Honda lifts guidance as govt stimulus fuels sales

Honda Motor Co, the world's 7th-biggest car maker, more than doubled its annual profit forecast as second-quarter earnings fell less than expected thanks to a global sales boost supported by government stimulus schemes.

Honda, known for its Civic and other fuel-efficient cars, said on Tuesday its operating profit for July-September fell 56 percent to 65.54 billion yen ($712 million) from 148.85 billion yen in the second quarter last year as sales volumes decreased and the yen strengthened against the dollar.

The result beat an estimate of 42 billion yen in a poll of five analysts by Thomson Reuters I/B/E/S.

Net profit, which includes its earnings from the red-hot Chinese market, was 54.04 billion yen, against 123.32 billion yen last year.

Honda has weathered the industry turmoil, which drove two U.S. automakers to bankruptcy this year, better than many as its profitable and dominant motorcycle business cushioned the blow.

Its car business, the world's seventh largest by first-half sales, has also turned up recently thanks to government sales incentives such as the United States' cash-for-clunkers programme. That has helped Honda and others gradually lift production levels from a nadir earlier this year.

For the full year to March 31, 2010, Honda raised its operating profit outlook to 190 billion yen from 70 billion yen.

Consensus forecasts from 21 brokerages put Honda's operating profit for the year to March at 139 billion yen.

Shares of Honda gained 3.9 percent during the fiscal second quarter, outperforming Tokyo's transport sector subindex .ITEQP.T, which was flat.