Honda profit hit by falling sales

Honda's profits for the July to September period more than halved after car sales continued to fall during the global economic downturn.

Net profit came in at 54bn yen ($587m; £359m) for the quarter, down 56% on the 123.3bn yen recorded a year earlier.

Japan's second-largest carmaker said the strong yen had contributed to a fall in sales in overseas markets.

But the fall in profits was less than had been expected, and the carmaker tripled its full-year profit forecast.

Honda says it will now make a net profit of 155bn yen for the year to the end of March, up from its previous forecast of 55bn yen.

It also raised its full-year sales forecast, to 3.4 million cars from 3.29 million cars.

Despite the increase in projected future sales, revenue in the third quarter fell by 27% from a year ago.

This was largely due to falling car sales in overseas markets.

Sales in Japan have been less affected, largely due to government tax breaks and incentives on hybrids such as the new Honda Insight.

"Honda's numbers came in a bit better than forecast and the biggest factor seems to be the year-on-year reduction in production costs," said Andrew Phillips at KBC Securities.