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Honda first-quarter operating profit drops 16% on lower U.S. car sales

Honda first-quarter operating profit drops 16% on lower U.S. car sales
Honda's logo on its Modulo model is pictured at its showroom at its headquarters in Tokyo, Japan, February 19, 2019. REUTERS/Kim Kyung-hoon -
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KIM KYUNG-HOON(Reuters)
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TOKYO (Reuters) – Japan’s Honda Motor Co <7267.T> reported a 16% drop in first-quarter operating profit on Friday, as a stronger yen weighed on overseas earnings and U.S. vehicle sales dropped.

Japan’s No.3 automaker posted operating income of 252.4 billion yen (£1.95 billion) for the April-June period, compared with 299.3 billion yen a year ago and an average forecast of 246.9 billion yen from seven analysts polled by Refinitiv.

The company’s U.S. sales fell to 407,000 vehicles over the three-month period, from 425,000 vehicles a year earlier.

It lowered its forecast for global sales in the year to March 2020 to 5.11 million vehicles, from its prior projection of 5.16 million and a record 5.323 million sold last year.

Honda, however, reiterated its forecast for a 6% increase in operating profit to 770 billion yen for this fiscal year.

Honda, like other car makers, has been scrambling to reinvent itself amid rising competition from technology firms – such as Google parent Alphabet <GOOGL.O> and Uber <UBER.N> – as the auto industry moves toward vehicles that are shared, autonomous and electric.

In May, Honda signalled that it was looking to cut global production costs by 10% by 2025 and scale back regional model variations, channelling savings into research and development.

The company has also expanded partnerships, joining mobility project by SoftBank Group Corp <9984.T> and Toyota Motor Corp <7203.T>, and investing in General Motors Co’s <GM.N> Cruise self-driving vehicle unit.

(Reporting by Kevin Buckland; Editing by Himani Sarkar)

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