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Honda reports 76% jump in annual net profit

Japanese automaker Honda said today its net profit for the year to March soared 73.6% to $3.7 billion, thanks to robust overseas sales, a weaker yen, and cost cutting.

business Updated: Apr 26, 2013 17:11 IST

Japanese automaker Honda said on Friday its net profit for the year to March soared 73.6% to $3.7 billion, thanks to robust overseas sales, a weaker yen, and cost cutting.

The rosy bottom line figure underscores a recovery among the nation's major automakers after Japan's quake-tsunami disaster in 2011 devastated sales and production, and highlighted strong demand in the key Asian and US markets.

The yen, which has lost about one-fifth of its value on the dollar since November, has also helped, boosting Japanese firms' competitiveness overseas and jacking up the value of their repatriated foreign income.

Honda, Japan's third-biggest automaker, said it sold a record 4.01 million vehicles worldwide in the last fiscal year.

"In general Japan's major automakers showed a brisk performance for the past fiscal year on the back of strong demand in North America and the positive impact of the weak yen," said Shigeru Matsumura, auto analyst with SMBC Friend Securities.

"They are expected to continue to show firm results for the current fiscal year thanks to those issues," he added.

On Friday, Honda, Japan's third-biggest automaker, said it earned 367.15 billion yen ($3.7 billion) on revenue of 9.87 trillion yen, up from 7.95 trillion yen a year earlier.

The company's sales in China have almost returned to normal levels after plunging due to a bitter territorial row between Tokyo and Beijing that fuelled a consumer boycott of Japanese products.

The long-standing dispute flared again in September when Tokyo nationalised some of a tiny East China Sea archipelago that is also claimed by Beijing, setting off huge demonstrations across China and the consumer boycott.

Japanese factories and businesses across China temporarily closed or scaled back operations over fears of being targeted by angry mobs.

But "we think the Chinese market will continue to grow, especially having seen the enthusiasm and the number of firms participating in the Shanghai Motor Show" this month, said Tetsuo Iwamura, Honda's executive vice president.

"Our business (in China) is steadily recovering to the normal level."

The automakers have also been forced to recall millions of vehicles over safety and quality concerns in recent years.

But Honda is expecting another strong year to March 2014 with annual net profit of 580 billion yen on sales of 12.1 trillion yen.

Many automakers and durable goods producers are eyeing strong demand before the government hikes the national sales tax to eight% from the current five% over the next year, and eventually 10% by 2015.

Japanese industry has also benefited from the big-spending and easy-money policies of Prime Minister Shinzo Abe, who swept December elections on a promise to inject new life into the world's third-largest economy.

Huge easing measures from Abe's hand-picked team at the Bank of Japan have also pushed down the yen, with the dollar buying 98.69 yen in afternoon Tokyo forex trade on Friday -- from a low around 75 yen in late 2011.

Rival automakers Toyota and Nissan report their full-year earnings next month.

First Published: Apr 26, 2013 17:06 IST