Honda posts a 7% jump in operating profit in the first quarter of 2014

Article by Andrew Christian, on July 31, 2014

Honda Motor Co. posted a 7-percent jump in operating profit in the first quarter ended June 30, 2014 to JPY198 billion ($1.94 billion). The carmaker posted a 20-percent rise in net income to JPY146.5 billion, as well as a 5-percent surge in sales to JPY2.99 trillion. Honda saw its sales in home turf Japan boosted by back-orders from a buying rush preceding a sales tax hike on April 1.

It also saw sales in China, India and Indonesia boosted by model changes. These sales surges were enough to offset slumping sales in Thailand, and dropping demand in the United States. Honda is trying to hike sales in emerging markets to help cut its dependence on North America, which generates nearly half of revenue.

Part of the move was launching cars tailored for China, India and Indonesia, betting the model changeovers will allow it to capture market share from rivals Toyota and Volkswagen.

Kota Yuzawa, an auto analyst at Goldman Sachs Group remarked that India and Indonesia “have been very strong," noting that Honda’s recent aggressive investment in products for these markets are “starting to pay off."

Honda saw its operating profit fall from JPY71.9 billion to JPY67.5 billion in the April-June period. It also saw its sales in the US drop 1 percent in the first six months of 2014, heaved by slower demand for the Accord sedan and Acura models like the ILX and TSX, according to Autodata Corp.

Acura, which became a division with dedicated management and resources in April 1, has been struggling to hike it sales in the US as it chokes from bigger luxury brands.

Acura US chief Mike Accavitti has told Bloomberg that Acura should post better gains from August thanks to the launch of the new TLK sport sedan. Honda has already made the new Fit available in the US since June.

Topics: honda, profit

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