Honda Operating Profit May Fall 40% on Yen's Gain, Nikkei Says

By Kathleen Chu

Oct. 25 (Bloomberg) -- Honda Motor Co., Japan's second- largest automaker, may have a 40 percent fall in operating profit this year because of the yen's gains against other currencies and slower sales in North America, Nikkei English News said.

Honda's operating profit, sales minus the cost of goods sold and administrative expenses, may decline to as low as 550 billion yen ($5.8 billion) for the year ending March 31, Nikkei reported, without saying where it got the information.

The Tokyo-based automaker earlier forecast its earnings on expected foreign exchange rates of 100 yen per dollar and 160 yen per euro for the second half of the fiscal year, the report said.

Declining sales in North America may contribute to the drop in operating profit, Nikkei said.

Honda Motor cut its full-year forecast for operating income by 3.1 percent to 630 billion yen on July 25, citing increased costs for raw materials.

Calls to Honda's Tokyo office seeking comment on the Nikkei report were unanswered.

To contact the reporter on this story: Kathleen Chu in Tokyo at kchu2@bloomberg.net.