Japan’s third biggest automaker, Honda, reported on Wednesday its profit fell 7.5% in its second fiscal quarter, saying the strong yen hurt its earnings even though its revenue rose, the Associated Press (AP) said.

However, earnings for the first half of its fiscal year edged up, and Honda raised its earnings forecast for the year.

The automaker said it earned 127.12 billion yen ($1.2 billion) in the July-September quarter, down from 137.36 billion yen the same quarter last year.

Group sales in the quarter grew 3.8% to 2.094 trillion yen ($20 billion) from 2.017 trillion yen a year ago, AP said.

According to the report, for the six months ended September 30,Honda said it earned 241.38 billion yen ($2.3 billion) up from 239.18 billion yen a year earlier. First half sales rose 3.5% to 4.167 trillion yen ($39 billion) from 4.025 trillion yen a year earlier.

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Honda raised its profit outlook for the fiscal year ending March 31, 2005, to 447 billion yen ($4 billion), from its forecast in July for a profit of 417 billion yen ($3.9 billion) for the year. The forecast is about 4% below Honda’s 464 billion yen net profit for the last fiscal year, the Associated Press noted.

Honda said it now expects sales to total 8.69 trillion yen ($81 billion), up 6.5% from 8.16 trillion yen the previous fiscal year. Honda had forecast sales of 8.56 trillion yen in July, AP added.