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.
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.
The carmaker said yesterday its July-September operating profit fell 56 per cent to 65.5bn yen (£389m) from 148.9bn yen last year, as sales volumes fell and the yen strengthened against the dollar.
Net profit, which includes its earnings from the red-hot Chinese market, was 54.04bn yen, against 123.32bn yen last year.
For the full year to 31 March 2010 Honda nearly tripled its operating profit outlook to 190bn yen from 70bn yen.
The seventh biggest car maker by first-half sales also nearly tripled its net profit forecast to 155bn yen from 55bn yen.
That topped consensus forecasts from 21 brokerages for Honda’s operating profit for the full year to March 2010 to hit 139bn yen, with net profit of 113bn yen.
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.
While market forecasts suggest earnings will continue to improve for Honda next year, auto executives are concerned about volatile currency moves and repercussions on
demand.