Honda profits driven up by scrap scheme

CAR giant Honda tripled its annual profit forecasts yesterday, as second-quarter earnings fell less than forecast on the back of scrappage schemes worldwide.<br /><br />Honda has weathered the industrial turmoil, which drove two US car giants into bankruptcy last year, better than its competitors as its profitable motorbike business cushioned the blow.<br /><br />The carmaker said yesterday its July-September operating profit fell 56 per cent to 65.5bn yen (&pound;389m) from 148.9bn yen last year, as sales volumes fell and the yen strengthened against the dollar.<br /><br />Net profit, which includes its earnings from the red-hot Chinese market, was 54.04bn yen, against 123.32bn yen last year.<br /><br />For the full year to 31 March 2010 Honda nearly tripled its operating profit outlook to 190bn yen from 70bn yen.<br /><br />The seventh biggest car maker by first-half sales also nearly tripled its net profit forecast to 155bn yen from 55bn yen.<br /><br />That topped consensus forecasts from 21 brokerages for Honda&rsquo;s operating profit for the full year to March 2010 to hit 139bn yen, with net profit of 113bn yen.<br /><br />Rivals Toyota and Nissan are also expected to report improved second-quarter earnings next week, but Honda is seen making the most profit by far for the full year, partly due to its more flexible operations, fewer exports from Japan and a slim car line-up.<br /><br />While market forecasts suggest earnings will continue to improve for Honda next year, auto executives are concerned about volatile currency moves and repercussions on <br />demand.