Japan's number two car manufacturer Honda has slashed its annual profit target by over half as quarterly profit tumbled 90 percent, hit by rising costs, a stronger yen and falling sales in key markets.

Honda said net profit for the October-December period was less than 230 million US dollars versus more than 2 billion dollars a year earlier.

Koichi Kondo is Vice President of Honda Motor Company.

"We slashed the forecast for financial result by four times. We have never made such an adjustment in our corporate history. We hope to return revenue to our stake holders as soon as there is any change. The market movement was so drastic that we could not correctly forecast the result."

Honda said it spent more on raw materials such as steel and had higher sales costs compared to a year earlier. And foreign exchange took its toll, as the yen has hovered around 13-year lows.

The company also announced job cuts and scaled back production at manufacturing lines worldwide.