Honda predicts rebound this year after profits dive by 47%

HONDA expects a sharp rebound in profitability in 1994 following a slump in revenues last year, writes David Bowen.

The Japanese carmaker earned a net Y23.7bn ( pounds 150m) in the year to March, down 36 per cent on the previous year. Pre-tax profit was down 47 per cent at Y46.89bn on turnover that had fallen from Y4,130bn to Y3,860bn.

Analysts said the poor performance was caused by the strong yen and the weak Japanese economy, although Honda's heavy overseas exposure meant it was hit less hard than Japan's other car groups. It makes 800,000 of its 1.9 million cars outside Japan, mostly in the US.

Honda expects to more than double net profit this year. US sales were up by 25 per cent in the first four months, against an overall market rise of 15 per cent, and market share rose to 4.2 per cent from 3.9 per cent in the same period last year. Sales of the Accord rose by 44 per cent to push it back to a strong second place, only 12,000 units behind the top-selling Ford Taurus.

Honda is still having difficulties in Europe, where sales are being damaged by its partner Rover.