Honda profit expected to jump 43%


The yen crossed 134 against the dollar for the first time since October 1998, a run that will boost Honda's bottom line

TOKYO, Japan -- Honda Motor Co. expects to post record operating profit this year, up 43 percent, according to a report.

For the business year through March, the carmaker's operating profit will hit 580 billion yen ($4.3 billion), the Nihon Keizai Shimbun reports Wednesday.

Honda is Japan's third-largest carmaker, after Toyota Motor and Nissan. It is also the world's largest motorcycle maker.

It had earlier forecast a 550 billion yen operating profit this year. A Honda spokeswoman said it has no plans to revise its full-year forecast.

The car company is seeing strong sales in Japan, particularly with its subcompact Fit car and its minivan, the Stream.

In the United States, its Acura and Civic models have been selling well.

Japan and the United States each account for more than 40 percent of Honda's sales.

Sales expected to rise 13%

For the full year, total sales are expected to rise 13 percent, to 7.3 trillion yen ($54.5 billion), according to the Nikkei.

Honda's profits have also been helped by the yen's slide against the dollar. It is down more than 15 percent against the greenback since last September.

The currency crossed 134 for the first time since October 1998 in European trade on Tuesday. Though it has settled slightly to 133.95 in Tokyo on Wednesday morning, analysts expect it to weaken to 140 or beyond.

If the yen averages around 124 against the dollar in the quarter through March, that should boost Honda's bottom line by around 30 billion yen. The company forecast a yen rate of 117.

A weaker yen makes Honda cars made in Japan cheaper when they are shipped overseas. Though Honda makes most of its cars for the American market in U.S. plants, sales there are also boosted by a weak yen.

Sales in U.S. dollars are greater when they are converted back into the Japanese currency.

Honda has had trouble with sales in Europe, where many Japanese companies have struggled to break in. But it has been getting a boost from solid sales in China and elsewhere in Asia.

Honda stock was up 70 yen or 1.36 percent to 5230 yen after morning trade on Wednesday.

Also on Wednesday, Honda said it will set up a $17 million research operation in Shanghai, China, next month.

It hopes to start research and development there in April 2003 to help it tap China, the world's biggest motorcycle market.