Honda’s billions
Automaker’s quarterly profits rise 39% on strong SUV sales.
TOKYO — Honda Motor Co.’s net profit in the JulySeptember quarter jumped 39 percent from a year earlier to $1.7 billion, helped by strong sales of its sport utility vehicles in China, the company said Monday.
The company upgraded its forecast for its fiscal fullyear net profit to $3.96 billion, from an earlier estimate of $3.72 billion.
The Tokyo-based company, which makes the Accord sedan and Gold Wing touring motorcycle, expects to sell 4.98 million vehicles in the fiscal year that ends March 31, up slightly from its earlier estimate for 4.92 million and a 5 percent increase from a year earlier.
Sales of motorcycles were expected to fall slightly, while sales of power products are forecast to be flat.
The company said the demand for its upgraded Civic sedan and its XR-V and Vezel SUVs in China in the second quarter helped to support its strong performance, despite unfavorable currency trends that pulled its total revenue down nearly 10 percent from a year earlier in the JulySeptember quarter, to $31.1 billion.
“Their redesigned models, especially the small crossovers, are giving them a strong boost,” said Seiji Sugiura, an analyst at Tokai Tokyo Research Center. “We expect the Chinese government to take some action,
further supporting the industrywide growth, and Honda will continue to benefit.”
Demand for vehicles with smaller engines paced Honda’s 26 percent gain in China sales.
The Japanese automaker’s sales in the U.S. rose 3.3 percent from the same period last year, outpacing industrywide expansion, helped by demand for models including the Civic and HR-V.
The carmaker is introducing a larger, redesigned CRV SUV in December with a sportier look and expanded safety features.
While the CR-V was America’s most popular SUV in eight of the past nine years, new models from Ford Motor Co., General Motors Co. and other automakers are challenging its dominance.
Honda’s profit fell 6 percent in the April-June quarter from a year earlier, as the automaker took a hit from air-bag recalls at its supplier Takata.
Honda is one of Takata’s biggest customers.
The company said it cannot fully anticipate all costs associated with the recalls of air bags that have caused up to 16 deaths worldwide.
Takata uses ammonium nitrate to create a small explosion to fill air bags.
In some cases, the chemical deteriorates and burns too quickly, blowing apart a metal canister and spewing shrapnel.
The strong yen, which reduces the earnings of Japanese exporters like Honda, has also hurt the company’s results.
Honda’s latest forecasts are based on an exchange rate of 103 yen per U.S. dollar traded.
The dollar was trading at about 105 yen per dollar on Monday.