Honda Corporate Update 214 Autumn ACURA TLX (US) 1
Honda Corporate Update Honda FY211 Rating Review Honda Business Status Business Strategy Automobile Operations Motorcycle Operations Financial Highlights 2
Profit Structure Profile over Past Decade and Profit structure and Strong Recovery in FY13 USD/JPY 1,2 (Billion) 12% O/P margin 1, 8 6 8.8% 7.7% 7.9% Automobile Lehman Shock 4.2% 6.5% Japan Earthquake Thai Flood 5.5% 6.3% 6.% 1% 8% 6% 4 1.9% 2.9% 4% 2-2 Motorcycle Finance FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 (P) FY12 2% % -2% 3
Current Fiscal Year Projection Sales growth and cost reduction will contribute to a rise in operating income Yen (billions) Top-line growth and cost reduction +116.7 Rev/Mix +73.7 C/R +43. SG&A Expenses - 84. R&D Expenses - 12. FOREX Effects -1. Operating income 75.2 Consolidated Unit Sales Growth Auto 3.56 3.76 mil (+5.6%) M/C 1.34 1.85 mil (+4.9%) Operating income, excluding forex effects Operating income 77. FY3/14 FY3/15(P) (as of Oct. 28) FY14 (P) Change Capital Expenditures 726.1 67. - 56.1 Depreciation and Amortization 375.8 415. + 39.2 R&D expenses 634.1 645. + 1.9 4
Current Fiscal Year Projection (Jul-29 vs. Oct-28) Honda Group Unit Sales Unit (thousands) (Motorcycles) (Automobiles) 18,8 17,95 4,83 4,62 Operating Income +56. -52. ± Yen (billions) - 13 ( -.7 %) - 21 ( - 4.3 %) 77. -7. +3. 77. ROS 6.% FOREX Vol/Mix CD SGA ROS 6.% Previous (Jul-29) Revised (Oct-28) Difference Previous (Jul-29) Revised (Oct-28) Difference Japan 23 22-1 99 89-1 North America 31 3-1 1,81 1,81 Europe 175 18 + 5 17 17 Asia 15,68 15,64-4 1,59 1,49-1 Other Region 1,685 1,61-75 27 26-1 Total 18,8 17,95-13 4,83 4,62-21 Motorcycle : Reductions in Other Region (mainly Brazil), and Asia. Automobile : Reductions in Japan and China. Previous (Jul-29) Main Reasons for revision of forecast FOREX +56. Vol/Mix -52. Revised (Oct-28) 4W : On the operating income line, a delay in New/FMC model introductions, the impact of a higher consumption tax and increased competition in the mini vehicle segment led to a decrease of 1, units in Japan 2W : Prolonged distressed financial environment in Brazil as well as changes in other countries,led to a decrease in the sales plan in Other Region by 75, units. 5
Current Fiscal Year Projection (Apr-25 vs. Oct-28) Honda Group Unit Sales Unit (thousands) (Motorcycles) (Automobiles) 18,24 17,95 4,83 4,62 Operating Income +66. -52. +1. Yen (billions) - 29 ( - 1.6 %) - 21 ( - 4.3 %) 76. ROS 6.% FOREX Vol/Mix -7. +3. CD SGA 77. ROS 6.% Original (Apr-25) Revised (Oct-28) Difference Original (Apr-25) Revised (Oct-28) Difference Japan 23 22-1 99 89-1 North America 3 3 1,81 1,81 Europe 175 18 + 5 17 17 Asia 15,765 15,64-125 1,59 1,49-1 Other Region 1,77 1,61-16 27 26-1 Total 18,24 17,95-29 4,83 4,62-21 Motorcycle : Reductions in Other Region (mainly Brazil), and Asia. Automobile : Reductions in Japan and China. Original (Apr-25) Main Reasons for revision of forecast FOREX +66. Vol/Mix -52. Revised (Oct-28) 4W : On the operating income line, a delay in New/FMC model introductions, the impact of a higher consumption tax and increased competition in the mini vehicle segment led to a decrease of 1, units in Japan 2W : Prolonged distressed financial environment in Brazil as well as changes in other countries,led to a decrease in the sales plan in Other Region by 16, units. 6
Honda Corporate Update Honda FY211 Rating Review Honda Business Status Business Strategy Automobile Operations Motorcycle Operations Financial Highlights 7
Core Strategies Honda for FY211 Growth Rating Automobile Review Operations (Highly efficient and fun to drive powertrain technologies) Global Operation Reform Regional Concurrent Development Locally Optimized Design/ Increase in Local Procurement Higher Production Efficiency Global Core Models & New Models for Uncultivated Markets Sustainable & Profitable Growth 8
Honda introducing full line-up of new engines and transmissions Full range of new gasoline engines Earth Dreams Technology New diesel engines New CVT transmissions 1.5L class engine 1.8L class engine 2.4L class engine 3.5L class V6 engine 1.5/1.6L class engines Minivehicle Minivehicle Compact vehicle Mid-sized vehicle New 66cc New 2.4L Direct Injection i-vtec+ CVT New 3.5L Direct Injection i-vtec Engine RLX MDX New 2.4L / 3.5L Direct Injection i-vtec Engine TLX Accord N Box 2.4L 27 mpg (city) 3.5L 21 mpg (city) New 1.6L Diesel Engine (Civic and CR-V, Europe) New 1.5L Diesel Engine (Amaze, India) New 1.5L Direct Injection Engine + CVT (Fit and Vezel, Japan) New 1.5L Diesel Engine (City and Honda MOBILIO, India) CY211 212 213 214 9
Earth Dreams Technology INTEGRATED MOTOR ASSIST Enhance Hybrid Line-up Intelligent Dual-Clutch Drive (i-dcd) Global Compact series One-Motor Hybrid system Fit Hybrid Vezel Hybrid CR-Z Fit/Jazz Hybrid Freed / Spike Hybrid Fit Shuttle Hybrid Civic Hybrid Acura ILX Hybrid Sports Hybrid Intelligent Multi-Mode Drive (i-mmd) Two-Motor hybrid system mid-to-large sized vehicles Plug-in Hybrid 21 211 212 Jan 213 Accord Hybrid Jul 213 (Japan) Three-Motor Sports Hybrid SH-AWD system for Acura models RLX NSX 1
Earth Dreams Technology Balances outstanding environmental performance with FUN Realizes outstanding dynamic performance for motorsports enthusiasts 11
Safety Leadership (U.S.) 1 Honda or Acura vehicles have earned either Top Safety Pick or Top Safety Pick + ratings. Honda leads the industry with seven TOP SAFETY PICK+ vehicles 1 2 3 4 5 6 7 8 American Japanese Japanese Japanese Japanese American European American European Korean Japanese American European European Next Generation ACE Body Structure Cabin strength increased through the use of hot stamp material and high tensile steel Accord Coupe Acura MDX The 215 CR-V is also expected to achieve TOP SAFETY PICK+ Civic Accord Sedan Acura RLX Note: as of Nov. 214 Side frame, upper frame and bulkhead efficiently absorb crash energy Odyssey Acura TLX 12
Honda SENSING AcuraWatch Safety Leadership Honda is also at the forefront of the development of active safety or accident prevention technologies which benefit all road users - automobiles, motorcycles and pedestrians. A Suite of Safety and Driver Assistive Technologies Collision Avoidance Acura TLX (US, Aug 214) CR-V (US, Oct 214) Legend (JPN, Jan 215) Introduction of such technologies will be expanded to other models in the near future. Forward Collision Mitigation Brake System (CMBS) False Start Prevention Function Road Departure Mitigation (RDM) system Pedestrian Collision Mitigation Steering System Preventive Adaptive Cruise Control with Low Speed Follow Lane Keep Assist System (LKAS) Lead Car Departure Notification System Traffic Sign Recognition Side Blind Spot Intrusion Warning Lane Watch Rear Multi-Angle Rearview Camera with View Mode Selection Parking Support Sensor System Backing out of Parking Space Support Collision Mitigation Brake System (CMBS) Adaptive Cruise Control with Low Speed Follow Lane Keep Assist System (LKAS) 13
Global Automobile Production Capacity CY213 CY214 Current plan from 215 onward Other China Asia Europe North America 4,575 15 87 625 3 +16 +2k Dongfeng, China (Within 213) +5k Malaysia (Oct 213) +9k 4,735 15 89 675 3 1,63 1,72 Alabama +4 Indiana +5 (Jan 213) +37 +12k India (Feb 214) +13k Indonesia (Jan 214) 25k 15k UK Reduced to single line (October 214) +2k 5,15 15 89 945 2 1,92 Brazil (Unit : 1,) Single production shift (+6k/year) to start in 215 China +24k Guangqi +12k Dongfeng +12k to begin production in 215 Thailand +12k CKD production to start in October, 215 CBU production to start in March, 216 Japan End of Yorii Plant New plant in Mexico 1, 2k 1, (Feb 214) 1, (July 213) +α +α +α 212 213 214 Capacity increase to 5.7 mil Global capacity increased to 5.1 million units in CY214 14
Utilization Image Global Automobile Production Japan (Units) Europe 2, Dedicating to produce Civic and CR-V Accord & L/T models Jazz (Plan) 1 mil +α <Export> Compact & Hybrid models 1-2% for Other regions Hybrid models Acura & L/T models North America 1.92 mil <Export> Acura & L/T models Middle East and Africa Accord 8-9% for Local markets CR-V Asia Acura South America 945, China 15, <Export> Strengthen mutual parts/production sharing among Asia Exporting to Africa 89, <Export> Utilizing the cost benefit for the next market (Africa) Total Capacity 5.1 mil units (end of CY214) Establish stable production structure Capacity leveraging increase regional to capacity 5.7 mil + mutual parts/product sharing 15
Global Compact Series Roll Out of Honda s Global Compact Series with best-in class Fun to Drive, Fuel Economy, Packaging and Safety (Fit / Jazz) 45 4 35 3 25 2 15 1 5 (City / Grace) Highest Volume in Core Model Line-up Fit / City accounted for about 18% of Honda global unit sales in 213 ( units) Fit / City 4.27 mil CY213 Accord Civic 684 691 753 CR-V 741 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 (HR-V / Vezel) Global Launch Schedule City City Vezel FY14 FY16 215 215 215 Jun 214 215 Sep 14 May 14 Oct / Nov 14 May 14 215 May 14 Jan 14 Dec14 Dec13 Sep 13 16
North America North America Automobile Operations (U.S.) Unit (thousands) Passenger Cars 2, 1, Light Trucks Industry Demand Unit (thousands) 2, Honda Unit Sales Acura Honda Passenger Cars Honda Light Trucks 1,59 1,551 16.4 15.6 1,5 1,428 14,491 1,23 12,778 1,15 1,147 11,588 1,429 1, 1,422 1,525 1,55~ 5 CY6 7 8 9 1 11 12 13 14E CY6 7 8 9 1 11 12 13 14P Source: Honda For Further Growth New Model/FMC Launches New model launches with brand-new powertrains - Fully remodeled Fit launched in June 214 - All new Acura TLX launched in August 214 - Minor model change of CR-V debut in Oct 214 - All new stylish CUV, HR-V to be debut in winter/spring Fit (June 214) Acura TLX (Aug 214) Acura RLX Sport Hybrid (Sep 214) Continue to invest to N.A auto manufacturing and R&D operations to enhance the model competitiveness CR-V MMC (Oct 214) HR-V (FY215) 17
New models to be launched with new technologies and competitive cost structure Strategies for improving model cost structure Significant cost reduction for next-generation core models by maximizing parts-commonality Expand sourcing of parts from Mexico Optimize model allocation to improve cost effectiveness Enhance rolling cost reduction efforts from launch Fit (Jun 214) Strategies for U.S. Market HR-V (FY215) Civic More than 1 mil unit sales from 3 models 215 21X CR-V Accord 21X Source more parts from Mexico Strengthen SUV line-up 215 CR-V (Oct 214) Strengthening model the model competitiveness New models with Earth Dreams Technology for each segment Variety of SUV models to be launched in growing segments 18
Acura Strategy Acura Strategy New Models with Advanced Technologies All-new Direct injected engines All-new 8DCT and 9AT transmissions Three-Motor Sports Hybrid SH-AWD ( ) 25 2 15 199 Unit Sales in the U.S. 21 21 18 TSX Revitalize sedan line-up 156 165 145 134 123 16 1 TL 5 MDX RDX CY4 5 6 7 8 9 1 11 12 13 14 Independent Organizational Structure Specific to Acura Business Operations Established 19
Japan Automobile Operations Industry Demand Honda Unit Sales 6, Mini vehicle Registered vehicle 1, Registered vehicle Mini vehicle 75 4, 5 2, 25 FY8 FY9 FY1 FY11 FY12 FY13 FY14 N BOX (Dec 211) N-One (Nov 212) N-WGN (Nov 214) FY8 FY9 FY1 FY11 FY12 FY13 FY14 Source: JAMA Source: Honda Strategy for Japan Market New Model Announced Launches/ FMC Efficient enhancement of product line-up - Launch of 3 rd generation Fit and all-new SUV Vezel in 213 - Launch of Grace, sedan derivative of Global Compact series, in Dec 214 - Launch of new mini vehicles, S66 and 5th model of the N series - Strengthen minivan line-up by introducing new value minivan and fully remodeled StepWGN - Strengthen sedan line-up: fully remodeled Legend (+ Grace) Fit (Sep 213) Legend (Jan 215) Odyssey (Oct 213) Grace (Dec 214) N-WGN (Nov 213) S66 (215) Vezel (Dec 213) Three more models to be announced launches in 2
Japan Automobile Production Innovation Yorii Plant Started production in July 213 Dedicated to the production of small-sized vehicles Capacity : 25k units / year Yorii Plant employs a number of innovative technologies and is a world-leading energysaving plant. Example of Innovative Technologies Honda Smart Ecological Paint A highly-functional painting technology that eliminates a middle coating process from a commonly used 4-coat/3-bake auto body painting process to realize a 3-coat/2-bake water-based painting process. Yorii is the first plant to use this technology and it has also been introduced in the new Mexican plant. Thailand, Brazil and China plants will be next. 4-coat/3-bake (Conventional painting process) Reduction of the amount of paint materials 4% reduction in the number of processes 4% reduction of the amount of CO2 emitted during painting process 3-coat/2-bake (Honda Smart Ecological Paint) Image of test painting This new technology enables Honda to reduce the cost of paint materials, process layouts and equipment 21
Asia Automobile Operations (ASEAN) Industry Demand Honda Unit Sales Retail Sales 3,5 4 3, 2,5 Malaysia Indonesia Thailand Philippines 35 3 Malaysia Indonesia Thailand Philippines 25 2, 2 1,5 15 1, 1 5 5 CY7 8 9 1 11 12 13 Source: Honda Strategy for ASEAN Market <Indonesia> Honda MOBILIO launched in the low-price MPV segment - the largest volume segment in Indonesia which was previously uncultivated by Honda Fully remodeled City and Jazz launched HR-V is scheduled to be launched in 215 <Thailand> Fully remodeled City and Jazz and all- new Honda MOBILIO launched in 214 CY7 8 9 1 11 12 13 Brio Amaze, Thailand (Nov 212) Honda MOBILIO, Indonesia, Thailand (Jan 214~) Source: Honda New Model Launches/ FMC Accord, Thailand (Mar 213) City, Thailand, Malaysia, Indonesia, Philippines (Jan 214~) Brio Satya, Indonesia (Nov 213) Jazz, Thailand, Indonesia (May 214~) 22
Asia Automobile Operations (India) India Industry Demand (excluding commercial vehicles) Honda Unit Sales in India 3, Diesel Gasoline 12 Retail Sales 2,5 1 2, 8 1,5 6 1, 4 5 2 FY9 FY1 FY11 FY12 FY13 FY14 Source: SIAM, Honda Strategy for India Market Profitability of automobile operations in Indian market has improved due to introduction of FMC models New models equipped with diesel engines launched - Amaze debut with new 1.5L diesel engine - City and Honda MOBILIO launched Expansion of dealer network Expansion of automobile production capacity - 2nd automobile factory started production in February 214 CY8 CY9 CY1 CY11 CY12 CY13 Amaze (Apr 213) New Model / FMC Launches Source: Honda Earth Dreams Technology 1.5L i-dtec Diesel Engine City (Jan 214) Honda MOBILIO (July 214) 23
2, 18, 16, 14, 12, 1, 8, 6, 4, Minivan SUV MPV Sedan Asia Automobile Operations (China) Industry Demand Honda Unit Sales (excluding commercial vehicles) 1, 9 8 7 6 5 4 3 2 (Guangqi + Dongfeng + Acura) Accord Odyssey City Fit CR-V Civic CRIDER Jade Others 2, 1 CY8 9 1 11 12 13 Source: J.P. Morgan CY8 9 1 11 12 13 Source: Honda Strategy for China Market New Model Launches/ FMC Introduce all-new Vezel and XR-V models into rapidly growing SUV segment (15% increase from CY12->13) Strengthen local development function to incorporate local customer needs/tastes into models for Chinese market Increase local procurement to achieve further cost reduction Expand dealership network to inland regions where economic growth is anticipated CRIDER (Jun 213) Jade (Sep 213) Accord (Sep 213) Fit (May 214) Odyssey (Aug 214) Vezel (Oct 214) XR-V (214) Spirior (214) 24
New Model Strategy in China Segment SDN(4D/5D) SUV MUV D Guangqi Dongfeng Accord (213 FMC) Spirior (FMC in 214) Crosstour Elysion (current model) Odyssey (Aug 214 FMC) Concept M (in 215) ** C Guangqi Dongfeng Crider (213) Civic CR-V Jade (213) B Guangqi Dongfeng Fit (May 214 FMC) City Concept B (in 216)* Vezel (Oct 214) XR-V (in 214) Accord etc. Fit City etc. Civic CR-V Jade etc. * the joint venture partner for concept B has not been announced yet **two different models based on Concept M will be introduced one by each JV partner CY213 China Unit Sales by Platform By utilizing common platforms and strengthening local procurement as well as local R&D functions, a number of cost competitive models will be launched 25
Honda Corporate Update Honda FY211 Rating Review Honda Business Status Business Strategy Automobile Operations Motorcycle Operations Financial Highlights 26
Motorcycle Market Size and Honda Share (CY213) Thailand 1.9 million Vietnam 2.7 million 81% (CY212: 76%) 68% (CY212: 62%) Indonesia India 24% 7.7 million 61% Brazil 1.5 million 14.8 million (CY212: 58%) 81% (CY212: 8%) (CY212: 18%) 27
2 nd plant 4 th plant 1 st plant Manesar Rajasthan Gujarat Asia Motorcycle Operations (India) Expansion Plan Annual Capacity : 4. mil 5.8 mil 5.8mil 4.6mil 4.6mil 1.2 4.mil 3 rd 1.2 1.8 1.8 1.8 3 rd plant Bangalore 2 nd 1 st 1.2 1.2 1.2 1.2 1.6 1.6 1.6 1.6 Future Honda Growth CY 213 214(P) 215(P) 216(P) Product Line-up Expand capacity to meet growing demand Strengthen 11cc model line-ups Improve fuel economy of scooter models Prepare for exports to Next Markets (Africa, etc.) Honda introduced new 11cc Scooters and Motorcycles into Indian Market 11cc AT-Scooter Activa Dream Yuga (Apr 212) Dream Neo (Apr 213) CD 11 Dream (Jul 214) 28
Asia Motorcycle Operations (Indonesia) Sales Results and Respective Fuel Injection (FI) ratios 29 212 FY214 Total 27 1% Total 49 29% Total 476 1% Capacity Expansion Applied FI to all models by end of FY 214 BeAT-Fi 5.3mil 4 th plant started operations in 214 with an annual production capacity of 1.1 million units 4.4mil 1.1 4th 3rd 2.4 2.2 Scoopy FI 2nd 1st 1. 1. 1. 1. 212 214(P) 29
Honda Corporate Update Honda FY211 Rating Review Honda Business Status Business Strategy Automobile Operations Motorcycle Operations Financial Highlights 3
Outline of 2nd Quarter Results Summary (Consolidated) Results Summary Operating income for the second quarter was 164.4 billion yen due mainly to - Increased competitiveness in the North American and Japanese automobile markets - Positive impact of new automobile model introductions in Asia - Continuous cost reduction efforts 2nd Quarter Results FY14 and FY14 2,8 2,5 Consolidated Unit Sales 2,585 2,743 9 8 1,4 869 88 1,295 1,286 Unit (thousand) 3, Net Sales / Operating Income 2 2,89.2 3,14.7 171.4 164.4 15 2 15 Yen (billion) 141.8 12.3 2,2 7 1,2 2, 1 5 1 5 1,9 6 1, 1, Motorcycles Automobiles Power Products Net Sales Operating Income Net Income *1 For *1, please refer to footnotes on page 49 31
2nd Quarter Unit Sales Honda Group Unit Sales (thousand) 2Q Results (3 Months) FY14 Change Motorcycles 4,216 4,581 + 8.7% Automobiles 1,47 1,71 + 2.3% 5, 4,5 4, 3,5 Honda Group Unit Sales 4,216 4,581 1,1 1, 9 1,2 1,1 FY14 Unit (thousand) 1,47 1,71 1,295 1,286 1,3 F Power Products 1,295 1,286 -.7% Consolidated Unit Sales (thousand) 2Q Results (3 Months) FY14 Change Motorcycles 2,585 2,743 + 6.1% Automobiles 869 88 + 1.3% Power Products 1,295 1,286 -.7% 3, 2,8 2,6 2,4 2,2 2, 2,585 8 9 2,743 869 8 7 88 1, Motorcycles Automobiles Power Products Consolidated Unit Sales 1,3 1,2 1,1 1, Unit (thousand) 1,295 1,286 Motorcycles Automobiles Power Products Honda Group Unit Sales - Increase in motorcycle unit sales mainly in India and Indonesia - Increase in automobile unit sales due to the positive impact of new model introductions as well as the launch of fully remodeled vehicles in Asia as well as other markets 32
2nd Quarter Financial Results (Consolidated) Financial Results Yen (billion) 2Q Results (3 Months) FY14 Change Net Sales 2,89.2 3,14.7 + 4.3% Operating Income 171.4 164.4-4.1% Operating Margin 5.9% 5.5% -.4pt Income before income taxes 165.5 179.8 + 8.6% Equity in income of affiliates 31.6 22.7-28.2% Net Income *1 12.3 141.8 + 17.9% EPS (Yen) *2 66.79 78.73 + 11.94 Average Rates (Yen) US Dollar 99 14 Euro 131 138 Yen down by 5 yen Yen down by 7 yen Financial Summary - Net sales and other operating revenue increased by 4.3% mainly due to a rise in motorcycle and automobile unit sales as well as the positive impact of foreign exchange effects - Operating income decreased by 4.1% mostly due to a decrease in income associated with changes in sales volume and model mix and increased R&D expenses, despite cost reduction efforts and positive FOREX effects - Net income increased by 17.9% For *1 and *2, please refer to footnotes on page 49 25 2 15 1 5 Operating Income 198. 184.9 171.4 164.4 228.5 Yen (billion) FY14 165.2 8% 6% Operating Margin 6.6% 6.5% 5.9% 5.5% 7.6% FY14 5.3% 2Q 3Q 4Q 4% 2Q 3Q 4Q 33
Change in Income before Income Taxes < 2nd Qtr> Income before Income Taxes + 14.2 ( + 8.6 % ) Yen (billion) Operating Income - 7.( - 4.1 % ) Other Income & Expenses + 21.2 165.5-29.5 Revenue, model mix, etc. + 15.2 Cost Reduction, etc. + 6.9-9.7 + 1. -13.9 Decrease in SG&A Increase in R&D + 35.2 Currency Other Effects Unrealized gains and losses related to derivative instruments 179.8 <Decrease Factors> - Decrease in sales volume and model mix, - Increased sales Incentives etc. Operating Income 171.4 - Currency effects due to difference between average sales rates and transaction rates + 2.3 - Other + 14.9 Operating Income 164.4 FY14 2Q 2Q 34
(Attachment 3) - Cash Flows of Non-financial Services Businesses - FY14 Six Months Free cash flow + 3.2 + 415.5-385.2 Net change - 72.9 Yen (billion) 1,18. Net Cash 639.7 Cash & Cash equivalents at beginning of the FY14 Six Months + 59.6 + 398.4-338.7-136.3 Net change - 66.4-153.7 + 33.1 1,148.6 1,82.1 Net Cash 583.2 Cash & Cash equivalents at beginning of the Cash flows from operating activities Net income + 27.2 Equity in income of affiliates - 63.4 Depreciation + 215.9 Other + 55.7 Cash flows from operating activities Free cash flow Net income + 239. Equity in income of affiliates - 61.3 Depreciation + 233.9 Other - 13.2 Cash flows from investing activities Capital expenditures *1-354. Other - 31.2 Cash flows from financing activities *1 This includes Purchases of intangible assets Cash flows from investing activities Capital expenditures *1-348.3 Other + 9.5 Effect of exchange rate changes on cash and cash equivalents Dividends paid - 7.2 Others - 66. Cash flows from financing activities *1 This includes Purchases of intangible assets + 27.6 Effect of exchange rate changes on cash and cash equivalents Dividends paid - 79.3 Others - 77.4 1,17. Net Cash 569.1 Cash & cash equivalents at end of the period Net Cash 539.6 Cash & cash equivalents at end of the period 35
Operations by Business Segment 7 Yen (billions) Motorcycle Business =Operating Income =Operating Margin 22% 13.6% 17% 5 13.6% 3 5.8% 8.4% 9.6% 9.8% 9.6% 38.9 8.5% 9.2% 1.6% 8.2% 7.4% 6.7% 1.9% 1.7% 9.6% 8.6% 1.8% 8.7% 12% 7% 1 3.4% 2.2% 5.6 9.3 15.8 28. 31.3 3. 29.1 48.1 44.9 1.9% 25.8 32.8 36.8 25.4 22.8 25.2 42.5 45.5 34.5 42.9 43.9 38.1 2% -1 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -3% Yen (billions) Automobile Business =Operating Income 2 =Operating Margin 2% 154.2 1 8.2% 6.3% 1.4% 5.% 4.2% 5.3% 2.1% 3.6% 4.4% 3.7% 6.5% 4.3% 3.1% 3.4% 99.8 1%.9% -1.4% -2.4% -1.2% 45.1 2.4% 1.6-2.2% 37.1 77.2 3.6% 8.1 72.9 79.1 % -21.3 13.7 11.4 24. 148.9 86.3 68.4-6.5% -16.9-29.1-39.1-76.2 7.9 96.3-1% -1 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -2% 36
Operations by Business Segment 2 Yen (billions) Power Product & Other Businesses =Operating Income =Operating Margin 1% 3.1% 5%.7%.4% -.5% 1.7%-1.1% -4.%-3.7% -.4% -.2%.1%.1 1.3.5-5.9-4.6-2.9 -.4 -.3-2. -2.3-2.8%.2 -.1.1.1% 2.3-2.8% -2.2 -.8-3.1-2.1-2. -3.7% -6.4% -2.8-3.2% -2.7% -3.3% -8.1% -7.4-1.4% % -1. -5% -1% -8.9% -2 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -15% *Honda Trading related out-of-period adjustment is not included 8 Yen (billions) Financial Services Business 38.7% 4% 35.8% 33.2% 6 29.4% 29.8% 34.8% 32.% 32.9% 32.% 28.8% 3.5% 29.5% 28.7% 27.6% 26.6% 26.4% 27.4% 27.% 27.4% 24.% 25.6% 24.7% 3% 4 2% 2 1% 46.8 47.1 53.6 47.2 54.6 47.4 44.6 39.6 53.6 42.8 37.5 35.9 4.8 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 38.2 38.1 4.9 44.6 46.5 42.7 48.8 51.8 48.2 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q % 37
Operations by Region 15 Yen (billions) 1.8% North America 9.7% =Operating Income =Operating Margin 14% 1 5.7% 5.3% 7.% 7.4% 8.9% 2.5% 2.5% 7.6% 6.% 6.8% 6.8% 2.5% 5.7% 4.8% 3.1% 2.2% 8.2% 3.% 4.4% 2.5% 1% 6% 2% 7.1 47.6 11.7 7.7 11.7 75.8 89.6 24.5 18.5 47.7 74.8 82.2 82.2 26.7 7.8 29. 71.8 46. 131.1 41.8 67.5 38.9-2% -5-6% -1% -1-14% -15 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -18% 1 5-5 Yen (billions) Japan =Operating Income =Operating Margin 6.4% 6.1% 6.3% 6.1% 5.8% 4.5% 4.4% 4.9% 5.4% 3.9% 6.9 3.2% 1.2% 2.2%1.7% 1.2% 46.6 62.1 59.3 14.6-2.4% 49.2 43.2 -.6% 1. 53.2 3. -3.2% -1.% 2.2 4.7 62.1 59.8-4.6-25.7-8.7 12.5-45.8-35.3-41.2-4.4% -4.8% -21.8-7.3% 12% 6% % -6% -1-12% -15-18% -2 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -24% 38
Operations by Region 25 Yen (billions) Europe 9.9% =Operating Income 1% =Operating Margin 6.1% 15 5% 5-5.8%.9% 1.7 1.8-6.8-7.6-3.8% -3.7% 2.1% -1.9% 4. -3. -9.4-1.7-3.8-2.8% -.9% -6.1-4. -4.% -3.2% 2.4 1.1% -3.5 1.8-2.5% -6.% -7.6-8.7-5.2% -9.7-13.5-5.5% -7.7% 14.9-1.4 -.7% -4.8% -8.7-7.5-4.% % -5% -6.3% -15 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -1% 7 Yen (billions) 8.8% Asia excluding Japan 9.4% 8.6% =Operating Income =Operating Margin 8.9% 8.7% 1% 6 7.4% 8.% 8.5% 7.6% 7.4% 7.2% 8% 5 6.3% 7.% 6.8% 6.7% 5.4% 6.2% 6.7% 6.9% 6% 4 5.7% 4.2% 4.2% 3 4% 2 2% 1 2.3 27.5 35. 3. 44.4 38.3 35.7 32.1 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 25.1 33.4 13.3 16.5 2Q 3Q 4Q FY13 31.7 36.4 4.5 38. 53.7 6. 5. 54. 65.2 68.4 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q % 39
Operations by Region Yen (billions) Other Regions =Operating Income =Operating Margin 7 6 5 4 3 2 1 9.4% 8.6% 8.4% 6.8% 7.2% 7.5% 6.6% 6.6% 6.1% 5.6% 5.% 4.6% 4.6% 5.% 4.4% 3.6% 3.2% 2.6% 2.2% 2.2% 1.2% -.3% 9.9 17.4 18.9 2.2 2.4 15.6 13.1 15.7 23. 12.5 5.6 12.2 1.5 2.6 1.2 5.4 18.6 7.9 12.9 4.5 9.1 -.4 15% 12% 9% 6% 3% % -1 FY1 2Q 3Q 4Q FY11 2Q 3Q 4Q FY12 2Q 3Q 4Q FY13 2Q 3Q 4Q FY14 2Q 3Q 4Q 2Q -3% 4
Financial (Consolidated) Yen (billion) FY14 Results Change amount % Change from previous forecast Net Sales 11,842.4 12,75. + 97.5 + 7.7% - 5. Operating Income 75.2 77. + 19.7 + 2.6%. Operating Margin 6.3% 6.% -.3pt - Income before Income taxes 728.9 765. + 36. + 4.9% + 1. Equity in income of affiliates 132.4 12. - 12.4-9.4% - 35. *1 Net Income 574.1 565. -9.1-1.6% -35. *2 EPS (Yen) 318.54 313.49-5.5 For *1 and *2, please refer to footnotes on page 49 Average Rates (Yen) US Dollar 1 14 ( 1H 13 / 2H 15 ) Euro 136 137 ( 1H 139 / 2H 135 ) Yen down by 4 yen Yen down by 1 yen Yen down by 3 yen Yen down by 1 yen 41
: Honda Group Unit Sales Motorcycles 17,21 18,8 17,95 4,323 Automobiles 4,83 4,62 6,36 Power Products Unit (Thousand) 6,335 6,185-13 ( -.7 %) - 21 ( - 4.3 %) - 15 ( - 2.4 %) Previous Revised Change Previous Previous Revised Change Previous Previous Revised Change Japan 23 22-1 99 89-1 325 335 + 1 31 3-1 1,81 1,81 2,85 2,815-35 Europe 175 18 + 5 17 17 1,7 1,75 + 5 Asia 15,68 15,64-4 1,59 1,49-1 1,595 1,48-115 1,685 1,61-75 27 26-1 495 48-15 Total 18,8 17,95-13 4,83 4,62-21 6,335 6,185-15 North America Other Region FY14 Previous Revised FY14 Revised FY14 Revised 42
: Consolidated Unit Sales Motorcycles Automobiles 1,343 1,915 3,87 1,85 3,76 3,56 Unit (Thousand) Power Products 6,36 6,335 6,185-65 ( -.6 %) -11 ( - 2.8 %) - 15 ( - 2.4 %) Previous Revised Change Previous Revised Change Previous Revised Change Japan 23 22-1 98 88-1 325 335 + 1 31 3-1 1,81 1,81 2,85 2,815-35 North America Europe 175 18 + 5 17 17 1,7 1,75 + 5 Asia 8,515 8,54 + 25 64 64 1,595 1,48-115 Other Region FY14 Previous Revised FY14 Previous Revised 1,685 1,61-75 27 26-1 495 48-15 Total 1,915 1,85-65 3,87 3,76-11 6,335 6,185-15 FY14 Previous Revised 43
Guidance: Units Sales by Business Segment Motorcycles Automobiles Power Products : Honda Group Unit Sales FY14 Results s Change FY14 Results s Change FY14 Results s Change Japan 226 22-6 818 89 + 72 314 335 + 21 North America 276 3 + 24 1,757 1,81 + 53 2,718 2,815 + 97 Europe 166 18 + 14 169 17 + 1 1,32 1,75 + 43 Asia 14,536 15,64 + 1,14 1,286 1,49 + 24 1,5 1,48-2 Other Region 1,817 1,61-27 293 26-33 472 48 + 8 Total 17,21 17,95 + 929 4,323 4,62 + 297 6,36 6,185 + 149 : Consolidated Unit Sales FY14 Results s Change FY14 Results s Change FY14 Results s Unit (Thousand) Change Japan 226 22-6 812 88 + 68 314 335 + 21 North America 276 3 + 24 1,757 1,81 + 53 2,718 2,815 + 97 Europe 166 18 + 14 169 17 + 1 1,32 1,75 + 43 Asia 7,858 8,54 + 682 529 64 + 111 1,5 1,48-2 Other Region 1,817 1,61-27 293 26-33 472 48 + 8 Total 1,343 1,85 + 57 3,56 3,76 + 2 6,36 6,185 + 149 44
: Change in Income before Income Taxes Income before Income taxes + 36. (+ 4.9% ) Yen (billion) Operating Income + 19.7 ( + 2.6 % ) Other Income & Expenses + 16.3 728.9 + 73.7 Revenue, model mix, etc. + 43. - 84. Cost Reduction, etc. Increase in SG&A - 12. -1. - 43. + 59.3 Increase in R&D Currency Effects Unrealized gains and losses related to derivative instruments Other 765. Operating Income 75.2 Operating Income 77. FY14 Revised 45
: Change in Income before Income Taxes Income before Income taxes + 1. ( + 1.3 % ) Yen (billion) Operating Income ± ( ± % ) Other Income & Expenses + 1. 755. + 56. ± + 1. 765. - 52. Revenue, model mix, etc. -7. Cost Reduction, etc. + 3. ± Decrease in SG&A R&D Expenses Currency Effects Unrealized gains and losses related to derivative instruments Other Operating Income 77. Operating Income 77. Previous Revised 46
: Capital Expenditures, Depreciation, R&D Expenses 8 Capital Expenditures Depreciation / Amortization R&D 8% 8 8% 8 8% 6 6% 6 6% 6 6% 4 4% 4 4% 4 4% 2 2% 2 2% 2 2% % % % Actual Amounts (billion Yen) % against Net Sales 47
Dividend (Yen) Dividend per Share FY14 (Expectation) Increase / Decrease from FY14 1 st Quarter End 2 22 + 2 2 nd Quarter End 2 22 + 2 3 rd Quarter End 2 ( 22 ) ( + 2 ) 4 th Quarter End 22 ( 22 ) ( ± ) Fiscal Year 82 ( 88 ) ( + 6 ) 48
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. (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. *1 Net income attributable to Honda Motor Co., Ltd. *2 Basic net income attributable to Honda Motor Co., Ltd. per share Basic net income attributable to Honda Motor Co., Ltd., per share is calculated based on weighted average number of shares outstanding as shown below: - 2nd Quarter FY14: 1,82,295, (approx), : 1,82,289, (approx) (page 33) - Fiscal Year FY14: 1,82,294, (approx), : 1,82,289, (approx) (page 41) 49
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