* Sees annual operating profit 710 bln yen, prior view 700 bln yen
* Cuts global group vehicle sales f’cast from previous view
* Expects to sell record 5.29 mln vehicles, prior view 5.38 mln (Recasts, adds details on results)
TOKYO, July 31 (Reuters) – Honda Motor Co raised its full-year forecast operating profit forecast on Tuesday, after posting a surprise rise in quarterly earnings due to higher automobile sales in North America and a rise in motorcycle sales in Asia.
Japan’s No. 3 automaker now expects an operating profit of 710 billion yen for the year to March 2019, versus an earlier view of 700 billion yen, as it expects to take a smaller hit from a stronger domestic currency. The revised forecast represents a 15 percent decrease on the year.
But it downgraded its global group vehicle sales forecast as it expects floods in Mexico to cut production by 75,000 units over the year, resulting in lower sales in North America.
Honda expects to sell 5.29 million vehicles globally in the year to March, still a record high but lower than a previous estimate for 5.38 million units.
For the first quarter, its global vehicle sales rose 3 percent, lifted by a 7.7 percent increase in North America, while sales rose 3.2 percent in Japan. Sales were slightly lower in Asia, its biggest regional market.
Honda said it was selling more of its Pilot SUVs in the United States, a key market, where buyers continue to shun its mainstay Civic and Accord sedans.
In China, the automaker has been facing a slump in sales amid a quality issue with popular models.
Sales in the world’s biggest vehicle market have been hit over the past months after it was detected that excess oil was accumulating in its popular CR-V SUV model’s oil pan.
This led to a recall and sales suspension of the model in China through May, leading to a 6.4 percent slide in annual sales in the country in the first six months of 2018.
Earlier this month, Chinese authorities also recalled around 300,000 of the Civic over the same issue.
Operating profit at Japan’s No.3 automaker rose 11.2 percent to 299.3 billion yen ($2.69 billion) for the April-June quarter, versus 269.2 billion yen a year ago.
This beat an average estimate for a drop to 250 billion yen from six analysts polled by Thomson Reuters I/B/E/S.
Like its rivals at home and abroad, Honda is bracing for a possible rise in U.S. tariffs that could significantly raise the cost of doing business in the world’s No. 2 car market.
The automaker said it had not made any decisions on whether to change its operations if the tariffs are implemented. ($1 = 111.2200 yen) (Reporting by Naomi Tajitsu; Editing by Himani Sarkar)