Car maker Honda profits jump 30 percent last quarter

Honda Motor Co, Japan’s third-largest automaker, reported Wednesday, July 19 a jump of almost 30 percent in net profit for the last quarter.  Strong sales in North and Latin America seem to be the reason for this jump.

Net profit came to 143.4 billion yen (1.22 billion dollars) in the fiscal first quarter, up 29.6 percent, on revenue of 2.60 trillion yen, up 14.8 percent year-on-year.

Both were record figures for a June quarter for Honda, which announced plans Tuesday to enter the market for light business jets in a joint venture with US-based Piper Aircraft.

"Revenue was mainly increased in the automobile business in North America and Latin America," the automaker said in a statement.

Operating profit rose 19.4 percent to 203.5 billion yen, primarily due to higher revenue, lower research and development costs and a weaker yen, which offset increased raw materials and other costs.

Honda’s automobile business sold 896,000 units in the June quarter, up 6.7 percent from a year earlier, although the Japanese market remained tough with sales down 6.6 percent to 156,000.

Overseas, the company grew sales 10 percent to 740,000 units, led by the North American market.

"Including foreign exchange movements, we believe we have been able to achieve our original goals and expectations, with some items seeing slightly stronger figures than expected," said Honda vice president Satoshi Aoki.

"In the United States, as gas prices near the three-dollar (per gallon) level, consumers are becoming more interested in energy efficient models. For example, the Civic and Accord are doing well," he said.

"Our products are very fuel efficient. We believe our sales of passenger vehicles and light trucks will remain strong."

In the June quarter, global motorcycle sales fell 7.8 percent to 2.38 million units, mainly due to a weaker Indonesian market, while in the power products business, sales jumped 16.3 percent.

Honda maintained its forecast for net profit of 550 billion yen for the full year to March 2007, down 7.9 percent from the previous year.
The group raised its revenue target slightly to 10.7 trillion yen from 10.6 trillion yen previously to reflect currency movements but said the positive impact on its bottom-line would be wiped out by high input costs.

"As for variables in the future, we may see negative impacts from a rising yen. In terms of costs, the prices of materials such as aluminum and copper are becoming higher than previously expected," Aoki said.

Honda unveiled plans Tuesday for the "Honda Jet," with orders expected to begin in the United States later this year, capping a 20-year effort to move into general aviation for the builder of cars, motorcycles and water craft.

"We have been able to produce a good product that is fuel efficient and spacious and one that could attract customers," said Aoki.