Honda Net Rises 38%
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Honda Net Rises 38% to $1.87 billion
Honda 2007 Q4
Honda's Net Rises 38%
On Fuel-Efficient Cars
By JOHN MURPHY
January 30, 2008 6:30 a.m.
TOKYO -- Amid a slowdown in the U.S. auto market, Honda Motor Co. on Wednesday reported a surprisingly strong 38% rise in earnings for the October-December period, helped by robust sales of its fuel-efficient cars to China, Europe and North America.
Japan's No. 2 auto maker by sales volume after Toyota Motor Corp. also raised its full-year profit forecast, pushing aside fears of a recession in the U.S., where it sells about 40% of its vehicles.
Honda posted net profit of ¥200.01 billion ($1.87 billion) for the quarter ended Dec. 31, compared with ¥144.83 billion a year earlier.
The auto maker is benefiting from a new demand in the U.S. for gas-sipping cars like its new Accord sedan and popular Civic as drivers turn away from SUVs in the face of higher fuel prices. Strong sales in emerging markets and cost-cutting efforts also helped support the Japanese car maker's profits, which exceeded analysts' expectations.
Honda sold 481,000 vehicles in North America during the quarter, up 2.1% from a year earlier. Revenue rose 1.8%, while operating income increased 32.3%, in part because of lower sales incentives and cost-cutting efforts.
Sales rose 21.3% in Asia to 188,000 vehicles. European sales rose 25% to 90,000 cars. Sales in Japan, where the market is shrinking because of an aging population, fell 7.1% to 145,000 vehicles.
Honda revised its forecast of net profit for the fiscal year ending March 31 to ¥690 billion from its previous forecast of ¥640 billion. The new forecast was 16.5% higher than the previous year's net profit of ¥592 billion.
The results highlight the apparent strength of Honda among the world's auto makers as they enter an uncertain year. Sales in the developed world are expected to stagnate or decline after an already weak 2007, while emerging regions like China, Russia and India will likely see a surge in growth. Given the mixed forecast, most analysts were expecting more modest earnings from Honda.
"I was really surprised. Those numbers were a lot better than we expected," said Koji Endo, a senior analyst with Credit Suisse Group who had predicted Honda's net profit for the October-December quarter wouldn't exceed 5%. Still, he added: "Then again, there are a lot of questions for the fourth quarter and beyond."
Despite its impressive earnings, Honda must cope with the impact of a strengthening yen against the dollar, which reduces the value of Honda's overseas earnings. It must also weather an expected decline in auto sales in the U.S. this year, Mr. Endo said.
Shares of Honda, along with its main rivals, Toyota and Nissan Motor Co. have taken a beating this year because of fears of a U.S. slowdown and the strengthening of the yen. Honda share prices have fallen as much as 22% since the beginning of the year.
Nissan's earnings will be released Friday and Toyota's are expected next week.
Although many auto makers are predicting flat U.S. sales in 2008, Honda remains optimistic that its sales there will expand 3% as drivers continue to turn to fuel-efficient vehicles in its lineup. Honda is planning to open a new plant this year in Indiana, where it will be able to produce 200,000 Civics per year.
Still, sluggish sales of Honda's other products including motorcycles and lawn mowers sales indicate that the U.S. subprime crisis is having an impact on its sales, says Koichi Kondo, Honda's executive vice president. "We're particularly affected in the states such as California, Louisiana, Florida and Georgia, where housing prices have sharply dropped and we have a big market." Mr. Kondo said.
World-wide, Honda says it expects to sell 3.9 million vehicles the fiscal year ending March 31, a decrease from its previous forecast in October of 3.935 million vehicles due an expected decline in sales in Japan.
Write to John Murphy at john.murphy@wsj.com
On Fuel-Efficient Cars
By JOHN MURPHY
January 30, 2008 6:30 a.m.
TOKYO -- Amid a slowdown in the U.S. auto market, Honda Motor Co. on Wednesday reported a surprisingly strong 38% rise in earnings for the October-December period, helped by robust sales of its fuel-efficient cars to China, Europe and North America.
Japan's No. 2 auto maker by sales volume after Toyota Motor Corp. also raised its full-year profit forecast, pushing aside fears of a recession in the U.S., where it sells about 40% of its vehicles.
Honda posted net profit of ¥200.01 billion ($1.87 billion) for the quarter ended Dec. 31, compared with ¥144.83 billion a year earlier.
The auto maker is benefiting from a new demand in the U.S. for gas-sipping cars like its new Accord sedan and popular Civic as drivers turn away from SUVs in the face of higher fuel prices. Strong sales in emerging markets and cost-cutting efforts also helped support the Japanese car maker's profits, which exceeded analysts' expectations.
Honda sold 481,000 vehicles in North America during the quarter, up 2.1% from a year earlier. Revenue rose 1.8%, while operating income increased 32.3%, in part because of lower sales incentives and cost-cutting efforts.
Sales rose 21.3% in Asia to 188,000 vehicles. European sales rose 25% to 90,000 cars. Sales in Japan, where the market is shrinking because of an aging population, fell 7.1% to 145,000 vehicles.
Honda revised its forecast of net profit for the fiscal year ending March 31 to ¥690 billion from its previous forecast of ¥640 billion. The new forecast was 16.5% higher than the previous year's net profit of ¥592 billion.
The results highlight the apparent strength of Honda among the world's auto makers as they enter an uncertain year. Sales in the developed world are expected to stagnate or decline after an already weak 2007, while emerging regions like China, Russia and India will likely see a surge in growth. Given the mixed forecast, most analysts were expecting more modest earnings from Honda.
"I was really surprised. Those numbers were a lot better than we expected," said Koji Endo, a senior analyst with Credit Suisse Group who had predicted Honda's net profit for the October-December quarter wouldn't exceed 5%. Still, he added: "Then again, there are a lot of questions for the fourth quarter and beyond."
Despite its impressive earnings, Honda must cope with the impact of a strengthening yen against the dollar, which reduces the value of Honda's overseas earnings. It must also weather an expected decline in auto sales in the U.S. this year, Mr. Endo said.
Shares of Honda, along with its main rivals, Toyota and Nissan Motor Co. have taken a beating this year because of fears of a U.S. slowdown and the strengthening of the yen. Honda share prices have fallen as much as 22% since the beginning of the year.
Nissan's earnings will be released Friday and Toyota's are expected next week.
Although many auto makers are predicting flat U.S. sales in 2008, Honda remains optimistic that its sales there will expand 3% as drivers continue to turn to fuel-efficient vehicles in its lineup. Honda is planning to open a new plant this year in Indiana, where it will be able to produce 200,000 Civics per year.
Still, sluggish sales of Honda's other products including motorcycles and lawn mowers sales indicate that the U.S. subprime crisis is having an impact on its sales, says Koichi Kondo, Honda's executive vice president. "We're particularly affected in the states such as California, Louisiana, Florida and Georgia, where housing prices have sharply dropped and we have a big market." Mr. Kondo said.
World-wide, Honda says it expects to sell 3.9 million vehicles the fiscal year ending March 31, a decrease from its previous forecast in October of 3.935 million vehicles due an expected decline in sales in Japan.
Write to John Murphy at john.murphy@wsj.com
Last edited by Mr. Jones; Feb 5, 2008 at 06:54 AM.
CL Community Team
Joined: Oct 2002
Posts: 30,268
Likes: 346
From: Canada
Press Release :
Honda Motor Co., Ltd. Reports Consolidated Financial Results for the Fiscal Third Quarter and the Nine Months Ended December 31, 2007
TOKYO, Jan. 30 /PRNewswire/ -- Honda Motor Co., Ltd. today announced
its consolidated financial results for the fiscal third quarter and the
fiscal nine months ended December 31, 2007.
Third Quarter Results
Honda's consolidated net income for the fiscal third quarter ended
December 31, 2007 totaled JPY 200.0 billion (USD 1,752 million), an
increase of 38.1% from the same period in 2006. Basic net income per common
share for the quarter amounted to JPY 110.25 (USD 0.97), an increase of JPY
30.80 from JPY 79.45 for the corresponding period in 2006. One Honda
American Depository Share represents one common share.
Consolidated net sales and other operating revenue (herein referred to
as "revenue") for the quarter amounted to JPY 3,044.8 billion (USD 26,674
million), an increase of 10.0% from the same period in 2006, due mainly to
increased revenue in Europe, Asia and other regions in motorcycle business
and in automobile business. Honda estimates that if calculated at the same
exchange rate as the corresponding period in 2006, revenue for the quarter
would have increased by approximately 8.9%.
Consolidated operating income for the quarter totaled JPY 276.2 billion
(USD 2,420 million), an increase of 34.7% compared to the same period in
2006. This increase in operating income was primarily due to the increased
profit attributable to higher revenue and continuing cost reduction efforts
which offset the negative impact of increased raw material costs, increased
depreciation expenses and R&D expenses.
Consolidated income before income taxes, minority interest and equity
in income of affiliates for the quarter totaled JPY 260.7 billion (USD
2,284 million), an increase of 31.2% from the same period in 2006.
Equity in income of affiliates amounted to JPY 31.3 billion (USD 274
million) for the quarter, an increase of 21.3% from the same period in
2006.
Business Segment
With respect to Honda sales for the fiscal third quarter by business
segment, motorcycle unit sales totaled 2,366 thousand units, a decrease of
14.4% from the same period in 2006. Unit sales in Japan totaled 54 thousand
units, a decrease of 23.9% from the same period in 2006. Overseas unit
sales was 2,312 thousand units, a decrease of 14.2% from the same period in
2006, due mainly to a decline in unit sales of parts for local production
at Honda's affiliates accounted for under the equity method in Asia, more
than offsetting favorable unit sales mainly in Brazil and Vietnam. Revenue
from external customers increased 20.3%, to JPY 364.6 billion (USD 3,195
million) from the same period in 2006, due mainly to the increased revenue
in Asia and other regions and the positive impact of currency translation
effects. Operating income increased by 172.2% to JPY 30.3 billion (USD 266
million) from the same period in 2006, due mainly to the change in model
mix, increased profit attributable to higher revenue, and positive currency
effects caused by the depreciation of the Japanese yen, offsetting
increased SG&A expenses.
Honda automobile unit sales totaled 991 thousand units, an increase of
8.3% from the same period in 2006. In Japan, unit sales amounted to 145
thousand units, a decrease of 7.1% from the same period in 2006. Overseas
unit sales increased 11.5% to 846 thousand units from the same period in
2006, due mainly to the increased unit sales in North America with the
positive effect of all-new Accord launched in September, and increased unit
sales in Europe, Asia and other regions. Increased overseas unit sales of
CR-V and Civic also contributed. Revenue from external customers increased
8.2% to JPY 2,449.0 billion (USD 21,454 million) from the same period in
2006, due mainly to increased overseas unit sales and the positive impact
of currency translation effects. Operating income increased 37.3% to JPY
220.7 billion (USD 1,934 million) from the same period in 2006, due mainly
to increased profit attributable to higher revenue, continuing cost
reduction efforts, a decrease in provision for sales incentives in North
America and decreased SG&A expenses, offsetting adverse effect on the
elimination of unrealized profits on inventories, increased raw material
costs, increased depreciation expenses and R&D expenses.
Revenue from customers in financial services business increased 30.4%
to JPY 135.9 billion (USD 1,191 million) from the same period in 2006.
Operating income increased 0.7% to JPY 22.9 billion (USD 201 million) from
the same period in 2006, due primarily to increased profit attributable to
higher revenue, offsetting the increased SG&A expenses.
Honda power product unit sales totaled 1,178 thousand units, a decrease
of 14.8% from the same period in 2006. In Japan, unit sales totaled 123
thousand units, a decrease of 0.8% from the same period in 2006. Overseas
unit sales totaled 1,055 thousand units, a decrease of 16.1% from the same
period in 2006, due primarily to a decline of unit sales of general purpose
engines that are supplied to original equipment manufacturers (OEM)* in the
U.S. and Europe despite increased unit sales of general purpose engines in
China. Revenue from external customers in power product and other
businesses decreased by 2.1% to JPY 95.1 billion (USD 834 million) from the
same period in 2006, due mainly to decreased unit sales of power products
in North America. Operating income decreased 78.3% to JPY 2.2 billion (USD
20 million) from the same period in 2006. This was primarily due to the
decreased revenue, increased SG&A expenses in power product business and
increased R&D expenses in other businesses.
*OEM: (Original Equipment Manufacturing)
OEM refers to a manufacturing of products and components supplied for
sale under a third-party brand.
Geographical Information
With respect to Honda sales for the fiscal third quarter by geographic
area, in Japan, revenue for domestic and exports sales totaled JPY 1,246.1
billion (USD 10,917 million), up 1.8% compared to the same period in 2006,
due primarily to the increased revenue from exports in automobile business,
which offset the negative impact of the decreased unit sales of automobiles
in Japan. Operating income totaled JPY 56.2 billion (USD 493 million), up
34.1% from the same period in 2006, due primarily to continuing cost
reduction efforts, higher revenue and decreased SG&A expenses, offsetting
increased raw material costs, increased depreciation expenses and R&D
expenses.
In North America, revenue increased by 1.8% to JPY 1,640.5 billion (USD
14,372 million) from the same period in 2006, due mainly to increased unit
sales in automobile business and increased operating lease revenues in
financial services business, offsetting the negative impact of currency
translation effects caused by depreciation of the U.S. dollars against
Japanese yen. Operating income increased by 32.3% to JPY 156.3 billion (USD
1,370 million) from the same period in 2006, due primarily to the change in
sales price and a decrease in provision for sales incentives in automobile
business, higher revenue, continuing cost reduction efforts and the
decreased SG&A expenses, which more than offset the negative impact of
increased raw material costs.
In Europe, revenue increased by 33.1% to JPY 361.7 billion (USD 3,169
million), from the same period in 2006, due primarily to the increased
automobile unit sales and the positive impact of currency translation
effects. Operating income increased by 54.5% to JPY 5.8 billion (USD 51
million) from the same period in 2006, due primarily to higher revenue and
positive currency effects caused by depreciation of the Japanese yen.
In Asia, revenue increased by 36.2% to JPY 413.4 billion (USD 3,622
million) from the same period in 2006, due primarily to increased
automobile unit sales and the positive impact of the currency translation
effects. Operating income increased by 89.3% to JPY 38.3 billion (USD 336
million) from the same period in 2006, due mainly to increased profit
attributable to higher revenue and positive currency effects caused by
depreciation of the Japanese yen, more than offsetting increased SG&A
expenses.
In Asia, in addition to subsidiaries, many affiliates accounted for
under the equity method manufacture and sell Honda-brand products.
Operating income does not include income from these affiliates. Income from
these affiliates is recorded as equity in income of affiliates and
reflected in net income. Accounting terms of some of the affiliates differ
from the Company's.
In other regions, revenue increased by 47.4% to JPY 284.6 billion (USD
2,493 million) compared to the same period in 2006, due mainly to increased
revenue in all business segments and the positive impact of currency
translation effects. Operating income increased by 98.1% to JPY 31.7
billion (USD 278 million) from the same period in 2006, due mainly to
higher revenue and the positive currency effects caused by depreciation of
the Japanese yen, offsetting increased SG&A expenses.
Nine Months Results
Honda's consolidated net income for the fiscal nine months ended
December 31, 2007 totaled JPY 574.6 billion (USD 5,034 million), an
increase of 38.1% from the same period in 2006. Basic net income per common
share for the period amounted to JPY 316.49 (USD 2.77), an increase of JPY
88.53 from JPY 227.96 for the same period in 2006.
Consolidated revenue for the period amounted to JPY 8,947.2 billion
(USD 78,382 million), an increase of 11.9% from the same period in 2006.
Honda estimates that if calculated at the same exchange rate as the
corresponding period in 2006, revenue for the period would have increased
by approximately 7.6%.
Consolidated operating income for the period totaled JPY 784.2 billion
(USD 6,870 million), an increase of 30.4% compared to the same period in
2006. This increase in operating income was primarily due to increased
profit attributable to higher revenue, continuing cost reduction efforts
and positive currency effects caused by depreciation of the Japanese yen,
which offset increased raw material costs, and increased depreciation
expenses, SG&A expenses and R&D expenses.
Consolidated income before income taxes, minority interest and equity
in income of affiliates for the period totaled JPY 748.9 billion (USD 6,561
million), an increase of 35.2% from the same period last year.
Equity in income of affiliates amounted to JPY 94.5 billion (USD 828
million) for the period, an increase of 13.3% from the same period last
year.
Business Segment
With respect to Honda sales for the fiscal nine months by business
segment, motorcycle unit sales totaled 6,952 thousand units, a decrease of
12.7% from the same period in 2006. Unit sales in Japan totaled 245
thousand units, a decrease of 5.0%. Overseas unit sales was 6,707 thousand
units, a decrease of 12.9% from the same period in 2006, due mainly to
decreased units sales of parts for local production at Honda's affiliates
accounted for under the equity method in Asia, offsetting an increase in
unit sales in other regions especially in Latin America. Revenue from
external customers increased 17.5%, to JPY 1,114.6 billion (USD 9,765
million) from the same period in 2006, due mainly to increased revenue in
Asia and other regions and the positive impact of currency translation
effects. Operating income increased by 74.8 % to JPY 98.5 billion (USD 863
million) from the same period in 2006, due mainly to the increased profit
on higher revenue and the positive currency effects caused by depreciation
of the Japanese yen, offsetting increased SG&A expenses and R&D expenses.
Honda automobile unit sales was 2,874 thousand units, an increase of
6.6% from the same period in 2006. In Japan, unit sales decreased 12.2% to
424 thousand units. Overseas unit sales increased 10.8% to 2,450 thousand
units, due mainly to the increased unit sales in North America, Europe,
Asia and other regions. Revenue from external customers increased 10.4% to
JPY 7,132.7 billion (USD 62,486 million) from the same period in 2006, due
to the increased overseas unit sales and the positive impact of currency
translation effects. Operating income increased 31.8% to JPY 582.0 billion
(USD 5,099 million) from the same period in 2006, due mainly to higher
revenue, continuing cost reduction efforts and positive currency effects
caused by the depreciation of the Japanese yen, which offset the negative
impact of increased raw material costs, increased depreciation expenses and
increased SG&A expenses and R&D expenses.
Revenue from customers in financial services business increased 35.3%
to JPY 395.5 billion (USD 3,465 million) from the same period in 2006.
Operating income increased 15.9% to JPY 86.4 billion (USD 757 million) from
the same period in 2006, due mainly to increased profit on higher revenue,
which offset increased SG&A expenses.
Honda power products unit sales was 3,965 thousand units, down 7.6%
from the same period in 2006. In Japan, unit sales totaled 399 thousand
units, an increase of 2.8% from the same period in 2006. Overseas unit
sales decreased 8.7%, to 3,566 thousand units, due mainly to a decline in
unit sales in North America. Revenue from external customers in power
product and other businesses increased by 1.5% to JPY 304.3 billion (USD
2,667 million) from the same period in 2006. Operating income was JPY 17.2
billion (USD 151 million), a decrease of 40.5% from the same period in
2006, due mainly to increased SG&A expenses in power product business and
the increased R&D expenses in Other businesses.
Geographical Information
With respect to Honda sales for the fiscal nine months by geographical
segment, in Japan, revenue for domestic and exports sales was JPY 3,637.9
billion (USD 31,870 million), up 3.7% compared to the same period in 2006,
due primarily to increased revenue from exports in automobile business and
positive currency effects, which partially offset the negative impact of
decreased automobile sales in Japan. Operating income was JPY 190.2 billion
(USD 1,666 million), up 19.0% from the same period in 2006, due primarily
to increased profit attributable to higher revenue, continuing cost
reduction efforts, decreased SG&A expenses and positive currency effects,
which offset the negative impact of increased raw material costs, increased
depreciation expenses and R&D expenses.
In North America, revenue increased by 6.2% to JPY 4,781.0 billion (USD
41,884 million) from the same period in 2006, due mainly to increased sales
in automobile business, increased operating lease revenues in financial
services business and positive impact of the currency translation effects.
Operating income increased by 12.5% to JPY 369.4 billion (USD 3,237
million) from the same period in 2006, due primarily to increased profit on
higher revenue, continuing cost reduction efforts and positive currency
effects.
In Europe, revenue increased by 27.0% to JPY 1,152.8 billion (USD
10,099 million) compared to the same period in 2006, due primarily to
increased automobile unit sales and the positive impact of the currency
translation effects. Operating income increased by 70.5% to JPY 32.8
billion (USD 288 million) from the same period in 2006.
In Asia, revenue increased by 35.1% to JPY 1,222.3 billion (USD 10,708
million) from the same period in 2006, due primarily to the increased
automobile sales and the positive impact of currency translation effects.
Operating income increased by 87.6% to JPY 108.7 billion (USD 952 million)
from the same period in 2006.
In other regions, revenue increased by 37.5% to JPY 778.8 billion (USD
6,823 million) compared to the same period in 2006, due mainly to increased
motorcycle and automobile sales and the positive impact of the currency
translation effects. Operating income increased by 58.8% to JPY 83.7
billion (USD 733 million) from the same period in 2006.
Forecasts for Fiscal Year Ending March 31, 2008
With regard to the forecasts of financial results for the fiscal year
ending March 31, 2008, Honda projects consolidated results as shown below:
FY2008 Forecasts for Consolidated Results
Fiscal year ending March 31, 2008
Yen (billions) Changes from FY2007
Net sales and other operating revenue 12,150 + 9.6%
Operating income 920 + 8.0%
Income before income taxes, minority
interest and equity in income of
affiliates 915 + 15.4%
Net income 690 + 16.5%
Yen
Basic net income per common share 380.25 --
These forecasts are based on the assumption that the average exchange
rates for the Japanese yen to the U.S. dollar and the Euro will be JPY 105
and JPY 155, respectively, for the fiscal fourth quarter ending March 31,
2008, and JPY 114 and JPY 161, respectively, for the full year ending March
31, 2008.
Dividend per Share of Common Stock
The Board of Directors of Honda Motor Co., Ltd., at its meeting held on
January 30, 2008, resolved to make the quarterly dividend of JPY 22 per
share of common stock, the record date of which is December 31, 2007. It
also intends to distribute year-end cash dividends of JPY 22 per share, the
record date of which will be March 31, 2008. The total projected annual
dividend per share of common stock for the fiscal year ending March 31,
2008, together with the first quarter and the second quarter cash dividends
of JPY 20 and JPY 22 per share, respectively, is JPY 86 per share, an
increase of JPY 19 per share from the annual dividends paid for the year
ended March 31, 2007.
This announcement contains "forward-looking statements" as defined in
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Such statements 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 materially differ 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.
SOURCE Honda Motor Co., Ltd.
TOKYO, Jan. 30 /PRNewswire/ -- Honda Motor Co., Ltd. today announced
its consolidated financial results for the fiscal third quarter and the
fiscal nine months ended December 31, 2007.
Third Quarter Results
Honda's consolidated net income for the fiscal third quarter ended
December 31, 2007 totaled JPY 200.0 billion (USD 1,752 million), an
increase of 38.1% from the same period in 2006. Basic net income per common
share for the quarter amounted to JPY 110.25 (USD 0.97), an increase of JPY
30.80 from JPY 79.45 for the corresponding period in 2006. One Honda
American Depository Share represents one common share.
Consolidated net sales and other operating revenue (herein referred to
as "revenue") for the quarter amounted to JPY 3,044.8 billion (USD 26,674
million), an increase of 10.0% from the same period in 2006, due mainly to
increased revenue in Europe, Asia and other regions in motorcycle business
and in automobile business. Honda estimates that if calculated at the same
exchange rate as the corresponding period in 2006, revenue for the quarter
would have increased by approximately 8.9%.
Consolidated operating income for the quarter totaled JPY 276.2 billion
(USD 2,420 million), an increase of 34.7% compared to the same period in
2006. This increase in operating income was primarily due to the increased
profit attributable to higher revenue and continuing cost reduction efforts
which offset the negative impact of increased raw material costs, increased
depreciation expenses and R&D expenses.
Consolidated income before income taxes, minority interest and equity
in income of affiliates for the quarter totaled JPY 260.7 billion (USD
2,284 million), an increase of 31.2% from the same period in 2006.
Equity in income of affiliates amounted to JPY 31.3 billion (USD 274
million) for the quarter, an increase of 21.3% from the same period in
2006.
Business Segment
With respect to Honda sales for the fiscal third quarter by business
segment, motorcycle unit sales totaled 2,366 thousand units, a decrease of
14.4% from the same period in 2006. Unit sales in Japan totaled 54 thousand
units, a decrease of 23.9% from the same period in 2006. Overseas unit
sales was 2,312 thousand units, a decrease of 14.2% from the same period in
2006, due mainly to a decline in unit sales of parts for local production
at Honda's affiliates accounted for under the equity method in Asia, more
than offsetting favorable unit sales mainly in Brazil and Vietnam. Revenue
from external customers increased 20.3%, to JPY 364.6 billion (USD 3,195
million) from the same period in 2006, due mainly to the increased revenue
in Asia and other regions and the positive impact of currency translation
effects. Operating income increased by 172.2% to JPY 30.3 billion (USD 266
million) from the same period in 2006, due mainly to the change in model
mix, increased profit attributable to higher revenue, and positive currency
effects caused by the depreciation of the Japanese yen, offsetting
increased SG&A expenses.
Honda automobile unit sales totaled 991 thousand units, an increase of
8.3% from the same period in 2006. In Japan, unit sales amounted to 145
thousand units, a decrease of 7.1% from the same period in 2006. Overseas
unit sales increased 11.5% to 846 thousand units from the same period in
2006, due mainly to the increased unit sales in North America with the
positive effect of all-new Accord launched in September, and increased unit
sales in Europe, Asia and other regions. Increased overseas unit sales of
CR-V and Civic also contributed. Revenue from external customers increased
8.2% to JPY 2,449.0 billion (USD 21,454 million) from the same period in
2006, due mainly to increased overseas unit sales and the positive impact
of currency translation effects. Operating income increased 37.3% to JPY
220.7 billion (USD 1,934 million) from the same period in 2006, due mainly
to increased profit attributable to higher revenue, continuing cost
reduction efforts, a decrease in provision for sales incentives in North
America and decreased SG&A expenses, offsetting adverse effect on the
elimination of unrealized profits on inventories, increased raw material
costs, increased depreciation expenses and R&D expenses.
Revenue from customers in financial services business increased 30.4%
to JPY 135.9 billion (USD 1,191 million) from the same period in 2006.
Operating income increased 0.7% to JPY 22.9 billion (USD 201 million) from
the same period in 2006, due primarily to increased profit attributable to
higher revenue, offsetting the increased SG&A expenses.
Honda power product unit sales totaled 1,178 thousand units, a decrease
of 14.8% from the same period in 2006. In Japan, unit sales totaled 123
thousand units, a decrease of 0.8% from the same period in 2006. Overseas
unit sales totaled 1,055 thousand units, a decrease of 16.1% from the same
period in 2006, due primarily to a decline of unit sales of general purpose
engines that are supplied to original equipment manufacturers (OEM)* in the
U.S. and Europe despite increased unit sales of general purpose engines in
China. Revenue from external customers in power product and other
businesses decreased by 2.1% to JPY 95.1 billion (USD 834 million) from the
same period in 2006, due mainly to decreased unit sales of power products
in North America. Operating income decreased 78.3% to JPY 2.2 billion (USD
20 million) from the same period in 2006. This was primarily due to the
decreased revenue, increased SG&A expenses in power product business and
increased R&D expenses in other businesses.
*OEM: (Original Equipment Manufacturing)
OEM refers to a manufacturing of products and components supplied for
sale under a third-party brand.
Geographical Information
With respect to Honda sales for the fiscal third quarter by geographic
area, in Japan, revenue for domestic and exports sales totaled JPY 1,246.1
billion (USD 10,917 million), up 1.8% compared to the same period in 2006,
due primarily to the increased revenue from exports in automobile business,
which offset the negative impact of the decreased unit sales of automobiles
in Japan. Operating income totaled JPY 56.2 billion (USD 493 million), up
34.1% from the same period in 2006, due primarily to continuing cost
reduction efforts, higher revenue and decreased SG&A expenses, offsetting
increased raw material costs, increased depreciation expenses and R&D
expenses.
In North America, revenue increased by 1.8% to JPY 1,640.5 billion (USD
14,372 million) from the same period in 2006, due mainly to increased unit
sales in automobile business and increased operating lease revenues in
financial services business, offsetting the negative impact of currency
translation effects caused by depreciation of the U.S. dollars against
Japanese yen. Operating income increased by 32.3% to JPY 156.3 billion (USD
1,370 million) from the same period in 2006, due primarily to the change in
sales price and a decrease in provision for sales incentives in automobile
business, higher revenue, continuing cost reduction efforts and the
decreased SG&A expenses, which more than offset the negative impact of
increased raw material costs.
In Europe, revenue increased by 33.1% to JPY 361.7 billion (USD 3,169
million), from the same period in 2006, due primarily to the increased
automobile unit sales and the positive impact of currency translation
effects. Operating income increased by 54.5% to JPY 5.8 billion (USD 51
million) from the same period in 2006, due primarily to higher revenue and
positive currency effects caused by depreciation of the Japanese yen.
In Asia, revenue increased by 36.2% to JPY 413.4 billion (USD 3,622
million) from the same period in 2006, due primarily to increased
automobile unit sales and the positive impact of the currency translation
effects. Operating income increased by 89.3% to JPY 38.3 billion (USD 336
million) from the same period in 2006, due mainly to increased profit
attributable to higher revenue and positive currency effects caused by
depreciation of the Japanese yen, more than offsetting increased SG&A
expenses.
In Asia, in addition to subsidiaries, many affiliates accounted for
under the equity method manufacture and sell Honda-brand products.
Operating income does not include income from these affiliates. Income from
these affiliates is recorded as equity in income of affiliates and
reflected in net income. Accounting terms of some of the affiliates differ
from the Company's.
In other regions, revenue increased by 47.4% to JPY 284.6 billion (USD
2,493 million) compared to the same period in 2006, due mainly to increased
revenue in all business segments and the positive impact of currency
translation effects. Operating income increased by 98.1% to JPY 31.7
billion (USD 278 million) from the same period in 2006, due mainly to
higher revenue and the positive currency effects caused by depreciation of
the Japanese yen, offsetting increased SG&A expenses.
Nine Months Results
Honda's consolidated net income for the fiscal nine months ended
December 31, 2007 totaled JPY 574.6 billion (USD 5,034 million), an
increase of 38.1% from the same period in 2006. Basic net income per common
share for the period amounted to JPY 316.49 (USD 2.77), an increase of JPY
88.53 from JPY 227.96 for the same period in 2006.
Consolidated revenue for the period amounted to JPY 8,947.2 billion
(USD 78,382 million), an increase of 11.9% from the same period in 2006.
Honda estimates that if calculated at the same exchange rate as the
corresponding period in 2006, revenue for the period would have increased
by approximately 7.6%.
Consolidated operating income for the period totaled JPY 784.2 billion
(USD 6,870 million), an increase of 30.4% compared to the same period in
2006. This increase in operating income was primarily due to increased
profit attributable to higher revenue, continuing cost reduction efforts
and positive currency effects caused by depreciation of the Japanese yen,
which offset increased raw material costs, and increased depreciation
expenses, SG&A expenses and R&D expenses.
Consolidated income before income taxes, minority interest and equity
in income of affiliates for the period totaled JPY 748.9 billion (USD 6,561
million), an increase of 35.2% from the same period last year.
Equity in income of affiliates amounted to JPY 94.5 billion (USD 828
million) for the period, an increase of 13.3% from the same period last
year.
Business Segment
With respect to Honda sales for the fiscal nine months by business
segment, motorcycle unit sales totaled 6,952 thousand units, a decrease of
12.7% from the same period in 2006. Unit sales in Japan totaled 245
thousand units, a decrease of 5.0%. Overseas unit sales was 6,707 thousand
units, a decrease of 12.9% from the same period in 2006, due mainly to
decreased units sales of parts for local production at Honda's affiliates
accounted for under the equity method in Asia, offsetting an increase in
unit sales in other regions especially in Latin America. Revenue from
external customers increased 17.5%, to JPY 1,114.6 billion (USD 9,765
million) from the same period in 2006, due mainly to increased revenue in
Asia and other regions and the positive impact of currency translation
effects. Operating income increased by 74.8 % to JPY 98.5 billion (USD 863
million) from the same period in 2006, due mainly to the increased profit
on higher revenue and the positive currency effects caused by depreciation
of the Japanese yen, offsetting increased SG&A expenses and R&D expenses.
Honda automobile unit sales was 2,874 thousand units, an increase of
6.6% from the same period in 2006. In Japan, unit sales decreased 12.2% to
424 thousand units. Overseas unit sales increased 10.8% to 2,450 thousand
units, due mainly to the increased unit sales in North America, Europe,
Asia and other regions. Revenue from external customers increased 10.4% to
JPY 7,132.7 billion (USD 62,486 million) from the same period in 2006, due
to the increased overseas unit sales and the positive impact of currency
translation effects. Operating income increased 31.8% to JPY 582.0 billion
(USD 5,099 million) from the same period in 2006, due mainly to higher
revenue, continuing cost reduction efforts and positive currency effects
caused by the depreciation of the Japanese yen, which offset the negative
impact of increased raw material costs, increased depreciation expenses and
increased SG&A expenses and R&D expenses.
Revenue from customers in financial services business increased 35.3%
to JPY 395.5 billion (USD 3,465 million) from the same period in 2006.
Operating income increased 15.9% to JPY 86.4 billion (USD 757 million) from
the same period in 2006, due mainly to increased profit on higher revenue,
which offset increased SG&A expenses.
Honda power products unit sales was 3,965 thousand units, down 7.6%
from the same period in 2006. In Japan, unit sales totaled 399 thousand
units, an increase of 2.8% from the same period in 2006. Overseas unit
sales decreased 8.7%, to 3,566 thousand units, due mainly to a decline in
unit sales in North America. Revenue from external customers in power
product and other businesses increased by 1.5% to JPY 304.3 billion (USD
2,667 million) from the same period in 2006. Operating income was JPY 17.2
billion (USD 151 million), a decrease of 40.5% from the same period in
2006, due mainly to increased SG&A expenses in power product business and
the increased R&D expenses in Other businesses.
Geographical Information
With respect to Honda sales for the fiscal nine months by geographical
segment, in Japan, revenue for domestic and exports sales was JPY 3,637.9
billion (USD 31,870 million), up 3.7% compared to the same period in 2006,
due primarily to increased revenue from exports in automobile business and
positive currency effects, which partially offset the negative impact of
decreased automobile sales in Japan. Operating income was JPY 190.2 billion
(USD 1,666 million), up 19.0% from the same period in 2006, due primarily
to increased profit attributable to higher revenue, continuing cost
reduction efforts, decreased SG&A expenses and positive currency effects,
which offset the negative impact of increased raw material costs, increased
depreciation expenses and R&D expenses.
In North America, revenue increased by 6.2% to JPY 4,781.0 billion (USD
41,884 million) from the same period in 2006, due mainly to increased sales
in automobile business, increased operating lease revenues in financial
services business and positive impact of the currency translation effects.
Operating income increased by 12.5% to JPY 369.4 billion (USD 3,237
million) from the same period in 2006, due primarily to increased profit on
higher revenue, continuing cost reduction efforts and positive currency
effects.
In Europe, revenue increased by 27.0% to JPY 1,152.8 billion (USD
10,099 million) compared to the same period in 2006, due primarily to
increased automobile unit sales and the positive impact of the currency
translation effects. Operating income increased by 70.5% to JPY 32.8
billion (USD 288 million) from the same period in 2006.
In Asia, revenue increased by 35.1% to JPY 1,222.3 billion (USD 10,708
million) from the same period in 2006, due primarily to the increased
automobile sales and the positive impact of currency translation effects.
Operating income increased by 87.6% to JPY 108.7 billion (USD 952 million)
from the same period in 2006.
In other regions, revenue increased by 37.5% to JPY 778.8 billion (USD
6,823 million) compared to the same period in 2006, due mainly to increased
motorcycle and automobile sales and the positive impact of the currency
translation effects. Operating income increased by 58.8% to JPY 83.7
billion (USD 733 million) from the same period in 2006.
Forecasts for Fiscal Year Ending March 31, 2008
With regard to the forecasts of financial results for the fiscal year
ending March 31, 2008, Honda projects consolidated results as shown below:
FY2008 Forecasts for Consolidated Results
Fiscal year ending March 31, 2008
Yen (billions) Changes from FY2007
Net sales and other operating revenue 12,150 + 9.6%
Operating income 920 + 8.0%
Income before income taxes, minority
interest and equity in income of
affiliates 915 + 15.4%
Net income 690 + 16.5%
Yen
Basic net income per common share 380.25 --
These forecasts are based on the assumption that the average exchange
rates for the Japanese yen to the U.S. dollar and the Euro will be JPY 105
and JPY 155, respectively, for the fiscal fourth quarter ending March 31,
2008, and JPY 114 and JPY 161, respectively, for the full year ending March
31, 2008.
Dividend per Share of Common Stock
The Board of Directors of Honda Motor Co., Ltd., at its meeting held on
January 30, 2008, resolved to make the quarterly dividend of JPY 22 per
share of common stock, the record date of which is December 31, 2007. It
also intends to distribute year-end cash dividends of JPY 22 per share, the
record date of which will be March 31, 2008. The total projected annual
dividend per share of common stock for the fiscal year ending March 31,
2008, together with the first quarter and the second quarter cash dividends
of JPY 20 and JPY 22 per share, respectively, is JPY 86 per share, an
increase of JPY 19 per share from the annual dividends paid for the year
ended March 31, 2007.
This announcement contains "forward-looking statements" as defined in
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Such statements 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 materially differ 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.
SOURCE Honda Motor Co., Ltd.
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