* April-June oper profit up 7.1 pct, beats forecasts
* FY oper profit outlook raised to 770 bln yen from 760 bln
* Honda's N.American Q1 operating profit down 6 pct
* Production at new Mexico plant slower than expected -exec
* Still aims for annual US sales target of 1.55 mln vehicles
(Adds executive comment, North American profit decline, Brazil
and China information)
By Yoko Kubota
TOKYO, July 29 Honda Motor Co said
teething troubles at a new plant in Mexico dented sales and
profit in the U.S. market, its biggest, taking the shine off a
better-than-expected rise in quarterly profit powered by brisk
results in Japan.
U.S. sales by Japan's third-largest automaker dipped 0.8
percent in the first half, while sales rose at rivals Toyota
Motor Corp and Nissan Motor Co. It posted a
6.0 percent drop in North American operating profit for the
Overall earnings were buoyant, however, with a 7.1 percent
rise in quarterly operating profit to 198.04 billion yen ($1.9
billion), beating the 181.8 billion yen mean estimate of 12
analysts polled by Thomson Reuters I/B/E/S.
Honda said its Mexico plant, which makes the Fit subcompact,
was hit by delays as it adopted new manufacturing techniques,
but the company kept its full-year U.S. sales targets unchanged
and said volumes would get back on track.
"We are extra careful with quality, and that's why initial
delivery was somewhat delayed, but as the workers acquire more
skills, we can catch up," Honda Executive Vice President Tetsuo
Iwamura, who heads the company's U.S. operations, told a news
conference on Tuesday.
"We want to hit our annual (U.S. sales) target of 1.55
million vehicles, and we are doing our best to do so."
Honda nudged up its full-year profit forecast to 770 billion
yen from 760 billion to reflect a slightly weaker yen
The company also cited the delayed launch of the new Acura
TLX sedan as another factor behind its dull performance in the
United States for the quarter.
Honda's average U.S. incentive per vehicle in April-June was
$1,941, according to TrueCar - up 11 percent from a year ago and
slightly higher than Toyota's, although below Nissan's. A Honda
spokesman said it was trying to keep incentive levels low for
key models such as the Accord and the Civic.
The quarterly operating margin for Honda's four-wheeled
vehicle business was an anaemic 4.3 percent, nearly flat from a
year ago, weighed down by the cost of investments in new plants
in Mexico, Thailand and Brazil.
Honda is carefully watching conditions in Brazil, where auto
sales are slumping despite government stimulus, to decide
whether it needs to push back the start of a new $430 million
plant, Iwamura said.
Weakness in the United States was outweighed by strength in
Japan due partly to strong sales of the redesigned Fit and to
back-orders left over from a rush of buying that preceded an
April 1 sales tax hike.
In China, Honda's sales grew 11.7 percent year-on-year in
January-June, but the car maker's inventories have built up
somewhat, and it has curtailed operations at its Wuhan plant to
one shift per day from two, Iwamura said.
Honda's shares ended down 0.8 percent before the earnings
were announced, compared with a 0.6 percent rise in Tokyo's
benchmark Nikkei average. The shares were down 18
percent for the year so far, underperforming the Nikkei's 4
($1 = 101.9600 Japanese Yen)
(Reporting by Yoko Kubota; Editing by Edmund Klamann,
Christopher Cushing and Jane Baird)