Japanese carmaker Honda has blamed a fourth quarter 85.6 per cent dive in profit on higher taxes and increased operating costs.
Despite selling more cars over the three-month period to March 31st 2008 compared to last year over a million during the quarter, a 9.8 per cent rise from last year the automobile maker posted a consolidated net income of JPY25.4 billion (£122 million) from JPY176.2 billion (£849 million) in 2007.
Consolidated income before income taxes, minority interest and equity in income of affiliates for the quarter totalled JPY146.8 billion (£707 million), a decrease of 38.6 per cent from the same period in 2007.
Sales incentives in North America, increased raw material costs, depreciation expenses and the appreciation of the Japanese yen all offset the increased car sales and efforts to cut costs.
Overseas unit sales increased 12 per cent to 860,000 units from last year, but the strong yen and the weak dollar led to a three per cent decline in revenue from external customers to JPY2,356 billion (£11.35 billion).
Motorcycle sales were down ten per cent over the quarter.
For the full year, Honda posted a 13 per cent increase in pre-tax profit to JPY895.84 billion (£4.3 billion), compared to JPY792.87 billion (£3.82 billion) in 2007.
For the year to 2009, Honda predicts sales will be up slightly by 1.1 per cent, but net income will be down 18.3 per cent to JPY490 billion (£2.36 billion).