Honda three-month profit jumps nearly 20 per­cent to US$1.5 bil.

The China Post - - WORLD BUSINESS -

Honda said Fri­day that net profit in April- June jumped nearly 20 per­cent as strong sales in North Amer­ica and a weak yen helped off­set the im­pact of an ex­plod­ing air- bag cri­sis.

The Civic maker’s bot­tom- line profit came to 186 bil­lion yen ( US$ 1.5 bil­lion) for the three months, up from 155.6 bil­lion yen a year ear­lier, while sales jumped 15.5 per­cent to 3.7 tril­lion yen.

Op­er­at­ing profit rose 16.4 per­cent, as a sharp drop in Ja­pan’s cur­rency ben­e­fits ex­porters such as Honda by mak­ing them more com­pet­i­tive over­seas and in­flat­ing repa­tri­ated earn­ings.

“In gen­eral, the Ja­panese auto sec­tor has con­tin­ued to en­joy the pos­i­tive im­pact of a weak yen,” said Ya­suo Imanaka, an­a­lyst at Rakuten Se­cu­ri­ties in Tokyo.

Honda’s sales in North Amer­ica and Asia rose from a year ago, but weak con­sumer de­mand at home saw Ja­panese ve­hi­cle sales fall.

Ja­pan’s num­ber

three

auto- maker left its fis­cal- year forecast un­changed at a net profit of 525 bil­lion yen on sales of 14.5 tril­lion yen.

In June, Honda re­vised down its an­nual earn­ings for the pre­vi­ous fis­cal year, blam­ing the ex­pand­ing re­calls of faulty airbags made by em­bat­tled sup­plier Takata, which have been linked to eight deaths and scores of in­juries.

This month Honda, the hard­est hit global au­tomaker, said it was re­call­ing another 4.5 mil­lion ve­hi­cles as the scare over a deadly de­fect in Takata- made airbags widened.

The move took to 24.5 mil­lion the to­tal num­ber of ve­hi­cles that it had called back over the airbag af­fair.

The de­fect — thought to be as­so­ci­ated with a chem­i­cal pro­pel­lant that helps in­flate the airbags — can cause them to de­ploy with ex­plo­sive force, send­ing me­tal shrap­nel hurtling to­ward driv­ers and pas­sen­gers.

One of the most re­cent con­firmed vic­tims was a woman in Los An­ge­les who died last year af­ter the de­fec­tive in­fla­tor in a 2001 Honda Civic rup­tured, fir­ing me­tal shards at her.

Honda’s big­gest do­mes­tic ri­vals Toy­ota and Nissan have also ex­panded their huge global re­calls, with world­wide to­tals now well into the tens of mil­lions.

Tokyo- based Takata has been un­der fire over the cri­sis, as it faces law­suits and reg­u­la­tory probes into ac­cu­sa­tions that it knew about the prob­lem and con­cealed the dan­gers.

“Con­cerns over re­calls re­lated to Takata’s airbags has cast a shadow over the sec­tor es­pe­cially Honda,” Rakuten’s Imanaka said.

“Due to the cur­rent trend of firms us­ing com­mon auto parts, un­ex­pected mas­sive re­calls are po­ten­tial, size­able risks for any car­maker,” he added.

Nissan on Wed­nes­day said its three- month net profit jumped 36.3 per­cent to US$ 1.3 bil­lion on strong sales in North Amer­ica, Europe and China.

Toy­ota an­nounces its quar­terly earn­ings re­sults next week.

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