By Naomi Tajitsu
TOKYO (Reuters) - Honda Motor Co. posted a stronger-than-expected 11.5 percent rise in first-quarter operating profit as higher vehicle and motorcycle sales as well as lower costs offset the impact of a stronger yen.
Japan's third-largest automaker by sales clocked 266.8 billion yen (1.97 billion pounds) in operating profit for April-March, surpassing an average estimate of around 183.31 billion yen from 10 analysts surveyed by Thomson Reuters I/B/E/S/.
Honda maintained its previous forecast for operating profit to rise 19.2 percent to 600 billion yen for the full year to March, citing uncertainties about currency moves and the upcoming presidential election in the United States, a key market.
It expects slightly higher vehicle sales and decreased costs to recall potentially faulty Takata Corp air bags for the full year.
The results come after Nissan Motor Co., Japan's second-largest automaker, reported last week a 9 percent fall in quarterly operating profit, hurt by a stronger yen and sliding domestic sales. Japan's biggest automaker, Toyota Motor, reports later this week.
Honda expects the yen to trade around 105 yen to the U.S. dollar and 120 yen to the euro this year, unchanged from a previous forecast.
The automaker said that April-June sales were boosted by the rollout of the remodelled Civic sedan in China and Malaysia, while the start of an additional line at one of its motorcycle plants in India drove up scooter production and sales in Asia.
Sales also rose in North America, its largest market, and Europe.
Honda sells roughly 40 percent of its global production in North America, where its Civic and Accord sedans are among the best-selling vehicle models in the United States and Canada.
It said that sales of its revamped Ridgeline pick-up truck and its Pilot SUV in North America were brisk in the quarter, adding that it would increase focus on light trucks while keeping passenger cars a mainstay of its product offering.
Cost cuts, along with reduced quality related costs, which include recall costs, also lifted Honda's operating profit, offsetting a 75.8 billion yen hit due largely to an appreciating yen.
Honda produces roughly 84 percent of its vehicles outside Japan, leading Japanese automakers in manufacturing locally for local markets to minimise exposure to currency swings.
The automaker expects to take a 303 billion yen hit from foreign exchange fluctuations in the year to March, anticipating the biggest impact from strength in the Japanese currency versus the U.S. dollar.
