While the first-quarter financial numbers might look bleak, revised sales forecasts and other signs point toward Honda Motor Co., making a strong recovery as its 2011 fiscal year continues, especially on the heels of strengthening certified pre-owned sales.

First, here is the unsightly news that came out Monday.

Honda’s first-quarter consolidated net income totaled 31.7 billion yen ($394 million), a decrease of 88.3 percent from the same period last year.

Officials calculated first-quarter basic net income attributable per common share amounted to 17.64 yen (22 cents), a decrease of 132.63 yen from 150.27 yen for the corresponding period last year.

Honda also reported first-quarter consolidated net sales and other operating revenue amounted to 1,714.5 billion yen ($21.239 billion), a decrease of 27.4 percent from the same period last year.

As expected, the automaker explained the sharp declines were due primarily to decreased revenue in the automobile business mainly caused by the impact of the Great East Japan Earthquake that occurred on March 11. The company also pointed out it faced unfavorable foreign currency translation effects, despite increased revenue in the motorcycle business.

Honda estimated that if calculated at the same exchange rate as the corresponding period last year, revenue for the quarter would have decreased by approximately 22.7 percent.

In other areas of its finances, Honda disclosed that its consolidated operating income for the quarter amounted to 22.5 billion yen ($280 million), a decrease of 90.4 percent from the same period last year.

The company said that decline was due primarily to decreased sales volume and model mix, increase in fixed cost per unit as production output has reduced and the unfavorable foreign currency effect, despite decreased SG&A expenses.

Honda determined it sold 547,000 units during the first quarter, a decrease of 39.2 percent from the same period last year due to production disruptions in all regions from the earthquake.

The automaker said revenue from sales to external customers decreased 35.1 percent, to 1,176.9 billion yen ($14.578 billion), from the same period last year due mainly to decreased unit sales and unfavorable currency translation effects.

Honda also reported an operating loss of 76.2 billion yen ($944 million), a deterioration of 225.1 billion yen from the same period last year, due primarily to decreased unit sales and increase in fixed cost per unit, despite decreased SG&A expenses.

Furthermore, Honda mentioned revenue from customers in the financial services business decreased 9.1 percent to 135.8 billion yen ($1.682 billion) from the same period last year due mainly to the unfavorable foreign currency translation effects.

The OEM determined operating income decreased 1.9 percent to 53.6 billion ($664 million) from the same period last year due mainly to the unfavorable foreign currency effects, despite the decreased allowance for losses on credit and lease residual values.

Honda’s Reasons for Optimism

After clearing the deck of  its bleak first-quarter financial performance, Honda then raised its full-year profit forecast by 18 percent. The reason: a quicker-than-expected recovery from the March 11 earthquake.

Honda expects to post net income of 230 billion yen ($2.96 billion) in the 2011 fiscal year that ends next March 31. Previously, company executives placed their earlier forecast at 195 billion yen.

For reference, the automaker mentioned that its 2010 fiscal year income level came in at 534 billion yen.

Honda raising its forecast “is a sign that production is recovering at a faster-than-expected pace, and that even with the high yen, sales are strong,” Tatsuya Mizuno, a director at Mizuno Credit Advisory in Tokyo told Bloomberg.

Meanwhile, back in the United States, a stronghold for Honda has been its certified program.

The Honda brand posted CPO sales of 19,824 units in June, a 14.6-percent increase. The year-to-date sum is at 114,366 units, an 18.2-percent surge.

Elsewhere, Honda’s Acura division moved 4,102 CPO units during the month (up 11.8 percent) and reached year-to-date sales of 25,412 units (up 22.4 percent).

Not long after the Japanese natural disasters, Honda national remarketing manager Dan Crowe told Auto Remarketing that franchise dealers would likely have to make adjustments in light of the disaster’s impact.

“With the temporary interruption of new-car production and the declining new-car inventory, dealers will have to rely on their pre-owned operations to carry them through the spring selling season,” Crowe shared at that time.

“Since certified vehicles are a core part of our dealers’ pre-owned inventory, I anticipate our CPO sales will remain strong throughout the next several months,” he added.

On Monday, CPO sales figures for July for Honda and the rest of the certified market were not yet available. Auto Remarketing will publish the Autodata sales information and quotes and insights from top CPO executives in the coming days.

Meanwhile, with its certified division more than holding its own, Honda also boosted its new-unit sales forecast. The automaker expects to move 3.435 million vehicles this fiscal year, up from an earlier estimate of 3.3 million.

Bloomberg reported that Honda chief financial officer Fumihiko Ike said, “We’ve been able to move up the recovery from the parts shortage. Most of the increase in higher sales will be booked in this quarter.”