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Honda’s profit dips despite surge in sales

November 13, 2006
Filed under Features

Japan’s Honda Motor Co., Ltd. took a hit in second-quarter profits but announced record sales and income for the first six months of its current fiscal year.
Honda said net income for its second fiscal quarter ended Sept. 30 was 127.91 billion yen ($1.08 billion), down 4.3 percent from 133.71 billion yen during the same three months in 2005, because of hedging interest rates, foreign exchange and bonds.
Still, increased sales in North America and Asia helped bring fiscal second-quarter revenue to 2.631 trillion yen ($22.4 billion), up 13 percent from 2.338 trillion yen in the second quarter of last fiscal year, and group operating profit surged 19 percent to 193.02 billion yen ($1.6 billion) from 162.69 billion yen, propelled by higher revenue, cost reductions and a weaker yen overcoming higher raw materials costs.
Honda’s net income for the first half of the year ended Sept. 30 was 271.3 billion yen ($2.3 billion), up 11 percent compared to the same six months last year. Revenue was 5.23 trillion yen ($44.5 billion), up 13.7 percent.
Honda said increased profit from higher revenue and the positive effects of the depreciation of the yen offset the negative impacts of changes in the model mix, soaring raw materials costs exceeding continued cost-reduction efforts, and an increase in selling, general and administrative expenses.
Honda said it hopes to sell 10.7 million motorcycles, 3.7 million automobiles and 6.2 million power products this year.
First-half motorcycle sales totaled 5.19 million units, up 2.5 percent from sales during the same six-month period last year, due primarily to growth in India and Brazil.
Global automobile sales were up 6.3 percent to 1.78 million units and power product sales were up 11 percent to 2.911 million units – both new sales records. Honda says the automobile business benefited from increased sales in North America and Asia while the power products business realized increased sales in North America, Japan and Europe.
Honda is aiming for revenue of 11 trillion yen ($93.6 billion) for the fiscal year ending March 31, 2007, up 11 percent from revenue of 9.907 trillion yen for the year ended March 31, 2006. Net income is expected to be around 555 billion yen ($4.7 billion), a 7 percent drop from net income of 597 billion yen last year.

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