Honda Motors posted a better-than-expected 16 per cent rise in quarterly profit as increased exports and currency gains outweighed higher raw material and sales costs, and it lifted its full-year forecasts to reflect a softer yen.
Like the rest of the Japanese auto industry, second-ranked Honda is suffering from sliding sales at home, but its domestic plants are running near full capacity to fill orders for the popular Civic, CR-V and Fit models overseas.
Rising exports have been an extra boon with the yen's weakening against major currencies.
Tokyo-based Honda, also the world's biggest motorcycle maker, raised its net profit forecast to 625 billion yen ($5.18 billion) from 575 billion for the year to March 31, 2008. It also lifted its operating profit forecast to 880 billion yen from 770 billion to reflect a weaker yen.
Honda now sees the dollar and euro averaging 117 yen and 155 yen in 2007/08, up from its previous assumptions of 115 and 150, respectively.
Honda earned a net profit of 166.12 billion yen in April-June, ahead of an average estimate of 159.3 billion from three brokerages. The result was lifted by big valuation losses a year earlier.
Operating profit, which excludes earnings made in China, grew 8.9 per cent to 221.68 billion yen, while revenue rose 13 per cent to 2.93 trillion yen.
Honda's performance stood in contrast to that of third-ranked Nissan Motor, which posted a worse-than-expected drop in quarterly profits a day earlier as US sales of its bigger, higher-margin vehicles were hit by high gasoline prices.
Analysts expect Honda's sales to be lifted later this year by a string of key new product launches including the flagship Accord, Pilot SUV and Fit/Jazz subcompact.
Annual profit growth, however, is expected to slow as Honda invests heavily on new factories and expansion to satisfy growing demand.
All Japanese carmakers temporarily halted production over the past week due to a supply disruption from an earthquake-hit parts maker, but analysts expect little impact on earnings since lost production is due to be made up in due course.