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Honda reported 1Q net income increased 15.8% to ¥166.1 billion ($1.38b) on sales growth of 13% to ¥2.93t ($24.3b). Honda raised its fiscal year (ending March) net profit forecast by 8.7% to ¥625b, as it expects sustained demand for fuel-efficient autos and continued yen weakness, but incurs rising capex costs. Honda-Chart-7-25-2007 Honda also upward revised its FY operating profit and sales forecasts by 14.3% to ¥880b ($7.3b) and by 5.1% to ¥12.35t ($102.5b), respectively. Total vehicle sales rose 5.6% to 946,000 units, with a 9.5% rise in overseas sales offsetting a 12.8% decline in Japan. Honda earned ¥50.5b ($419m) in operating profit from the weak yen. Analysts expect Honda may raise its FY forecast again later this year as the company rolls out new auto models. Honda's ordinary shares lost 2.4% to ¥4,390 ($36.43 ADR equiv. at ¥120.5/$1) ahead of its earnings release. Its ADRs lost 0.2% to $36.82 on Tuesday.

Sources: Press release, Bloomberg, MarketWatch, Reuters
Commentary: Big Three Automakers Lose Ground to Japanese in JuneHigh Gas Prices Driving Hybrid DemandJapan's Auto Parts Makers Gaining Attention
Stocks/ETFs to watch: Honda (HMC) (JP: 7267). Competitors: Toyota (TM) (JP:7203), Nissan (OTCPK:NSANY) (JP: 7201), General Motors (GM), Ford (F), DaimlerChrysler (DCX). ETFs: BLDRS Asia 50 ADR Index (ADRA), iShares S&P/TOPIX 150 (ITF), iShares MSCI Japan (EWJ)
Related: Honda financial results presentation [pdf]

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Source: Honda Posts 16% Rise in Q1 Profit, Raises FY Forecast