TOKYO -- Japanese automaker Honda reported Friday a 20 percent jump in fiscal first-quarter profit on the back of a cheap yen that offset the damage from a large air-bag recall.
Honda Motor Co.'s April-June net profit totaled $1.5 billion, up from $1.25 billion in the same period the previous year.
Quarterly sales gained nearly 16 percent to $29.9 billion.
Honda and other Japanese carmakers have faced a slowdown in the world's largest vehicle market this year. The carmaker saw sales in China jump 30 percent in the first half as it introduced new compact and crossover models. Its performance in China helped Honda partly offset slumping sales in Japan and Southeast Asia.
"China is one of the very few bright spots in their business," Koji Endo, an auto analyst at Advanced Research Japan, said before the earnings announcement. "But still, as competition worsens and market goes down, it's hard to imagine they can maintain such rapid growth for long."
While major Japanese carmakers in China have sold cars at a faster pace than rivals this year, some executives have warned of a price war in the market.
Fumihiko Ike, chairman of the Japan Automobile Manufacturers Association and also Honda chairman, said last month that China's vehicle market has shown signs of a "downward spiral" that will eventually hit Japanese carmakers.
The Tokyo-based maker of the Accord sedan and Odyssey minivan has been the hardest hit among automakers from the costs related to a global recall of Takata Corp.'s air bags that can explode.
Takata has recalled almost 34 million air-bag inflators in the United States. Globally, the recalls number more than 57 million, although some of the vehicles are being recalled more than once.
At least eight people have been killed and 100 have been injured by Takata air bags, which can explode with too much force and send shrapnel into the vehicle.
Honda, which has a stake in Takata, relies heavily on the Tokyo-based air-bag and seat-belt maker.
Honda estimates its recalls related to Takata air bags worldwide at 24.5 million vehicles.
It did not break down costs for the quality woes but said that was part of the overall sales and administrative expenses estimated at $484 million for the fiscal year through March 2016.
Results got a boost from healthy sales, especially in North America, where it introduced the HR-V sport utility vehicle and Acura TLX luxury model. The CR-V crossover also did well in the region.
The cheap yen, which lifts the overseas earnings of Japanese exporters, also helped. The dollar has been trading at 120 yen levels, up sharply from about 102 yen a year ago.
The favorable perk from currency exchange rates helped lift sales by nearly $3 billion for the April-June quarter.
Honda left its forecasts unchanged, projecting a $4.2 billion profit for the fiscal year through March 2016. That would mark a 3 percent on-year rise.
It expects to sell 4.7 million vehicles around the world for the fiscal year, up from nearly 4.4 million vehicles for the previous fiscal year, which ended March 2015.
Information for this article was contributed by Ma Jie and Masatsugu Horie of Bloomberg News.
Business on 08/01/2015