Honda races to record profits


Honda's profits for the first quarter was the strongest it has posted in any quarter

TOKYO, Japan – Honda Motor Co. announced a 20.4 percent jump in year-on-year group net profits for the June quarter to 107.6 billion yen ($899.8 million) on Monday.

Honda's net profit figure is a quarterly record for the company, but according to Reuters still fell below analyst's expectations of between 172 million to 207 million yen.

Strong sales overseas, most notably a 12 percent rise in North America, combined with a weaker than expected yen also helped Honda's quarterly sales rise 10 percent to 1.9 trillion yen ($15.9 billion).

Honda's first quarter earnings follows a record performance for the previous fiscal year, in which profit and revenue

Fluctuating yen

The yen averaged 127 against the U.S. dollar over the quarter, weaker than Honda's expected rate of 125.

If the yen had followed Honda's expectations, the company said the increase in sales would have only been 6.5 percent.

However, despite the recent strength of the currency and moves to adjust expected exchange rate by other exporters such as Sony, the company has yet to change its forecast.

The yen is currently trading at 119.03 to the dollar, 4.8 percent stronger than Honda's expected rate.

"The short-term currency fluctuation is a bit worrisome, but we will wait and see for a while to decide whether we need to revise our exchange rate assumption," said Honda's Executive Vice President, Koichi Amemiya at a news conference.

Full-year targets

Despite doubts over Honda's ability to make their targets for the year with a stronger yen, most analysts predict that the company will make its targets.

"They will make their full-year targets easily," Christopher Redl, auto analyst at UBS Warburg, told Reuters.

In a separate announcement, Honda said it would buy back up to three million or 15 million yen worth of its own shares, between August 7 and October 25.

Despite Honda's earnings coming after the closing bell in Tokyo, Honda stocks outperformed the 0.79 rise in the benchmark Nikkei industry by surging 4.8 percent higher to finish at 5,020 yen.

Honda wasn't the only Japanese car manufacturer announcing bullish figures, as main rival Toyota also announced on Monday that it would up its global sales target for the year to 5.5 million vehicles, 5 percent higher than last year.