Honda profit jumps on brisk U.S. sales
Wed Jul 26, 2006 8:51 AM BST

By Chang-ran Kim

TOKYO (Reuters) - Honda Motor Co., Japan's third-biggest car maker, posted a 30 percent jump in quarterly net profit on Wednesday, fuelled by strong North American sales, and kept its full-year profit forecast.

Honda's fleet of fuel-efficient cars is revving up sales in the United States as gasoline prices average $3 (1.63 pounds) a gallon, prompting more buyers to opt for sedans and car-based crossovers instead of gas-guzzling sport utility vehicles offered mainly by Detroit's General Motors Corp. and Ford Motor Co.

Honda, which does not make traditional truck-based SUVs or pickups, is struggling to build enough of its new Civic sedans, and is seeing healthy demand for its new Fit subcompact and end-of-life CR-V crossover.

Rival Toyota Motor Corp., also known for its fuel-sipping cars, is also expected to report strong profit growth next week, as overseas sales expand.

Second-ranked Nissan Motor Co., meanwhile, booked a worse-than-expected 26 percent drop in operating profit on Tuesday as sales dipped amid a lack of new models.

April-June net profit at Honda, also the world's biggest motorcycle maker, rose to 143.4 billion yen (667 million pounds) from 110.67 billion yen a year earlier. Six brokers surveyed by Reuters Estimates had forecast profit of 138.93 billion yen.

First-quarter operating profit, which excludes earnings from joint ventures in China and some other Asian operations, rose 19.4 percent to 203.52 billion yen.

Revenue rose 14.8 percent to 2.6 trillion yen, fuelled also by brisk demand in Europe for Honda's diesel-powered cars.

The maker of the popular Accord maintained its full-year net profit forecast at 550 billion yen, but lifted its revenue forecast slightly to 10.7 trillion from 10.6 trillion yen.

The profits would be down on last year when Honda booked big extraordinary gains related to pension funds.