Honda Profit Up 27% on Sales Gain

Japanese automaker Honda Motor Co. said Tuesday that its profit rose 27% in its fourth fiscal quarter as surging sales offset the damage from an unfavorable exchange rate. Full-year profit rose 5%. Honda forecast a decline in earnings but higher sales this year.

The report comes amid strong financial postings from other Japanese automakers, in contrast to results being released at U.S. rivals General Motors Corp. and Ford Motor Co.

Tokyo-based Honda’s group profit for the January-March period totaled 94.1 billion yen ($875 million), up from 74.1 billion yen in the same period a year earlier. Sales rose 10% to 2.3 trillion yen ($21.4 billion) from 2.1 trillion yen.

Honda’s profit for the fiscal year through March totaled 486 billion yen ($4.5 billion), up 5% from 464 billion yen the previous year.

Fiscal-year sales climbed to a record-high 8.65 trillion yen ($80.5 billion), up 6% from 8.16 trillion yen.

Honda is forecasting profit of 450 billion yen for the fiscal year ending March 31, 2006, down 7% from the latest fiscal year, as sales rise 8% to 9.3 trillion yen.

For the last fiscal year, Honda sold 3.24 million vehicles, up 9% from 2.98 million. It plans to sell 3.4 million automobiles this year.

Although Honda’s vehicle sales for the fiscal year slipped 0.6% in Japan, they rose 16% in Europe and 50% in Asia. North American sales inched up 1.1% from the previous year.

The dollar’s decline in the last year has hurt the earnings of Japanese exporters such as Honda by lowering the value of their overseas profits when converted into yen.

On Monday, Honda’s Japanese rival Nissan Motor Co. reported a 1.7% rise in profit for the just-ended fiscal year as it sold more vehicles than it ever has worldwide, including an 18% sales surge in the U.S.

Last week, General Motors reported a loss of $1.1 billion for the January-March quarter, its biggest quarterly loss in more than a decade. Though faring better than GM, Dearborn, Mich.-based Ford posted lower earnings for the first quarter and said it was cutting North American production.

Honda, which earns almost two-thirds of its annual operating profit from the U.S., said it wouldn’t raise vehicle prices in the world’s largest vehicle market because it didn’t want to alienate potential customers.

“There is no way Honda will increase prices and ignore our customers” in the U.S., Honda Executive Vice President Koichi Amemiya said Tuesday in Tokyo. “Price increases should be decided depending on market conditions.”

Honda shares closed Tuesday at $24.30, down 65 cents, on the New York Stock Exchange.