Honda says profit up but deadly airbag costs lurk in background

Honda said Wednesday its half-year net profit jumped as strong North American sales helped offset the impact of an exploding airbag crisis and sluggish demand in the Japanese market.

The Civic sedan maker's net profit in the six months through September rose 14 percent to 313.7 billion yen ($2.59 billion), while sales jumped more than 15 percent to 7.32 trillion yen.

Rival Nissan on Monday raised its full-year forecasts, citing new model rollouts and a strong North American market.

Toyota is set to report its latest earnings results this week.

Japanese automakers have benefited significantly from healthy growth seen in the US market with low interest rates, while the weaker yen has made them relatively more competitive overseas and inflated the value of repatriated overseas profits.

Sales have been sluggish in their home market, however, after a sales tax rise last year dented consumer spending and as younger urban residents delayed buying a vehicle.

"Honda is showing strong results," said Shigeru Matsumura, analyst at SMBC Friend Research Center.

"The impact of airbag recalls on Honda is receding, while its sales are expected to grow in North America thanks to its planned introduction of new Civic models."

This summer Honda revised down its annual earnings for the previous fiscal year, blaming the expanding recalls of faulty airbags made by embattled supplier Takata, which have been linked to eight deaths and scores of injuries.

Takata shares plunged nearly 20 percent at one stage Wednesday after Honda said it was dumping it as an airbag parts supplier and US safety regulators slapped it with a record fine.

Of the dozen global automakers affected by the auto parts crisis, Honda has been the hardest hit, with the company recalling more than 24 million vehicles to fix the deadly defect.

On Wednesday Honda repeated previous warnings that the extent of future airbag-linked costs remained elusive.

"It is not possible for Honda to reasonably estimate the amount and timing of potential future losses" linked to the crisis, it said, pointing to more possible lawsuits.

The company said it has allocated an unspecified sum to cover the expected cost of future recalls.

The Takata defect -- thought to be associated with a chemical propellant that helps inflate the airbags -- can cause them to deploy with explosive force, sending metal shrapnel hurtling toward drivers and passengers.

One of the most recent confirmed victims was a woman in Los Angeles who died last year after the defective inflator in a 2001 Honda Civic ruptured, firing metal shards at her.