The strong yen and rising raw-materials costs took their toll on Honda Motor Co. and Mitsubishi Motors Corp. in the quarter to ended March, and while Mazda Motor Corp. put in a strong performance, all three Japanese auto makers issued dismal profit guidance for the coming year, the Wall Street Journal reports.

Honda on Friday reported an 86% slide in net profit for the quarter as the yen’s strength and heavier sales promotion costs in the U.S. — plus tax payment provisions — offset solid sales of its small fuel-effective vehicles in North America, Asia and Europe.

Local rival Mitsubishi also said the same day that its net profit dropped for the same quarter on a stronger yen and some one-time losses. Although Mazda said it reaped healthy profit growth in that quarter on strong overseas sales, it joined its rivals in saying it expects the yen’s appreciation and high material prices to dent profits for the current fiscal year. A stronger yen deflates profits earned overseas when translated into yen.

The three are the latest among Japanese carmakers to offer downbeat outlooks – the latest indication of Japan’s auto industry struggling in a tougher business environment.

Suzuki Motor Co., Daihatsu Motor Co. and Hino Motors Ltd. Thursday forecast weaker profits for this fiscal year through March 2009. Toyota Motor Corp. will release its earnings on May 8 and Nissan Motor Co. will report its earnings on May 13.

Honda, Japan’s second-biggest car maker by sales volume after Toyota, posted a net profit of & #317;25.43 billion ($243.7 million) in the three months ended Mar. 31, down sharply from & #317;176.18 billion a year earlier. Its operating profit fell 33% to & #317;168.84 billion from & #317;250.22 billion and sales fell 1% to & #317;3.056 trillion from & #317;3.088 trillion.

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