Honda’s profit declines 20%

Honda Motor Co. reported a 20% drop in profit for the January-to-March quarter despite solid sales that helped mark its seventh straight fiscal year of record sales.

The decline in profit was unrelated to Honda’s healthy auto operations; it stemmed from a special gain in a Japanese government reimbursement for pension funds that had boosted earnings for the previous year.

Rising raw material costs and research expenses also pushed down earnings, offsetting the positive effect of cost cuts and the weak yen, Japan’s second-biggest automaker said.

Profit for Honda’s fiscal fourth quarter totaled 176 billion yen ($1.5 billion), down from 219.5 billion yen a year earlier. Sales rose 9% to 3.1 trillion yen ($26 billion) on strong demand for its models, which have a reputation for fuel efficiency at a time when gasoline prices are soaring.