2008 Accord (for North American Market)

Honda Update November 2007 2008 Accord (for North American Market) 1 Table of Contents FY07* Financial Results Outline P. 3 - 4 Profit Analysis...
Author: Janis Jenkins
2 downloads 3 Views 3MB Size
Honda Update November 2007

2008 Accord (for North American Market)

1

Table of Contents

FY07* Financial Results Outline

P. 3 - 4

Profit Analysis

P. 5 - 6

Segment Information

P. 7 - 19

FY08* Financial Forecasts Outline (Sales units / Profit analysis / Capital Expenditures / R&D, etc.) Returning Profit to Shareholders

P. 20 - 23 P. 24 - 25

Highlights of Major Strategies for Business Growth Automobile Business : North America

- Stable increase in slowing market

P. 27 - 29

BRICs

- Steady Growth

Japan

- Improving margin of Fit, highest-selling model

P. 30 - 34 P. 35

Production capacity - Continuous growth

P. 36 - 37

Motorcycle Business : Asia

- Steady Growth of Honda’s subsidiaries

P. 38 - 41

Brazil

- Strong position in the market

P. 42

*FY07: Fiscal year ended March 31, 2007,

FY08: Fiscal year ending March 31, 2008

2

Outline of 2nd Quarter Financial Results (Consolidated) 2Q Results

Unit Sales Unit (thousands)

FY07

FY08

Change

Motorcycles

2,816

2,333

- 17.2%

Automobiles

884

937

+ 6.0%

1,187

1,258

+ 6.0%

Power Products

Business environment Yen depreciation in 2Q YOY basis in spite of underlying yen appreciation mainly against the U.S. dollar High prices for raw materials and gasoline continued Motorcycle business: Growth in Brazil continued Tougher competitive conditions in Asian major motorcycle market such as in India and Indonesia Struggling motorcycle and ATV market in North America

Automobile business: Growth of Emerging markets such as BRICs and others Strong demand for fuel-efficient cars in the U.S. Japan automobile market situation remained stagnant

2Q Results

Financial results Yen (billions)

FY07

FY08

Change

Net sales & other operating revenue

2,630.8

2,971.3 *

+ 12.9%

Operating income

193.0

286.3 *

+ 48.3%

Income before income taxes

163.6

269.9 *

+ 65.0%

27.4

26.2

Equity in income of affiliates

Motorcycles: Automobiles: Power Products:

- 4.4%

Decreased unit sales of component parts sets for Asia Strong sales in South America, etc. Increased sales of CR-V in overseas regions Increased unit sales in Japan, Europe, Asia and Other Regions Decreased unit sales in North America

Net sales & other operating revenue

Net income

127.9

208.4 *

+ 63.0%

EPS (Yen)

70.05

114.94 *

+ 44.89

Note : Shares which are based on calculation of EPS

Major change factors Increased unit sales in overseas regions mainly in automobile business Improved operating margin in all regions Unit Sales

approx. 1,825,993,000 shares

approx. * Record high 1,813,784,000 shares

(weighted average number of shares outstanding )

Average Rates (Yen)

US Dollar

116

118

weaker by 2 yen

Euro

148

162

weaker by 14 yen

Increased unit sales in automobile segments / Currency effects from the depreciation of the yen

Operating income - Increased profit from higher revenue - Decrease in unrealized profit due to inventories - Continuing cost reduction effects - Currency effects from the depreciation of the yen - Change in model mix - Increased incentives in North America - Increased depreciation expenses - Increasing raw material prices - Increased SG&A and R&D expenses

3

Outline of 2nd Quarter & 1st Half Financial Results (Consolidated) 1H Results

2Q Results

Unit Sales Unit (thousands)

FY07

FY08

Change

FY07

FY08

Change

Motorcycles

2,816

2,333

- 17.2%

5,196

4,586

- 11.7%

Automobiles

884

937

+ 6.0%

1,780

1,883

+ 5.8%

1,187

1,258

+ 6.0%

2,911

2,787

- 4.3%

Power Products

2Q Results

Financial results Yen (billions)

FY07

1H Results

FY08

Change

FY07

FY08

Change

Net sales & other operating revenue

2,630.8

2,971.3 *

+ 12.9%

5,230.5

5,902.4 *

+ 12.8%

Operating income

193.0

286.3 *

+ 48.3%

396.5

508.0 *

+ 28.1%

Income before income taxes

163.6

269.9 *

+ 65.0%

355.0

488.2 *

+ 37.5%

27.4

26.2

- 4.4%

57.6

63.2*

+ 9.8%

Net income

127.9

208.4 *

+ 63.0%

271.3

374.6 *

+ 38.1%

EPS (Yen)

70.05

114.94*

+ 44.89

148.52

206.26*

+ 57.74

Equity in income of affiliates

Note : Shares which are based on calculation of EPS

approx. 1,825,993,000 shares

approx. * Record high 1,813,784,000 shares

approx. 1,826,739,000 shares

approx. * Record high 1,816,129,000 shares

(weighted average number of shares outstanding )

(weighted average number of shares outstanding )

Average Rates (Yen)

US Dollar

116

118

weaker by 2 yen

115

119

weaker by 4 yen

Euro

148

162

weaker by 14 yen

146

162

weaker by 16 yen

4

Change in Income Before Income Taxes < FY08 2nd Quarter > Income before Income taxes + 106.3 bn. yen ( + 65.0 % ) Other Income & Expenses + 13.0 bn. yen

Operating Income + 93.3 bn. yen ( + 48.3 %)

Factors> - Increasing raw materials prices - Increases in depreciation expenses, etc.

Yen (billions)

Income before Income taxes + 133.2 bn. yen ( + 37.5 % ) Operating Income + 111.4 bn. yen ( + 28.1 %) - Increasing raw materials prices - Increases in depreciation expenses, etc. - Continuing cost reduction effects, etc.

- Increased sales expenses, storage fees due to the increase in unit sales, etc.

Yen (billions)

Other Income & Expenses + 21.7 bn. yen

- Decreased expenses for advertising, sales promotion, etc.

- 8.8

+ 133.6

355.0

- 30.1

+ 30.6

Cost Reduction, the effect of raw material cost fluctuations, etc.

Fair value of derivative instruments

- 33.3 Increase in SG&A

+ 77.5 - 36.3 Increase in R&D

Revenue, model mix, etc. - Increased profit from higher revenue in all regions - Change in sales prices in North America - Decrease in unrealized profit due to inventories, etc.

Others

488.2

( Exhibit 2)

Currency Effect - Difference between transaction rates and average rates : + 3.8 bn. yen - Gain and loss from valuation of the balance of receivable and debt : - 12.7 bn. yen

- Increased sales incentives in North America - Change in model mix, etc.

FY07 1H

Currency effects (change in average rates + translation effects): Difference between transaction rates and average rates:

+ 77.5 bn. yen



+ 3.8 bn. yen



Currency effect on income before income taxes:

+ 81.4 bn. yen

(Exhibit 1)

FY08 1H

6

Motorcycle Unit Sales (Motorcycles + All-Terrain Vehicles, etc.) FY08 2Q Unit (thousands)

6,000 6,000

Japan North America Europe Asia

5,000 5,000

Other Regions Total

Change from FY 07 2Q

107

+9

121

- 22

68

-3

1,645

- 518

392

+ 51

2,333

- 483

( - 11.7% ) ・Decreased unit sales of utility ATVs such as FourTrax Rancher model ・Decreased unit sales of cruisers such as Shadow Spirit 750

Today (Japan)

・Decreased unit sales of 125cc models such as XL125 model in France

5,196

・Decreased unit sales of component parts sets for India ・Introduction of POP100 model in Brazil ・Increased unit sales of CG125 FAN model in Brazil

Approx.1,150

Approx.500

2,380

2,816

Approx.640

629 CG125 FAN (Brazil)

Approx.1,100

314

2,408 362

2,000 2,000 2,163

1,706

1,000 1,000

1Q

第1四半期 第1四半期

Approx.1,020

2,333

2,253 371

392

1,623

1,645

Unit sales of Honda-brand motorcycle products that are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its subsidiaries

4,586 763

Other Regions

3,972

3,268

Asia

176 232 187

163 201 191

Europe North America Japan

2,217

1,809

105 89 89

( - 17.2% )

2,765

341

288

00

Approx.1,060

- 483 Approx.560

Approx.2,120

・Introduction of all new Today model

4,000 4,000

3,000 3,000

- 610

Major increase/decrease factors

71 143 98

56 107 71

2Q

3Q

第2四半期 第2四半期

第3四半期 第3四半期 FY07

68 121 107

97 164 79

95 80 84

4Q

第1四半期 第1四半期

第4四半期 第4四半期

1Q

FY08

2Q

第2四半期 第2四半期

1H 66ヶ月間通算 ヶ月間通算 FY07

1H 66ヶ月間通算 ヶ月間通算 FY08

Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts for Honda’s affiliates accounted for under the equity method.

7

Motorcycle Business FY07 Net Sales

Yen (billions)

Net Sales/Operating Income/Operating Margin FY08

FY07

FY08

1Q

2Q

3Q

4Q

1Q

2Q

1H

1H

310.1

335.5

303.2

421.7

368.3

381.6

645.6

749.9

(+ 13.8%)

Operating Income Operating Margin

10.5%

60

- Currency effects of weakened yen, etc. - Increased sales incentives in North America - Increased SG&A expenses - Increased R&D expenses, etc.

(+ 16.2%)

68.1 ( + 50.7%)

9.7%

9.6%

Yen (billions)

9.1%

10%

8.5%

45.2

44.2

40

7.0% 37.0 ( + 15.4%)

32.0

31.1

5%

4.2%

20

3.7%

13.1

11.1

0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

8

Automobile Unit Sales FY08 2Q

Unit (thousands)

2,000

Major increase/decrease factors + 103 ( + 5.8% )

・Decreased unit sales of Zest and Stream models ・Introduction of Crossroad model

Japan

143

- 28

North America

445

+ 34

・Increased unit sales of CR-V and Fit models

Europe

100

+ 21

・Increased unit sales of Civic and CR-V models in Russia and UK

Asia

1,500

Change from FY 07 2Q

Other Regions Total

177

+ 14

72

+ 12

937

+ 53

CR-V Civic

1,883 1,780

・Increased unit sales of component parts sets for China (CR-V and Fit models ) ・Increased unit sales CR-V model in ASEAN countries such as Indonesia and Thailand

120 Civic 4Door

・Introduction of Civic FFV model

364

+ 53 ( + 6.0% )

896

884

60

60

153 71

915 61 155

163

72

79

946

937

67

66

72

102

192

Europe

Civic 5Door

957 149

Asia

316

150

1,000

138

Other Regions

North America

187

177

92

100

465

445

867

910

500 456

471

411

450

327 156

171

156

189

136

143

1Q 第1四半期

2Q 第2四半期

3Q 第3四半期

4Q 第4四半期

1Q 第1四半期

2Q 第2四半期

279

Japan

0 FY07

FY08

1H 累計 FY07

1H 累計 FY08

Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts for Honda’s affiliates accounted for under the equity method.

9

Automobile Business FY07 Net Sales

FY08

FY07

FY08

1Q

2Q

3Q

4Q

1Q

2Q

1H

1H

2,095.6

2,098.8

2,263.8

2,430.7

2,327.2

2,356.4

4,194.4

4,683.7

(+ 12.3%)

Yen (billions)

400

Net Sales/Operating Income/Operating Margin

Operating Income Operating Margin

350

300

250

(+ 11.7%)

- Increased profit from higher revenue - Decrease in unrealized profit due to inventories - Continuing cost reduction effects - Currency effects of weakened yen, etc. - Increased sales incentives in North America - Increasing raw material prices - Increases in depreciation expenses - Increased SG&A expenses - Increased R&D expenses, etc.

7.2%

10%

6.2%

361.3

9.0%

( + 28.6%)

8% 280.9

7.1% 6.5%

Yen (billions)

7.7%

6.4% 6.7%

6%

213.0

200

( + 62.8%)

150

160.7

150.0

157.7

4%

148.3

130.8 100 2% 50

0%

0 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

10

Unit Sales Ratio of Honda’s 4 Global Models

Jan.- Sept. 2006

Jan.- Sept. 2007

Accord 19.2%

Others 33.7%

Others 39.9%

Accord 18.7%

Civic 20.3% Fit 11.2%

CR-V Fit 11.9% 8.7%

Civic 23.0% CR-V 13.4% Source: Honda

Fit

Civic

CR-V

Growing 4 Global models

Accord 11

Power Products Unit Sales Change from FY 07 2Q

FY08 2Q

Unit (thousands)

3,000

Major increase/decrease factors

Japan

141

+ 14

North America

479

- 15

Europe

280

+ 26

・Increased unit sales of push lawn mowers in Europe

Asia

242

+ 35

Other Regions

・Increased unit sales of general-purpose engines and others in China

116

+ 11

1,258

+ 71

Total

2,500

・Decreased unit sales of push lawn mowers in the U.S.

- 124 (- 4.3%)

HRX537(push loan mower)

2,911 177

213

462

112

636

230

Europe

1,724

670

72 162

1,529

1,500

1,382

624

117

1,187

97

1,258

220

116

161

105

1,000

Asia

GX160 (general-purpose engine)

2,128

382

Other Regions

369

+ 71 (+ 6.0%)

2,000

2,787

242

390

207

365

1,166 1,023

254

North America

1,465

280

971

500

687

615

479

494

0

137

127

124

139

135

141

1Q 第1四半期

2Q 第2四半期

3Q 第3四半期

4Q 第4四半期

1Q 第1四半期

2Q 第2四半期

FY07

FY08

264

276

累計 1H

累計 1H

FY07

FY08

Japan

Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts for Honda’s affiliates accounted for under the equity method. 12

Power product & Other Businesses Net Sales/Operating Income/Operating Margin

FY07 Net Sales

20

FY08

FY07

FY08

1Q

2Q

3Q

4Q

1Q

2Q

1H

1H

108.4

100.0

105.0

125.3

115.2

105.0

208.5

220.2

(+ 4.9%)

Yen (billions)

(+ 5.6%)

Operating Income Operating Margin

10.2%

9.9%

Yen (billions)

12%

- Increased R&D expenses, etc. - Decreased SG&A expenses - Currency effects of weakened yen, etc.

18.4

10%

15 8.9%

14.9 ( - 19.1%)

7.5%

8% 6.9%

10

11.0

10.4

6.8%

6.6%

5.8% 6% 7.9

7.4

7.2

6.9

4%

( - 6.5%)

5 2%

0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

13

Financial Services Business FY07

FY08 1Q

Net Sales Yen (billions)

70

Net Sales/Operating Income/Operating Margin

90.8

2Q

3Q

98.9

105.0

4Q *

118.4

FY07 1Q

*

2Q

129.8

*

137.8

*

(+ 39.3%) Operating Income Operating Margin

FY08 1H

1H

189.8

267.6

Yen (billions)

(+ 41.0%)

* Including increased net sales due to start of operating lease transaction

34.6%

32.2%

- Increased profit from higher revenue - Decreased SG&A expenses

63.5

- Currency effects of weakened yen, etc.

60

( + 22.5%)

26.4%

50

51.8 22.8%

21.7%

40

30%

27.3% 23.7%

21.3% 40.9

20% 34.2

30 29.2

29.3 ( + 29.7%)

20

22.6

22.7

2Q

3Q

10%

10

0

0% 1Q

FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

14

Japan

Net Sales / Operating Income / Operating Margin

FY07 Net Sales Yen (billions)

140

FY08

FY07

2Q

3Q

4Q

1Q

2Q

1H

1H

1,109.2

1,175.8

1,223.8

1,265.1

1,176.2

1,215.5

2,285.1

2,391.8

(+ 3.4%) Operating Income Operating Margin

8% 133.9 ( + 13.6%)

117.9 6.0%

5.9%

100

5.4%

Yen (billions)

(+ 4.7%)

- Increased profit from higher revenue - Continuing cost reduction effects - Decreased SG&A expenses - Currency effects of weakened yen, etc. - Increasing raw material prices - Increases in depreciation expenses - Increased R&D expenses, etc.

120

80

FY08

1Q

5.6%

6%

5.2%

5.2%

4.4% 3.4% 68.9

68.2

60

4%

73.3 ( + 6.3%)

60.6 48.9

40

41.9

2%

20

0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

15

North America

Net Sales / Operating Income / Operating Margin

FY07 Net Sales

FY08

FY08

2Q

3Q

4Q

1Q

2Q

1H

1H

1,467.9

1,421.0

1,612.1

1,671.4

1,583.3

1,557.1

2,888.9

3,140.5

(+ 9.6%)

Yen (billions)

220

FY07

1Q

(+ 8.7%)

- Increased profit from higher revenue in automobile and financial services business segments - Continuing cost reduction effects - Currency effects of weakened yen, etc. - Change in model mix - Increased sales incentives in motorcycle and automobile business segments - Increasing raw material prices, etc.

Operating Income Operating Margin

200 180 7.8% 160

210.2

213.0

10%

( + 1.4%)

7.5%

7.7%

7.3%

Yen (billions)

8% 7.3% 6.8%

6.7% 6.1%

140

6%

128.4

120 118.2

114.4

116.0 ( + 21.2%)

100 97.0

95.7

4%

80 60

2%

40 20 0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

16

Europe

Net Sales / Operating Income / Operating Margin

FY07 Net Sales

FY08

FY07

2Q

3Q

4Q

1Q

2Q

1H

1H

325.1

310.7

271.6

440.1

400.2

390.8

635.9

791.0

(+ 25.8%) Yen (billions)

FY08

1Q

Operating Income Operating Margin

(+ 24.4%)

- Increased profit from higher revenue - Continuing cost reduction effects - Currency effects of weakened yen, etc. - Increased SG&A expenses, etc.

30

Yen (billions)

5% 4.3%

27.0

25

( + 74.4%)

4%

3.4%

20 2.9%

2.9%

3% 16.7

15

2.4%

( + 84.7%)

2.6%

15.5

2.0%

2%

12.6

10

10.3 9.0

5

1.4% 1%

6.4 3.7

0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

17

Asia

Net Sales / Operating Income / Operating Margin

FY07 Net Sales Yen (billions)

FY08

FY07

FY08

1Q

2Q

3Q

4Q

1Q

2Q

1H

1H

287.5

313.5

303.4

366.9

393.3

415.6

601.0

808.9

(+ 32.6%)

Operating Income Operating Margin

Yen (billions)

(+ 34.6%)

10% 9.4% 70.3 8.7%

8.0%

60

8% ( + 86.7%)

6.8%

6.7% 5.8%

5.2%

- Increased profit from higher revenue - Currency effects of weakened yen, etc. - Increased SG&A expenses, etc.

6.3% 6%

40 37.6 36.9

33.4

4%

( + 82.9%)

20 19.4

20.2

18.2

19.2

2%

0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

18

Other Regions

Net Sales / Operating Income / Operating Margin

FY07 Net Sales Yen (billions)

60

FY08

FY07

2Q

3Q

4Q

1Q

2Q

1H

1H

176.9

196.3

193.0

231.3

226.3

267.9

373.2

494.2

(+ 36.4%)

Operating Income Operating Margin

50

Yen (billions)

(+ 32.4%)

- Increased profit from higher revenue - Continuing cost reduction effects - Currency effects of weakened yen, etc. - Increased SG&A expenses, etc.

11.3%

51.9 ( + 41.5%)

10.9%

10.5% 9.8%

9.6%

40

FY08

1Q

8.6%

8.3%

10%

8.4% 36.6

30

30.1 (+ 40.7%)

20

5%

21.7

21.4

19.5 16.0

15.2

10

0

0% 1Q

2Q

3Q FY07

4Q

1Q

2Q FY08

1H FY07

1H FY08

19

Forecast: Unit Sales by Business Segment Unit sales of Honda-brand motorcycle products that are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its subsidiaries

Unit (thousands)

Motorcycles - 789 Approx. 4,840

Approx. 4,000 4,680

Approx. 2,860

3,652

Automobiles

Power Products

+ 283

- 86

3,960

3,935

310

315

6,421 406

248

12,000

6,000

750

10,369 1,305

3,000

9,930 1,535

9,000

750

6,220

6,335

410

420

760

620

1,020

955

Other Regions Asia

5,000

9,580 324

1,555

390

390 1,625 4,000

1,650

1,715

Europe

2,000 6,000

7,895

7,220

6,855

1,788

1,850

1,855

3,000

3,103 2,000 1,000

2,560

2,670

580

575

FY08

FY08 Revised

North America

3,000 1,000

329 503 337 FY07

295 550 330 FY08 Forecasts of Jul. 25th

295 545 330 FY08 Revised

672

660

625

Japan

527 FY07

FY08 Forecasts of Jul. 25th

FY08 Revised

FY07

Forecasts of Jul. 25th

Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts for Honda’s affiliates accounted for under the equity method.

20

FY08 Financial Forecasts (Consolidated) Yen (billions)

FY07

FY08

Results

Revised Forecasts

Change amount

%

Change from previous forecasts

Net sales & other operating revenue

11,087.1

12,300.0

+ 1,212.8

+ 10.9%

- 50.0

Operating income

851.8

880.0

+ 28.1

+ 3.3%

-

Income before income taxes

792.8

870.0

+ 77.1

+ 9.7%

-15.0

Equity in income of affiliates

103.4

98.0

- 5.4

- 5.2%

+ 1.0

Net income

592.3

640.0

+ 47.6

+ 8.0%

+ 15.0

324.62

352.85

+ 28.23

EPS (Yen) Note : Shares which are based on calculation of EPS

approx. 1,824,675,000 shares

(weighted average number of shares outstanding )

approx. 1,813,782,000 shares

(Sep. 30, 2007)

Average Rates (Yen) US Dollar

Euro

117

116

stronger by 1 yen

stronger by 1 yen

(1H: 115 2H: 119)

(1H: 119 2H: 113)

(1H: weaker by 4 yen 2H: stronger by 6 yen)

(1H:stronger by 2 yen 2H: ± 0 yen)

151

155

(1H: 146 2H: 155)

(1H: 162 2H: 148)

weaker by 4 yen (1H: weaker by 16 yen 2H: stronger by 7 yen)

± 0 yen (1H: stronger by 1 yen 2H: ± 0 yen)

21

Forecast: Change in Income Before Income Taxes Yen (billions)

Income before income taxes + 77.1 bn. yen ( + 9.7 %) Operating Income + 28.1 bn. yen ( + 3.3 %)

+ 49.0 bn. yen

- 8.0

+ 174.3

Cost Reduction, the effect of raw material cost fluctuations, etc.

- 106.0 Increase in SG&A

792.8

FY07

Revenue, model mix, etc.

Other Income & Expenses

+ 14.0 - 38.2 Change in R&D

+ 6.0 Currency Effect

+ 35.0

Others

870.0

Fair value of derivative instruments

FY08 Revised Forecasts

22

FY08 Financial Forecasts (Consolidated)

Yen (billions)

FY07

FY08

Results

forecasts

Capital expenditures *

627.0

Depreciation and amortization * R&D expenses

Change

Change from previous forecasts

755.0

+ 127.9

-

361.7

410.0

+ 48.2

-

551.8

590.0

+ 38.2

-

* Capital expenditures in results and the forecast aforementioned exclude investment in operating leases. Depreciation and amortization in results and the forecast aforementioned exclude depreciation of investment in operating leases.

23

Dividend to Shareholders (Yen)

Dividend per share 1st quarter End

FY07 Results

-

FY08 ( Projects )

Increase from FY07 results

20 + 12

quarter End

30

22

3rd quarter End

17

( 22 )

(+ 5)

4th quarter End

20

( 22 )

(+ 2)

67

( 86 )

( + 19 )

2nd

Fiscal Year

24

Return to Shareholders Purchase of the Company’s own shares *1

Shareholders return ratio *3

Dividend amounts *2

Payout ratio

(billion yen)

250 30% 200

150

20%

100 10% 50

0

0% FY02

FY03

FY04

FY05

FY06

FY07

FY08(P)

*1: Purchase of the Company’s own shares amounts correspond to shareholders meetings date *2: Dividend amounts correspond to each fiscal year’s record date *3:Shareholders return ratio =

Cash dividend + Purchase of Company’s own shares Net income

25

Table of Contents

FY07* Financial Results Outline Profit Analysis Segment Information FY08* Financial Forecasts Outline (Sales units / Profit analysis / Capital Expenditures / R&D etc.) Returning Profit to Shareholders Highlights of Major Strategies for Business Growth Automobile Business : North America

- Stable increase in slowing market

BRICs

- Steady Growth

Japan

- Improving margin of Fit, highest-selling model

Production capacity - Continuous growth Motorcycle Business : Asia

- Steady Growth of Honda’s subsidiaries

Brazil

- Strong position in the market

*FY07: Fiscal year ended March 31, 2007

FY08: Fiscal year ending March 31 , 2008

26

Update on Inventory and Incentives Days Days Inventory Inventory (days)

Incentives Incentives (U.S.$ / unit)

Passenger Cars

Source: Autodata

Passenger Cars

3,000

U.S. Big 3

100

Industry average 2,000

Japanese Automakers

50

1,000

Honda Honda

0

0

Jan.05

J ul

Jan.06

J ul

Jan.07

Jul

Jan.05

Oct.

Jul

Light Trucks

Jan.06

Jul

Jan.07

July

Oct.

Light Trucks 5,000

120

U.S. Big 3 4,000

Industry average 3,000

Japanese Automakers

70

2,000

1,000

Honda

Honda 0

20 Jan.05

Jul

Jan.06

Jul

Jan.07

Jul

Oct.

Jan.05

Jul

Jan.06

Jul

Jan.07

July

Oct.

Honda maintains sound inventory level and lowest incentive level in both segments

27

Honda’s Principal Models Inventory / Incentives / Residual Value Days Days Inventory Inventory (days)

Incentives Incentives (U.S.$ / unit)

Passenger Cars

100

Passenger Cars Source: Autodata

Residual Residual Value Value (( 36 months) 36 months)

2,500

Accord

2,000

75

Source: Auto Lease Guide

Accord Accord LX LX (4D) (4D) 54% 54%

Accord 1,500

50 1,000

Civic Civic LX LX (4D) (4D) 59% 59%

Civic

25

500

Civic

0

0

Jan.05

Jul

Jan.06

Jul

Jan.07

Jul

Jan.05

Oct.

Jul

Jan.06

Jul

Jan.07

July

Oct.

Light Trucks

Light Trucks 2,500

100

Odyssey Odyssey LX LX 52% 52%

2,000

75

Odyssey 1,500

50 1,000

CR-V CR-V EX(4WD) EX(4WD) 60% 60%

25 500

CR-V

CR-V Odyssey

0

0

Jan.05

Jul

Jan.06

Jul

Jan.07

July

Oct.

Jan.05

Jul

Jan.06

Jul

Jan.07

Jul

Oct.

28

Update on Honda’s U.S. Automobile Business Honda’s Retail Unit Sales

Industry Demand and Honda Unit (thousands)

Unit (thousands)

20,000

12% Passenger Cars Light Trucks 16,965 Honda share 17,134 16,831 16,884 16,652 16,556 16,000 10%

(aggregate numbers of Honda brand and Acura brand)

Passenger Cars Light Trucks 1,500

1,462 1,349

15,000 1,207

1,509

1,560

1,394

1,247

8% 1,000

10,000

6%

4% 500

5,000 2%

0%

0 CY01

02

03

04

05

06

07(E)

0 CY01

02

03

Honda’s steady growth despite weak SAAR

04

05

06 07(P) Source: Honda

29

Automobile Demand in BRICs Markets Industry Demand (excluding commercial vehicles)

Industry: Unit (thousands)

China

India

Brazil

Russia

10,000

8,000

6,000

4,000

2,000

0 CY01

02

03

04

05

06

07(E)

Source: Global Insight

30

Honda’s Growth in China Industry Demand and Honda (excluding commercial vehicles)

Unit (thousands)

Honda’s Unit Sales

Unit (thousands) 10%

6,000

450 Over 400

400 5,000 8%

350 323 Civic

300

4,000 6%

257

250 3,000

200 City

4%

150

2,000

2%

100

1,000

50 0

0% 02

03

04

05

06

53

66

Accord

0

07(E)

CY01

02

03

04

05

Source: Honda

Honda’s Progress in China

GHAC models

Odyssey

123

CY01

CR-V Fit

214 Honda share

WDHAC models

06

07(P)

Source: Honda GHAC model line up

1 Enhancing model lineup and dealer network - New CR-V introduced in Apr. 2007 - Number of Dealer outlets: GHAC 300, WDHAC 140, Acura 5(Oct.2007) - Introduced Acura (TL/RL/MDX)

Fit

City

Accord

2 Progress in Manufacturing Operation GHAC*1 : Annual production capacity 360 thousand units WDHAC*2 : Annual production capacity 120 thousand units CHAC*3 : Added 2nd shift from Apr. 2007 CHAM*4 : A new powertrain plant started operation in Mar. 2007

Odyssey

WDHAC model line up *1 GHAC: Guangzhou Honda Automobile Co., Ltd. *2 WDHAC: Dongfeng Honda Automobile Co., Ltd. *3 CHAC: Honda Automobile (China) Co., Ltd. *4 CHAM: Honda Auto Parts Manufacturing Co., Ltd. Civic

CR-V

31

Honda’s Growth in India Unit (thousands) 1,200

Industry Demand and Honda (excluding commercial vehicles, SUV and MUV)

Honda’s Unit Sales

Unit (thousands) 10%

80

Category

70

70 1,000

Premium

8%

60

"A" 800

55 CR-V Civic

Honda share

800cc

50 6%

40

40

600

35 4%

30

City

400

20 15

2% 200

10

0

0% CY01

02

03

04

05

06

07(E)

10

12

Accord

0 CY01

02

03

04

Honda’s Progress in India

05

06

07(P)

Source: Honda

Source: Global Insight Honda model line up in India

1. Enhancing dealer network - Number of Dealer outlets: 34 (Mar. 2003) → 63 (Sep. 2007) 2. Further Accelerating production capacity expansion Existing Plant 50,000 →100,000 units (by the end of 2007)

Second Plant

City

Civic

60,000 units (initial) (To start operation by the end of 2009) Accord

CR-V

32

Update on Honda’s Automobile Business in South America Honda’s Unit Sales

Industry Demand and Honda Unit (thousands)

3,500

(including commercial vehicles) Unit (thousands)

Brazil

Argentina

Venezuela

Columbia

Ecuador

Peru

10%

Chile

Good sales of FFV models contributed to growth in 2007.

120 118

3,000 8%

100

Flexible Fuel Vehicles (currently marketed in Brazil) Petrol Engine Vehicles

2,500

84

Brazil

80 6%

2,000

68

Honda share

57

4%

50

40 1,000

36 26

2%

500 0%

0 CY01

02

03

04

05

06

07(E)

67

57

60 1,500

20

22

24

32

21

0 CY01

02

03

04

05

Source: Global Insight

Honda’s Progress in Brazil 1. Features of Honda FFV models in Brazil - Adapt to ethanol-to-gasoline ratios of between 20% and 100%

84

06 07(P) Source: Honda

Flexible Fuel Vehicles introduced in Brazil Civic FFV

Fit FFV

2. Enhancing dealer network - Number of Dealer outlets: 94 (2004 end) → 130 (Sep. 2007) 3. Further Accelerating production capacity expansion 50,000 → 100,000 units per year in 2007 Introduced in Nov. 2006

Introduced in Dec. 2006

33

Honda’s Growth in Russia Unit (thousands)

Industry Demand and Honda

Honda’s Unit Sales

Unit (thousands)

(excluding commercial vehicles)

38.0

2,000 Foreign brands

35

Domestic brands

30 1,500

25 20

1,000

500

15

15.7 Others

10

CR-V 8.9

5

3.5 0.8

1.3

CY01

02

Civic

6.0

Accord

0

0

CY01

CY02

CY03

CY04

CY05

CY06

CY07

03

04

06

07(P)

Source: Honda

Source: AEB (The Association of European Businesses) & DRI

Honda’s Progress in Russia

05

Honda model line up in Russia

1 Starting business - Established subsidiary in Feb. 2004 Jazz

2 Enhancing dealer network - Number of Dealer outlets: 15 (2004 end) → 34 (Sep. 2007) to expand mainly in large cities 70 outlets in a few years

CR-V

Civic 5D

Accord

Civic 4D

Legend

34

Update on Honda’s Automobile Business in Japan Unit (thousands)

Industry Demand and Honda

Honda’s Unit Sales

Unit (thousands)

900

Registered vehicle

892

873

Mini

20%

6,000

800 732

717

700

710

691

Others Honda share

15%

4,000

600 Minivan

500 10%

660

400 Small

300 2,000 5%

200 Mini

100 0

0%

CY01

02

03

04

05

06

07(E)

0 FY02

03

04

05

06

Source: Honda

Honda’s progress in Japan -Introduced all-new Fit in Oct. 2007 -Introducing all-new Accord by the end of 2007 -Aiming to enhance mini-vehicle models

07

08(P)

Source: Honda Models introduced in FY2007 and 2008

Stream Jul. 2006

Elysion Prestige Dec. 2006

CR-V Oct. 2006

Crossroad

Fit

Feb. 2007

Oct. 2007

35

Expansion of Production Capacity (Automobiles) FY2007: 3,700 CY2006 Japan U.S. Canada Mexico

North America U.K. Turkey

Europe Thailand Indonesia Philippines Malaysia Vietnam India Pakistan China Taiwan

Asia Brazil Argentina

Others Total

2010: 4,500 thousand

CY2007

2008

2009

2010 Yorii

1,300 Indiana

980 390 30

+200

+200

+20

1,400 250 30

+20

280 +120

120 50 15 20 10 50 50 530 30

+60

+50

875 50 0

+30

+20 +30

50 3,905

4,025 Capacity expansion

4,425 New plant

4,455

4,655 36

Expansion of Production Capacity (Automobiles)

Unit (thousands)

2010 2008

3,905

3,500

4,655

India Indiana Argentina +60 +30 +200

2007

Mexico Brazil +20 +50

2009

Yorii Japan +200

India +50

Thailand +120 Turkey +20

2006

37

Growth Potential of Principal Asian Motorcycle Markets Penetration Rate for Motorcycles Population (millions)

GDP per capita (U.S.$)

15,482

Taiwan

5,718

Malaysia

3,136

Thailand

723

Vietnam

1,640

Indonesia

796

India

People / Unit

Units in operation (millions)

1.7 people/unit 3.5 4.2 4.9 9.3 36.6

JETRO 2006

100

Industry: Unit ( thousands ) 40,000

30,000

China

India

Indonesia

Thailand

Vietnam

Philippines

200

1,000 Honda wholesales: Unit ( thousands ) 14,000

Business expansion in Vietnam market due to deregulation

12,000

Honda's units sales 10,000

8,000 20,000 6,000

4,000 10,000 2,000

0 CY01

02

03

04

05

06

0 07(E) Source: Honda

38

India Penetration Rate for Motorcycles : 36.6 people / unit – Solidify business foundation with 2 companies in rapidly growing market To expand annual production capacity (4,900 → 5,400 thousand units by the end of 2007)

Industry: Unit (thousands) 10,000

8,000

Other brands Hero Honda Honda Motorcycle & Scooter India Honda share

50%

40%

6,000

4,000 30% 2,000

0

CY 01

02

03

04

Principal models of Hero Honda Motors Limited

Splendor+ CY06 : 1,142 thousand units

CD Deluxe CBZ X-treme Introduced in Nov. ‘06

Introduced in Nov. ‘06

05

06

07(E)

Principal models of Honda Motorcycle & Scooter India

20% Source : Honda

Activa Shine CY06 : 397 thousand units Introduced in Apr. ‘06

39

Vietnam – Honda to enhance product pipeline for growing market Industry: Unit (thousands)

To expand of production capacity by the end of 2008 (1,000 → 1,500 thousand units per year)

Other brands Honda Honda share

Honda Share

60%

2,500 2,000

40%

1,500 1,000

20%

500 0%

0 CY01

02

03

04

05

06

07(E) Source: Honda

Principal models

Super Dream

Wave RS

Future Neo FI

Click 40

Indonesia Penetration Rate for Motorcycles : 9.3 people / unit Industry: Unit (thousands)

6,000

– Continuous competitive market situation

Honda Share

Other brands Honda Honda share

60%

5,000 50% 4,000 40% 3,000

30%

2,000

20%

1,000

10%

Added annual production capacity in Sep. 2005 (2,000 → 3,000 thousand units)

0

0% CY01

02

03

04

05

06

07(E)

Source: Honda

Principal models

Revo * AT model: Motorcycles equipped with automatic transmission

Vario (AT* model) 41

Brazil – Solid operation as a market leader in ongoing expansion of Brazilian market Industry: Unit (thousands)

Honda Share

Other brands Honda Honda share

1,600

100%

1,400 80%

1,200 1,000

60%

800 40%

600

Accelerating expansion of production capacity by the end of 2007 (1,350 → 1,500 thousand units per year)

400 200

20%

0

0% CY01

02

03

04

05

06

07(E)

Source: Honda

Principal models

CG 150 Titan

CG 125 FAN

Biz 125

CBX125 Twister 42

Honda’s Continued Growth (Production) ~ Motorcycles CY2006 Japan

700

North America (U.S.)

430

Spain Italy

30 200

Europe

230

Thailand Indonesia Vietnam Philippines Malaysia India Pakistan China

1,500 3,000 860 500 250 4,900 500 2,600

Asia

CY2007

Unit (thousands)

2008

2009

2010

600

+500

+140

HHML +500

HMSI +200

14,110

Brazil Peru

1,000

Argentina

+350

+150 +25

15

Others

1,030

Total

16,500 New plant

17,165

18,165

18,165

18,365

Capacity expansion

43

(Reference) Transition of commodity markets (Base metal prices)

3000

Aluminum

(US$/tonne)

Copper

(US$/tonne)

9000

8000 2500 7000

Average 2,550

Average 2,483

2000

6000

Average 7,699

Average 7,666

5000 1500 4000

3000

1000

2000 500 1000

0

0 3Q

4Q

FY06

1Q

2Q

3Q

FY07

4Q

1Q

2Q

FY08

3Q

4Q

FY06

1Q

2Q

3Q

FY07

4Q

1Q

2Q

FY08

*Source: LME

44

(Reference) Transition of commodity markets (Precious metal prices) (US$ per troy oz)

(US$ per troy oz)

Platinum

Rhodium

6000

1200

Average 6,120

5000

1000

Average 1,294

Average 1,218

800

4000

Average 4,694

3000

600

2000

400

1000

200

0

0

3Q

4Q

1Q

2Q

FY06

3Q

4Q

1Q

FY08

FY07

(US$ per troy oz) 400

2Q

3Q

4Q

FY06

1Q

2Q

3Q

FY07

4Q

1Q

2Q

FY08

Palladium

300

Average 349

Average 326 200

100

0

3Q

4Q

FY06

1Q

2Q

3Q

FY07

4Q

1Q

2Q

FY08

*Source: Platinum Today

45

Caution Cautionwith withRespect Respectto toForward-Looking Forward-LookingStatements: Statements: This Thisslide slidecontains containsforward-looking forward-lookingstatements statementsabout aboutthe theperformance performanceof ofHonda, Honda,which which are based on management’s assumptions and beliefs taking into account information are based on management’s assumptions and beliefs taking into account information currently currentlyavailable availableto toit. it.Therefore, Therefore,please pleasebe beadvised advisedthat thatHonda’s Honda’sactual actualresults resultscould could differ differmaterially materiallyfrom fromthose thosedescribed describedin inthese theseforward-looking forward-lookingstatements statementsas asaaresult result of ofnumerous numerousfactors, factors,including includinggeneral generaleconomic economicconditions conditionsin inHonda’s Honda’sprincipal principal markets and foreign exchange rates between the Japanese yen and the U.S. markets and foreign exchange rates between the Japanese yen and the U.S.dollar, dollar,the the Euro and other major currencies, as well as other factors detailed from time to time. Euro and other major currencies, as well as other factors detailed from time to time.

Accounting Accountingstandards: standards: Our Ourconsolidated consolidatedfinancial financialstandards standardsare areprepared preparedin inconformity conformitywith withU.S. U.S.generally generally accepted accounting principles. accepted accounting principles.

Notice Noticeon onthe theFactors Factorsfor forIncreases Increasesand andDecreases Decreasesin inIncome: Income: The Thevarious variousfactors factorsfor forincreases increasesand and decreases decreasesin inincome incomeset setforth forthin inthis thisslide slidehave have been classified in accordance with a method that Honda considers reasonable. been classified in accordance with a method that Honda considers reasonable.

46