Honda Q3 profits down 40 percent image

Honda announced today a 40 percent decline in profit for the third quarter, mainly reflecting sharp decline in domestic automobile unit sales as well as unfavorable currency effects.

Still, Japanese automakers have also taken steps to cut fixed costs and boost manufacturing efficiencies, as pat of a strategy expected to keep profit margins relatively healthy, preparing for future earnings as the U.S. market recovers.

But Honda’s performance overseas in emerging markets and the US helped it to lift its full year profit forecast to 530 billion yen, up 97.5 percent year-on-year, up from 500 billion yen forecast in October. The automaker recently launched an all-new Odyssey minivan and is rolling out more new models for the U.S. market, including a redesigned Civic compact coming out in spring.

Honda Motor Co. was upbeat about the full fiscal year through March 2011, raising its profit forecast to 530 billion yen ($6.5 billion) from its October forecast of 500 billion yen ($6.1 billion). A survey of 20 analysts by Thomson Reuters I/B/E/S forecasts profit of 594 billion yen.

“Honda’s profits could rise even further by the end of March as it has also set very conservative currency rate forecasts of 80 yen against the dollar and 105 yen against the euro (for the fourth quarter),” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

Honda shares ended down 1.4 percent at 3,475 yen before the results were announced.