Honda Information Meeting 2010

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Honda Information Meeting 2010

  1. 1. Honda Information Meeting 2010 CR-Z(Europe) 1 Caution with Respect to Forward-Looking Statements: This slide contains forward-looking statements about the performance of Honda, which are based on management’s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that Honda’s actual results could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in Honda’s principal markets and foreign exchange rates between the Japanese yen and the U.S. dollar, the Euro and other major currencies, as well as other factors detailed from time to time. Accounting standards: Our consolidated financial standards are prepared in conformity with U.S. generally accepted accounting principles. Notice on the Factors for Increases and Decreases in Income: With respect to the discussion above of the change in operating income, management has identified the factors set forth below and used what it believes to be a reasonable method to analyze the respective changes in such factors. Each of these factors is explained below. Management has analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries. (1)“Foreign currency effects” consist of translation adjustments, which come from the translation of the currency of foreign subsidiaries’ financial statements into Japanese Yen, and foreign currency adjustments, which result from foreign-currency-denominated sales, which, at the levels of the Company and those consolidated subsidiaries which have been analyzed, primarily relate to the following currencies: U.S. dollar, Canada dollar, Euro, GBP, BRL and Japanese Yen. (2) With respect to “cost reduction and effects of raw material cost fluctuations”, management has analyzed cost reduction and effects of raw material cost fluctuations at the levels of the Company and its material foreign manufacturing subsidiaries in North America, Europe and other regions. (3) With respect to “changes in net sales and model mix”, management has analyzed changes in sales volume and in the mix of product models sold in major markets which have resulted in increases/decreases in profit, as well as certain other reasons for increases/decreases in net sales and cost of sales. (4) With respect to “selling, general and administrative expenses”, management has analyzed reasons for an increase/decrease in selling, general and administrative expenses from the previous fiscal year net of currency translation effects. 2
  2. 2. Honda Information Meeting 1. FY10 4Q Financial Highlights 1. FY10 4Q Financial Highlights 2. Major Market Outlook and Honda’s Performance 2. Major Market Outlook and Honda’s Performance 3. Honda’s Medium-term Strategies 3. Honda’s Medium-term Strategies 3 Outline of FY10 Twelve Months Financial Results (Consolidated) Business Environment FY10 Twelve Months -Signs of moderate recovery could be seen in the U.S. Unit (Sales) -European economy has bottomed out Unit (thousands) FY09 FY10 Change although there still remains concern about stagnation Motorcycles 10,114 9,639 - 4.7% -Chinese economy has recovered and expansion is expected going forward. Indian economy has also recovered. -Economies in other Asian countries have also been recovering. Automobiles 3,517 3,392 - 3.6% -Although the situation in Japan remains severe, signs of economic recovery are visible. Power Products 5,187 4,744 - 8.5% Motorcycle market - Markets in India and Indonesia have expanded. FY10 Twelve Months - Formerly declining market in Vietnam has been expanding. Financial results - Demand in the U.S. has dropped significantly Yen (billions) FY09 FY10 Change Automobile market - Demand in China, India and Brazil expanded significantly. Net sales & other - Formerly declining Japanese market has now been expanding operating revenue 10,011.2 8,579.1 - 14.3% supported by government stimulus packages. - European market has moderately recovered in the latter half of the year Operating income 189.6 363.7 + 91.8% with various government incentive plans - U.S. market has continuously declined, however it has been showing Income before income moderate recovery since the latter half of the year . taxes 161.7 336.1 + 107.9% Major Change Factors Equity in income of affiliates 99.0 93.2 - 5.8% Due mainly to a companywide effort to reduce costs and expenses and the recovery of automobile business in the latter half of the year, Honda achieved a higher profit than the previous forecast, Net income attributable to Honda Motor Co., Ltd. 137.0 268.4 + 95.9% although unit sales decreased in all business segments. Unit Sales EPS attributable to Motorcycles: + 95.9% Sales increased in Asia, declined in other regions including Latin America Honda Motor Co., Ltd. 75.50 147.91 ( + 72.41 yen) Automobiles: (Yen) Sales increased in Asia and Japan, decreased in North America and Europe Power Products: approx. approx. Sales increased in Asia, decreased in North America and Europe. Note : Shares which are based 1,814,560,000 shares 1,814,605,000 shares Net sales & other operating revenue on calculation of EPS (weighted average number (weighted average number of shares outstanding ) of shares outstanding ) Unit sales decreased in automobile business Average Rates (Yen) Negative impact of currency translation effect Yen up by Operating income US Dollar 101 93 8 yen <Increase Factors> Decreased SG&A and R&D expenses Continuing cost reduction efforts Yen up by <Decrease Factors> Decreased revenue Euro 142 130 12 yen Increased fixed cost per unit due to production cut Currency effect 4
  3. 3. Change in Income before Income Taxes <FY10 Twelve Months > Yen (billions) Income before Income taxes + 174.4 bn. yen Other Income Operating Income + 174.1 bn. yen & Expenses <Increase Factors> + 0.3 bn. yen -Change in pricing for the new model year, etc. -Currency effect due to difference between average rates <Decrease Factors> and transaction rates: - 41.4 bn. yen -Decline in profit attributable to lower unit sales, etc - Others + 19.5 bn. yen + 99.8 - 167.5 <Increase Factors> -Continuing cost + 420.9 reduction effort, etc. Decrease in R&D + 22.2 - 21.9 <Decrease Factors> 336.1 -Increased fixed cost Currency Effect Unrealized gains and Others per unit due to Losses related to production cut, etc. derivative instruments (Exhibit 2) - 246.5 161.7 Operating Operating income income 189.6 363.7 + 67.4 FY09 Decrease in SG&A FY10 Twelve Months Cost Reduction, etc. Twelve Months Revenue, model mix, <Increase Factors> etc. -Decreased expenses for advertising, sales promotion -Decreased logistics expenses, etc. < Currency Effects > Impact on Operating income - 167.5 bn. yen (due to difference of average rates and translation effects) Impact on Other income & expenses - 41.4 bn. yen (due to difference between average rates and transaction rates) Impact on Income before income taxes - 209.0 bn. yen (see also Exhibit 1) 5 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 Motorcycles Automobiles Power Products Unit (thousands) + 736 + 223 + 126 Approx. 18,000 17,435 Approx. 6,000 15,489 4,000 15,000 Approx. 7,060 3,615 3,392 5,000 4,744 4,870 300 480 Other Approx. 250 469 Regions 12,000 5,850 3,000 10,375 960 4,000 950 1,130 Asia 9,639 1,069 1,565 9,000 1,433 240 3,000 2,000 249 1,066 1,085 Europe 6,000 8,240 7,628 1,480 2,000 1,297 North 1,000 America 1,818 1,850 3,000 1,000 199 200 646 189 185 635 322 325 Japan 0 190 185 0 0 FY10 FY11 FY10 FY11 FY10 FY11 Forecasts Forecasts Forecasts Unit sales is the total of sales of finished products of Honda and its consolidated subsidiaries and sales of parts for Honda’s affiliates accounted for under the equity method. 6
  4. 4. FY11 Financial Forecasts (Consolidated) Yen (billions) Change FY10 FY11 Results Forecasts amount % Net sales & other operating revenue 8,579.1 9,340.0 + 760.8 + 8.9% Operating income 363.7 400.0 + 36.2 + 10.0% Income before income taxes 336.1 410.0 + 73.8 + 22.0% Equity in income of affiliates 93.2 95.0 + 1.7 + 1.8% Net income attributable to Honda Motor Co., Ltd. 268.4 340.0 + 71.6 + 26.7% EPS attributable to Honda Motor Co., Ltd. 147.91 187.37 + 39.46 + 26.7% (Yen) Note : Shares which are based approx. approx. on calculation of EPS 1,814,605,000 shares 1,814,602,000 shares (weighted average number (number of shares outstanding of shares outstanding ) as of March 31, 2010 ) Average Rates (Yen) US Dollar 93 90 Yen up by 3 yen Euro 130 120 Yen up by 10 yen 7 Forecast: Change in Income before Income Taxes Yen (billions) Income before income taxes + 73.8 bn. yen ( + 22.0 % ) Other Income & Operating Income + 36.2 bn. yen ( + 10.0 % ) Expenses + 37.5 bn. yen + 198.9 + 6.0 - 87.0 Cost Reduction, the effect of raw - 36.7 material cost, etc. - 45.0 Increase + 58.5 410.0 in SG&A 336.1 Increase - 21.0 in R&D Currency Revenue, Effect Unrealized gains Others model mix, etc. and losses related to derivative instruments Operating Operating Income Income 363.7 400.0 FY10 FY11 Forecasts 8
  5. 5. Forecast: Capital Expenditures, Depreciation, R&D Expenses Yen (billions) FY10 FY11 Change Results Forecasts Capital expenditures * 329.7 380.0 + 50.2 Depreciation and amortization * 366.6 350.0 - 16.6 R&D expenses 463.3 500.0 + 36.7 * “Capital expenditures” in results and the forecast aforementioned exclude investment in operating leases and acquisition of intangible assets. * “Depreciation and amortization” in results and the forecast aforementioned exclude depreciation of investment in operating leases and amortization of intangible assets. 9 Dividend to Shareholders (Yen) Dividend per share FY09 FY10 Results Results & Increase/Decrease from FY11 Increase/Decrease from Projection Projection FY09 Results FY10 Results 1st quarter End 22 8 - 14 12 * +4 * * * 2nd quarter End 22 8 - 14 12 +4 3rd quarter End 11 10 -1 12 * +2 * 4th quarter End 8 12 * +4 * 12 * ± 0 * Fiscal Year 63 38 * ++ - 25 * 48 * + 10 * * Projection as of Apr. 28th ++ Revised upward by 2 yen from the previous projection of 36 yen as of February 3. 2010 10
  6. 6. Honda Information Meeting 1. FY10 4Q Financial Highlights 1. FY10 4Q Financial Highlights 2. Major Market Outlook and Honda’s Performance 2. Major Market Outlook and Honda’s Performance 3. Honda’s Medium-term Strategies 3. Honda’s Medium-term Strategies 11 Operations in North America Major Markets – Honda Automobile Business in U.S. Industry Demand Honda Unit Sales Unit Unit (thousands) (aggregate numbers of Honda brand and Acura brand) (thousands) 2,000 Passenger Cars Passenger Cars Light Trucks ※Retail Sales ※Retail Sales Light Trucks 20,000 1,551 1,509 16,884 16,965 16,556 1,500 1,394 1,462 1,428 16,148 13,300 1,150 10,429 1,000 10,000 500 0 0 CY04 05 06 07 08 09 10(E) CY04 05 06 07 08 09 10(P) Source: Honda Source: Honda Strategy in N.A Market To Address Crossover models for new segment ( Accord Crosstour Premium and versatile crossover utility vehicle ) Accord Crosstour Acura ZDX Insight (Mar 2009) (Nov 2009) (Dec 2009) All new Hybrid CR-Z and more Strengthen Acura brand with new models. ( TSX Wagon and ZDX provocative 4-door sports coupe ) CR-Z TSX Wagon Odyssey Concept (will be launched in 2010) (will be launched in 2010) (will be launched in 2010) 12
  7. 7. Operations in North America Operating income for the fourth quarter increased by JPY 178.2 billion from the last year, due mainly to Increased sales of L/T models such as CR-V, MDX and Odyssey, etc. Yen (billions) 150 16% 10.8% 12% 100 9.5% 7.8% 7.7% 7.5% 6.7% 7.3% 7.0% 6.1% 6.3% 8% 5.7% 4.3% 5.3% 50 1.6% 4% 0.7% 114.4 95.7 118.2 128.4 97.0 116.0 156.3 63.1 94.5 22.5 70.0 47.6 110.7 70.7 0 0% -107.4 7.1 -4% -50 -8% -100 -12% -15.7% -150 -16% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 13 Operations in Japan Mature Markets - Honda Automobile Business in Japan Industry Demand Honda Unit Sales Unit (thousands) 1,000 Unit Registered vehicle Registered vehicle (thousands) Mini vehicle ※Retail Sales Mini ※Retail Sales 6,000 5,855 5,854 5,739 5,354 5,082 750 717 710 720 640 662 4,609 580 4,000 500 2,000 250 0 0 CY04 05 06 07 08 09 10(E) FY05 06 07 08 09 10 11(P) Source: Honda Source: Honda Strategy in Japan Market Enhancing product line up with efficiency - Strengthen Hybrid model lineup, extend Hybrid technology to core models CR-Z (Feb 2010) Insight (Feb 2009) FCX Clarity (Nov 2008) - Cost reduction by using global purchasing network Enhancing sales network - Improving consolidated car dealer’s profit - Improving stability of consolidated sales subsidiaries FREED (May 2008) Fit (Oct 2007) 14
  8. 8. Operations in Japan Operating income for the fourth quarter improved JPY 167.3 billion from the last year, due mainly to decreased SG&A expenses, increased sales of Fit, STEPWGN, and all new CR-Z. Yen (billions) 100 12% 5.9% 6.0% 4.5% 5.4% 50 4.4% 3.4% 5.2% 6% 3.3% 3.4% 0.2% 1.2% 48.9 68.9 41.9 68.2 60.6 73.3 56.2 37.9 40.9 -0.6% 0 0% 2.3 -64.3 -25.7 10.0 -8.7 -4.6 -1.0% -176.0 -3.2% -50 -6.0% -6% -100 -12% -150 -18% -23.8% -200 -24% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 15 Operations in Europe Operating income for the fourth quarter improved JPY 2.8 billion compared to the same period last year as a result of increased production in U.K. Yen (billions) 10% 25 15 4.3% 4.2% 5% 3.1% 2.9% 2.4% 2.9% 2.6% 5 0.8% 0.9% 2.0% 1.6% 1.4% 0.4% 1.8 1.7 6.4 9.0 3.7 12.6 10.3 16.7 5.8 18.6 11.2 8.3 1.1 0% -10.5 -6.8 -7.6 -5 -4.0% -3.8% -3.7% -15 -5% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 16
  9. 9. Operations in Asia Industry Demand in Major Asian Motorcycle Markets 25,000 Industry: Unit ( thousands ) ※Wholesale 20,000 India Indonesia Thailand Vietnam (18.7mil) (2.3mil) (1.7mil) 15,000 (5.9mil) 10,000 5,000 (8.8mil) 0 CY04 05 06 07 08 09 10(E) Source: Honda 17 Operations in Asia In India, motorcycle business foundation solidified behind ※Wholesale two companies, Hero Honda and HMSI Industry: Unit (thousands) 10,000 Other brands Hero Honda Honda Motorcycle & Scooter India 8,000 6,000 4,000 (4,323) 2,000 (1,091) 0 Source : CY 04 05 06 07 08 09 10(E) Honda Principal models of Honda Motorcycle & Scooter India Activa CB Twister FMC Apr. 09 Debut in Feb. ‘10 18
  10. 10. Operations in Asia Demand for Honda expected to grow in 2010 ※Wholesale Industry: Unit (thousands) Other brands 6,000 Honda 5,000 4,000 3,000 2,000 (2,701) 1,000 0 CY04 05 06 07 08 09 10(E) Source: Honda Principal models CS1 BeAT Blade Revo 125cc 110cc 110cc 110cc Debut Apr. 08 AT Model Debut Dec.08 FMC Jan.09 Debut Jun. 08 19 Operations in Asia Honda to enhance product pipeline for Industry: Vietnamese motorcycle market Unit (thousands) Other brands ※Wholesale Honda 3,500 3,000 2,500 2,000 1,500 1,000 (1,397) 500 0 CY04 05 06 07 08 09 10(E) Source: Honda Principal models Lead Wave110S Air Blade FI SH125,150 Future X (2008 Dec) (2009 May) (2009 June) (2009 Nov) (2010 Feb) 20
  11. 11. Operations in Asia Honda Automobile Business in Southeast Asia Industry Demand Honda Unit Sales 2,500 Unit (thousands) 250 Unit ※Wholesale (thousands) ※Retail Sales Malaysia Thailand Indonesia Philippines Malaysia Thailand 2,000 200 Indonesia Philippines 190 189 1,704 156 1,500 148 146 150 138 1,000 100 500 50 0 0 CY04 05 06 07 08 09 10(E) CY04 05 06 07 08 09 10(P) Source: Honda Source: Honda Strategy in Southeast Asian Market Optimal allocation to enhance production efficiency Production of FREED in Indonesia started in June 2009 Enhance complementary products in ASEAN region Jazz (May 2008) City (Sep 2008) FREED (Jun 2009) 21 Operations in Asia Operating income for the fourth quarter increased JPY 25.5 billion from the last year, due mainly to increased revenue and favorable currency effect. Yen (billions) 50 15% 13% 40 11% 9.4% 9.3% 8.4% 8.6% 8.8% 9% 7.4% 30 6.8% 6.7% 8.0% 6.5% 6.3% 7% 5.8% 7.0% 5.3% 5% 5.2% 20 3% 1% 10 1.3% -1% 19.4 18.2 20.2 19.2 36.9 33.4 38.3 21.9 37.4 33.4 24.9 4.5 20.3 27.5 35.0 30.0 0 -3% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 22
  12. 12. Operations in Other Regions Solid operation as a market leader in Brazilian motorcycle market Introducing PGM-FI (Fuel Injection) models to meet Euro3 Industry: ※Wholesale Unit (thousands) Other brands Honda 2,000 Source: Honda 1,500 1,000 (1,192) 500 0 CY04 05 06 07 08 09 10(E) Principal models Biz 125 CG 150 Titan Mix CB 300R LEAD XRE 300 NXR 150 BROS Mix Flex Fuel Flex Fuel Debut Mar 09 Debut June 09 Debut July 09 Debut Aug 09 Nov 09 23 Operations in Other Regions Confidential Honda Automobile Business in Brazil Industry Demand Honda Unit Sales (including commercial vehicles) Strong sales of FFV models contributed to growth Unit Unit (thousands) ※Retail Sales (thousands) ※Retail Sales 4,000 200 180 Brazil ( Flexible Fuel Vehicle) 3,008 160 ( Petrol Engine Vehicle) 3,000 2,671 140 126 2,377 118 120 2,000 1,844 100 1,618 86 1,532 80 67 FFV 60 57 50 1,000 40 20 0 0 CY04 05 06 07 08 09 10(E) CY04 05 06 07 08 09 10(P) Source: Honda Source: Honda Strategy in South America Market Environmental strategy FFV model for Brazil market Expansion of production capacity Brazil: Expand capacity to 120,000 units in Aug 2008 City launched in July 2009 as the third locally produced model Fit FFV (Nov 2008) City FFV 24
  13. 13. Operations in Other Regions Operating income for the fourth quarter increased JPY 10.9 billion from the last year, due mainly to increased sales of motorcycles such as flex fuel NXR150 BROS MIX in Brazil. Yen (billions) 50 14.0% 15% 13.8% 12.4% 40 10.9% 11.3% 11.2% 12% 10.4% 9.6% 8.6% 30 8.3% 8.4% 9% 7.5% 7.2% 20 6% 4.4% 4.1% 10 3% -0.5% 15.2 21.4 16.0 19.5 21.7 30.1 31.7 32.7 36.3 48.7 41.8 8.0 9.9 17.4 18.9 0 0% -0.3 -10 -3% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 25 Operations by Business Segment Yen (billions) Motorcycle Business 22% 70 17% 50 11.9% 11.6% 10.5% 12% 9.6% 9.7% 7.9% 8.3% 8.5% 8.4% 30 7.4% 5.8% 7% 4.2% 3.4% 3.7% 2.2% 10 2% 13.1 32.0 11.1 44.2 31.1 37.0 30.3 52.7 31.1 46.3 25.2 -2.8 5.6 9.3 15.8 28.0 -1.0% -10 -3% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q Yen 300 (billions) Automobile Business 25% 200 15% 9.0% 9.0% 7.2% 7.1% 6.7% 100 6.2% 6.5% 6.4% 6.3% 3.4% 3.6% 3.6% 1.4% 0.9% 5% 24.0 150.0 130.8 160.7 157.7 148.3 213.0 220.7 79.5 150.3 79.0 70.5 13.7 110.4 -21.3 0 -1.4% -5% -100 -15% -200 -21.2% -275.4 -300 -25% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 26
  14. 14. Operations by Business Segment Yen 20 (billions) Power Product & Other Businesses 15% 10.2% 9.9% 10% 7.5% 6.9% 6.6% 5.8% 4.2% 5% 2.3% 0.2% 11.0 7.4 10.4 7.2 7.9 6.9 2.2 5.1 0.2 0 0% -2.8 -11.9 -5.9 -4.6 -2.9 -3.1 -0.9 -0.9% -4.0% -3.7% -3.5% -6.4% -5% -8.1% -10% -15.0% -20 -15% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 80 Yen Financial Services Business 40% (billions) 34.6% 34.8% 32.2% 32.0% 29.8% 29.4% 60 30% 26.4% 22.1% 21.3% 22.8% 19.2% 40 21.7% 20% 14.9% 16.4% 13.1% 20 10% 6.5% 29.2 22.6 22.7 40.9 34.2 29.3 22.9 31.3 28.7 24.3 9.4 18.0 46.8 47.1 53.6 47.2 0 0% FY07 2Q 3Q 4Q FY08 2Q 3Q 4Q FY09 2Q 3Q 4Q FY10 2Q 3Q 4Q 1Q 1Q 1Q 1Q 27 Honda Information Meeting 1. FY10 4Q Financial Highlights 1. FY10 4Q Financial Highlights 2. Major Market Outlook and Honda’s Performance 2. Major Market Outlook and Honda’s Performance 3. Honda’s Medium-term Strategies 3. Honda’s Medium-term Strategies 28
  15. 15. Honda Direction and Key Challenges 1. Honda Business Update 1. Honda Business Update 2. Advancement of Motorcycle Business 2. Advancement of Motorcycle Business 3. Advancement of Automobile Business 3. Advancement of Automobile Business 29 Honda Direction and Key Challenges 1. Honda Business Update 1. Honda Business Update • Honda motorcycle sales units and automobile production/sales units trend in major markets • Financial outline for FY10 results and FY11 forecasts • Business overview for FY10 and FY11 30

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