Honda Motor Co., Japan's second-largest carmaker, said Wednesday it raised its full-year profit forecast after demand for fuel-efficient models in the U.S. and a weaker yen boosted first-quarter profit 16 percent.

Net income in the year ending in March will probably be 625 billion yen, compared with a previous forecast of 575 billion yen, the carmaker said. Profit in the three months to June 30 rose to 166.1 billion yen, or 91.38 yen a share, from 143.4 billion yen, or 78.46 yen, a year earlier.

President Takeo Fukui said the company won customers in the U.S., Honda's biggest market, from General Motors Corp. and Ford Motor Co. with Civic compacts and CR-V sport utility vehicles. A weaker Japanese currency added 50.5 billion yen to Honda's operating profit last quarter as earnings surged from overseas sales.

"Honda is gaining from the weaker yen as most of its business is outside Japan, and especially in North America," said Yoshihiro Okumura, who helps oversee the equivalent of $365 million at Chiba-gin Asset Management Co. in Tokyo. "We can also expect the automaker to gain in sales, as it will release redesigned versions of its global models."

Vehicle sales rose 5.6 percent to 946,000 in the quarter, as a 12.8 percent drop in domestic demand was more than offset by a 9.5 percent increase in overseas sales. The company will introduce a new version of its Accord sedan, its top-selling model, later this year. The company will drop the hybrid version of the model.

"They had to increase incentives on Accords in the U.S. to get rid of excess inventory, but they seem to have solved that problem," said Takashi Aoki, who helps manage about 130 billion yen at Mizuho Asset Management Co. "I don't think they'll mess up with the switch to the redesigned Accord."

First-quarter profit was more than the 154 billion yen median estimate of five analysts surveyed. Sales in the period rose 13 percent to 2.9 trillion yen.

The yen dropped 5.3 percent against the dollar in the quarter compared with the year-ago period, boosting the value of repatriated profits. Operating profit jumped 60 percent in Europe in the quarter.

The company's annual operating profit gains about 13 billion yen for every 1 yen Japan's currency weakens against the dollar, and 2.5 billion yen for every 1 yen drop against the euro, according to Koji Endo, a senior analyst at Credit Suisse Group in Tokyo.

The carmaker based its new forecast on 117 yen to the dollar and 155 yen to the euro. It expects the Japanese currency to strengthen later this year as first-quarter earnings were based on 121 yen to the dollar and 162 yen to the euro.

The weaker yen is offsetting higher production costs globally due to the rise in prices of metals such as steel and aluminum. The company is working with suppliers to cut component costs as prices of aluminum and precious metals may increase this year, the company has said.

Honda hasn't factored in domestic production losses stemming from a lack of parts caused by last week's earthquake in Niigata.