Honda Motor Co lifted its cautious outlook even as a strong yen and sliding Japanese sales hit quarterly profits, confirming investors' optimism about the automaker's robust earnings potential.

Honda, Japan's third-biggest automaker, raised its operating profit forecast for the year to March 31 to 620 billion yen ($7.55 billion) from 500 billion yen. A survey of 20 analysts by Thomson Reuters I/B/E/S forecast an operating profit of 594 billion yen.

It lifted its net profit forecast to 530 billion yen from 500 billion yen.

For October-December, the maker of the popular Accord and Civic models, reported a 29 percent fall in operating profit to 125.7 billion yen, down from 177 billion yen a year ago but beating the average of 110 billion yen estimated by seven analysts surveyed by Reuters.

Honda's third-quarter net profit, which includes earnings made in China, was 81.1 billion yen, down 40 percent from a year earlier.

Honda shares ended down 1.4 percent at 3,475 yen before the results were announced.

($1=82.10 Yen)

(Reporting by Chang-Ran Kim; Editing by Anshuman Daga and Edmund Klamann)

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