Honda Motor Company on Wednesday published another set of read-it-and-weep-Detroit figures, reporting its sixth consecutive record quarterly consolidated sales and operating revenue.
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Sales rose across all business sectors, particularly in North America, where, as petrol has passed the $3-a-gallon mark, buyers are increasingly choosing the Japanese automaker’s fuel-efficient cars over domestic SUVs and trucks.
“Higher oil prices, higher gasoline prices have been working very much in the favour of Japan’s auto makers,” Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, told Reuters, adding: “The desire for more fuel-efficient cars has increased worldwide.”
Honda boosted net income 29.6% to 143.4bn yen for the first quarter ended 30 June, up from 110.6bn a year previously.
Six brokers surveyed by Reuters Estimates had forecast profit of 138.9bn yen.
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By GlobalDataOperating income rose 19.4% to 203.5bn yen, on net sales up 14.8% to 2,599.7bn yen.
Honda said this was due to increased profit from higher revenue, a reduction in R&D costs and a fall in the value of the Japanese yen offset by model mix changes, raw material cost rises and increases in selling and other costs.
At a press conference in Tokyo, Honda’s executive vice president Satoshi Aoki told the news agency that higher raw materials costs exceeded cost cuts, slashing 10.9bn yen, or about 5%, off the quarterly operating profit.
Aoki reportedly said that Honda was not in talks with materials suppliers to pay more for steel and other metals, and it wanted to keep car prices steady.
“It is not realistic to pass on the rising price of materials to consumers in these market conditions,” he said.
Automobile sales rose 6.7% to 896,000 units world-wide.
Based on sales of 10,700bn yen (up 8%), including 3.72m automobiles (1.77m in North America), Honda is maintaining its forecast of fiscal full-year operating income down 13.7% to 750bn yen and net profit off 7.9% to 550bn yen. This is because the automaker last year booked large extraordinary gains related to pension funds.
Reuters noted that Honda has revised its assumed average euro exchange rate for the year to March 2007 to 139 yen, from a previous 132 yen, but kept to an assumed dollar rate of 112 yen.
According to the news agency, Aoki said Honda expected to spend more on sales incentives in the United States this year as demand falters for SUVs, and raised its budget by $US100m to more than $1.15bn.
“Our spending on incentives is still much lower than the industry average, but we’re seeing a slight rise for light trucks,” he told Reuters.
Honda’s US sales rose 7.1% in the first half, pushing its up its market share to 8.9%, from 8.1% a year earlier, the news agency added.
