29, 2009]  TOKYO (AP) -- Honda bucked expectations of losses in the first quarter, Wednesday posting a 7.5 billion yen ($79.8 million) profit and raising forecasts for the full year on optimism auto sales will improve.

The results for the April-June period were better than the flood of red ink some analysts had forecast though profit was still down 96 percent, battered by slumping car sales and a strong yen, which offset cost cuts. Honda made a net profit of 173.3 billion yen in the same period of 2008.

The numbers show that Japan's No. 2 automaker, reputed for ecological small cars including the Insight hybrid and the Accord sedan, is holding up better than its rivals during the global economic slump.

Governments around the world have introduced measures that aim to boost hybrid and other green-car sales as part of broader economic stimulus packages.

Tokyo-based Honda raised its forecast for the full year through March 2010 to a 55 billion yen ($585.1 million) profit from 40 billion yen ($425.5 million).

Other Japanese automakers, including Toyota Motor Corp., the world's biggest, are forecasting deep losses for the full fiscal year. Toyota reports earnings Aug. 4.

Even with the raised forecast, Honda will be posting a 59.9 percent decrease in profit for the fiscal year, for the second consecutive year of slipping profits.

The previous fiscal year, Honda had posted a 137 billion yen profit -- a result that's dismal for once-booming Honda, reflecting the fallout from the global financial crisis, which hit last year.

Honda's quarterly sales tumbled 30.2 percent to 2.002 trillion yen ($21.3 billion) from 2.867 trillion yen a year earlier.

It sold 766,000 vehicles around the world during the quarter, down 20.4 percent, mainly because of crashing sales in the key North American market.

For the full fiscal year, Honda expects to sell 3.295 million vehicles globally, better than its April projection for selling 3.2 million vehicles. For the fiscal year ended March 31, Honda's global vehicle sales totaled a stronger 3.52 million vehicles.

With mature markets like the U.S., Europe and Japan stagnant, Honda is looking to new markets for growth. Honda said earlier this week that it posted record production in China for the first half of this year.

Also Wednesday, Nissan reported a smaller-than-expected 16.5 billion yen ($175.5 million) loss for the fiscal first quarter Wednesday and unveiled plans to build more cars in China.

Besides making popular cars, like the Odyssey minivan and Fit subcompact, Honda also makes motorcycles, small jets and the Asimo walking human-shaped robot.

Honda shares rose 1 percent to close at 2,770 yen ($29) in Tokyo. Earnings were announced after trading ended.

[Associated Press; By YURI KAGEYAMA]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.