Honda Motor Co.’s group profit fell in the latest fiscal year for the first time in six years because of the yen’s strength against the U.S. dollar.
Japan’s third-largest automaker said group net profit for the year fell 14 percent to 262.42 billion yen, or $2.4 billion, from 305.05 billion yen the previous year.
Sales during the period dropped 2.1 percent to 6.099 trillion yen, or $56.3 billion, from the previous year’s 6.231 trillion yen.
Honda is especially vulnerable to changes in the yen-dollar rate because half of all the Accord and Civic sedans and other vehicles it makes are sold in North America.
The value of those sales is eroded when the dollar is translated into fewer yen.
Honda said it lost 620 billion yen ($5.7 billion) because the yen’s 14 percent rise against the dollar decreased the value of dollars earned overseas.
The yen averaged of 111 per U.S. dollar in fiscal 1999, compared with 127 yen the year before.
The Tokyo-based carmaker said total auto sales rose 6 percent to 2.473 million vehicles in the year just ended. Sales in North America jumped 9.5 percent to 1.295 million units, thanks to strong sales of its Odyssey minivans and Acura TL luxury sedans.
However, the company said that profit will drop another 28 percent in the fiscal year through March 2001 as a further rise in the yen and uncertainty about growth in the United States and Europe outweigh an expected rebound in Japan.
Honda said that group net profit for the current fiscal year will drop 28 percent to 190 billion yen ($1.8 billion) as the Japanese currency strengthens further against the dollar. Sales are expected to rise 1.7 percent to 6.20 trillion yen ($57.2 billion). s