High-mileage Civic and Fit boost U.S. sales, contributing to a nearly 30% earnings increase.
Yuri Kageyama - AP - July 27, 2006
2007 Honda Fit
TOKYO - First-quarter profit at Honda soared nearly 30 percent as a solid reputation for mileage lifted sales in the U.S., a critical region that makes up half of the Japanese automaker's vehicle sales.
With U.S. gas prices hovering at around $3 a gallon, Americans were snatching up Honda's small car models like the Civic and Fit, boosting Honda's North American sales by nearly 9 percent to 456,000 vehicles for the quarter from the same period a year earlier.
Net profit at Honda grew 29.6 percent to 143.4 billion yen ($1.2 billion) in the fiscal first quarter through June, up from 110.6 billion yen the same period the previous year, Japan's No. 3 automaker said Wednesday.
Quarterly sales climbed 14.8 percent to 2.6 trillion yen ($22.3 billion) from 2.26 trillion yen a year earlier, and the Tokyo-based manufacturer chalked up its sixth straight record for first quarter earnings and sales.
Honda kept its profit outlook for the full fiscal year ending March 2007 at 550 billion yen ($4.7 billion) but revised its sales forecast upward to 10.7 trillion yen ($91.6 billion) from the forecast in April for 10.6 trillion yen ($90.7 billion).
The success of Honda, which makes cars that deliver solid mileage, contrasts with the troubles at General Motors Corp. and Ford Motor Co., which have been losing market share in North America to Asian competitors.
Honda said it sold 896,000 vehicles worldwide in the April-June quarter, largely on growth in North America and Asia, up 6.7 percent from 840,000 in fiscal 2005. Although Honda's domestic vehicle sales dipped 6.6 percent to 156,000 vehicles, overseas sales surged 10 percent to 740,000 vehicles in the latest quarter.
A weaker yen also was a boon for earnings, and a decline in research costs also helped results, offsetting the soaring costs of raw materials, Honda said in a statement.
Toyota Motor Corp., Japan's No. 1 automaker that some analysts believe is on its way to overtake GM, reports earnings next week.
For the April-June quarter, Honda recorded improved sales revenue in all key regions, including Japan, North America, Europe and Asia. In Asia, revenue increased by a whopping 24.2 percent to 287 billion yen ($2.5 billion).
Honda, which produces the Accord compact, Odyssey minivan as well as motorcycles, power products and robots, is now entering the small jet business.
Honda shares, which have gained by about 25 percent during the last year, closed at 3,770 yen ($32) in Tokyo, up 0.5 percent.