Honda nearly triples profit outlook

Honda's making profits like nobody's business - here's the news from money.com:

Honda (HMC), the world's seventh-biggest car maker, has weathered the industry turmoil that drove two U.S. automakers to bankruptcy this year better than many as its profitable and dominant motorcycle business cushioned the blow.

Sales by the maker of Honda Civic cars have also turned up thanks to government sales incentives such as the United States' cash-for-clunkers program. That has helped Honda and others gradually lift production levels from a nadir earlier this year.

"The strong results and conservative views on the second half and currency rate assumptions will be positive for Honda's stock price," said Fumiyuki Nakanishi, manager at SMBC Friend Securities in Tokyo. "The stock will probably surge tomorrow."

Honda lowered its average dollar assumption to ¥85 from ¥90 for the October-March second half of its financial year to next March, lower than around ¥92 in trading on Tuesday. A weaker dollar crimps Honda's earnings in yen terms.

Honda bumped up its global car sales forecast for the full year by 3.3% to 3.40 million units from 3.29 million.

Still, some voiced caution about the longer-term outlook as the effect of government stimulus schemes fades and competition from rivals in South Korea heats up.

"I would like to wait a little bit more to see the effect of the end of government incentive programs before talking about Honda's outlook for the next year on," said Kazutaka Oshima, CEO of Rakuten Investment Management in Tokyo.

He added that Japanese makers were losing their quality advantage that could have made up for the price gap with their South Korean rivals such as Hyundai Motor Co, which he called Honda's "real rival".

Hyundai, the world's No. 4 automaker by sales in the first half of this year when combined with affiliate Kia Motor Corp last week beat forecasts with a record quarterly net profit that analysts said posed a threat to Japanese automakers.

Continue article here: http://money.cnn.com/2009/10/27/news/international/honda_earnings.reut/index.htm?postversion=2009102704