Honda profit slips on air-bag woes despite sales growth

TOKYO (AP) — Honda Motor Co.'s fiscal second quarter profit slipped compared to a year ago as costs related to a massive air-bag recall erased the perks of strong sales, the Japanese automaker said Wednesday.

Honda reported its July-September profit totaled 174 billion yen ($1.5 billion), down 1.7 percent from 177 billion yen a year earlier.

Quarterly sales jumped nearly 16 percent on-year to 3.78 trillion yen ($33 billion), according to the Tokyo-based maker of the Accord compact, Odyssey minivan and Asimo robot.

In September, Honda and some people suing the automaker over faulty Takata Corp. air-bag inflators agreed to a $605 million settlement in the U.S.

Honda was among Takata's biggest customers. The defective inflators are linked to 19 deaths and dozens of injuries. Some 100 million air-bag inflators were recalled worldwide.

Honda raised its full year forecast through March 2018, to 585 billion yen ($5.1 billion) from 545 billion yen ($4.8 billion) projected earlier, but that's still 5 percent lower than what it earned the previous fiscal year.

For the latest quarter, a favorable currency rate helped Honda's bottom line. A weak yen is a plus for giant Japanese exporters like Honda, whose overseas earnings rise in value when converted into yen.

The biggest sales growth for Honda is recently being marked in China, where demand is strong for the Civic compact, as well as the UR-V and Avancier sport-utility vehicles.

Honda is also banking on electric car sales growth in China, where the government is pushing EVs as a major policy, the company said.

Honda's sales did well in Japan as well, where its N-Box series, a tiny car that looks like a box, was a hit.

Its motorcycle sales rose 15 percent during the quarter compared to the previous year on healthy demand in India, Indonesia and Vietnam, the company said.

Honda recently marked a milestone with its Super Cub motorcycle, reaching 100 million units of global production. Super Cub production began in 1958, and the small scooter-like motorcycle is now produced in 15 countries and sold in more than 160 countries.

Although the U.S. auto market lagged in recent months, Honda marked solid sales of its new Accord sedan, Civic Hatchback and Acura RDX luxury crossover, doing better than the overall market trend, it said.