Honda’s profit dropped 32% in the last quarter amid rising material costs and a shortage of computer chips.

The Japanese car giant reported a profit for the three months to December of 192.9 billion yen (£1.1 billion), down from 284 billion yen (£1.8 billion) the year before.

The Tokyo-based company said quarterly sales slipped 2% to 3.7 trillion yen (£23.6 billion).

Like the rest of the world’s car makers, Honda’s manufacturing has also been affected by delays due to coronavirus restrictions. Japan’s top car company, Toyota, reported a similar drop in profit.

Honda said it expects the challenges to persist.

Rising material costs are also a problem, but the company said cost-cutting efforts have allowed it to raise its profit projection.

It raised its full fiscal year profit forecast to 670 billion yen (£4.3 billion) from an earlier projection of 555 billion yen (£3.6 billion), an improvement from the 657 billion (£4.2 billion) profit earned in the previous fiscal year.