Honda on Tuesday predicted it would stay profitable this year in spite of the worldwide car industry slump, as it revealed better earnings than expectedfor last year.

Japan’s second-biggest carmaker, which has been battered by a stronger yen as well as slumping demand, reported a Y186bn ($2bn) net loss for the January-March fourth quarter. Its profit for the full year, at Y137bn, was down more than 70 per cent compared with a year earlier.