Honda's interim net profits were at an all-time high yesterday thanks to strong sales overseas and a weak yen.

Japan's third biggest carmaker, which makes European versions of the Civic at Swindon, said favourable currency exchange rates were allowing it to raise its its full-year forecasts.

"Sales as well as operating, pretax and net profits all hit a record for the first half, led by solid overseas sales and a weak yen," Honda Motor vice-president Satoshi Aoki said.

"And with the yen now trading at a lower-than-expected level both against the dollar and the euro, we are also revising up our full-year forecasts."

Honda said net income for the six months to September totalled 271.31 billion yen (#1.2 billion) compared with 244.37 billion (#1 billion) a year earlier.

First-half revenue grew by 13.7 per cent year-on-year to a record 5.23 trillion yen (#22 billion) as global sales surged by 6.3 per cent to 1.78 million units, with US sales up 6.5 per cent and sales to Asia rising by 18.4 per cent.

"Gasoline prices in the US are beginning to show clear signs of peaking out and this may help change the underlying sluggish demand there," Mr Aoki said.

"But as the sales environment for light trucks remains challenging in the US, we may increase our annual budget for sales promotion incentives in the US from $1.1 billion (#588 million) to $1.6 billion (#855 million)."

Honda's UK dealers have hit sales records for 13 months in a row, but sales in the company's home market fell by 6.6 per cent in the first half from a year earlier.

"The business environment is very challenging in Japan, with more consumers preferring the environment-friendly mini vehicles over the standard ones which consume more fuel," Mr Aoki said.

The Japan Automobile Manufacturers Association said domestic sales of new cars, trucks and buses, excluding mini vehicles, fell for the 15th straight month in September.

The weak domestic sales prompted Honda to reduce its full-year global sales forecast to 3.70 million from 3.72 million units.

But its robust sales overseas helped offset a 23.1 billion yen (#103 million) increase in sales, general and administrative costs, lifting operating profit to an all-time high of 396.54 billion yen (#1.8 billion) in the first half from 333.09 billion (#1.5 billion) a year earlier.

Honda also said the weak yen contributed 96.1 billion yen (#430 million) to pretax earnings during the six-month period.

For the full year, the company now forecasts net profit of 555 billion yen (#2.5 billion). Domestic rivals such as Toyota and Nissan are also enjoying windfall currency gains.

"We all know that forex is the main reason behind Honda's upward revision, which could be followed by similar moves by other auto makers," said Takashi Miyazaki, general manager of the investment strategy division at Mitsubishi UFJ Asset Management.