Honda profit up 20% as robust US sales, weak yen offset quality costs

The car maker faces quality-related costs as it continues to recall cars for faulty air bags

Honda Motor Co said on Friday its quarterly net profit jumped 20%, beating estimates, as strong sales in the United States and a weak yen helped it absorb the impact of higher quality-related costs.

April-June net profit at Japan's third-biggest automaker rose to 186.04 billion yen ($1.50 billion), from 155.60 billion yen a year earlier. Honda reported the first-quarter results under international accounting standards for the first time.

That result beat an average estimate of 145.75 billion yen in a survey of 11 analysts polled by Thomson Reuters. Like other Japanese automakers, Honda has benefited from the cheaper yen, which boosts the value of repatriated earnings.

Honda is still soaking up hefty quality-related costs as it continues to recall cars equipped with air bag parts made by top supplier Takata Corp. The Tokyo-based automaker has recalled tens of millions of cars globally since 2008 to replace potentially faulty inflators, including almost 5 million vehicles just two months ago.

Regulators have linked eight deaths - all on Honda's cars - to Takata's inflators, which can explode with too much force and send metal fragments inside the vehicle. Honda, which didn't break out details of quality-related costs for the first quarter, restated its earnings for last year to reflect additional costs for the expanded recalls.

Honda said on Friday that its global car sales rose 4.9% to 1.147 million.

Sales in North America advanced 11% in the first quarter, driven by increased production of its popular HR-V compact sport utility vehicle (SUV) at its new plant in Mexico. The U.S. market - its biggest - has been buoyant, with a range of automakers reporting higher sales there.

Meanwhile, car sales in Asia jumped 19%, thanks partly to a strong performance in China helped by the refreshed Vezel SUV and other models. The gains in Asia and North America more than cancelled out a 27% drop in Japan and a 16% decline in Europe.

Honda its financial forecasts unchanged for the year ending March 2016, calling for a modest 3.1% rise in net profit to 525 billion yen.

($1 = 124.1000 yen)