• The Associated Press


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

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

Rising raw materials costs and research expenses also helped push earnings downward, offsetting the positive effect of cost cuts and the weak, yen Honda Motor Co. said Wednesday in a statement.

Profit for the business fourth quarter totaled 176 billion yen, down from 219.5 billion yen the same period the previous year.

Quarterly sales totaled 3.1 trillion yen, up 9 percent from 2.8 trillion yen a year ago. Demand has been strong for Honda models, which have a global reputation for fuel-efficiency at a time when gas prices are soaring.

Honda’s vehicle sales were up in nearly all major regions, marking a 17 percent jump in Europe to 102,000 vehicles and a 4 percent gain in North America to 450,000 vehicles, compared with the same period a year earlier.

Worldwide sales by units rose 6 percent to 957,000 vehicles during the quarter. The only major market that remained flat was Japan, where the number of vehicles sold edged down 0.5 percent to 189,000.

Honda and the other major Japanese automakers have been capitalizing on the recent interest in smaller cars delivering good mileage, at a time when U.S. rivals are ailing.

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