Honda ready to top market expectations

Honda Motor is on track for its strongest earnings in three years after raising its outlook above market expectations thanks to a recovery in the United States, where improving profitability is countering a strong yen and sliding Japanese sales.

By The Newsroom

Published 1st Feb 2011, 16:51 BST

Robust sales growth in emerging markets has helped global automakers to weather a fall in mature markets such as Europe, and Honda has especially benefited from its lucrative and dominant motorcycle business in developing countries such as India.

But a convincing recovery in the US car market – Honda’s biggest – is the main factor that has stoked optimism among investors, sending its shares up nearly a fifth over the past three months.

Honda, which fell behind Nissan Motor Co to become Japan’s third-biggest automaker last year, raised its operating profit forecast for the year to March 31 to 620bn yen (£4.75bn) from 500bn yen.

Japanese car makers have taken steps to improve manufacturing efficiency and reduce fixed costs to cushion the blow from the yen’s rise.