June 2009

Honda Update 2009
CR-Z Concept
1
Honda Direction and Key Challenges
1. Strengthening Advanced Environmental Technologies
2. Advancement of Motorcycle Business
3. Advancement of Automobile Business
2
Strengthening Advanced Environmental Technologies
¾ Hybrid models：
INSIGHT
Honda recognizes hybrid technologies as the most
realistic path for CO2 reduction at this time
Early 2009 Launched in U.S., Japan and Europe
¾Excellent Fuel Economy ---- 41mpg
¾Less CO2
---- 101g/k
¾Affordable Price
---- $19,800～
Integrated Motor Assist (IMA) system
ＣＶＴ
Motor
Engine
path of
drive force
path of an
electronic force
a lightweight and compact
1.3-liter engine with a motor
500,000
units
Inverter Battery
Annual global sales target
(beyond 2010)
FIT/Jazz Hybrid
CR-Z
Insight
Civic Hybrid 2nd Generation
2005
2009
2010
3rd Generation
3
Strengthening Advanced Environmental Technologies
¾Enhancement of hybrid vehicle lineup
- Establishment of Blue Energy Co., Ltd., joint venture with GS Yuasa
for lithium-ion batteries for hybrid vehicles
- Development of hybrid system for
with medium to large-size vehicles
Blue Energy Osadano Plant in Kyoto, Japan
Production start in Fall 2010
4
Strengthening Advanced Environmental Technologies
¾Applying PGM-FI (fuel injection) system to all models in Thailand
by the end of 2009
Redesigned Wave 110 series with PGM-FI is a new
Asian core-platform model;
– 18% performance improvement
– Improved fuel efficiency; 18% mileage improvement
– Significant reduction in cost and development time
¾Honda to develop and market Electric Motorcycle around 2010
– Targeting Zero CO2 next generation transportation
– Launching in 2 years time
5
Honda Direction and Key Challenges
1. Strengthening Advanced Environmental Technologies
2. Advancement of Motorcycle Business
3. Advancement of Automobile Business
6
Advancement of Motorcycle Business
¾Maintaining strong position particularly in markets with high potential
( Million Units )
CY2008 Unit Sales
Subsidiary
Other
8
7
6
Joint Venture
Market Penetration
100%
77%
69%
66%
60%
5
75%
46%
4
50%
Honda’s Market Penetration
3
3 .2
2
25%
2 .9
1
1 .2
0 .9
0
1 .5
1 .1
0%
India
Indonesia
Vietnam
Thailand
Brazil
Source: Honda
Penetration Rate (per capita) of Motorcycles
$828
Vietnam
$3,732
Thailand
$16,697
Taiwan
1 unit for 16.9 people
14.8%
Units in operation (millions)
1 unit for 6.8 people
*As of 2007
*Indonesia as of 2006
*India as 2005
23.6% 1 unit for 4.2 people
25.3%
1 unit for 4.0 people
(millions)
Population (millions)
1 unit for 21.7 people
5.9%
1,200
700
Indonesia
1,100
600
$1,925
500
500
Brazil
400
400
$6,938
4.6%
300
300
India
200
200
$941
100
100
0
GDP per capita (U.S.$)
(JETRO 2007)
0
59.5%
1 unit for 1.7 people
7
Advancement of Motorcycle Business
¾Growth centered in Asia and South America
Unit
(millions)
Honda Motorcycle Sales Growth (2003 to 2008)
16
15. 038
Europe
Japan
14
North America
1.7
South America
12
1.5
1.0
10
China
1.2
0.8
8
0.8
6
11.1
4
9.0
9.2
9.6
Asia
2005
2006
2007
2008
7.6
5.8
2
0
2003
2004
8
Advancement of Motorcycle Business
¾Super Cub series, a big hit for 50 years, continues as a Honda strength
Not a performance bike, but meets everyday customer needs
– Global Production of Cub Series has reached 60 Million Units
– Honda Cub Series sells more than 3 million units a year worldwide
– Cub Series achieves high profitability with production efficiency and strong brand
image
Wave110 （Thailand）
Unit （millions）
Revo （Indonesia）
Biz （Brazil）
Super Cub (Japan)
Honda Motorcycle Production
Unit of cub series produced in 2008
Total unit produced
15
50%
Ratio of cub series
40%
10
30%
20%
5
10%
0%
0
FY 01
02
03
04
05
06
07
9
Honda Direction and Key Challenges
1. Strengthening Advanced Environmental Technologies
2. Advancement of Motorcycle Business
3. Advancement of Automobile Business
10
Advancement of Automobile Business
¾Growth of global models makes Honda competitive and efficient
Unit: thousands
- Unit Sales of Honda’s Global 4 Models ＋１（Hybrid Models）
4,000
- Growth of
Hybrid Models
3,500
3,000
Others
500,000
2,500
units
2,000
Fit/Jazz/City
1,500
CR-V
1,000
Civic
76%
58%
Annual global
sales target
(beyond 2010)
Insight
500
Accord
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0
Source: Honda
Fit/Jazz
Civic
CR-V
Accord
11
Advancement of Automobile Business
¾Global Common Design and Global Purchasing Network
- Current Fit model demonstrated that sourcing from Asia contributed
to significant cost reduction
- Current Fit attained cost reduction compared to previous model
(Including City)
270K
Previous
220K
160K
As volume grows, Thai and China J/V
ship more cost competitive FIT / City
components to Japan
Current FIT
Current City
12
Advancement of Automobile Business
¾Flexible model allocation to optimize capacity utilization
Passenger cars
Annual
Capacity
Location
Line
Line 11
Canada
Canada
Ontario
Ontario
195
195
Small
Middle
Light Trucks
Luxury
Crossover
Pickup
Van
CSX
Civic
Alliston
Alliston
Line
Line 22
195
195
Marysville
Marysville
440
440
East
East
Liberty
Liberty
240
240
MD-X ZD-X Ridgeline
Civic
Accord
TL
RDX
Ohio
Ohio
Civic
CR-V
Element
Mid 2009
U.S.
U.S.
Indiana
Indiana
Greensburg
Greensburg
100
100
Civic
Line
Line 11
Alabama
Alabama
Lincoln
Lincoln
Ridgeline Odyssey
150
150
Accord
Sedan V6
Line
Line 22
150
150
Mexico
Mexico
Import
Import
from
from Japan
Japan
El
El Salto
Salto
Pilot
Odyssey
CR-V
50
50
Civic
Accord
CR-V
13
Advancement of Automobile Business
¾Mature flexible production system to enable Honda to get
through anticipated future changes with minimal impact
- Production of the Stream was transferred from Suzuka Factory to Saitama
Factory in January 2009
- Production of the U.S. and Canada version of the Honda Fit started
in Saitama Factory from May 2009 in addition to Suzuka Factory
FIT（
FIT（US model）
model）
■ Saitama
Suzuka ■
STREAM
14
Advancement of Automobile Business
¾Reallocation of CAPEX and R&D expenses
- In order to minimize the impact of recent changes in the business
environment and to focus company resources on necessary areas,
All investments and development projects were reviewed.
Yorii
Assembly Plant
2012～
Sakura
R&D Center
2010～
- Revision of CAPEX for expansion
9 Yorii Assembly plant
9 Sakura R&D Center
69%
Yachiyo Industry
New Mini-vehicle Plant
2011～
9 Yachiyo Industry new mini-vehicle plant
50%
Capital Expenditures & Depreciation
50%
700
627
654
599
600
Capital
Expenditures
Depreciation
500
- Revision of R&D activities and expenses
300
9 Withdrawal of Acura brand launch for Japan market
9 Discontinue NSX successor model with V10 engine
9 Withdrawal from F1 and focus on environmental
technologies
390
400
417
408
FY08
FY09
361
380
200
100
0
FY07
FY10(P)
15
¾In market deterioration due to the financial crisis, our goal is for
business to be in the black in FY10 based on cost structure reforms
- Total Amount of Cost Structure Reform
Approx. 250B yen
Yen (billions)
Operating Income - 179.6 bn. yen ( - 94.7 %)
Currency
Effect
FY09
- 193.0
Operating
income
Cost Structure
Reform
-Effects of
cost reductions, etc
-Reducing sales incentive, etc
Decrease
+50B yen
Decrease
in R&D
Operating
income
10.0
in SG&A
Revenue,
model mix,
etc.
- 334.8
FY10
+ 48.2
+30B yen
189.6
Cost Structure Reform
Cost
Structure
Reform
- Targeting
business
in the black
+ 339.0
Cost Reduction,
etc.
Cost Structure Reform
-Decrease in quality related expenses
-Withdrawal from some racing activities
-Revision of expenses, etc
- 39.0
+125B yen
16
Industry and Major Market Outlook
1. Honda global business environment
2. North America
3. Japan
4. Europe
5. Asia
6. Other Regions
17
Honda Global Business Environment
North America
Europe
U.S. unemployment rate remain high -- 8.9% in April
Lack of consumer confidence
Monetary measures “TALF”
Auto sales down by 12% in Western Europe in April
Gas price stable around $2
Russia auto sales down by 54% in April
April SAAR 9.3Ｍ
Auto sales increased 20% in Germany due to scrap incentives in April
Chrysler began Chapter 11 bankrupcy procedures
Scrap incentives will start in U.K. from May
Used vehicle prices recover since end of 2008
Honda announced voluntary separation
opportunity in America
Honda UK plant shut down from Feb to May
Japan
Tax cut program for Eco-vehicle started from April
Auto sales down by 23% in April
FY10 auto demand forecast 4.3mill (JAMA)
Honda Insight No.1 sales in April in Japan
(registered car segment)
South America
Asia
Interest rate cut down 7.25% in Indonesia
Palm oil price raise in Indonesia for 5month
IPI tax cut extended until June
Brazil auto sales down by 6% in April
Brazil motorcycle sales down
by 16% in April
Preferential vehicle purchase tax cut (below 1.6L) from 10% to 5% in China
Auto sales increase approx. 30% in China
2009 auto demand forecast over 10mill units
Honda motorcycle sales up by 30% in April in India
Motorcycle sales in April down 30% in Indonesia.
Operations in North America
¾4Q operating income in North America down due to sluggish
sales in U.S., increase in fixed cost and higher yen
Yen
(billions)
150
16%
12%
100
9.5%
7.8%
6.7%
7.3%
7.7%
7.5%
6.1%
6.3%
8%
5.7%
50
4%
4.3%
114.4
95.7
118.2
128.4
97.0
116.0
156.3
63.1
1.6%
94.5
22.5
70.0
0%
0
-107.4
-4%
-50
-8%
-100
-12%
-15.7%
-16%
-150
FY07 1Q
2Q
3Q
4Q
FY08 1Q
2Q
3Q
4Q
FY09 1Q
2Q
3Q
4Q
19
Operations in North America
¾Major Markets – Honda Automobile Business in U.S.
Industry Demand
Unit
(thousands)
Unit
(thousands)
20,000
Passenger Cars
Light Trucks
16,831
16,652
※Retail Sales
16,884
16,556
Honda Unit Sales
(aggregate numbers of Honda brand and Acura brand)
2,000
※Retail Sales
Passenger Cars
16,148
Light Trucks
1,500
15,000
13,300
1,349
1,394
1,462
1,509
1,551
1,428
( 10,500 )
10,000
1,000
5,000
500
0
0
CY03
04
05
06
07
08
09(E)
CY03
04
05
06
07
08
09(P)
Source: Honda
Source: Honda
Strategy in N.A Market
9 Production capacity & flexible lines
New Indiana plant , New Canadian Engine plant started production
Accord V6 will be produced in Alabama plant
Acura TSX (May 2008)
Pilot (May 2008)
Fit (Aug 2008) FCX Clarity (Jul 2008)
9Innovative technologies to achieve CAFE Leadership
Acura TL (Sep 2008)
Insight (Mar 2009)
Acura ZDX (Fall 2009)
20
Operations in Japan
¾4Q operating income in Japan down by higher yen and
decrease in revenue and model mix change, etc
Yen
(billions)
100
12%
5.9%
50
3.4%
4.4%
48.9
68.9
41.9
5.4%
68.2
6.0%
4.5%
5.2%
60.6
6%
73.3
56.2
0.2%
3.3%
3.4%
37.9
40.9
0%
0
2.3
-64.3
-6.0%
-50
-176.0
-6%
-100
-12%
-150
-18%
-23.8%
-200
FY07 1Q
2Q
3Q
4Q
FY08 1Q
2Q
3Q
4Q
FY09 1Q
2Q
3Q
-24%
4Q
21
Operations in Japan
¾Mature Markets - Honda Automobile Business in Japan
Industry Demand
Unit
(thousands)
Registered vehicle
Mini
6,000
900
5,829
5,855
5,854
800
※Retail Sales
Honda Unit Sales
Unit
(thousands)
732
5,739
717
710
700
5,354
※Retail Sales
720
640
5,082
580
600
(572)
Others
500
4,000
Minivan
400
300
Small
2,000
200
Mini
100
0
0
CY03
04
05
06
07
08
Source: Honda
**
09(E)
FY04
05
06
07
**Apr.09-Mar.10
08
09
10(P)
Source: Honda
Strategy in Japan Market
9Enhancing product line up with efficiency
- Strengthen Hybrid model
- Cost reduction by using global purchasing network
9Enhancing sales network
FREED (May 2008)
Odyssey (Oct 2008)
Life (Nov 2008)
- Enhancing sales and marketing function for hybrid vehicles
- Improving stability of consolidated sales subsidiaries
FCX Clarity (Nov 2008)
Accord (Dec 2008)
Insight (Feb 2009)
22
Operations in Europe
¾4Q operating income in Europe (including Russia)
down, due to sluggish sales in Western Europe
Yen
(billions)
10%
25
15
5%
4.2%
4.3%
3.1%
2.9%
2.4%
5
2.6%
2.9%
2.0%
6.4
1.6%
1.4%
9.0
3.7
12.6
10.3
16.7
5.8
0.4%
18.6
11.2
8.3
1.1
0%
-10.5
-5
-4.0%
-5%
-15
FY07 1Q
2Q
3Q
4Q
FY08 1Q
2Q
3Q
4Q
FY09 1Q
2Q
3Q
4Q
23
Operations in Europe
¾Mature Markets - Honda Automobile Business in Western Europe
Industry Demand
Unit
(thousands)
Petrol
15,000
Honda Unit Sales
（EU15+EFTA）
(excluding commercial vehicles)
（EU15+EFTA）
Unit
(thousands)
※Retail Sales
350
※Retail Sales
Diesel
13,558
300
272
280
256
232
250
Others
220
10,000
200
194
Jazz
150
5,000
CR-V
Accord
100
50
0
Civic
0
CY03
04
05
06
07
08
09(E)
Source: Global Insight
CY03
04
05
06
07
08
09(P)
Source: Honda
Strategy in Western Europe Market
9Environmental strategy
Low CO2 emission models; Insight 101g/km, Jazz 125g/km
9Flexible Production Lines and Production Allocation
Jazz production starts at UK plant within 2009
Jazz (Oct 2008)
Insight (Mar 2009)
Accord (Jun 2008)
24
Operations in Asia
¾Operating income in Asia exceeded 100 billion in FY09
with auto and motorcycle growth
Yen
(billions)
15%
50
13%
11.6%
40
11%
9.4%
9.3%
8.4%
8.0%
30
6.8%
9%
6.7%
7%
5.8%
20
6.5%
5.2%
5%
5.3%
3%
10
19.4
18.2
20.2
19.2
36.9
33.4
38.3
21.9
48.3
33.4
1%
24.9
0
-6.3
-1.9%
-10
FY07 1Q
2Q
3Q
4Q
FY08 1Q
2Q
3Q
4Q
FY09 1Q
2Q
3Q
-1%
-3%
4Q
25
Operations in Asia
¾Industry Demand in Major Asian Motorcycle Markets
25,000
Industry:
Unit ( thousands )
※Wholesale
20,000
India
Indonesia
Thailand
Vietnam
(18.3mil)
(2.7mil)
15,000
(1.4mil)
10,000
(2.4mil)
(2.9mil)
(2.1mil)
(1.9mil)
(1.6mil)
(5.1mil)
(4.6mil)
(4.9mil)
(1.8mil)
(1.3mil)
(1.7mil)
(2.0mil)
(1.8mil)
(6.5mil)
(3.9mil)
(2.8mil)
5,000
(5.4mil)
(6.0mil)
(6.8mil)
(7.8mil)
(7.4mil)
(7.4mil)
CY03
04
05
06
07
08
0
09(E)
Source: Honda
26
Operations in Asia
¾ In India, motorcycle business foundation solidified behind
two companies, Hero Honda and HMSI
Industry:
Unit (thousands)
10,000
※Wholesale
Other brands
Hero Honda
Honda Motorcycle & Scooter India
8,000
6,000
4,000
(3,516)
2,000
(979)
0
CY 03
04
05
06
Principal models of Hero Honda Motors Limited
Splendor NXG
Debut in May. ‘07
Super Splendor
Passion+
Debut in May. ‘07
Debut in May. ‘07
07
08
09(E)
Source :
Honda
Principal models of
Honda Motorcycle & Scooter India
Activa
FMC Apr. 09
CBF Stunner
Debut in June. ‘08
27
Operations in Asia
¾ Steady Growth of Honda Motorcycle & Scooter India (HMSI),
a subsidiary of Honda in India
Industry:
※Wholesale
Unit (thousands)
1,400
1,200
(979)
1,000
800
600
400
200
0
CY 03
04
05
06
07
08
09(E)
Source :
Honda
Principal models of HMSI
Activa
FMC Apr. 09
Aviator
CBF Stunner
Debut in Feb. ‘08
Debut in June. ‘08
28
Operations in Asia
¾ Continuously introducing innovative products
to the Indonesian motorcycle market
Industry:
Unit (thousands)
6,000
※Wholesale
Other brands
Honda
5,000
4,000
3,000
(2,875)
2,000
1,000
Added annual production capacity in Sep. 2005
(2,000 → 3,000 thousand units)
0
CY03
04
05
06
07
08
Source: Honda
Principal models
CS1
125cc
Debut Apr. 08
BeAT
110cc
AT Model
Debut Jun. 08
Blade
110cc
Debut Dec.08
09(E)
Revo
110cc
FMC Jan.09
29
Operations in Asia
¾ Honda to enhance product pipeline for
Vietnamese motorcycle market
Industry:
Unit (thousands)
Other brands
Honda
3,500
※Wholesale
3,000
2,500
2,000
1,500
1,000
(1,247)
500
0
CY03
04
05
06
07
Future Neo FI
125cc
Fuel Injection
Debut Apr 07
Air Blade
110cc
AT Model
Debut Apr 07
09(E)
Source: Honda
Principal models
Click
110cc
AT Model
Debut Oct. 06
08
Wave S
100cc
Debut May 07
Wave α
100cc
ＭＭＣ Ｊｕｌ 08
30
Operations in Asia
¾Honda Automobile Business in Southeast Asia
Industry Demand
2,500
Honda Unit Sales
Unit
(thousands)
2,000
※Wholesale
Malaysia
Thailand
Indonesia
Philippines
1,892
250
Unit
(thousands)
200
※Retail Sales
Malaysia
Thailand
Indonesia
Philippines
190
156
1,500
148
150
146
138
123
1,000
100
500
50
0
0
CY03
04
05
06
07
08
09(E)
CY03
04
05
06
Source: Honda
07
08
09(P)
Source: Honda
Strategy in Southeast Asian Market
9Optimal allocation to enhance production efficiency
Production of FREED in Indonesia starting in June 2009
9Enhance complementary approach in ASEAN region
9Strengthening of purchase function to flexibly consolidate
and re-allocate
Jazz (May 2008)
City (Sep 2008)
Freed (Jun 2009)
31
Operations in Asia
¾Honda Automobile Business in India
Industry Demand
1,500
(excluding commercial vehicles, SUV and MUV)
Unit
(thousands)
※Retail Sales
Unit
(thousands)
※Wholesale
Category
Honda Unit Sales
80
1,200
Premium
61
60
"A"
1,000
302
800cc
53
55
405
CR-V
303
195
40
249
521
135
425
500
362
Civic
40
35
531
357
20
299
213
242
244
CY03
04
05
294
299
264
06
07
08
0
09(E)
City
15
Accord
0
CY03
04
05
06
07
08
09(P)
Source: Honda
Source: Global Insight
Strategy in India Market
9Established 2nd plant (parts) in Sep 2008
to supply body panels and engine components to the 1st plant
to export engine components to Asian countries
9Introduce Jazz in India in mid 2009
to enjoy excise duty benefit for small-sized car
City (Nov 2008)
Jazz (Mid 2009)
32
Operations in Other Regions
¾Operating income in Other regions in FY09
centers on Brazil to grow
Yen
(billions)
50
15%
14.0%
13.8%
12.4%
40
11.3%
10.9%
11.2%
10.4%
9.6%
10%
8.6%
30
8.3%
8.4%
20
5%
4.1%
10
15.2
21.4
16.0
19.5
21.7
30.1
31.7
32.7
21.7
48.7
41.8
32.7
0
0%
FY07 1Q
2Q
3Q
4Q
FY08 1Q
2Q
3Q
4Q
FY09 1Q
2Q
3Q
4Q
33
Operations in Other Regions
¾ Solid operation as a market leader in Brazilian motorcycle market
¾ Introducing PFM-FI (Fuel Injection) models to meet Euro3
※Wholesale
Industry:
Unit (thousands)
Other brands
Honda
2,000
Source: Honda
1,500
Exceed one million units per year
(1,459)
1,000
500
0
CY03
04
05
06
07
08
09(E)
Principal models
CG 150 Titan Mix
CG 125 FAN
Biz 125
CG 150 Titan
Flex Fuel
Debut Mar 09
34
Operations in Other Regions
Confidential
¾Honda Automobile Business in Brazil
Industry Demand
Honda Unit Sales
(including commercial vehicles)
Unit
(thousands)
9Strong sales of FFV models contributed to growth
※Retail Sales
3,000
Unit
(thousands)
※Retail Sales
200
2,671
180
Brazil (
(
2,377
160
140
1,844
2,000
1,532
Flexible Fuel Vehicle)
Petrol Engine Vehicle)
1,618
118
120
1,339
100
86
67
80
1,000
50
60
40
FFV
57
32
20
0
0
CY03
04
05
06
07
08
09(E)
03
04
Source: Global Insight
05
06
07
08
09(P)
Source: Honda
Strategy in South America Market
9Environmental strategy
(FFV->Brazil)
9 Expansion of production capacity
Brazil: Expand capacity to 120,000 units in Aug 2008
Fit FFV (Nov 2008)
Civic FFV
35
Financial Highlights
FY 09 4Q Results
- Outline
- Profit Analysis
- Business Segment Information
FY 10 Forecasts
Dividend per Share
36
Outline of FY09 Twelve Months Financial Results (Consolidated)
Business Environment
FY09 Twelve Months
Unit (Sales)
Unit (thousands)
FY08
FY09
Change
Motorcycles
9,320
10,114
+ 8.5%
Automobiles
3,925
3,517
- 10.4%
Power Products
6,057
5,187
- 14.4%
Crude oil and raw material prices rose significantly worldwide in the first
half, then declined in the second half.
The economy in the U.S. and Europe deteriorated caused by the financial
crisis. A further downturn due to the negative economic cycle is feared.
In China and India, economic growth slowed down in the second half.
In Japan, both capital expenditures and consumer spending declined, and
the economy is rapidly deteriorating
Yen appreciation against the U.S. dollar and Euro
Motorcycle market
Demand in the U.S declined significantly
Due to strong sales in the first half, industry-wide sales volume in Brazil,
India and Thailand maintained YOY despite reduced sales in the second
half
Automobile market
FY09 Twelve Months
Financial results
Yen（billions）
FY08
FY09
Change
Net sales & other
operating revenue
12,002.8
10,011.2
- 16.6%
Operating income
953.1
189.6
- 80.1%
Income before income
taxes
895.8
161.7
- 81.9%
Equity in income of
affiliates
118.9
99.0
- 16.7%
Net income
600.0
137.0
- 77.2%
330.54
75.50
( - 255.04 yen)
approx.
1,815,356,000 shares
approx.
1,814,561,000 shares
EPS (Yen)
Note : Shares which are based
on calculation of EPS
(weighted average number
of shares outstanding )
- 77.2%
Demand in the U.S., Western Europe and Japan declined significantly in
the second half.
Overall market size was increased in Brazil, China and India despite a
temporary decline in demand.
Major Change Factors
Asia and other regions including Brazil contributed to gain in
operating profit, offsetting deterioration in major markets.
Unit Sales
Motorcycles:
Favorable sales in Asia and Other Regions, which includes Brazil
Decreases in North America, Japan and Europe
Automobiles:
Strong sales in Asia and Brazil
Decreases in North America, Japan and Europe
Power Products:
Increases in Asia and “Other” Region, which includes Middle East
Decreases in North America, Europe and Japan
Net sales & other operating revenue
Decline due to lower sales volume of automobiles and power
products
Negative currency translation effects
(weighted average number
of shares outstanding )
Average Rates (Yen)
Operating income
US Dollar
114
101
Yen up by
13 yen
Euro
162
142
Yen up by
20 yen
<Increase Factors> Effects of cost reduction
Decrease in R&D
<Decrease Factors>Decrease in revenue and model mix change, etc.
Increased raw material costs
Increased fixed cost due to production cut
Currency factors
37
Change in Income before Income Taxes < FY09 Twelve Months >
Income before Income taxes
Operating Income-
895.8
- 247.7
- 734.1 bn. yen (- 81.9%)
763.4 bn. yen （ - 80.1 % ）
Other Income
&
Expenses
+ 29.3 bn. yen
<Increase Factors>
• Effects of cost reductions,
etc.
<Decease Factors>
• Impact of increase in raw material prices
• Increase in fixed cost due to production cut , etc.
- 182.5
Yen
（billions）
<Increase Factors>
• Decrease in quality related expenses , etc.
<Decease Factors>
• 0ne-off expenses related to withdrawal from some racing activities
and cancellations of new model developments
• Increase in provisions for credit loss and residual loss , etc.
Revenue,
model mix, etc.
Currency effect due to difference between average
rates and transaction rates:
+33.0 bn. yen
- 88.3
Cost Reduction,
the effect of raw
material cost , etc.
Interest rate swap cost, etc. ：
+ 24.7
Increase in SG&A
- 89.4 bn.yen
- 269.5
Decrease in R&D
+ 85.7
- 56.4
161.7
(Exhibit 2)
Operating
income
953.1
FY08
12 Months
<Increase Factors>
• Change in pricing for the new model year
• Decrease in sales incentives for North America
automobile business
Others
Currency Effect
of derivative
instruments
Operating
income
189.6
FY09
12 Months
<Decease Factors>
• Decline in profit attributable to lower unit sales
•Model mix impact, etc.
<Currency Effects >
Impact on Operating income
Impact on Other income & expenses
Impact on Income before income taxes
Fair value
- 269.5 bn. yen
+ 33.0 bn. yen
- 236.5 bn. yen
(due to difference of average rates and translation effects)
(due to difference between average rates and transaction rates)
(see also Exhibit 1)
38
Outline of FY09 4th Quarter Financial Results (Consolidated)
Business Environment
4Q Results
Unit (Sales)
Unit (thousands)
FY08
FY09
Change
Motorcycles
2,368
2,002
- 15.5%
Automobiles
1,051
680
- 35.3%
Power Products
2,092
1,531
- 26.8%
Financial crisis and deterioration of real economy led the U.S. and
Europe recession to deepen and become more serious.
Japan economy deteriorated rapidly due mainly to a decline in
exports.
Pace of economic expansion has further slowed down in Asia
Yen appreciation against the U.S. dollar and Euro
Motorcycle market
Steep deterioration not only in the U.S. but in Thailand and Indonesia
Demand in India has recovered from the previous quarter.
Automobile market
4Q Results
Financial results
Yen（billions）
FY08
FY09
Change
Net sales & other
operating revenue
3,055.5
1,783.8
- 41.6%
Operating income
168.8
- 283.0
－
Income before income
taxes
146.8
- 309.5
－
Equity in income of
affiliates
24.3
2.7
Net income
25.4
- 186.1
－
14.01
- 102.59
( - 116.60 yen)
approx.
1,814,587,000 shares
approx.
1,814,610,000 shares
EPS (Yen)
Note : Shares which are based
on calculation of EPS
- 88.7%
-
Steep downturn in the U.S., Japan and Western Europe
Demand in Russia continued to decline largely.
Expanding markets in India, Brazil and China
Major Change Factors
Honda earned operating profit for the fiscal year, however it
posted operating loss in the 4Q due to decreased volume in all
businesses under rapid market deterioration.
Unit Sales
Motorcycles:
Decreased unit sales in all the regions
Automobiles:
Decreased unit sales in all the regions
Power Products:
Decreased unit sales in all the regions
Net sales & other operating revenue
Decline mainly due to decreased unit sales of automobiles
Negative currency translation effects
Operating income
(weighted average number
of shares outstanding )
(weighted average number
of shares outstanding )
US Dollar
106
94
Yen up by
12 yen
Euro
158
121
Yen up by
37 yen
Average Rates (Yen)
<Increase Factors>
Effects of cost reduction
Decrease in SG & A
<Decrease Factors>
Decrease in revenue and model mix change, etc.
Increased fixed costs due to production cut
Increased raw material costs
Currency factors
39
Change in Income before Income Taxes <FY09 4ｔｈ Quarter>
Income before Income taxes
Operating Income
Yen
（billions）
- 456.4 bn. yen
Other Income
&
Expenses
- 4.5 bn. yen
- 451.8 bn. yen
<Increase Factors>
• Change in pricing for the new model year, etc.
146.8
- 357.9
<Decease Factors>
• Decline in profit attributable to lower unit sales
•Model mix impact, etc.
Operating
income
<Increase Factors>
• Decrease in quality related expenses
• Decreased expenses for advertising, sales promotion, etc.
<Decease Factors>
• 0ne-off expenses related to withdrawal from some racing activities
and cancellations of new model developments , etc.
168.8
FY08 4Q
FY09 4Q
Currency effect due to difference between average
rates and transaction rates:
+12.4 bn. yen
- 107.9
Revenue,
model mix, etc.
Interest rate swap cost, etc. ：
+ 21.5
+ 19.3
Decrease in R&D
- 26.8
Currency Effect
Cost Reduction,
Decrease in SG&A
the effect of raw
material cost , etc.
<Increase Factors>
• Effects of cost reductions, etc.
<Decease Factors>
• Increase in fixed cost due to production cut
Impact of increase in raw material prices,
etc.
<Currency Effects >
Impact on Operating income
Impact on Other income & expenses
Impact on Income before income taxes
- 9.3 bn.yen
Operating
income
-283.0
- 7.6
+ 3.0
Fair value
Others
of derivative
-309.5
instruments (Exhibit 2)
- 26.8 bn. yen
+12.4 bn. yen
- 14.4 bn. yen
(due to difference of average rates and translation effects)
(due to difference between average rates and transaction rates)
(see also Exhibit 1)
40
Motorcycle Unit Sales (Motorcycles + All-Terrain Vehicles, etc.)
Unit
(thousands)
16,000
14,000
Change from
FY 08 4Q
FY09 4Q
Major increase/decrease factors
Japan
51
- 15
- Increase of leisure model such as Monkey
- Decrease in sales of scooters such as TODAY and
FORZA
North
America
72
-78
- Decrease of sports bikes such as CBR1000RR and
custom bikes such as VTX1300C
71
- 18
1,449
-168
Europe
Asia
12,000
Other
Regions
Total
10,000
359
-87
2,002
-366
+ 794
（ + 8.5% ）
Monkey (Japan)
- Increase of scooters such as SH150 in Italy
- Decrease of scooters such as SH125 in Spain
- Increase of Unicorn、Shine in India
- Decrease of Wave、CLICK in Thailand
Approx 4,700
Approx 4,580
- Increase of CG125 in Brazil
- Decrease of CG150 TITAN, BIZ125 in Brazil
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
8,000
- 366
（ - 15.5% ）
6,000
4,000
2,000
Approx 1,100 Approx 1,020
Approx 1,210
Approx 1,160 Approx 1,280
2,253
2,333
2,366
2,368
371
392
401
446
1,623
1,645
1,748
95
80
84
0
1Q
68
121
107
2Q
3Q
FY08
2,893
436
509
91
80
58
1Q
1,763
1,610
7,523
6,633
Approx 1,100
2,504
2,002
459
2,146
2,050
9,320
Approx 1,110
2,715
89
150
66
4Q
Approx 1,260
359
1,617
61
102
54
10,114
Unicorn (India)
1,878
66
93
79
2Q
3Q
FY09
1,449
48
75
44
Other
Regions
Asia
4Q
276
320
232
313
453
311
71 Europe
72 North America
51 Japan
12 Months
12 Months
FY08
FY09
* 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.
41
Motorcycle Business Net Sales/Operating Income/Operating Margin
FY08
Net
Sales
FY09
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
368.3
381.6
364.6
444.0
393.0
401.0
342.8
274.4
（- 38.2%）
FY08
12 Months
FY09
12 Months
1,558.6 1,411.5
Yen
(billions)
（- 9.4%）
Operating Margin
<Increase Factors>
• Effects of cost reduction,
etc.
<Decrease Factors>
• Increase in raw material costs,
• Decrease in revenue and model mix change, etc.
Operating Income
Yen
(billions)
160
16%
140
( - 34.0% )
11.9%
11.6%
120
12%
9.7%
9.7%
100
8.5%
14%
7.9%
8.3%
10%
7.4%
7.1%
80
8%
151.2
60
6%
99.9
40
20
52.7
31.1
37.0
4%
46.3
31.1
30.3
2%
25.2
0
0%
- 1.0%
- 2.8
-20
1Q
2Q
3Q
FY08
4Q
1Q
2Q
3Q
FY09
4Q
-2%
12 Months
12 Months
FY08
FY09
42
Automobile Unit Sales
Unit
(thousands)
Change from
FY 08 4Q
FY09 4Q
4,500
4,000
Japan
141
- 50
North
America
219
-240
Europe
103
Asia
3,500
Other
Regions
3,000
Total
-6
- 408
Major increase/decrease factors
（ - 10.4% ）
- Increase of FREED, INSIGHT, etc.
- Decrease of FIT, etc.
- Increase of FIT, etc.
- Decrease of Accord, Civic, CR-V, etc.
INSIGHT （Japan）
- Increase of Civic and CR-V in Russia
- Decrease of CR-V and Civic in the U.K., Spain and Italy
151
-52
- Decrease of component parts for China (Accord and
CR-V, etc.)
- Decrease of CR-V, in Indonesia, etc.
66
-23
- Increase of CR-V in Brazil
- Decrease of Civic, CR-V in Australia
680
- 371
3,925
314
3,517
322
CR-V （Brazil）
755
793
391
2,500
- 371
（ - 35.3% ）
350
2,000
1,850
1,500
946
1,000
991
937
72
87
187
92
177
100
188
90
465
445
481
66
500
0
1,051
89
203
109
459
1,496
962
935
940
91
87
221
680
204
217
75
87
85
460
401
416
66
151
103
Other
Regions
Asia
Europe
219
North America
Japan
78
136
143
145
191
128
152
135
141
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
FY08
FY09
615
556
12 Months
12 Months
FY08
FY09
* 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.
43
Automobile Business Net Sales/Operating Income/Operating Margin
FY08
1Q
Net
Sales
2Q
FY09
3Q
4Q
1Q
2Q
3Q
4Q
2,327.2 2,356.4 2,449.0 2,356.6 2,228.0 2,170.6 1,974.2 1,301.4
（- 44.8%）
Yen
(billions)
Operating Income
600
700
500
FY09
12 Months
9,489.3 7,674.4
Yen
(billions)
（- 19.1%）
<Increase Factors>
• Effects of cost reductions,
• Decrease in SG&A expenses
etc.
<Decrease Factors>
• Decrease in revenue and model mix change , etc.
• Increase in fixed cost due to production cut
etc.
• Increase in raw material costs
Operating Margin
FY08
12 Months
50%
661.6
45%
40%
(- 96.3%)
400
35%
30%
25%
300
213.0
200
220.7
20%
161.2
148.3
79.5
100
6.4%
9.0%
9.0%
0
15%
79.0
7.0%
70.5
24.5
7.2%
3.4%
10%
5%
0%
3.6%
3.6%
0.3%
-100
-5%
-10%
-15%
-22.0%
-200
-20%
-300
-25%
- 286.2
1Q
2Q
3Q
FY08
4Q
1Q
2Q
3Q
FY09
4Q
12 Months
12 Months
FY08
FY09
44
Power Products Unit Sales
Unit
(thousands)
Change from
FY 08 4Q
FY09
4Q
7,000
Japan
101
- 50
North
America
655
- 233
Europe
472
- 199
Asia
200
-51
Other
Regions
103
-28
1,531
- 561
6,000
Total
5,000
Major increase/decrease factors
- Increase of gas-powered mini-tiller Pianta FV200, etc
- Decrease of GX series engines for OEM generators
- 870
（- 14.4%）
- Decrease of GC/GC(V) series for OEM washer
pressure and lawn mower in United States
- Decrease of general purpose engines, such as
GX/GC series engines for OEM construction
machinery and generators
- Increase of water pumps in Indonesia
- Decrease of generators in India
- Decrease in general purpose engines, such as the
GX series generators in Australia
Pianta FV200 （Japan）
6,057
484
5,187
915
502
970
4,000
1,693
- 561
（- 26.8%）
1,306
3,000
2,092
2,000
97
220
1,000
131
251
1,529
390
1,258
1,178
116
242
140
202
280
687
0
671
352
479
361
135
141
123
1Q
2Q
3Q
FY08
1,339
119
249
319
888
1,531
1,202
1,115
127
153
225
284
296
231
493
402
151
159
146
343
110
4Q
1Q
2Q
3Q
FY09
2,415
103
200
Other
Regions
Asia
472
Europe
655
North America
101
Japan
4Q
1,893
550
516
12 Months
12 Months
FY08
FY09
* 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.
45
Power Product & Other Businesses
FY08
Net
Sales
Net Sales/Operating Income/Operating Margin
FY09
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
FY08
12 Months
115.2
105.0
100.2
122.3
106.8
103.0
79.5
79.4
442.7
（- 35.1%）
FY09
12 Months
368.9
Yen
(billions)
（- 16.7%）
Operating Margin
Operating Income
<Increase Factors>
• Decrease in SG&A expenses
Yen
(billions)
<Decrease Factors>
• Decrease in revenue
and model mix change, etc.
• Increase in R&D expenses
for Other Businesses
(expenses related to start-up
of new businesses) , etc.
25
20
20%
16%
22.3
15
10
5
6.9%
7.9
6.6%
12%
8%
4.2%
5.0%
2.3%
6.9
4%
0.2%
2.2
0
5.1
- 0.9%
0.2
-5
0%
- 3.5%
- 0.9
- 2.8
- 11.9
-4%
- 4.2%
-8%
-10
- 15.4
-12%
-15
- 15.0%
-16%
-20
1Q
2Q
3Q
FY08
4Q
1Q
2Q
3Q
FY09
4Q
12 Months
12 Months
FY08
FY09
46
Financial Services Business
FY08
Net
Sales
Net Sales/Operating Income/Operating Margin
FY09
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
FY08
12 Months
FY09
12 Months
129.8
137.8
139.6
141.7
149.5
162.6
146.0
138.3
549.0
596.5
（- 2.4%）
Operating Margin
Yen
(billions)
（+ 8.6%）
Operating Income
Yen
(billions)
<Increase Factors>
• Increase in finance receivables and property
on operating leases,
etc.
<Decrease Factors>
• Increase in provisions for residual loss, etc.
130
120
110
30%
26.4%
(- 42.3%)
(- 31.5%)
100
22.1%
21.3%
90
80
19.2%
16.4%
70
21.5%
20%
14.9%
60
13.5%
13.1%
50
117.7
40
30
34.2
20
31.3
29.3
22.9
28.7
24.3
9.4
1Q
2Q
3Q
FY08
4Q
1Q
10%
18.0
10
0
80.6
6.5%
2Q
3Q
FY09
4Q
12 Months
12 Months
FY08
FY09
0%
47
FY10 Financial Forecasts (Consolidated)
Yen （billions）
FY09
FY10
Results
Forecasts
Change
Amount
%
Net sales & other
operating revenue
10,011.2
8,370.0
- 1,641.2
- 16.4%
Operating income
189.6
10.0
- 179.6
- 94.7%
Income before
income taxes
161.7
10.0
- 151.7
- 93.8%
99.0
50.0
- 49.0
- 49.5%
40.0
- 97.0
- 70.8%
22.04
- 53.46
- 70.8%
Equity in income
of affiliates
Net income
137.0
EPS (Yen)
75.50
Note : Shares which are based
on calculation of EPS
Approx. 1,814,561,000 shares
(weighted average number
of shares outstanding )
※
Approx. 1,814,609,000 shares
(as of Mar. 31, 2009)
※Net income FY10 means attributable to
shareholders of Honda
Average Rates (Yen)
U.S. Dollar
101
95
Yen up by 6 yen
Euro
142
125
Yen up by 17 yen
48
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
Automobiles
- 1,519
Power Products
- 307
- 527
15,000
6,000
Approx 4,700
4,000
Approx 5,380
10,114
322
1,763
8,595
3,210
5,000
240
3,000
9,000
5,187
3,517
12,000
4,000
793
502
350
290
2,000
3,000
880
Asia
1,230
Europe
2,000
6,500
1,496
1,350
1,000
3,000
Other
Regions
1,306
6,000
7,523
440
970
775
1,465
4,660
North
America
1,893
1,690
516
420
FY09
Results
FY10
Forecasts
1,000
0
276
320
232
FY09
Results
205
235
190
FY10
Forecasts
556
0
FY09
Results
555
FY10
Forecasts
0
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.
49
Forecast: Change in Income before Income Taxes
Yen
(billions)
Income before income taxes - 151.7 bn. yen ( - 93.8 %)
Operating Income - 179.6 bn. yen ( - 94.7 %)
161.7
+ 48.2
- 334.8
Other Income
&
Expenses
+ 27.9 bn. yen
- 193.0
+ 339.0
Decrease in R&D
+ 20.0
+ 7.9
Others
Operating
income
Currency
Effect
189.6
FY09
Fair value of
derivative
instruments
10.0
Operating
income
10.0
FY10
Results
- 39.0
Revenue,
model mix,
etc.
Forecasts
Cost Reduction, etc. Decrease in SG&A
50
Forecast: Capital Expenditures, Depreciation, R&D Expenses
Yen
(billion)
Capital
expenditures *
Depreciation and
amortization *
R&D expenses
FY09
FY10
Results
Forecasts
599.1
390.0
- 209.1
408.2
380.0
- 28.2
563.1
515.0
- 48.1
Change
* “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.
U.S. Dollar
101
95
Yen up by 6 yen
Euro
142
125
Yen up by 17 yen
51
Dividend to Shareholders
(Yen)
FY09
FY10
Dividend per share
FY08
Results
Results &
Projection
Increase/Decrease
from
FY08 Results
1st quarter End
20
22
+2
8 *
- 14 *
2nd quarter End
22
22
±0
8 *
- 14 *
3rd quarter End
22
11
- 11
8 *
-3 *
4th quarter End
22
8*
- 14 *
8 *
±0 *
Fiscal Year
86
63 *
- 23 *
32 *
- 31 *
Projection
Increase/Decrease
from
FY09 Results
* Projection as of Apr. 28th
52
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.
53