Honda's first quarter operating profit drops 16% on lower US car sales

TOKYO (Reuters) – The Japanese company Honda Motor Co (7267.T) announced a 16% drop in operating income in the first quarter on Friday, as the strength of the yen weighed on foreign earnings and sales of vehicles in the United States fell.

Japanese automaker No. 3 reported operating profit of 252.4 billion yen ($ 2.36 billion) for the April-June period, compared to 299.3 billion yen last year and a forecast average of 246.9 billion yen by seven badysts surveyed by Refinitiv.

The company's sales in the United States dropped to 407,000 vehicles in the three-month period, compared with 425,000 vehicles a year earlier.

It lowered its global sales forecast for the year until March 2020 to 5.11 million vehicles, up from 5.16 million and a record 5.323 million vehicles sold last year.

Honda, however, reiterated its forecast for a 6% increase in operating profit, which should reach 770 billion yen for this year.

Honda, like other automakers, is striving to reinvent itself in the face of growing competition from tech companies – such as Google's parent Alphabet (GOOGL.O) and Uber (UBER.N– while the automobile industry is moving towards shared, autonomous and electric vehicles.

In May, Honda announced that it planned to reduce global production costs by 10% by 2025 and reduce variations in regional models, channeling savings into research and development.

The company has also expanded its partnerships by joining the mobility project of SoftBank Group Corp. (9984.T) and Toyota Motor Corp. (7203.T) and the investment in General Motors Co (GM.N) Self-driving cruise unit.