April 25 (Bloomberg) -- Yamaha Motor Co., the world's second-largest motorcycle maker, said first-quarter profit fell 12 percent as demand dropped in the U.S., and a stronger yen eroded earnings.

Net income fell 12 percent to 22.2 billion yen ($213 million) from 25.2 billion yen a year earlier, the Iwata City, Japan-based company said in a statement today. Sales fell 9 percent to 413 billion yen.

U.S. demand for the company's Royal Star Venture motorcycles and other models are waning as home foreclosures damp consumer spending. Yamaha's unit sales in North America, where the company earns about a quarter of its revenue, tumbled 37 percent last quarter.

``Things look pretty rough for Yamaha,'' said Kazuhito Sasaki, a senior analyst at Tokai Tokyo Research Center Co. in Tokyo, who rates the company ``maintain.'' ``Demand in the U.S. for the company's products, particularly the leisure-oriented ones, are slumping.''

Rising sales of lower-priced motorcycles in growing markets such as Indonesia and Thailand are not enough to make up for sagging demand in North America and Europe, Sasaki said. Asia sales, excluding Japan, rose 24 percent to 1.1 million units.

North American sales fell to 43,000 motorcycles in the first quarter and European sales fell 9 percent to 100,000.

Yamaha rose 38 yen, or 1.9 percent, to close at 2,025 yen on the Tokyo Stock Exchange.

The company reiterated a full-year net income forecast of 59 billion yen, which it gave on Feb. 5.

To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net; Kiyori Ueno in Tokyo at kueno2@bloomberg.net.

Last Updated: April 25, 2008 03:41 EDT