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