Honda's January-March profit plunges 86 percent on tax; still posts record profit for year

TOKYO: Honda's net profit in the January-March quarter plunged 86 percent compared with the same period a year ago because of a one-time corporate tax levied on its Chinese joint venture, the Japanese carmaker said Friday.

But Japan's second biggest automaker still reported a record profit for the fiscal year just ended on booming overseas sales.

Honda Motor Co.'s profit for the fourth fiscal quarter totaled 25.4 billion yen (US$244.2 million; euro154.9 million), down from 176 billion yen the same period the previous year.

Quarterly sales edged down 1 percent to 3.056 trillion yen (US$29.4 billion; euro18.6 billion) from 3.088 trillion yen.

Honda wasn't upbeat about coming months, as fears grow about an unfavorable yen-dollar exchange rate that could cut into the overseas profits of giant Japanese exporters. Also adding to the pessimism are concerns about the North American market, where the credit crisis could crimp sales.

For the fiscal year just ended March 31, Honda said strong sales and cost reduction efforts offset larger dealer discounts in North America, soaring material costs and other costs to boost profit to 600 billion yen (US$5.77 billion; euro3.66 billion) _ an all-time record for Honda. That was a 1.3 percent increase over the previous fiscal year.

Honda's U.S. auto sales shrank 3 percent in March compared with a year ago. A drop in truck and sport utility vehicle sales couldn't be offset by strong demand for Honda's popular smaller fuel-efficient models such as the subcompact Fit.

Honda sold 9.8 percent more vehicles around the world for the latest quarter at 1.05 million vehicles, on strong growth in Asia and other regions.

Honda's sales for the quarter were solid in North America, up 2 percent. Sales in Europe rose 7 percent. Even in Japan, a recently stagnant market, Honda's sales rose 1 percent.