Japanese carmaker Honda reports booming profit

Honda sold more than 2.8 million vehicles globally (Alamy/PA)

Honda’s profit for the fiscal year through to March jumped 70% as vehicle sales grew and a weak yen buoyed overseas earnings, the Japanese automaker reported on Friday.

Annual profit at Tokyo-based Honda Motor Co totalled 1.1 trillion yen (£5.6 billion) as sales surged nearly 21% to 20.4 billion yen (£104.5 million).

Weaker sales in China were offset by strong demand in the US market.

Honda sold more than 2.8 million vehicles globally, up from 2.3 million a year earlier, with sales growing in Japan, the US and Europe.

The maker of the Accord sedan and CR Electric Proto motorcycles was less optimistic about this fiscal year, forecasting that its profit will decline nearly 10% to one trillion yen (£5.1 billion), as research and development spending was expected to increase to nearly 1.2 trillion yen (£6.1 billion) from 964 billion yen.

All the Japanese automakers are investing in research and development, given the global shift to electric vehicles, using the profit gains they have racked up lately thanks to the blessings of a weak yen to invest in the future.

Honda’s Japanese rivals Motor Corp and Nissan Motor Co, which both reported earnings earlier, racked up robust increases in profit, but also stressed they were investing in research.

Honda chief executive Toshihiro Mibe told reporters there was “anxiety due to uncertainty about electrification” at the company, despite its latest robust profits.

Japanese automakers have scored great success with traditional fuel-powered vehicles and hybrids, which have both a gas engine and electric motor.

But they have lagged rivals such as BYD of China and Tesla of the US in the drive toward battery electric vehicles.

Honda said it would make the current fiscal year a major electrification year to ensure future growth. A strategy will be outlined next week, it said.