Honda Corporate Update - 217 Spring CR-V (US Model)
Honda Corporate Update Honda Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Financial Highlights 2
Profit Structure Profile over Past Decade and FY18 Forecast 13 12 11 1 9 USD/JPY 15 for FY18 8 7 1,8 PP & Others Finance Motorcycle Automobile O/P Margin Yen (billion) 1,6 7.9% US GAAP IFRS 1,4 6.4% 6.6% 6.% 7% 1,2 1, 8 6 4 2-2 953 Lehman Crisis 4.2% Earthquake Thai flood 569 2.9% 544 1.9% 363 231 189 5.5% 5.% 823 461 28 84 3.4% 75 153 51 177 192 182 171 183 23 199 178 FY28 29 21 211 212 213 214 215 216 217 218(P) 212 67 Airbag Inflator Issue 53 5.% 5% 3% 1% -1% 3
Forecast: Consolidated Unit Sales Motorcycles 12,22 11,237 Automobiles 3,683 3,685 Power Products 6,121 6,165 Unit (Thousand) + 983 ( + 8.7 %) + 2 ( +.1 %) +44 ( +.7 %) Results FY18 Forecast Results FY18 Forecast Results FY18 Forecast Results FY18 Forecast Change Results FY18 Forecast Change Results FY18 Forecast Change Japan 156 17 + 14 63 615 + 12 31 265-36 294 315 + 21 1,97 1,92-5 2,977 3,1 + 33 North America Europe 217 22 + 3 184 175-9 1,35 1,3-5 Asia 9,513 1,465 + 952 684 73 + 46 1,43 1,46 + 3 Other Region 1,57 1,5-7 242 245 + 3 378 4 + 22 Total 11,237 12,22 + 983 3,683 3,685 + 2 6,121 6,165 + 44 4
FY18 Forecast: Change in Operating Profit Operating profit - 135.7 ( - 16.1 % ) Yen (billion) Excluding currency effects and impact of pension accounting treatment Operating profit + 43.3 ( + 6.5 % ) 84.7-95. Currency Effects - 84. Impact of pension accounting treatment 661.7 + 59.3 + 75. - 37. Cost Reduction, Revenue, etc. model mix, etc. Increase in SG&A - 54. Increase in R&D 75. - JPY / USD - USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies (INR, THB, VND, CNY, IND) -Others -38. -1.5-13. -42.5 Operating margin 6.% Operating margin 4.9% Operating margin 5.% Results FY18 Forecast 5
Alliance as an Open Innovation Strategic alliance to optimize Honda s strengths YAMAHA Collaboration in the Area of Small-sized Scooters in the Japanese Market Grab Collaboration in the area of motorcycle sharing services HITACHI Establish JV for the development, manufacture and sales of motors for electric vehicles Strength of Honda Strengths in technology and manufacturing in a broad area Customer/Market base with 28 million customers around the world Ability to create solutions GM Collaborate on Next- Generation Fuel Cell Technologies Waymo Technical Collaboration of Fully Self-driving Automobile Technology Japan Post Collaboration Toward the Establishment of Social Infrastructure SoftBank Joint Research Project for Artificial Intelligence 6
Honda Corporate Update Honda Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Financial Highlights 7
23 Vision Summary Serve people worldwide with the Joy of expanding their life s potential - Lead the advancement of mobility and enable people everywhere in the world to improve their daily lives- Growth through the pursuit of quality Creating the Joys Expanding the Joys Ensuring the Joys for the Next Generation Business viewpoint to focus on Creating value for mobility and daily lives Provide people the joy and freedom of mobility Accommodate the different characteristics of people and society Provide the ideal products and services that fulfill societies expectations and meet individual needs Toward a clean and safe/secure society Lead efforts to realize a carbon-free society Provide people the joy of making their lives better Lead efforts to realize a collision-free mobile society Effective utilization of corporate resources 8
Business Viewpoint to Focus on Strengthen business foundation for further growth What we have to focus on in order to transform and advance existing businesses and create new value Effective Utilization of Corporate Resources Advance the Six-region global operation structure (Increase efficiency of our operations from a global perspective) Collaboration for open innovation with third parties (Focus on what we have to do + Open innovation) Solidifying existing businesses 9
Honda Corporate Update Honda Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Financial Highlights 1
Automobile Business - Civic Honda FY211 Rating Review Core Strategies for Growth in Automobile Operations Advance the Six-region Global Operation Structure Develop Innovative Products Unique to Honda Strengthen global and regional models Flexible global production infrastructure Strong attention to product concept and further evolution of design and driving experience Electrification Technologies Improve quality of business for sustainable & profitable growth 11
Strengthen Global and Regional models Global models : core models developed for worldwide distribution Global Compact Series Civic CR-V Accord Acura Other China specific models Brio series in Asia Light Trucks in U.S. Mini and compact models in Japan 5. CY216 mil 16% 14% Global models 7% BR-V (Asia) Ridgeline Regional models : models developed and produced locally to meet specific needs of that region or market Avancier (China) 12
Global models : Civic, CR-V and Accord Civic global launch schedule Civic 2D Coupe Civic 4D Civic 5D Hatchback New Civic utilizes common platform for 4D, 2D and 5D hatchback. 5D hatchback is manufactured in the UK and is exported to North America and Japan. (Plan) CR-V and new Accord will utilize commonized platform and downsized turbo engine. CR-V 14% 5. mil CY216 Accord 11% Fit / City / Vezel 31% Civic 14% Civic, CR-V and Accord continue to be widely popular representing approx. 39% of CY216 global Honda unit sales. 13
Global models: Direction of Model Development 213 214 215 216 HR-V Fit City Global Compact Series Civic CR-V New Accord Further enhance electrification, autonomous driving and connectivity technologies. Spearhead industry effort to realize a carbon-free and collision-free mobile society. Global Operation Reform Concurrent development in all six regions Adoption of locally optimized design Adopt Lead-Country Introduction Strategy (Clarification of model development leadership in each region and increase model development efficiency.) Increase commonality of platform and parts (Civic, CR-V, Accord) Introduce advanced platforms to accommodate electrification of powertrains 14
Regional models Model Line-up in North America All Honda Light Trucks to undergo full-model change in short period Ridgeline Pilot (June 215) Ridgeline (June 216) Odyssey (Spring 217) 215 216 ~ Global models HR-V (May 215) Civic Sedan (November 215) Civic Coupe (March 216) Civic Hatchback (September 216) CR-V (December 216) New Accord 15
Production Allocation in North America Production in North America 11 Production Allocation Production Plant Ohio East Liberty Plant (ELP) Alabama RDX CR-V MDX Pilot 216 Odyssey Ridgeline Shift 217 MDX As of the end of 217 Indiana Civic CR-V Japan Ohio(East Liberty) RDX CR-V MDX Indiana Civic New CR-V Civic Mexico El Salto CR-V Shift HR-V Alabama Japan Plan to import Civic Pilot Ridgeline Odyssey 16
Regional Models in China Segment D Guangqi Dongfeng SDN(4D/5D) SUV MPV Accord (213 FMC) Spirior (Dec 214) Avancier (Oct 216) UR-V (Mar 217) Odyssey (Aug 214) Elysion (Jan 216) Guangqi Crider (213) C Dongfeng New Civic (April 216) New CR-V (217) Jade (213) B Guangqi Fit (May 214) City (Aug 215) Vezel 1.8L Vezel 1.5L (Oct 214) (Mar 215) Dongfeng Gienia (Oct 216) Greiz (Nov 215) XR-V 1.8L (Dec 214) XR-V 1.5L (Jul 215) By utilizing common platforms and strengthening local procurement and R&D functions, successive launch of cost competitive models being realized 17
Regional Models in Asia Global Compact Series 25 2 Thailand Volume Honda Share 2% 15% City Fit / Jazz Brio Series HR-V 15 1 5 *First car incentive 1% 5% 211 Brio Amaze Mobilio 212 213 214 215 216 BR-V 12 1 8 CY12 13 14 15 16 Volume Honda share Malaysia % 2% 15% Unit (thousand) 3 25 2 India Volume Honda Share WR-V India (Mar 17) 15% 1% 6 4 2 2 15 CY12 13 14 15 16 Volume Honda Share Indonesia 1% 5% % 2% 15% 15 1 5% 1 1% 5 CY12 13 14 15 16 % 5 CY12 13 14 15 16 5% % 18
Automobile Business - Civic Honda FY211 Rating Review Global Production Capacity Other China 5,189 15 84+5 (Export only) +361 5,55 151 1,8+5 (Export only) -15 5,4 151 1,8+5 (Export only) Unit (thousand) Asia Europe North America 96 FY216 1,8 FY217 93 2 China +24 2 Thailand -15 2 Guangqi +12 Dongfeng +12 1,923 1,923 1,923 Thailand +12 Nigeria +1 Japan 1,66 1,66 1,66 as of Mar '15 Mar '16 Since Apr '17 19
Flexible global production infrastructure Utilization Image Europe 2, Primarily Civic 5D and CR-V production Middle East and Africa 1, Jazz CR-V, HR-V (plan) Accord & L/T models Japan 1.6 mil <Export> Global Models & Hybrid models Civic 5D from UK 1-2% for Other regions 8-9% for Local markets Fit Hybrid models Clarity Series (plan) Civic (option) City Acura North America 1.92 mil <Export> Acura & L/T models Fit & CR-V CR-V (Units) Asia South America 93, China 15, <Export> Strengthen mutual parts/model sharing within Asia Export to Africa 1.13 mil <Export> Leverage local cost benefit for next markets (Africa) Total Capacity approx. 5.4 mil units (Since April 217) Capacity increase to 5.7 mil Establish stable production structure leveraging regional capacity + mutual parts/model sharing 2
Capacity Utilization by Region North America Japan 11% FY14 94% FY15 1% FY16 11% 88% 81% 71% 76% FY14 FY15 FY16 China (Excluding export factory) Asia 96% 96% 111% 118% 77% 7% 73% 69% FY14 FY15 FY16 FY14 FY15 FY16 Europe South America 5% 61% FY14 FY15 64% FY16 84% 95% 95% FY14 FY15 14% FY16 88% 21
Roadmap for Environmental Technologies Honda s Environmental and Safety Vision Enable people to experience the joy and freedom of mobility and contribute to the creation of a sustainable society where people can enjoy more harmonious lifestyles (22) (28) (216) (22) (CO2(g/km) FCX FCX CLARITY CLARITY FUEL CELL New BEV Clarity BEV (217) Clarity PHEV ACCORD PHEV (217) (213) New FCV Looking towards zero emissions with the development of ZEV and PHEV ZERO emissions technology Technologies to increase electrical efficiency Two-motor Hybrid system Three-motor Hybrid system Global expansion One-motor Hybrid system DI engine CVT / DCT Turbo engine Global expansion Technologies to increase thermal efficiency 2 21 22 23 22
Roadmap for Environmental Technologies The Clarity series will contribute to an anticipated five-fold increase in Honda's U.S. sales of electrified vehicles over the next four years. New FHEV in US & Europe New FCV Two-thirds of global sales will come from electrified vehicles by 23 NSX (Sports Hybrid) ACCORD PHEV ACORD HEV Fit HR-V Freed Grace(City) etc. CLARITY FUEL CELL Clarity BEV Clarity PHEV CR-V HEV MDX (Sports Hybrid) New BEV in China CDX HEV GM Collaborate on Next-Generation Fuel Cell Technologies HITACHI Establish JV for the development, manufacture and sales of motors for electric vehicles Optimizing the merit of alliance, expands to the mass-volume models to increase sales volume and cope with ZEV/NEV requirement in the US and China. ZEV in the US will be enhanced in 218 NEV in China starts in 218 215 216 217 218 22 225 23 US : Two-motor hybrid system to be applied to light truck lineup. More than half of all new models launching in next two years will be electrified vehicles. Europe : Hybrid, plug-in hybrid, battery electric and fuel cell cars to make up two thirds of Honda s European sales by 225. 23
Roadmap for Environmental Technologies 3-in-1 Clarity series provides unparalleled electric drive choice with premium midsize sedan capability and three advanced electrified powertrain options The Clarity Fuel Cell, only five passenger sedan in the industry, launched in Japan in March 216 and in US in December 216 respectively. Clarity Plug-in Hybrid will be launched in the US in 217 which will be anticipated to earn 42-mile EV driving range rating and 33-mile extended range rating Three advanced electrified powertrains in a single vehicle platform to address cost and manufacturability and provide customers with more choices 24
Roadmap for Safety Technologies Toward Zero Collisions Aiming for practical application of autonomous driving on highways around 22 25
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United States Automobile Operations Unit (thousands) 2, 15, 1, Passenger Cars Light Trucks Industry Demand 12,777 11,588 1,43 17,479 17,55 16,522 15,6 14,491 Unit (thousands) 2, 1,5 1, Acura 1,151 1,259 Honda Unit Sales Honda Passenger Cars Honda Light Trucks 1,147 1,423 1,525 1,541 1,587 1,638 5, 5 CY9 1 11 12 13 14 15 16 Source: Autodata Honda Topics Improve cost competitiveness of core models - Increase commonality of platforms and parts - Leverage global suppliers Increase production capacity of Light Trucks - Shift all production of MDX from Alabama to Ohio by fall, 217 CY9 1 11 12 13 14 15 16 Odyssey (Spring 217) New Model Launches/ FMC Civic Si, Type R (Summer 217) Source: Honda Introduce more electrified vehicles - Clarity Electric and Clarity Plug-in Hybrid will be launched in 217 Clarity Electric (Within 217) Clarity Plug-in Hybrid (Within 217) Accord (TBA) 27
Japan Automobile Operations Unit (thousands) 6, 4, 4,88 Registered vehicles Mini vehicles 4,61 Industry Demand 4,753 5,211 5,692 5,297 4,937 5,78 1, Unit (thousands) 8 662 6 Honda Unit Sales Registered vehicles 848 Mini vehicles 788 717 68 61 74 711 4 2, 2 FY1 11 12 13 14 15 16 17 Source: MUMSS FY1 11 12 13 14 15 16 17 Source: Honda Honda Topics Enhancement of product line-up - Introduce Civic series ( Civic sedan / Civic Hatchback / Civic Type R ) Strong sales momentum of key models - Vezel marked No.1 share in SUV segment in 216 - N-Box marked No.1 share in mini-vehicle segment in 216 Improve capacity utilization through exporting global models Civic Sedan (Summer 217) New Model Launches/ FMC Civic Type R (Summer 217) Civic Hatchback (Summer 217) Pictures of Civic series above are US or EU models for your reference. 28
Europe Automobile Operations 2, Unit (thousands) Industry Demand (excluding commercial vehicles) 4 Unit (thousands) Honda Unit Sales (EU+EFTA ) 15, 14,58 13,743 13,542 12,452 12,24 14,95 12,913 15,132 3 256 1, 2 187 15 141 14 133 132 159 5, 1 CY9 1 11 12 13 14 15 16 Source: ACEA / Honda CY9 1 11 12 13 14 15 16 Source: ACEA / Honda Honda Topics New models - New Civic Hatchback was launched in March 217 - Civic Sedan will be introduced in 217 - New Civic Type R will be introduced in late 217 New Model Launches/ FMC Being a global supply base of Civic Series - U.K factory to concentrate on producing Civic series and exporting to other countries like US. (Plan to export approximately 6K units per year) Civic Hatchback (Mar 217) Civic Sedan (Within 217) Civic Type R (Late 217) 29
China Automobile Operations 3, Unit (thousands) 25, 2, 15, 1, 1,331 Industry Demand (excluding commercial vehicles) Minivan SUV MPV Sedan 15,495 14,473 13,757 21,146 19,71 17,929 24,378 1,5Unit (thousands) Acura Honda Unit Sales 28-214 Wholesale 215-216 Retail SUV 1,2 MPV 1,1 Sedan 9 793 757 652 622 58 599 6 1,256 5, 3 CY9 1 11 12 13 14 15 16 Source: Honda CY9 1 11 12 13 14 15 16 Source: Honda Honda Topics Strengthen Acura Brand - China specific TLX-L to begin production in China in 217 - New RDX will be launched and produced in China in 218 New Model Launches/ FMC Further expand sister model strategy and introduce new powertrains - Avancier sister model, UR-V, launched at Dongfeng in Mar. 217 - Spirior Hybrid launched in Feb. 217 - Avancier 1.5 Turbo launched in Mar. 217 Spirior Hybrid (Feb 217) UR-V (Mar 217) Acura CDX Hybrid (In 218) Acura TLX-L (Within 217) Acura RDX (In 218) CR-V (Announced in Apr 217) 3
Asia (ASEAN) Automobile Operations 4, Unit (thousands) 3, Industry Demand (Four main markets in ASEAN region) Malaysia Thailand Indonesia Philippines 2,244 2,393 3,1 3,35 2,952 2,72 2,676 5 Unit (thousands) 4 3 Honda Unit Sales Retail Sales Malaysia Thailand 393 Indonesia 367 349 Philippines 282 412 2, 1,642 2 189 234 177 1, 1 CY9 1 11 12 13 14 15 16 Source: Honda CY9 1 11 12 13 14 15 16 Source: Honda Honda Topics New Model Launches/ FMC Favorable sales of new models launched to meet specific market needs in each Asian market - Big minor model change of City - New Civic is rolled out in Asia City (BMC) Jan 217 Thailand Mar 217 Indonesia (Announced) CR-V Mar 217 Thailand Jun 217 Indonesia Civic Hatchback Mar 217 Thailand TBA Indonesia 31
India Automobile Operations 4, Unit (thousands) 3, A C E Industry Demand (excluding commercial vehicles, SUV B D 2,249 MPV and pickups) 2,596 2,43 2,443 2,525 2,744 2,82 25 Unit (thousands) 2 15 A C E SUV Honda Unit Sales Retail Sales B 195 D 175 MPV 165 2, 1,748 17 1, 1 5 63 63 49 73 CY9 1 11 12 13 14 15 16 Source: Honda CY9 1 11 12 13 14 15 16 Source: Honda Launch of new models Honda Topics - All-new WR-V launched in March 217. WR-V has less than 4m length, which has tax advantage for the customers. - Big minor model change of City in Feb. 217. Expansion of dealer network New Model Launches/ FMC City (BMC) (Feb 217) WR-V (Mar 217) 32
Brazil Automobile Operations Unit (thousands) Industry Demand (excluding trucks) Registration 2 Unit (thousands) Honda Unit Sales Retail Sales 4, 3, 3,8 3,329 3,426 3,634 3,58 3,333 2,481 15 126 126 135 139 138 153 123 2, 1,989 1 93 1, 5 CY9 1 11 12 13 14 15 16 Source: ANFAVEA CY9 1 11 12 13 14 15 16 Source: Honda Honda Topics Launch of new models - New Civic launched in August 216 - All-new WR-V launched in March 217 Improve FX Toughness - Increase local procurement and localization of development New Model Launches/ FMC WR-V (Mar 217) 33
Honda Corporate Update Honda Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Financial Highlights 34
Overview of Motorcycle Business Yen (billion) 3. 25. 2. 15. 1. Operating Profit and Margin 9.7% 7.1% 5.2% 1.8% 1.6% 8.2% 1.5% 1.4% 1.1% 9.9% 5.. 151 1 59 139 143 11 177 192 182 171 FY8 9 1 11 12 13 14 15 16 17 *Operating profit and margin until FY13 are based on US GAAP while FY14 and after are based on IFRS Honda M/C Business = High Profitability + Stability + Growth Potential Unit (thousand) 16, Honda Global Unit Sales 12, 8, 4, 28 29 21 211 212 213 214 215 216 *excluding sales by Hero Honda 35
Overview of Motorcycle Business Mega Models Annual sales of each of these Mega Models has grown to approximately 3 million units. By leveraging the scale merit of this sales volume we will further enhance the efficiency of our parts procurement activities. Cub 11/125cc 2.3 mil 17.66 mil FY216 1.9 mil Light Motorcycle 11/125cc ACTIVA 11cc 2.4 mil Scooter 11cc 3.6mil 36
Motorcycle Market Size and Honda Share (CY216) Motorcycle production at 34 plants in 21 countries Thailand 1.7 mil Vietnam 3.1 mil Europe.9 mil Italy 16% China Pakistan Bangladesh India 79% Vietnam Japan.4 mil 69% 47 % 21% U.S.A (MS+ATV).7 mil Mexico U.S.A (ATV, S S) Nigeria Kenya Thailand Malaysia Philippines Peru India 17.7 mil 27% Indonesia Indonesia 5.9 mil 74% Brazil Argentine 71% Brazil 1. mil *Market share excluding 5cc Annual Production Capacity in India 5.8mil in 216 6.4mil in 217 37
Growth in Motorcycle Popularity GDP per capita (USD) 1.7mil Thailand (CY216) 4, 3, 2, 1, Nigeria.4mil Kenya.1mil Myanmar Bangladesh.8 mil.2mil Philippines 1mil 1.4mil Pakistan India 17.7 mil Indonesia 5.9mil 3.1mil Vietnam Next Markets Growing Markets Mature Markets Motorcycle Market Penetration in Asia India 8% (millions) 1,292 Source: Honda & IMF Indonesia 25% 255 Significant growth expected Vietnam Thailand 33% 91 4% 68 Number of motorcycles units in operation Population 38
Motorcycle Market Share Trend in India 5% 45% 4% 35% Hero Honda India Company A (Wholesale) Fast Growing Segment Scooter / Motorcycle Sales Ratio (Industry) In CY211 SC 18% In CY216 MC MC 68% 82% SC 32% 3% 25% 2% 15% Company B Honda Company C 7, 6, 5, Scooter Unit Sales of Honda / Competitors and Honda Share in Scooter Market Competitors (Unit) Honda (Unit) Honda Share(%) 7% 6% 5% 1% 4, 4% 5% Company D 3, 3% % 21 211 212 213 214 215 216 2, 2% Honda has gained the No.2 market share position 1, 21 211 212 213 214 215 216 1% % 39
India Motorcycle Operations Capacity Expansion 4th 1 st 2 nd Gujarat Manesar Rajasthan Expanded annual production capacity to 6.4 mil. 4.6mil 4.6mil 4.mil 5.8mil 1.2 1.2 1.8 1.8 1.8 6.4mil 1.2 2.4 4th 3 rd 3 rd Karnataka 1.2 1.2 1.2 1.2 1.2 1.6 1.6 1.6 1.6 1.6 2 nd 1 st Product Line-up CY13 CY14 CY15 CY16 CY17(P) 11cc AT-Scooter Activa 11cc AT-Scooter Dio 125cc Motorcycle CB Shine 11cc Motorcycle Dream Yuga 4
Motorcycle Business Operations in Next Markets Unit (thousands) 2, 1,5 47% 48% 48% Pakistan 51% 52% 7% 6% 5% Unit (thousands) 2, 1,5 Others Honda Share Myanmar 7% 6% 5% 1, 4% 3% 1, 4% 3% 5 FY13 14 15 16 17 2% 1% % CD7 Others Honda Share 5 9% 12% % 1% 1% FY13 14 15 16 17 2% 1% % Unit (thousands) 1, 75 5 25 Bangladesh Others Honda Share 4% 5% 6% % % FY13 14 15 16 17 7% 6% 5% 4% 3% 2% 1% % Honda Business Strategy < Pakistan > Local production capacity was increased up to 1.35 million units in 216. Increase dealer network and number of service shops Expand model line-up by strengthening the competitiveness of core 7cc models as well as introducing larger sized 125cc to 15cc models < Myanmar > Expand Model Line-up Expand dealership network < Bangladesh> Expand dealership network Cost reductions through increase in local procurement 41
Honda Corporate Update Honda Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Financial Highlights 42
4th Quarter Unit Sales Honda Group Unit Sales (thousand) 4Q Results (3 Months) FY16 Change Motorcycles 4,173 4,248 + 1.8% Automobiles 1,229 1,285 + 4.6% Power Products 1,955 2,218 + 13.5% Consolidated Unit Sales (thousand) 4Q Results (3 Months) FY16 Change Motorcycles 2,633 2,689 + 2.1% 5, 4, 3, 2, 1, 5, 4, 3, Honda Group Unit Sales 1,4 4,173 4,248 1,229 1,285 1,2 2,218 1,955 1, 8 6 4 2 Consolidated Unit Sales 1,4 1,2 FY16 3, 2, 1, 1, 98 96 2, 2,633 2,689 1,955 8 3, Unit (thousand) Motorcycles Automobiles Power Products Unit (thousand) 2,218 Automobiles 98 96-2.% Power Products 1,955 2,218 + 13.5% 2, 1, 6 4 2 1, Motorcycles Automobiles Power Products Honda Group Unit Sales - Increase in motorcycle unit sales due mainly to sales growth in Pakistan and Vietnam, despite a decline in sales in Indonesia - Increase in automobile unit sales due primarily to positive effect of new model introductions in China and Malaysia 43
4th Quarter Financial Results (Consolidated) 4Q Results (3 Months) Financial Results Yen (billion) FY16 Change Sales revenue 3,657.8 3,763.4 + 2.9% Operating profit - 63.8 138.1 - Operating margin -1.7% 3.7% + 5.4pt Share of profit of investments accounted for using the equity method 8.3 48.5 + 479.% Profit before income taxes - 58.7 186.9 - Profit for the period attributable to owners of the parent - 93.4 95.9 - Earnings per share (Yen) attributable to owners of the parent - 51.85 53.24 + 15.9 Market average rates (Yen) US Dollar 115 114 3 2 1-1 Operating Profit 266.8 239.2 228. 27.6 164.8 163. FY16-63.8 1Q 2Q 3Q 4Q 138.1 Yen up by 1yen Yen (billion) 1% 8% 6% 4% 2% % -2% Financial Summary Sales revenue increased 2.9% primarily due to an increase in revenues in financial services business operations and automobile business operations. Operating profit increased by JPY 21.9 billion due primarily to cost reduction efforts and a decrease in SG&A expenses, including quality related costs, despite an increase in R&D expenses and negative foreign currency effects. Operating Margin 7.7% 6.5% 7.% 5.9% 4.6% 4.5% FY16 3.7% 1Q 2Q 3Q 4Q -1.7% 44
Motorcycle - Honda Group Unit Sales (Motorcycles + All-Terrain Vehicles, etc.) 5, Vision (Vietnam) <North America> Decreased sales of ATVs and motorcycles <Asia> Increased sales in Pakistan, Vietnam and Thailand Decreased sales in Indonesia Unit (thousand) + 75 ( + 1.8 % ) 4,5 4, 3,5 3, 4,15 4,37 4,47 4,173 4,352 4,538 4,523 4,248 2,5 2, 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16 Japan 47 5 41 42 29 33 49 45 North America 75 75 69 89 78 71 68 77 Europe 66 48 33 57 72 48 31 66 Asia 3,571 3,851 3,968 3,743 3,885 4,125 4,115 3,812 Other Regions 346 346 296 242 288 261 26 248 Total 4,15 4,37 4,47 4,173 4,352 4,538 4,523 4,248 45
Automobiles - Honda Group Unit Sales 1,4 Civic (China) <North America> Decreased sales mainly in the sedan segment Positive impact of Civic Hatchback introduction <Asia> China: positive impact of introductions of new models Increased sales in Malaysia and Pakistan Unit (thousand) +56 ( + 4.6 % ) 1,2 1, 1,147 1,139 1,228 1,229 1,213 1,218 1,312 1,285 8 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16 Japan 147 168 151 22 146 156 17 196 North America 497 473 466 493 51 479 51 471 Europe 32 42 43 55 45 45 43 51 Asia 45 395 53 42 453 482 527 52 Other Regions 66 61 65 59 59 56 62 65 Total 1,147 1,139 1,228 1,229 1,213 1,218 1,312 1,285 46
Change in Profit before Income Taxes < 4th Qtr> Profit before Income Taxes + 245.6 Yen (billion) Operating Profit + 21.9-58.7 Operating Profit - 63.8 FY16 4Q <Increase Factors> - Cost reduction efforts, etc. - 17.2 + 45.4 Revenue, Cost Reduction, model mix, etc. etc. + 223.9 Decrease in SG&A - 28. Increase in R&D - 22.2 Currency Effects Impact of pension accounting treatment -JPY/ USD -17. - USD / Others + 3. (BRL, CAD, MXN) - JPY / Asian Currencies -4.5 (INR, THB, VND, CNY, IND) -Others -3.7 <Increase Factors> - Decreased product warranty expenses, etc. + 4.1 + 3.5 Share of profit of investments accounted for using the equity method Finance income and finance costs - Currency Effects - Interest rate swap/currency swap - Others 186.9 Operating Profit 138.1 4Q + 6. - 9. + 6.6 47
Cash Flows of Non-financial Services Businesses FY16 Twelve Months 1,378.5 Net Cash 785.9 Cash & Cash equivalents at beginning of FY16 + 721.4 Net Change + 288.3 + 1,43.5-79. Cash flows from operating activities Free cash flow Profit before income taxes + 419.3 Share of profit of investment accounted for using the equity method - 126. Depreciation* + 657.8 Other + 479.3 Cash flows from investing activities - 36.8 Cash flows from financing activities Capital expenditures - 634.4 Intangible assets - 232.3 Other +157.7-126.2 Effect of exchange rate changes Dividends paid - 158.6 Others - 148.2 Yen (billion) 1,666.8 Net Cash 1,171.5 Cash & Cash equivalents at end of period Twelve Months Free cash flow + 567.9 + 1,79.3-511.4 Net Change + 335.6 1,666.8 Net Cash 1,171.5 Cash & Cash equivalents at beginning of Cash flows from operating activities Profit before income taxes + 828.9 Share of profit of investment accounted for using the equity method - 164.7 Depreciation* + 671.4 Other - 256.2 Cash flows from investing activities - 231.2-1.1 Cash flows from financing activities Capital expenditures - 493.7 Intangible assets - 139.9 Other +122.2 * Depreciation, amortization and impairment losses excluding equipment on operating leases Effect of exchange rate changes Dividends paid - 162.2 Others - 69. 2,2.5 Net Cash 1,524.8 Cash & Cash equivalents at end of period 48
Motorcycle Business Sales Revenue /Operating Profit (Margin) Unit (thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) FY16 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4,15 (2,545) 4,37 (2,74) 4,47 (2,654) 4,173 (2,633) 4,352 (2,831) 4,538 (3,42) 4,523 (2,675) 4,248 (2,689) Sales Revenue 472.7 453.2 442.1 437.2 432.4 49.3 42.6 453.7 Yen (billion) Operating Profit ( + 3.8 % ) + 16.5 (Currency effect +.3) 14 12 1 8 6 Operating Margin 11.8% 1.8% 11.2% 6.3% <Increase Factors> Cost reduction efforts, etc. <Decrease Factors> Negative foreign currency effects, etc. 7.2% 14.5% (excl. pension impact: 12.9% ) 1.% 8.4% (+ 38.1 % ) 2% 15% 1% 5% % -5% 4 2 55.5 49. 49.5 27.6 31.1 59.5 41.8 38.1-1% -15% -2% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16 49
Automobile Business Sales Revenue/Operating Profit (Margin) Unit (thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) FY16 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1,147 (888) 1,139 (889) 1,228 (879) 1,229 (98) 1,213 (98) 1,218 (89) 1,312 (925) 1,285 Sales Revenue 2,76. 2,655.5 2,684.5 2,721.5 2,536.1 2,377.4 2,596.4 2,746.7 (96) Operating Profit Operating 35 Margin Yen (billion) 25 15 <Increase Factors> Decrease in SG&A expenses, including quality related expenses Cost reduction efforts, etc. <Decrease Factors> negative impact from sales volume and model mix Increase in in R&D expenses, etc. 4.8% ( +.9 % ) + 25.2 (Currency effect - 34.9) 7.3% 5.5% (excl. pension impact: 2.4%) 5.% 15% 12% 9% 6% 5-5 13.7 2.6% 2.6% 67.7 69.5-114.7 184.5 131.8 129.8 2.% 54.9 3% % -3% -15-4.2% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16-6% 5
Unit (thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) FY16 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1,558 (1,558) Power Product & Other Businesses Sales Revenue/Operating Profit (Margin) 1,275 (1,275) 1,177 (1,177) 1,955 (1,955) 1,488 (1,488) 1,24 (1,24) 1,175 (1,175) 2,218 (2,218) Sales Revenue 88.1 88.2 82. 93.6 8.9 73.5 8.3 114.8 Yen (billion) 3 2 1 Operating Profit Operating Margin ( + 22.6 % ) + 21.1 (Currency effect - 2.2) <Improve Factors> Decrease in expenses in other businesses operations, etc. 25% 2% 15% 1% -1-2.5.6% -3.8-4.4% -7.4-9.1% -2.2.5.7% -1. -6.3-1.4% -7.9% (excl. pension impact: - 4.4%) -2.7-2.4% 5% % -5% -1% -15% -2% -3 (For reference) Operating profit from aircraft and aircraft engines -21.6% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16-12.1-12.4-17.1-29.3-8.8-1.6-12.3-12. -25% 51
Financial Services Business Total Assets/Sales Revenue/Operating Profit (Margin) Yen (billion) FY16 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Total Assets of Finance Subsidiaries 9,56.2 9,377.7 9,431.9 9,71.8 8,538.3 8,44.3 9,643.3 9,437. Sales Revenue 476.8 465.1 447.8 459.8 467.9 446.3 455.7 521.1 Yen 12 (billion) 1 8 6 Operating Profit Operating Margin 11.% 11.1% 11.5% 9.5% 1.8% <Increase Factors> Increase in operating lease revenues, etc. <Decrease Factors> Increase in SG&A expenses, etc. (+13.3%) + 61.3 (Currency effect - 5.9) 8.5% 9.3% 9.2% ( + 9.6 % ) 2% 15% 1% 5% % 4 2 52.4 51.8 51.4 43.5 5.5 37.7 42.3 47.7-5% -1% -15% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16 52
Sales Revenue/Operating Profit by Geographical Segment < 4th Qtr> Yen (billion) Japan North America Europe Asia Other Regions 4Q 4Q 4Q 4Q 4Q FY16 FY16 FY16 FY16 FY16 Sales Revenue 997.2 1,76.9 2,12.6 2,134. 229.7 257.3 841.1 946.3 163.4 199.8 15 Operating Profit: Yen (billion) 1 15.5 5-5 -41.8 26.4 + 298.9 % 21.8 15.4 65.7 67.7-29.6 % + 3.1 % -19.7 2. -1-18.4-15 -2 4Q 4Q 4Q 4Q 4Q FY16 FY16 FY16 FY16 FY16 53
Share of Profit of Investments Accounted for Using the Equity Method Yen (billion) + 4.1 ( + 479. % ) 5 4 3 2 1 38.3 34.1 45. 27.2 39.8 49.1 48.5 8.3 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY16 From Asia 32.5 28.9 39.4 24.3 39.3 36.2 4.8 43.8 Yen (billion) 54
FY18 Financial Forecast (Consolidated) Results FY18 Forecast Change amount % Yen (billion) Sales revenue 13,999.2 14,2. + 2.8 + 1.4% Operating profit 84.7 75. - 135.7-16.1% Operating margin 6.% 5.% -1. pt Share of profit of investments accounted for using the equity method 164.7 175. + 1.2 + 6.2% Profit before income taxes 1,6.9 875. - 131.9-13.1% Profit for the year attributable to owners of the parent 616.5 53. - 86.5-14.% Earnings per share (Yen) attributable to owners of the parent 342.1 294.7-48.3 Market average rates (Yen) US Dollar 18 15 Yen up by 3 yen 55
FY18 Guidance: Units Sales by Business Segment [IFRS] "Honda Group Unit Sales" Global Honda group unit sales including affiliates, such as China Auto and Motorcycle in Indonesia (thousand) Motorcycles Automobiles Power Products Results FY18 Forecast Change Results FY18 Forecast Change Results FY18 Forecast Change Japan 156 17 + 14 668 68 + 12 31 265-36 North America 294 315 + 21 1,97 1,92-5 2,977 3,1 + 33 Europe 217 22 + 3 184 175-9 1,35 1,3-5 Asia 15,937 17,15 + 1,78 1,964 2,6 + 96 1,43 1,46 + 3 Other Region 1,57 1,5-7 242 245 + 3 378 4 + 22 Total 17,661 18,77 + 1,19 5,28 5,8 + 52 6,121 6,165 + 44 Consolidated Unit Sales" Consolidated unit sales do not include sales units in affiliates (thousand) Motorcycles Automobiles Power Products Results FY18 Forecast Change Results FY18 Forecast Change Results FY18 Forecast Change Japan 156 17 + 14 63 615 + 12 31 265-36 North America 294 315 + 21 1,97 1,92-5 2,977 3,1 + 33 Europe 217 22 + 3 184 175-9 1,35 1,3-5 Asia 9,513 1,465 + 952 684 73 + 46 1,43 1,46 + 3 Other Region 1,57 1,5-7 242 245 + 3 378 4 + 22 Total 11,237 12,22 + 983 3,683 3,685 + 2 6,121 6,165 + 44 56
FY18 Forecast: Change in Profit before Income Taxes Profit before Income Taxes - 131.9 (-13.1 % ) Yen (billion) Operating Profit - 135.7 ( - 16.1 % ) 1,6.9 + 59.3 + 75. - 37. Increase in Cost Reduction, SG&A Revenue, etc. model mix, etc. - 54. Increase in R&D - 95. Currency Effects - 84. Impact of pension accounting treatment + 1.2-6.4 Share of profit of investments accounted for using the equity method Finance income and finance costs 875. Operating Profit 84.7 - JPY / USD - USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies (INR, THB, VND, CNY, IND) -Others -38. -1.5-13. -42.5 Operating Profit 75. Results FY18 Forecast 57
FY18 Forecast: Capital Expenditures, Depreciation and R&D Yen (billion) Results FY18 Forecast Change Capital expenditures * 541. 53. -11. Depreciation and amortization * 437.6 45. + 12.3 Research and development expenditures ** 685.3 75. + 64.6 * Capital expenditures as well as Depreciation and amortization in results and forecast aforementioned exclude investment in operating leases, finance leases and intangible assets ** Research and development expenditures are research and development activity related costs incurred during the reporting period. In accordance with IFRS, a portion of research and development expenditures is recognized as an intangible asset and amortized over its estimated useful life. As such, this amount is not in conformity with "Research and development" on our Consolidated Statement of Income. Research and development expenditures aforementioned exclude decrease of 25.4 billion yen due to the impact of pension accounting treatment in 2nd quarter. 8 Capital Expenditures 8% 8 Depreciation 8% 8 R&D Expenditures 8% 6 6% 6 6% 6 6% 4 4% 4 4% 4 4% 2 2% 2 2% 2 US GAAP IFRS US GAAP IFRS US GAAP IFRS % % FY11 12 13 14 15 16 17 18P FY11 12 13 14 15 16 17 FY11 12 13 14 15 16 17 18P Actual Amounts % against Sales 2% % 58
Dividend Yen Dividend per Share FY16 ( Projection) Increase/ Decrease from FY16 FY18 (Expectation) Increase/ Decrease from 1 st Quarter End 22 22 - ( 24 ) ( + 2 ) 2 nd Quarter End 22 22 - ( 24 ) ( + 2 ) 3 rd Quarter End 22 24 + 2 ( 24 ) ( - ) 4 th Quarter End 22 ( 24 ) ( + 2 ) ( 24 ) ( - ) Fiscal Year 88 ( 92 ) ( + 4 ) ( 96 ) ( + 4 ) 59
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 fluctuation of foreign exchange rates, as well as other factors detailed from time to time. Accounting standards: Our consolidated financial standards are prepared in conformity with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) Notice on the Factors for Increases and Decreases in Income: With respect to the discussion above of the change in Operating profit, 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) 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 foreigncurrency-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, etc, 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 Revenue, model mix, etc, 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 sales revenue 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. (5) With respect to Research and Development expenses, management has analyzed reasons for an increase/decrease in research and development expenses from the previous fiscal year net of currency translation effects. 6
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