Japan's second-largest automaker Honda Motor Co. said Wednesday that its third-quarter net profit surged 38 percent to a record high helped by solid sales in fast-growing emerging economies.
Honda hiked its full-year forecast amid the brisk demand in countries such as Brazil, Russia, China and India, which drove up profits despite feeble domestic sales and recession fears in the US, the world's largest auto market.
Net profit increased to 200.0 billion yen (1.87 billion dollars) in the three months to December from 144.8 billion yen a year earlier, Honda said.
Operating profit jumped 34.7 percent to 276.2 billion yen, also a record for the third quarter, it added.
Revenue rose by 10.0 percent to 3.05 trillion yen as strong demand in Europe and most of Asia offset sluggish sales in the automaker's domestic market and economic turbulence in the United States due to slowing economic growth.
The robust sales in foreign markets and cost cutting efforts more than offset slow Japanese sales, rising raw materials prices and the impact of a weaker dollar, Honda officials said.
“The North American market is showing signs of uncertainty,” Honda executive vice president Kichi Kondo told reporters.
“But for this fiscal year, so-called BRIC nations (Brazil, Russia, India and China) as well as the Middle East, Africa and East Europe showed rapid growth that we have never seen before.
“Those regions will remain the key driving force for the auto market,” he said.
Honda, along with rival Toyota Motor, is one of the pioneers of environmentally friendly cars, which have proven to be major hits, particularly in the United States, at a time of soaring oil prices.
But with the US economy running into trouble, and Japan's car market in the doldrums as the population shrinks, Japanese automakers are relying increasingly on emerging economies to underpin their rapid expansion.
Honda's automobile sales grew by 10 percent in North America to 481,000 vehicles in the third-quarter, while Japanese sales dropped 11 percent to 145,000.
Sales in the rest of Asia meanwhile surged 33 percent to 188,000 vehicles, while European sales climbed 18 percent to 90,000.
Honda raised its projection for annual net profit to 690 billion yen, up 7.8 percent from an earlier forecast and 16.5 percent higher than in the previous financial year to March.
Although the outlook for the US market is becoming more uncertain, prospects are not entirely gloomy, said Kondo.
“For the US market … the subprime mortgage problem is showing an impact, particularly for our (sales of) motorcycles and power products, but automobiles are showing a solid sales performance,” he said.
“We are neither positive nor negative about the outlook of the US market. We are reviewing the situation carefully,” he said.
