HONDA Motor Co, Japan’s third-largest carmaker, raised its profit forecast to the highest in seven years after adjusting for a weaker yen and new models boost emerging markets.
Net income will probably climb 4.5 per cent to 600 billion yen (RM18.8 billion) in the year ending March 31, it said in a statement yesterday. That compares with the 595 billion yen the company previously forecast and the 631.4 billion yen average of 25 analyst estimates compiled by Bloomberg.
The carmaker is boosting sales in emerging markets to help reduce its reliance on North America, which accounts for almost half of revenue. Honda has introduced cars tailored for China, India and Indonesia since last year, betting the models will take share from rivals including Volkswagen AG and Toyota Motor Corp.
“India and Indonesia have been very strong,” said Kota Yuzawa, a car analyst at Goldman Sachs Group Inc.
“The recent aggressive investment in products for these markets is starting to pay off.”
Honda also raised its forecasts for revenue and operating profit, after revising its currency projections to 101 yen to the dollar and 136 yen per euro, versus the previous estimate for 100 yen and 135 yen, respectively.
Net income rose 20 per cent to 146.5 billion yen. Operating profit in the quarter rose 7.1 per cent to 198 billion yen, beating the analysts’ estimate of 185.3 billion yen. Sales rose 5.4 per cent to 2.99 trillion yen, in line with analysts’ estimates.
Honda’s stock declined 0.8 per cent to 3,548 yen as of the close in Tokyo trading yesterday, before it announced earnings.
The stock has fallen 18 per cent this year, compared with a 4.1 per cent decline for the Nikkei 225 Stock Average.
In North America, Honda reaped 67.5 billion yen in operating profit last quarter, falling from 71.9 billion yen a year earlier. US sales fell one per cent in the first six months this year.
Back home in Japan, operating profit was little changed at 62.1 billion yen. Deliveries jumped in the quarter, helped by the new Fit and back orders from the rush buying before the sales tax rise in April.
In China, the world’s largest car market, Honda’s sales extended gains last quarter, as a consumer backlash eased over a territorial dispute between Japan and China.
In Asian markets excluding Japan, operating profit rose 21 per cent to 65.3 billion yen, as deliveries surged in India and Indonesia on new models.
Honda sales rose 40 per cent in April-June quarter to about 40,000 units in India, helped by diesel versions of its City and Amaze cars.
In Indonesia, sales rose 68 per cent to more than 82,000 vehicles in the first half of the year, with more than half of sales from Mobilio.
The operating loss in Europe narrowed to 1.49 billion yen from 9.7 billion yen loss a year earlier, even as the region has shown signs of bottoming out.
It will halt production at one of the two production lines at the Swindon plant in the United Kingdom from autumn, in anticipation that it won’t see any growth in Europe in the next two to three years, it said in March. Bloomberg