Page last updated at 07:38 GMT, Friday, 25 July 2008 08:38 UK

Honda's profit rises unexpectedly

Honda Civic Hybrid
There has been strong demand for Honda's more fuel-efficient cars

Honda Motor has reported an unexpected rise in three-month profits but it still predicting falling profits for the whole of the year.

Net profit between April and June was 179.6bn yen ($1.68bn; 848m), up 8.1% from the same period last year.

The result came despite a 2.2% fall in revenue as a result of the strengthening Japanese currency.

Despite the better-than-expected figure Honda maintained its forecast for an 18% fall in full-year net profit.

Honda managed to raise three-month profits by raising prices and cutting costs.

It has also seen strong demand for its fuel-efficient cars as oil prices have risen.

Honda has also benefited from the flexibility of its factories, which have been able to switch production away from sport utility vehicles and into smaller vehicles as demand has shifted.

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