Honda Corporate Update Spring Acura RDX (Prototype)

Transcription

1 Honda Corporate Update Spring 2019 Acura RDX (Prototype)

2 Honda Corporate Update Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations 2030 Vision Other Topics Financial Highlights 2

3 Profit Structure Profile over Past Decade and FY19 Forecast USD/JPY for FY ,800 PP & Others Finance Motorcycle Automobile O/P Margin Yen (billion) 1,600 US GAAP IFRS 1,400 1,200 1, % 4.2% Earthquake Thai flood 2.9% % 5.5% 5.0% % % 5.4% 4.5% FY (P) * 2012 * Forecast as of April 27, Airbag Inflator Issue 503 7% 5% 3% 1% -1% 3

4 Forecast: Honda Group Unit Sales 19,554 Motorcycles 20,545 Automobiles Power Products 5,199 5,375 6,262 6,290 Unit (Thousand) ( % ) ( % ) +28 ( % ) Results FY19 Forecast Results FY19 Forecast Results FY19 Forecast Results FY19 Forecast Change Results FY19 Forecast Change Results FY19 Forecast Change Japan ,902 2, ,012 3, North America Europe ,022 1, Asia 17,720 18, ,166 2, ,512 1, Other Region 1,120 1, Total 19,554 20, ,199 5, ,262 6,

5 Forecast: Consolidated Unit Sales 12,954 Motorcycles 13,560 Automobiles 3,689 3,835 Power Products 6,262 6,290 Unit (Thousand) ( % ) ( % ) +28 ( % ) Results FY19 Forecast Results FY19 Forecast Results FY19 Forecast Results FY19 Forecast Change Results FY19 Forecast Change Results FY19 Forecast Change Japan ,902 2, ,012 3, North America Europe ,022 1, Asia 11,120 11, ,512 1, Other Region 1,120 1, Total 12,954 13, ,689 3, ,262 6,

6 FY19 Financial Forecast (Consolidated) Yen (billion) Results FY19 Forecast Change amount % Sales revenue 15, , % Operating profit % Operating margin 5.4% 4.5% - 0.9pt Share of profit of investments accounted for using the equity method % Profit before income taxes 1, % *2 Profit for the year attributable to owners of the parent 1, % Earnings per share attributable to owners of the parent *1 (Yen) *1:Please refer to the footnote on page 48 Market average rates (Yen) *2 :Profit for the year attributable to owners of the parent, excluding the bil. yen impact of revaluation of deferred tax assets and liabilities in the U.S. consolidated subsidiaries due to the tax reform, is bil. yen, and earnings per share attributable to owners of the parent is yen, respectively. US Dollar Yen up by 6 yen 6

7 FY19 Forecast: Change in Operating Profit Operating profit ( % ) Yen (billion) Currency Effects Litigation Settlement * Restitution income * Excluding currency effects, litigation settlement and restitution income Operating profit ( % ) Revenue, model mix, etc. Cost Reduction, etc. Increase in SG&A Increase in R&D Operating margin 5.4% Operating margin 4.5% Operating margin 4.5% Results *Litigation settlement and restitution income related to airbag inflator in FY19 Forecast 7

8 Change in the company s shareholders return policy Purpose for the change Further improving the Company s capital strategy Points of the change Acquisition of the Company s own shares at a timing that it deems optimal Goal: to maintain a shareholders return ratio of approximately 30% Goal: to realize a return ratio alone of approximately 30% With respect to the redistribution of profits to its shareholders, the Company s basic policy is to determine such distributions after taking into account, among others, its retained earnings for future growth and consolidated earnings performance based on a long-term perspective. 8

9 Shareholders Return (Yen) Dividend per Share FY17 Increase/ FY19 (Expectation) Decrease from FY17 Increase/ Decrease from 1 st Quarter End ( 27 ) ( + 3 ) 2 nd Quarter End ( 27 ) ( + 3 ) 3 rd Quarter End ( 27 ) ( + 2 ) 4 th Quarter End ( 27 ) ( - ) Fiscal Year ( 108 ) ( + 8 ) Acquisition of the Company s Own Shares Total number of shares to be acquired : Up to 18 million shares (shares of common stock) (1.0% of total number of issued shares (excluding treasury stock)) Total amount of shares to be acquired : Up to 70 billion yen Period of acquisition: Starting on May 7, 2018 and ending on December 31, 2018 Method of acquisition: Market purchases on the Tokyo Stock Exchange 9

10 Recent Shareholders Return Summary Trend FY11 Actual FY12 Actual FY13 Actual FY14 Actual FY15 Actual FY16 Actual FY17 Actual Actual FY19 (Expectation) 1 st Quarter End (27) 2 nd Quarter End (27) Dividend (Yen) 3 rd Quarter End (27) 4 th Quarter End (27) Fiscal Year (108) Dividend ratio* 18.3% 51.1% 37.3% 25.7% 32.2% 46.0% 26.9% 25.1% ** (33.4%) Acquisition of the (billion) Company s Own Shares (billion Yen) % Acquisition of the Company s Own Shares 51.1% (70.0) 37.3% Total Dividend 25.7% 32.2% Dividend Ratio 46.0% ** incl. impact of revaluation of DTA/DTL 16.9% 26.9% ** 25.1% % FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY19 * US GAAP up to FY15, IFRS from FY16 10

11 Honda Corporate Update Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations 2030 Vision Other Topics Financial Highlights 11

12 Inter-regional coordination and collaboration Further enhance inter-regional coordination and collaboration and increase the efficiency of our operations from a global perspective. 12

13 Global models: Accord, Civic, CR-V, Vezel/ HR-V and Fit/ Jazz Accord Civic CR-V Sharing of down-sized turbocharged engine at some trim levels Focus on platform and parts commonality Accord - All-new Accord launched in October 2017 in N.A. to be followed by other markets Civic - Underwent full model change in 2015 in N.A. and successfully launched in global market - Shares commonized platform between sedan, coupe and hatchback CR-V - All-new CR-V underwent full model change in 2016 in N.A. and global launch to be completed by Vezel/ HR-V - Grew into strong model and became one of the global models since its launch in 2013 Vezel/ HR-V Focus on platform and parts commonality Other Derivative models *Derivative models: City/Grace, Greiz and XR-V Fit 8% Accord 10% 5.3mil CY2017 Vezel 10% Civic 16% CR-V 14% Fit/ Jazz Global Models continue to be widely popular representing approx. 70% of CY2017 global Honda unit sales 13

14 Global models: Direction of Model Development Fit HR-V Global Operation Reform Concurrent development in all six regions Adoption of locally optimized design Civic CR-V Accord Further enhance electrification, autonomous driving and connectivity technologies. Spearhead industry effort to realize a carbon-free and collision-free mobile society. Adopt Lead-Country Introduction Strategy (Clarification of which region is responsible for model development leadership and increase model development efficiency.) Introduction of modular strategies Increase commonality of platform and parts (Civic, CR-V and Accord) Introduce advanced platforms to accommodate electrification of powertrains 14

15 Global Model Introductions Civic Sedan North America ASIA China Brazil Europe Japan CY2015 CY2016 CY2017 CY2018 CY2019 November March April August April September Civic Sedan CR-V (PE) North America ASIA Brazil CY2015 CY2016 CY2017 CY2018 CY2019 November April June China Europe July In 2018 CR-V Japan In

16 Regional Models China: Brand differentiation between two Joint Ventures GAC Dongfeng North America: Light Truck models Crider UR-V Pilot Odyssey Avancier XR-V Ridgeline Asia: Meet demand in each country with affordable models Japan: Mini-vehicles Mobilio BR-V N-Box N-Box + Brio Amaze N-One N-WGN Introduction of regional models has also been expanding in each region. 16

17 Flexible Global Production Infrastructure Utilization Image Japan (Units) Europe 200,000 Primarily Civic 5D production Middle East and Africa 1,000 Accord & L/T models Civic 5D Jazz CR-V, HR-V (plan) 1.06 mil <Export> Global Models & Electrified models Civic 5D 10-20% for Other regions 80-90% for Local markets Electrified models Clarity Series Civic City Acura North America 1.92 mil <Export> Acura, L/T models, Accord & CR-V CR-V South America Asia 930,000 China 150,000 <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 2017) Capacity increase to 5.7 mil Establish stable production structure leveraging regional capacity + mutual parts/model sharing 17

18 Mutually Complementary System for our Global Operations Advance our six-region global operation structure through inter-regional cooperation and coordination Flexible production system complementary production allocation between regions Supply Civic hatchback from the UK to North America and Japan WR-V was developed mainly for South America but is now also sold in Asia. 18

19 Global Production Capacity Unit (thousand) 5, , , ,270 Other China 151 1, (Export only) 151 1, (Export only) 151 1, , Asia Europe North America 1,080 FY Thailand Plan China Dongfeng ,923 1,923 1,923 Plan Japan Saitama -250 Brazil Sumare -120 Itirapina ,923 Japan 1,066 1,066 1, as of Mar '16 Apr '17 Plan '19 Plan '22 19

20 Automobile New Model Introductions (main models only) Already Launched in 2017 To be launched UR-V: China WR-V: Brazil, India Accord: N.A. Insight: U.S. Mar Apr May Jun Jul Aug Sep Oct Nov Dec RDX: U.S., China Odyssey: N.A. N-Box: Japan Clarity BEV: U.S. * Please note that To be launched models reflect the current plan and is subject to change. Also, photos are from currently available sources and are not actual specification models. Clarity PHEV: U.S., Japan (2018) 20

21 Automobile Operations by Regions <Industry> 7,500 Registered vehicles Mini vehicles 5,211 4,601 4,753 5,000 Japan 5,692 5,297 4,937 5,077 5,195 <Industry> 20,000 15,000 Passenger Cars Light Trucks 14,491 11,588 12,777 United States 15,600 16,522 Unit (thousands) 17,479 17,550 17,230 10,000 2,500 5,000 0 FY Source: JAMA <Honda> 1,000 Registered vehicles 848 Mini vehicles CY Source: Autodata <Honda> 2,000 1,500 1,000 Acura Honda Passenger Cars Honda Light Trucks 1,525 1,423 1,541 1,587 1,259 1,147 1,638 1, FY' Source: Honda 0 CY Source: Honda Improve capacity utilization through exporting global models Increase production capacity of light truck models to meet industry demand 21

22 Model Allocation: North America Production Allocation Production Plant Ohio East Liberty Plant Alabama RDX CR-V MDX Pilot 2016 Odyssey Ridgeline Shift 2017 MDX As of the end of 2017 Indiana Civic CR-V Split Global Source Ohio(East Liberty) RDX CR-V MDX Indiana Civic CR-V Civic Mexico El Salto CR-V Shift HR-V Alabama Global Source Export to N.A. Civic Pilot Ridgeline Odyssey 22

23 Model Allocation: North America Production Allocation Production Plant East Liberty MDX Ohio Marysville Accord Ohio East Liberty Plant RDX CR-V MDX CR-V CR-V Ohio Marysville Plant Accord TLX / ILX RDX TLX CR-V CR-V Indiana Civic Insight Brand-New Indiana Canada Ontario CR-V Civic Civic CR-V Insight 23

24 Automobile Operations by Regions <Industry> 8,000 4,796 4,493 4,000 Asia (Five main markets in Asia) * India: excluding commercial Malaysia Thailand vehicles and pickups Indonesia Philippines 5,965 India 5,696 5,748 5,477 5,464 5,478 <Industry> China (excluding commercial vehicles) 30,000 Minivan SUV MPV Sedan 21,146 19,701 20,000 17,929 15,495 13,757 14,473 10,000 24,378 24,719 Unit (thousands) 0 CY Source: Honda <Honda> 0 CY Source: Honda <Honda> Malaysia Indonesia India Thailand Philippines ,500 1, Acura SUV MPV Sedan Wholesale Retail 1,256 1, ,458 0 CY Source: Honda 0 CY Source: Honda Introduce new models to meet specific market needs in each Asian market. Further expand sister model strategy. 24

25 Regional Models: China Segment Sedan(4D/5D) SUV MPV GAC Accord Avancier Odyssey D Dongfeng Spirior UR-V (Mar 2017) Elysion GAC Crider Jade C B Dongfeng GAC Civic CR-V (July 2017) Fit City Vezel Two joint ventures offer different model types consistent with their respective brand image Dongfeng Gienia Greiz XR-V By utilizing common platforms and strengthening local procurement and R&D functions, successive launch of cost competitive models being realized. 25

26 Automobile Operations by Regions <Industry> 20,000 Europe (EU+EFTA) (excluding commercial vehicles) 13,743 13,542 14,095 15,132 15,632 15,000 12,452 12,240 12,913 <Industry> 5,000 Brazil (Main market in Other Region) 3,634 3,580 3,329 3,426 3,333 * excluding trucks Unit (thousands) 10,000 2,500 2,481 1,989 2,176 5,000 0 CY Source: ACEA / Honda <Honda> (EU and EFTA) CY Source: ANFAVEA <Honda> CY Source: ACEA / Honda 0 CY Source: Honda U.K. has been designated to serve as global supply base of the Civic Series. Improve Forex toughness by increasing local procurement and localization of development. 26

27 Roadmap for Environmental Technologies Strive to electrify two-thirds of all vehicles we sell globally by (CO2(g/km) FCX (2002) FCX Clarity (2008) Clarity Fuel Cell (2016) Accord PHEV (2013) Clarity BEV (2017) Clarity PHEV (2017) Global expansion ZERO emissions technology Technologies to increase electrical efficiency CR-V HEV (2017) Turbo engine Global expansion Technologies to increase thermal efficiency DI engine CVT / DCT CY2018 CY2019 CY2020 FCV BEV@China Clarity Plug-in Hybrid@Japan Urban NEW FCV Urban CDX Hybrid@China ACCORD Hybrid@NA Insight Hybrid@NA CR-V Europe 27

28 Leverage our strengths Honda s Approach to Automobile Electrification We expect that two-thirds of global automobile unit sales will be electrified by Electrification = HEV + PHEV + BEV + FCV Optimize the technologies and experiences cultivated in HEV development for electrification expansion. Key technologies we will focus on for Electrification Cooperative control Battery management Electric motors Maximize cooperative control systems to fully extract and utilize the performance of the powertrain and related devices. Maximize energy management performance and enhance heat management technologies to extend battery performance. Established JV with Hitachi AMS for development, manufacture and sale of Honda s state-of-the-art electric motors to combine our compact high-power technology with their mass-production expertise. Reinforce organization Established Electric Vehicle Development Division which will oversee comprehensive vehicle development, including the powertrain and chassis, in order to further increase development speed. 28

29 Roadmap for Environmental Technologies: Clarity Series 3-in-1 Clarity series provides unparalleled electric drive choice with premium midsize sedan capability and three advanced electrified powertrains in a single vehicle platform to efficiently address cost and manufacturability PHEV: Benefits of both Hybrids and BEVs BEV: Affordable model for daily use FCV: Ultimate zero-emissions vehicle - Clarity Plug-in Hybrid earned a class-leading 47-mile EV driving range rating and 340-mile extended range rating, launched in the U.S.(2017) and will be launched in Japan (2018). - Clarity Electric, a spacious, comfortable and affordable sedan that suits their daily driving needs was launched in the U.S.(2017). - Clarity Fuel Cell, only five-passenger FCV sedan in the industry, was launched in Japan in March 2016 and in the U.S. in December 2016, respectively. 29

30 BEV/PHEV Model Introductions FY19 FY20 FY21 BEV China GAC Dongfeng SUV SUV North America Clarity(D-category) Europe Japan Urban EV (B-category) Urban EV PHEV North America Japan Regulation New ZEV (U.S.) Clarity(D-category) Clarity(D-category) NEV(China) Urban EV Concept Everus EV Concept Clarity Plug-In Hybrid 30

31 Toward realization of a collision-free mobile society * For Acura vehicles, called Acura Watch Expanding adoption of Honda SENSING Japan: Make Honda SENSEING standard equipment on all new models to be introduced North America/ China/ Europe/ Other regions: Expanding application to all-new models 31

32 Automated Driving Roadmap - Strive to realize automated lane-changing function which enables the vehicle to drive in multiple lanes without any command from the driver on highways in Strive to achieve the technological establishment of level 4 automated driving for use in personal cars by around

33 Honda s approach to the new business environment Autonomous Driving Waymo SenseTime Electrification Hitachi AMS (EV Motor) Neusoft(China EV) General Motors (FC Stack) Artificial Intelligence Softbank (Emotion Engine) Kyoto University Boston University (Information Security) Car Sharing ZipCar (U.S.) Reachstar (China) Grab (Asia) - Motorcycles Connectivity Softbank (5G Mobile Communication System) Alibaba (Honda CONNECT) New Organizational Structure R&D Center X Honda Xcelerator - Global expansion 33

34 Honda Corporate Update Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations 2030 Vision Other Topics Financial Highlights 34

35 Overview of Motorcycle Business Yen (billion) 300 Operating Profit and Margin 13.1% 10.6% 10.5% 10.4% 10.1% 9.9% % FY Honda M/C Business = High Profitability + Stability + Growth Potential Unit (thousand) 20,000 15,000 Honda Global Unit Sales 15,061 15,494 17,008 17,592 17,055 17,661 19,554 20,545 10,000 5,000 FY (P) *Operating profit and margin, and Unit sales until FY13 are based on US GAAP while FY14 and after are based on IFRS 35

36 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. FY2017 Cub 110/125cc 2.3 mil 1.9 mil Light Motorcycle 110/125cc ACTIVA 110cc 2.4 mil Scooter 110cc 3.6mil 36

37 Motorcycle Market Size and Honda Share (CY2017) Motorcycle production at 35 plants in 21 countries Thailand 1.8 mil Vietnam 3.3 mil Europe 1.1 mil Italy 16% China Pakistan Bangladesh India 80% Vietnam Japan 0.4 mil 72% 44 % 21% U.S.A (MC+ATV) 0.7 mil Mexico U.S.A (ATV, S S) Nigeria Kenya Thailand Malaysia Philippines Peru India 19.2 mil 28% Indonesia Indonesia 5.9 mil 75% Brazil Argentine 82% Brazil 0.8 mil *Market share excluding 50cc Annual Production Capacity in India 5.8mil in mil in

38 GDP per capita (USD) Growth in Motorcycle Popularity 1.8mil Thailand (CY2017) 4,000 3,000 Nigeria Philippines Indonesia 5.9mil 2,000 Kenya Bangladesh Myanmar India 19.2 mil 3.3mil Vietnam 1,000 Pakistan Source: Honda & IMF 0.2mil Next Markets Growing Markets Mature Markets Motorcycle Market Penetration in Asia India 8% (millions) 1,339 Indonesia 25% 264 Significant growth expected Vietnam Thailand 33% 96 40% 69 Number of motorcycles units in operation Population Source: Honda & United Nations Note: penetration rate is as of

39 Motorcycle Market Share Trend in India 50% 45% 40% 35% Hero Honda India Company A (Wholesale) Fast Growing Segment Scooter / Motorcycle Sales Ratio (Industry) In CY2011 SC 18% In CY2017 MC MC 67% 82% SC 33% 30% 25% 20% 15% Company B Honda Company C Scooter Unit Sales of Honda / Competitors and Honda Share in Scooter Market 7,000 6,000 5,000 Competitors (Unit) Honda (Unit) Honda Share(%) 70% 60% 50% 10% 4,000 40% 5% Company D 3,000 30% 0% CY ,000 20% Honda is now No.2 in market share. 1,000 0 CY % 0% 39

40 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 4.0mil 5.8mil mil th 3 rd 3 rd Karnataka nd 1 st CY Product Line-up 110cc AT-Scooter Activa 110cc AT-Scooter Dio 125cc Motorcycle CB Shine 110cc Motorcycle Dream Yuga 40

41 Electrification in Motorcycle and Mobile Battery Introduce PCX ELECTRIC / PCX HYBRID in Japan (2018). For future expansion of electric motorcycles/scooters: - Utilizing electric commuters, which feature a detachable mobile battery is under consideration (in collaboration with the Japan Post Co., Ltd.) - E-KIZUNA project with Saitama-city and Yamaha Motor Co., Ltd. is conducting an experiment involving electric motorcycles and replacement of batteries. EV motorcycle sharing scheme also under consideration. Removable mobile battery pack and recharging station PCX Electric Honda Mobile Power Pack Honda Mobile Power Pack Exchanger Concept 41

42 Honda Corporate Update Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations 2030 Vision Other Topics Financial Highlights 42

43 2030 Vision 43

44 2030 Vision - Focus on three areas: Mobility, Robotics and Energy - Strive to further expand the joy of people by offering products and services - Strive to become No.1 in the areas of the environment and safety 44

45 Honda Corporate Update Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations 2030 Vision Other Topics Financial Highlights 45

46 HondaJet The HondaJet is the world s most advanced light jet. The aircraft is the fastest, highest-flying, most fuel-efficient, and has the most comfortable cabin in its class. Advanced Technologies - Over-The-Wing Engine Mount (OTWEM) Configuration Wave drag reduction, maximized fuselage space - Natural Laminar Flow (NLF) Technology Aerodynamic drag reduction - Composite Fuselage Light-weight structure - Advanced Cockpit Minimized pilot workload, intuitive operation Certification Received - United States (Dec. 2015) - Mexico (Mar. 2016) - Europe (May. 2016) Sales Units - Canada (Jun. 2017) - Brazil (Aug. 2017) - Delivered 67 units by the end of Dec HondaJet was the most-delivered Jet in its category for Expanded sales to China, Hong Kong and Macau with appointment of Honsan General Aviation as HondaJet China. - Signed a Memorandum of Understanding for multiple HondaJets to upgrade the Wijet fleet, a provider of air taxi services. - Extended sales to India with appointment of Arrow Aircraft as HondaJet India. 46

47 The Company with Audit and Supervisory Committee Directors (excluding Audit and Supervisory Committee Members) Directors (serving as Audit and Supervisory Committee Members) Internal Outside Directors Total Total For faster decision making, transfer of authority to Executive Council from Board of Directors to resolve most matters - Board of Directors will focus more on discussions of mid to long term business strategies, as well as strengthening of oversight function 47

48 External Evaluation on Honda s Stakeholder Engagement Selected for the Dow Jones Sustainability World Index Honda was selected for the first time as a component of the Dow Jones Sustainability World Index ( DJSI World ). The Dow Jones Sustainability Indices ( DJSI ) serve as one of the key benchmarks for socially responsible investing *. The DJSI are the investment indices developed and offered cooperatively by the U.S.-based S&P Dow Jones Indices and Switzerland-based RobecoSAM who evaluate sustainability of the world's leading companies in terms of economic, environmental and social criteria and select companies that demonstrate overall excellence for the indices. Selected for the Second Straight Year with a Bronze Class Rating in the RobecoSAM Sustainability Index Honda was selected for the second year running with a Bronze Class rating in the Automobiles sector of the Sustainability Award 2017 issued by Switzerland-based RobecoSAM. RobecoSAM evaluates sustainability of approximately 2,500 companies worldwide in terms of economic, environmental and social criteria. Companies deemed to be particularly outstanding in each sector are rated in categories of Gold Class, Silver Class and Bronze Class each year. Selected for the Dow Jones Sustainability Asia/Pacific Index Securing an A- on the CDP Japan 500 Climate Change Report 2017 Honda was selected for the third consecutive year as a member of the Dow Jones Sustainability Asia/Pacific Index. The DJSI are the investment indices developed and offered cooperatively by the U.S.-based S&P Dow Jones Indices and Switzerland-based RobecoSAM who evaluate sustainability of the world's leading companies in terms of economic, environmental and social criteria and select companies that demonstrate overall excellence for the indices. In October 2017, CDP released the results of a survey on climate change initiatives and reduction of GHG emissions for 5,000 major companies worldwide. Honda received an A- rating, a score at the leadership level, in recognition of activities deemed to be best practices in environmental management in the CDP Japan 500 Climate Change Report 2017, one of those categories. CDP is an international NPO that provides a global system for measuring, disclosing, managing and sharing important environmental information from companies and cities. Company initiatives in environmental challenges are evaluated in the four stages of information disclosure, awareness, management and leadership. 48

49 Honda Corporate Update Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations 2030 Vision Other Topics Financial Highlights 49

50 Outline of Results Summary (Consolidated) Results Summary Operating profit was billion yen, a 7.1 billion yen decrease compared to the same period last year. Excluding FOREX effects, the reverse impact of the pension accounting treatment last fiscal year, the multidistrict class action litigation settlement and receipt of restitution, the positive impact from revenue and model mix, cost reduction efforts and other factors resulted in a real-term profit increase of 94.1 billion yen. Profit for the year attributable to owners of the parent increased to 1,059.3 billion yen, a 71.8% increase compared to last fiscal year, due primarily to an increase in share of profit of investments accounted for using the equity method as well as a billion yen positive impact resulting from a revaluation of deferred tax assets and liabilities of subsidiaries following a reduction in the U.S. federal corporate tax rate. 12-month results FY17 and Operating Profit Currency Effects Impact of Pension Accounting Treatment Litigation Settlement* Restitution Income* real-term profit increase FY Profit for the year attributable to owners of the parent 1,059.3 Yen (billion) FY17 *Litigation settlement and restitution income related to airbag inflator FY17 50

51 Honda Group Unit Sales < Twelve Months> Motorcycles 17,661 19,554 Automobiles Power Products 5,028 5,199 6,121 6,262 Unit (Thousand) + 1,893 ( % ) ( % ) ( % ) FY17 FY17 FY17 FY17 Change FY17 Change FY17 Change Japan ,970 1, ,977 3, North America Europe ,035 1, Asia 15,937 17, ,783 1,964 2, ,430 1, Other Regions 1,057 1, Total 17,661 19, ,893 5,028 5, ,121 6,

52 Financial Results (consolidated) 12 Months Financial Results Yen (billion) FY17 Change Sales revenue 13, , % Operating profit % Operating margin 6.0% 5.4% - 0.6pt Share of profit of investments accounted for using the equity method % Profit before income taxes 1, , % Profit for the year attributable to owners of the parent , % Earnings per share *1 *1(Yen) attributable to owners of the parent Market average rates (Yen) US Dollar , , Yen down by 3 yen Financial Summary Sales revenue increased by 9.7% primarily due to sales increases in all business operations and positive FOREX effects. Operating profit decreased by 0.9% due primarily to an increase in SG&A expenses, the multi-district class action litigation settlement and the impact of the pension accounting treatment last fiscal year, despite the positive impact from revenue and model mix and cost reduction efforts. For *1, please refer to footnotes on page 48 1, ,006.9 FY17 1,059.3 Yen(billion) Sales Revenue Operating Profit Share of profit of investments accounted for using the equity method Profit before Income Taxes Profit for the year attributable to owners of the parent 52

53 4th Quarter Unit Sales Honda Group Unit Sales (thousand) 4Q Results (3 Months) FY17 Change Motorcycles 4,248 4, % Automobiles 1,285 1, % 6,000 5,000 4,000 3,000 2,000 Honda Group Unit Sales 4,747 4,248 1,400 1,200 1, ,2851,296 FY17 3,000 2,500 2,000 1,500 1,000 Unit (thousand) 2,477 2,218 Power Products 2,218 2, % Consolidated Unit Sales (thousand) 4Q Results (3 Months) FY17 Change Motorcycles 2,689 3, % Automobiles % Power Products 2,218 2, % 1, ,000 3,000 2,000 1, Motorcycles Automobiles Power Products Consolidated Unit Sales 3,167 2,689 1, ,000 2,500 2,000 1,500 1, Unit (thousand) 2,218 2,477 Motorcycles Automobiles Power Products Honda Group Unit Sales Increase in motorcycle unit sales due mainly to sales growth in India, Pakistan and Thailand Increase in automobile unit sales due mainly to sales growth in China and North America despite a decrease in Indonesia 53

54 Financial Results 4Q Results (3 Months) FY17 Change Sales revenue 3, , % Operating profit % Operating margin 3.7% 3.2% - 0.5pt Share of profit of investments accounted for using the equity method % Profit before income taxes % Profit for the period attributable to owners of the parent *1 (Yen) Earnings per share attributable to owners of the parent Market average rates (Yen) *1: Please refer to the footnote on page % US Dollar Yen (billion) Operating Profit th Quarter Financial Results (Consolidated) Yen up by 6 yen Yen (billion) 10% FY17 7.7% 8% % 4% 2% Financial Summary Sales revenue increased by 4% primarily due to sales increases in all business operations. Operating profit decreased by 8.2% due primarily to an increase in SG&A expenses and negative FOREX effects despite the positive impact from cost reduction efforts and other factors. Profit for the period attributable to owners of the parent increased by 1.8% due mainly to an increase in share of profit of investments accounted for using the equity method. Operating Margin (excl. pension impact 4.4%) 7.0% 7.3% 4.1% 7.2% (excl. litigation settlement 5.5%) FY17 5.9% 3.7% 3.2% 0 1Q 2Q 3Q 4Q 0% 1Q 2Q 3Q 4Q 54

55 Motorcycles - Honda Group Unit Sales (Motorcycles, All-Terrain Vehicles, Side-by-Side etc.) Unit (Thousand) 7,000 6,000 Grazia (India) <Asia> Increased sales in India, Pakistan and Thailand ( % ) 5,000 4,000 3,000 2,000 4,352 4,538 4,523 4,248 4,699 5,238 4,870 4,747 1, Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY17 Japan North America Europe Asia 3,885 4,125 4,115 3,812 4,219 4,804 4,437 4,260 Other Regions Total 4,352 4,538 4,523 4,248 4,699 5,238 4,870 4,747 55

56 Automobiles - Honda Group Unit Sales 1,500 Pilot (U.S.) <North America> Increased sales of Pilot <Asia> Increased sales of Avancier and UR-V in China Decreased sales of HR-V in Indonesia Unit (Thousand) + 11 ( % ) 1, ,213 1,218 1,312 1,285 1,267 1,292 1,344 1, Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY17 Japan North America Europe Asia Other Regions Total 1,213 1,218 1,312 1,285 1,267 1,292 1,344 1,296 56

57 Power Products - Honda Group Unit Sales GCV160 (Engine) <North America> Increased sales of OEM engines <Asia> Increased sales of OEM engines in China and Thailand Unit (Thousand) ( % ) 2,500 2,000 1,500 1, ,488 1,240 1,175 2,218 1,331 1,258 1,196 2, Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY17 Japan North America , ,347 Europe Asia Other Regions Total 1,488 1,240 1,175 2,218 1,331 1,258 1,196 2,477 57

58 Change in Profit before Income Taxes < 4th Qtr> Profit before Income Taxes ( % ) Yen (billion) Operating Profit FY17 4Q Operating Profit ( % ) Excluding currency effects and restitution income Cost Revenue, Reduction, model mix, etc. etc Increase in SG&A Decrease in R&D <Decrease Factors> - Increase in warranty, etc. <Increase Factors> - Cost reduction efforts, etc. <Decrease Factors> - Raw material price increase, etc. Currency Effects - Impact of Pension Accounting Treatment In FY Litigation Restitution Settlement * Income* *Litigation settlement and restitution income related to airbag inflator +9.3 Share of profit of investments accounted for using the equity method - Currency Effects - Interest rate swap /currency swap -Others -JPY/ USD USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies -1.5 (INR, THB, VND, CNY, IDR) -Others Finance income and Finance costs Operating Profit Q 58

59 Change in Profit before Income Taxes < Twelve Months> Profit before Income Taxes ( % ) Yen (billion) 1,006.9 Operating Profit FY Operating Profit -7.1 ( % ) Excluding currency effects, pension impact, litigation settlement and restitution income Cost Reduction, Revenue, etc. model mix, etc. Increase in SG&A Increase in R&D <Increase Factors> - Cost reduction efforts, etc. <Decrease Factors> - Raw material price increase, etc. Currency Effects Impact of Pension Accounting Treatment In FY17 -JPY / USD - USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies (INR, THB, VND, CNY, IDR) -Others Litigation Restitution Settlement * Income* - Currency Effects - Interest rate swap /currency swap -Others *Litigation settlement and restitution income related to airbag inflator Share of profit of investments accounted for using the equity method Finance income and finance costs ,114.9 Operating Profit

60 Motorcycle Business Sales Revenue/Operating Profit (Margin) Unit (thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) FY17 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4,352 (2,831) 4,538 (3,042) 4,523 (2,675) 4,248 (2,689) 4,699 (3,245) 5,238 (3,446) 4,870 (3,096) 4,747 (3,167) Sales Revenue Yen (billion) Operating Profit Operating Margin ( % ) (Currency effect - 8.1) 7.2% 14.5% (excl. pension impact :12.9%) 10.0% 8.4% 15.5% 13.4% 13.0% 10.5% 20% 15% 10% <Increase Factors> Positive impact from sales volume 等 and model mix, etc. ( % ) 5% 0% -5% % -15% 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY17-20% 60

61 Automobile Business Sales Revenue/Operating Profit (Margin) Unit (thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) FY17 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1,213 (908) 1,218 (890) 1,312 (925) 1,285 (960) 1,267 (900) 1,292 (907) 1,344 (932) 1,296 Sales Revenue 2, , , , , , , ,826.1 (950) Yen (billion) Operating Profit Operating Margin ( % ) (Currency effect ) 7.3% 5.5% (excl. pension impact :2.4%) 5.0% 2.0% 5.3% 1.5% 5.8% (excl. litigation settlement :3.4%) 0.9% 10% <Decrease Factors> Increase in SG&A expenses incl. warranty, etc. ( % ) 0% -10% Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY % 61

62 Power Product & Other Businesses Sales Revenue/Operating Profit (Margin) Unit (thousand) Yen (billion) Honda Group * Unit Sales (Consolidated Unit Sales) FY17 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1,488 (1,488) 1,240 (1,240) 1,175 (1,175) 2,218 (2,218) 1,331 (1,331) 1,258 (1,258) 1,196 (1,196) 2,477 (2,477) Sales Revenue Yen (billion) Operating Profit Operating Margin ( % ) (Currency effect - 0) *Honda Group Unit Sales and Consolidated 10% Unit Sales include only power product units <Decrease Factors> Negative impact from sales volume and model mix, etc. 5% % % (excl. pension impact :- 4.4%) % % % 1.7% % 0% -5% -10 (For reference) Operating profit from aircraft and aircraft engines -7.9% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY % 62

63 Financial Services Business Total Assets/Sales Revenue/Operating Profit (Margin) Yen (billion) Total Assets of Finance Subsidiaries FY17 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 8, , , , , , , ,409.2 Sales Revenue Yen (billion) Operating Profit Operating Margin ( % ) (Currency effect ) 10.8% 8.5% 9.3% 9.2% 9.2% 8.8% 9.6% 9.1% 15% 10% <Increase Factors> Increase in operating lease revenues, etc. ( % ) 5% 0% -5% % -15% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY17-20% 63

64 Unit (thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales Motorcycle Business FY17 Twelve Months Sales Revenue/Operating Profit (Margin) by Business Segment < Twelve Months > Twelve Months Automobile Business FY17 Twelve Months Twelve Months Power Product and Other Businesses FY17 Twelve Months Twelve Months Financial Services Business FY17 Twelve Months Twelve Months 17,661 19,554 5,028 5,199 6,121 6, (11,237) (12,954) (3,683) (3,689) (6,121) (6,262) (-) (-) Sales Revenue 1, , , , , , Operating Profit : Yen (billion) Operating Margin : (%) ( 9.9 % ) ( 13.1 % ) ( 4.9 % ) ( 3.4 % ) ( % )( % ) ( 9.4 % ) % % % ( 9.2 % ) FY17 FY17 FY17 FY17 Twelve Twelve Twelve Twelve Twelve Twelve Twelve Twelve Months Months Months Months Months Months Months Months 64

65 Sales Revenue/Operating Profit by Geographical Segment < 4th Qtr> Japan North America Europe Asia Other Regions FY17 FY17 FY17 FY17 FY17 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q Sales Revenue 1, , , , , % % % % FY17 FY17 FY17 FY17 FY17 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 65

66 Yen (billion) Sales Revenue Japan North America Europe Asia Other Regions FY17 FY17 FY17 FY17 FY17 Twelve Months Sales Revenue/Operating Profit (Margin) by Geographical Segment < Twelve months> Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months 4, , , , , , incl. pension impact 84.0(profit) incl. litigation settlement 53.7(loss) % % % % % FY17 FY17 FY17 FY17 FY17 Twelve Twelve Twelve Twelve Twelve Twelve Twelve Twelve Twelve Twelve Months Months Months Months Months Months Months Months Months Months 66

67 Share of Profit of Investments Accounted for Using the Equity Method Yen (billion) ( % ) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY17 From Asia Yen (billion) 67

68 Cash Flows of Non-financial Services Businesses FY17 Twelve Months 1,666.8 Net Cash 1,171.5 Cash & Cash equivalents at beginning of FY17 Free cash flow , Cash flows from operating activities Profit before income taxes Share of profit of investment accounted for using the equity method Depreciation* Other Cash flows from investing activities Capital expenditures Intangible assets Other Net Change Cash flows from financing activities Dividends paid Others -1.1 Effect of exchange rate changes Yen (billion) 2,002.5 Net Cash 1,524.8 Cash & Cash equivalents at end of period Twelve Months Free cash flow Net Change , Cash flows from 2, ,150.1 investing activities Cash flows from operating activities Cash flows from financing activities Effect of exchange rate changes Net Cash 1,524.8 Cash & Cash equivalents at beginning of Profit before income taxes Share of profit of investment accounted for using the equity method Depreciation* Other Capital expenditures Intangible assets Other Dividends paid Others * Depreciation, amortization and impairment losses excluding equipment on operating leases Net Cash 1,678.1 Cash & Cash equivalents at end of period 68

69 Forecast: Capital Expenditures, Depreciation and R&D Results FY19 Forecast Change Capital expenditures * Depreciation and amortization * Research and development expenditures ** * Capital expenditures as well as Depreciation 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 Statements of Income. 800 Capital Expenditures 8% 800 Depreciation 8% 800 R&D Expenditures 8% 600 6% 600 6% 600 6% 400 4% 400 4% 400 4% % 200 2% 200 US GAAP IFRS US GAAP IFRS US GAAP IFRS FY P 0% 0 FY P 0% 0 FY P Amounts % against Sales 2% 0% 69

70 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 statements 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 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, 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. Unit sales: Motorcycle Business Honda Group Unit Sales is the total unit sales of completed products, including motorcycles, ATVs, and Side-by-Side of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Automobile Business Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business. Power Product Businesses Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In Power Product business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales since no affiliate and joint venture accounted for using the equity method was involved in the sale of Honda power products. 70

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