Honda quarterly profit slips despite solid sales

TOKYO: Honda Motor Co.’s net profit for the first quarter of its fiscal year slipped 7 percent, largely on financial expenses and other spending, although its auto sales increased outside of Japan.
Tokyo-based Honda reported a 122.4 billion yen ($1.25 billion) profit for the April-June period. The Japanese automaker also got a perk from a favorable currency rate.
The result was lower than the 146 billion yen ($1.5 billion) profit forecast by analysts surveyed by FactSet.
The company said it invested in research and new plants and that operating profit, which reflects its core-business performance and factors out its tax bill and one-time quirks, did better than the previous year.
But it lost money for financial reasons such as currency hedges and derivative expenses, the company said.
The maker of the Odyssey minivan and Fit subcompact stuck to its annual forecast for 580 billion yen ($5.9 billion) profit, up nearly 60 percent on year.
It’s expecting to sell 4.43 million vehicles for the fiscal year through March 2014, up from 4 million the previous year.
Japanese automakers, including Honda, are growing in emerging markets. Quarterly sales rose a strong 16 percent to 2.83 trillion yen ($28.9 billion) as auto sales grew around the world to 858,000 vehicles, up from 849,000 vehicles the same period a year earlier.
Another factor helping the Japanese is the strong dollar, which rose to nearly 100 yen during much of the April-June period this year from 80-yen levels the same quarter last year.
A cheap yen boosts the value of overseas earnings when converted into yen and can help make products cheaper abroad.
Honda gained nearly 83 billion yen ($847 million) in operating profit for the quarter from the benefits of a cheap yen against the dollar, euro and other currencies.
Honda is also getting a big boost from growing motorcycle sales, especially in Asia.
Also Wednesday, Hiroshima-based Mazda reported a 5.46 billion yen ($55.7 million) quarterly profit, a reversal from the 6.46 billion yen in red ink for the same period the previous year.
Toyota Motor Corp., the world’s top automaker, reports earnings on Friday.
Nissan Motor Co. reported last week that its April-June profit jumped 14 percent from the previous year to 82 billion yen ($820 million).
The test for the Japanese automakers is whether it can take advantage of the extra perk from a cheap yen and achieve real market growth.