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Honda Motor Co. said Wednesday that its net profit in the first quarter of fiscal 2005 fell 3.1 percent to 110.6 billion yen, despite brisk domestic and overseas sales.

Honda attributed the drop to a devaluation of derivatives worth 43.8 billion yen, which resulted from a drop in long-term interest rates.

Honda said its sales for the April-June period rose 9.2 percent from the previous year to a record 2.26 trillion yen. It is the fifth consecutive year the automaker has set a record for first-quarter sales.

Operating profit stood at 170.3 billion yen, up 6.5 percent from a year earlier.

The growth was attributed to increased sales and 8.2 billion yen in cost reductions that more than offset a rise in research and development expenses and general administrative costs.

In terms of volume, Honda’s global sales in the quarter to June grew 8.8 percent year-on-year to 840,000 vehicles.

Sales in Japan totaled 167,000 units, up 8.4 percent due to the popularity of new models, including the Step Wagon and Airwave minivans.

Sales in North America totaled 420,000 units, up 7.4 percent from the previous year, led by strong demand for the Ridgeline sport utility truck, the Odyssey minivan and the Acura RL luxury sedan.

In Europe, sales grew 9.1 percent to 72,000 vehicles, mainly due to the expansion of its diesel lineup. The popularity of the CRV Diesel and the Jazz compact, known as the Fit in Japan, fueled the increase.

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