Honda down on falling US demand

Honda Motor Co, Japan's second-largest automaker, said fiscal second-quarter profit fell 41 percent as vehicle demand in the United States plunged and the yen gained against the dollar, eroding the value of exports.

Net income was 123.3 billion yen ($1.3 billion), or 67.96 yen a share, for the three months ended September, compared with 208.5 billion yen, or 114.94, a year earlier, the Tokyo-based automaker said in a statement yesterday. Honda was expected to earn 131.4 billion yen, according to the median of three analyst estimates compiled by Bloomberg. Sales fell 4.9 percent to 2.83 trillion yen.

Higher gasoline prices and the financial crisis have slashed spending in the US, prompting Honda to cut production of Pilot sport-utility vehicles and other light trucks. A stronger yen, which hit a 13-year high against the dollar last week, has also hurt Honda's earnings, as the carmaker gets about 70 percent of operating profit from North America."The worst may still be ahead," said Ichiro Takamatsu, chief investment officer at Alphex Investments Co in Tokyo, which manages $64 million. "The stronger yen will keep squeezing Japanese automakers, and we will see more signs about a slowdown in the global economy."