TOKYO — Japan's Honda Motor Co. reported record profit for a fiscal first quarter Friday as sales growth in new markets offset the damage from a stronger yen and soaring material costs.

Honda earned US$1.68 billion in the April-June quarter, up 8.1 per cent from the same period the previous year.

Sales for the quarter dipped 2.2 per cent from a year ago to US$26.79 billion, largely because the rising yen eroded the value of the automaker's overseas earnings.

If the yen's value had remained the same against the dollar, sales would have jumped about 7 per cent, Honda said.

The Tokyo-based manufacturer of the Civic and Accord compacts has been benefiting from its reputation for making cars with good mileage. Honda sold more vehicles worldwide than in any other fiscal first quarter at 962,000 vehicles, up 1.7 per cent on year.

Demand for Honda products is booming in Asia, Brazil and other new markets, making up for declines in vehicle sales in the U.S., Europe and Japan, it said.

Cost-cutting, the decrease of auto discounts in North America and a lift from equity-related income from Chinese affiliates added to a strong performance, according to Honda.

Honda said it plans to sell 4.08 million vehicles for the fiscal year ending March 2009, up 3.9 percent from the previous year.

The plan is optimistic amid emerging worries among many of the world's automakers about faltering growth.

Honda gave a pessimistic outlook for profit for the current fiscal year at US$4.58 billion, down 18.3 per cent from the year ended March 31, 2008. It expects fiscal year sales to climb 1.1 per cent to US$113.36 billion.