Honda, the third-biggest car manufacturer in Japan, earned $2.61 billion (266 billion JPY) in terms of operating profit for March to April exceeding the forecast of 183.81 JPY made by 10 industry analysts in a recent poll.
The company upheld its earlier estimate for operating profit to increase to 600 billion JPY or by 19.2 percent however referred to instability caused by foreign currency fluctuations together with the forthcoming United States presidential elections.
The results came following the declaration by Nissan Motors Corporation that its operating profit for the quarter declined nine percent due to reduced local sales and its stronger domestic currency. Nissan is the second-largest car manufacturer after Toyota Motors.
Honda management revealed that sales from April to June received a lift from the rollout of its modified Civic in Malaysia and China. On the Also an extra line in one of the company’s motorcycle regions in India boosted production and sales of scooters in Asia. Sales also increased in the Euro region as well as North America, its biggest market at the moment.
The car maker is expecting the local currency to trade at approximately 105 JPY to the US dollar and 120 JPY to the euro in 2016, unchanged based on earlier projections.
Honda Motors sells close to 40 percent of its total production in the North American region. In fact, the Accord and Civic models are among the top-sellers in Canada and the United States. It manufactures more or less 84 percent of its cars overseas. It leads other Japanese car manufacturers in production locally for domestic markets to reduce exposure to currency fluctuations.
Company executives claimed their refurbished pick-up truck (Ridgeline) and the Honda Pilot Sports Utility Vehicle sold well during the quarter. Honda plans to concentrate more on trucks to ensure it maintains passenger automobiles as its main offering.
Honda still predicted a 303 billion (JPY) cost due to unstable foreign exchange rates in the year up to March.
Cost reductions plus lower quality-related expenses including recall costs was also responsible for the increase in the company’s operating profit. This offset costs of 75.8 billion JPY mainly because of the appreciating currency.
Honda executives also stated that looking forward they believe they will sell 4.9 million units for the fiscal year to March 2017, higher than the 4.7 million during the previous period.