Strong US recovery helps Honda get back on track

HONDA MOTORS is on track for its strongest earnings in three years after raising its outlook above market expectations thanks to a recovery in the US, where improving profitability is countering a strong yen and sliding Japanese sales.

Robust sales growth in emerging markets has helped global automakers weather a fall in mature markets such as Europe, and Honda has especially benefited from its lucrative and dominant motorcycle business in developing countries such as India.

But a convincing recovery in the US car market – Honda’s biggest – is the main factor that has stoked optimism among investors, sending its shares up nearly a fifth over the past three months.

Honda, which fell behind Nissan Motors to become Japan’s third-biggest automaker last year, raised its operating profit forecast for the year to 31 March to 620bn yen (£4.7bn) from 500bn yen. A survey of 20 analysts by forecasts profit of 594bn yen.

Honda lifted its net profit forecast, which includes earnings from China, to 530bn yen from 500bn yen.