TOKYO (Kyodo) -- Honda Motor Co. said Wednesday it has raised its full-year operating profit forecast to 830 billion yen ($6.2 billion) from the previously projected 810 billion yen, helped by the weaker yen and price hikes in overseas markets in response to global inflation.
The Japanese automaker also revised upward its sales outlook for the current business year through March to 16.75 trillion yen from 16.25 trillion yen. But its net profit estimate was unchanged at 710 billion yen due to an impairment loss and a higher tax burden.
The carmaker revised its operating profit estimate upward as it changed its assumed exchange rate for the year to 125 yen against the U.S. dollar from the previous 120 yen. Still, the new projection means a 4.7 percent drop from the year before.
The yen has fallen against the dollar sharply since March, reaching 24-year lows in July, on expectations that the interest rate gap between the two countries will widen because of their differing monetary policies.
The weaker yen assumption boosted its operating profit outlook by 80 billion yen from the previous forecast, according to the company. Honda raised its profit outlook also because it was able to pass on higher material costs to consumers in overseas markets, including the United States where inflation reached the highest in more than 40 years.
"We will increase the value of our products" in the U.S. market to entice customers even with products with higher sticker prices, Honda Chief Financial Officer Kohei Takeuchi said at a press briefing. "We may consider further price hikes if that's appropriate for our value-added products."
In the three months to June, the automaker's net profit fell 32.9 percent to 149.22 billion yen as auto sales declined due largely to a chip supply shortage and a lockdown in Shanghai. Sales were up 6.9 percent at 3.83 trillion yen.
The maker of the Civic sedan and Odyssey minivan models sold 815,000 vehicles worldwide in the April-June quarter, down 18.3 percent from a year earlier on lower sales in the world's two biggest auto markets, China and the United States.
Still, the company maintained its global vehicle sales target for the full business year at 4.2 million units, saying it will ramp up efforts to secure a sufficient supply of chips.
"We expect the chip shortage to continue at least for the rest of the business year," Takeuchi said. "But we will ramp up production toward the latter half of the business year by strengthening our risk management."
The carmaker is asking its chip suppliers to raise their inventory levels while trying to have longer-term contracts with some of them, the company said.