Honda Q1 profit beats forecasts as sales boost offsets FX impact

Honda Q1 profit beats forecasts as sales boost offsets FX impact

Honda Q1 profit beats forecasts as sales boost offsets FX impact

Written by Staff Writer

02 Aug, 2016 | 4:14 pm

Honda Motor Co. posted a stronger-than-expected 11.5 percent rise in first-quarter operating profit, Executive Vice President Seiji Kuraishi told a news conference on Tuesday (August 2).

Japan’s third-largest automaker by sales clocked 266.8 billion yen ($2.61 billion) in operating profit for April-March, surpassing an average estimate of around 183.31 billion yen from 10 analysts surveyed by Thomson Reuters I/B/E/S/.

“To sum up the fiscal first-quarter, despite the impact of a stronger yen and 2016 Kumamoto Earthquake, sales rose to 266.8 billion yen ($2.61 billion), 11.5 percent rise compared with the same period last year, thanks to employing new models, efforts in cutting cost, and reduced quality related costs,” he told reporters.

Honda maintained its previous forecast for operating profit to rise 19.2 percent to 600 billion yen for the full year to March, citing uncertainties about currency moves and the upcoming presidential election in the United States, a key market.

It expects slightly higher vehicle sales and decreased costs to recall potentially faulty Takata Corp air bags for the full year.

The results come after Nissan Motor Co., Japan’s second-largest automaker, reported last week a 9 percent fall in quarterly operating profit, hurt by a stronger yen and sliding domestic sales. Japan’s biggest automaker, Toyota Motor, reports later this week.

The automaker said that April-June sales were boosted by the rollout of the remodeled Civic sedan in China and Malaysia, while the start of an additional line at one of its motorcycle plants in India drove up scooter production and sales in Asia.

In spite of the unexpected boost in sales, the automaker expects to take a 303 billion yen hit from foreign exchange fluctuations in the year to March, anticipating the biggest impact from strength in the Japanese currency versus the U.S. dollar.

“We are concerned about many factors such as US Presidential election, problems of EU and terrorism. The most important concern we have is foreign exchange as we are afraid that current conversion of dollar around 102 yen would affect on our business to some degree,” said Kuraishi.

Honda produces roughly 84 percent of its vehicles outside Japan, leading Japanese automakers in manufacturing locally for local markets to minimize exposure to currency swings.

Source: Reuters

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