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Honda increases profit forecast on brighter US sales outlook

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Bloomberg Tokyo

Honda Motor Co, Japan’s third-largest carmaker, increased its profit forecast 6 per cent as rising US auto sales and Asian motorcycle demand helped offset the negative impact of a stronger yen.

The maker of Accord sedans and Civic compacts expects net income of ¥530 billion ($6.5 billion) in the year ending March 31, compared with an earlier estimate of ¥500 billion, the Tokyo-based company said today in a statement.

Honda, which gets 42 per cent of its unit sales in North America, expects to benefit from a market recovery in the US, where deliveries may rise 11 per cent to 12.8 million vehicles this year, according to researcher J D Power & Associates. Motorcycle sales in emerging markets may also help Honda’s profit surpass that of Toyota Motor Corp for a third year.

 

“In North America, Honda is selling more profitable cars, and so the overall results look good,” said Mamoru Kato, a Nagoya, Japan-based analyst at Tokai Tokyo Research Center. “There’s been a gap in results between Honda and Toyota since the second quarter, and that seems to be getting bigger.”

Honda’s net income fell to ¥81.1 billion in the three months ended December 31 from ¥135 billion a year earlier, as vehicle sales in Japan dropped after a government subsidy for car buyers expired. The result fell short of the ¥102.5 billion average of five analyst estimates compiled by Bloomberg. Revenue totaled ¥2.1 trillion.

US sales The carmaker fell 1.4 per cent in Tokyo trading to close at ¥3,475 before the earnings announcement. The stock has gained 8.1 per cent in 2011.

Toyota reports third-quarter earnings on February 8, and Nissan Motor Co reports the following day.

Honda expects its vehicle sales in the US may rise 10 per cent in the fiscal year that begins April 1, Executive Vice President Koichi Kondo said at a press conference today in Tokyo. The company said it expects to benefit from sales of more profitable models as customers buy more light trucks such as the Odyssey minivan, instead of passenger cars.

“Demand is dramatically shifting to sport-utility vehicles since September, even though gas prices are creeping up,” Kondo said.

The automaker plans to introduce an updated Civic compact in the United States around April, “which will have a big impact through reduced incentives,” said Kohei Takahashi, an auto analyst at JP Morgan Chase & Co in Tokyo.

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First Published: Feb 01 2011 | 1:16 AM IST

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