TOKYO -- Honda reported a 2.6 percent advance in operating profit in the latest quarter as brisk North American earnings, aggressive cost containment and lower warranty outlays offset shrinking global sales and losses from unfavorable foreign exchange rates.
Operating profit increased to 220.1 billion yen ($2.04 billion) in fiscal second quarter ended Sept. 30, the Japanese automaker announced in its earnings report on Friday.
Net income declined 6.7 percent to 196.5 billion yen ($1.82 billion) in the three-month period, partly because the company was hit by higher income tax expenses in India.
Revenue retreated 2.9 percent to 3.73 trillion yen ($34.6 billion), as worldwide sales dipped 0.4 percent to 1.24 million vehicles in the July-September quarter.
North America was a profit engine, driving Honda higher on robust sales of not only light trucks such as the CR-V crossover but passenger cars such as the Civic small sedan.
"As the market shrinks the CR-V, the new Passport and light truck models are going very strong and will continue to grow our business to post even better results than last year," Executive Vice President Seiji Kuraishi said while announcing Honda's earnings results.
"We are being very successful in the market," he said. "That is our situation in North America."
In August, Honda posted an all-time monthly U.S. sales record.
North America, Honda's biggest second-biggest market after Asia, saw regional operating profit climb 43 percent to 76.2 billion yen ($706.2 million) in the quarter.
North American vehicle sales increased 1.2 percent to 433,000.
Honda has been on a roll in the U.S., posting a 0.6 percent sales increase through September, even as the overall market contracted an estimated 0.8 percent. Japanese rivals, including Toyota, Nissan, Mitsubishi and Mazda, posted bigger declines than the overall market.
But Honda is also turning to incentives more than before.
In the July-September period alone, average spiff spending on Honda and Acura brand cars by American Honda Motor Co. increased 15 percent and to $2,268, although the outlays were still below the industry average of $3,951 per vehicle, according to figures from Motor Intelligence.
Average industry outlays increased only 4.7 percent in the quarter.