Honda Corporate Update Autumn. Accord

Transcription

1 Honda Corporate Update Autumn Accord

2 Honda Corporate Update Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Other Topics Financial Highlights 2

3 Profit Structure Profile over Past Decade and USD/JPY 19 for 8 7 1,8 PP & Others Finance Motorcycle Automobile O/P Margin Yen (billion) 1,6 7.9% US GAAP IFRS 1,4 6.4% 6.6% 6.% 7% 1,2 1, Lehman Crisis 4.2% Earthquake Thai flood % % % 5.% % FY (P) * 212 * as of November1, Airbag Inflator Issue 53 5.% 5% 3% 1% -1% 3

4 : Honda Group Unit Sales Motorcycles Automobiles Power Products Unit (Thousand) 17,661 18,77 19,18 5,28 5,8 5,13 6,121 6,165 6, ( %) + 5 ( + 1. %) ± ( ± %) Results Previous Previous Revised Revised Change Results Previous Previous Revised Revised Change Results Previous Previous Revised Revised Change Japan North America ,92 1,92-3,1 3,1 - Europe ,3 1,15-15 Asia 17,15 17, ,6 2, ,46 1,455-5 Other Regions 1,5 1, Total 18,77 19, ,8 5, ,165 6,165-4

5 : Change in Operating Profit Operating profit ( % ) Yen (billion) Excluding currency effects and one time issue Operating profit ( % ) Currency Effects Impact of pension accounting treatment Cost Reduction, etc. Revenue, model mix, etc. Increase in SG&A Increase in R&D Litigation settlement 745. Operating margin 6.% Operating margin 5.3% Operating margin 5.3% Operating margin 5.% Results Revised 5

6 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 3% Goal: to realize a return ratio alone of approximately 3% 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. 6

7 Honda Corporate Update Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Other Topics Financial Highlights 7

8 23 Vision 8

9 23 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 9

10 23 Vision Utilize our corporate resources effectively and strengthen our business foundation. 1

11 23 Vision Further enhance inter-regional coordination and collaboration and increase the efficiency of our operations from a global perspective. 11

12 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 217 in N.A. to be followed by other markets Civic - Underwent full model change in 215 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 216 in N.A. - Hybrid model will be launched initially in China Vezel/ HR-V - Grew into strong model and became one of the global models since its launch in 213 Vezel/ HR-V Focus on platform and parts commonality *Derivative models: City/Grace, Greiz and XR-V Other Derivative models Fit 1% Accord 11% 5.mil CY216 Vezel 11% Civic 13% CR-V 14% Fit/ Jazz Global Models continue to be widely popular representing approx. 7% of CY216 global Honda unit sales 12

13 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 Increase commonality of platform and parts (Civic, CR-V and 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 model development leadership in each region and increase model development efficiency.) Discuss introduction of modular strategies Introduce advanced platforms to accommodate electrification of powertrains 13

14 Regional Models China: Brand differentiation between two Joint Ventures Guangqi 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. 14

15 Model Allocation: North America Production Allocation Production Plant Ohio East Liberty Plant (ELP) Alabama RDX CR-V MDX Pilot 216 Odyssey Ridgeline Shift 217 MDX As of the end of 217 Indiana Civic CR-V 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 15

16 Regional Models: China Segment Sedan(4D/5D) SUV MPV Guangqi Accord Avancier Odyssey D Dongfeng Spirior UR-V (Mar 217) Elysion Guangqi Crider Jade C B Dongfeng Guangqi Civic CR-V (July 217) 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. 16

17 23 Vision * Mono-zukuri: The art of making things Koto-zukuri: New experiences drawn from the art of making things (technology/manufacturing expertise) (innovative business solutions) Identify and prioritize core technologies and strengths (ex. powertrain, packaging ) to be developed in-house and strategically partner with external specialists for other technologies. 17

18 23 Vision GM: Collaborate on production of Next-Generation Fuel Cell stack HITACHI: Establish JV for the development, manufacture and sale of motors for electric vehicles YAMAHA: Collaboration in the area of small-sized scooters in the Japanese market JP: Collaboration toward the establishment of local charging station infrastructure Grab: Collaboration in the area of motorcycle sharing services Waymo: Technical collaboration for fully autonomous automobile driving technology 18

19 23 Vision 19

20 Honda Corporate Update Honda Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Other Topics Financial Highlights 2

21 Roadmap for Environmental Technologies Strive to electrify two-thirds of all vehicles we sell globally by 23 (CO2(g/km) FCX (22) FCX Clarity (28) Clarity Fuel Cell (216) Accord PHEV (213) Clarity BEV (217) Clarity PHEV (217) ZNew BEV in China New FCV Urban EV Concept Global expansion ZERO emissions technology Technologies to increase electrical efficiency CR-V HEV (217) Turbo engine Global expansion Technologies to increase thermal efficiency DI engine CVT / DCT Developments related to expansion of electrified vehicles - Established Electric Vehicle Development Division in Oct Launch of Clarity BEV and Clarity PHEV in N.A.(217) and Japan (218). - Introduced CR-V Hybrid model in 217 in China (world premier) - Introduction of China-exclusive BEV model and Acura CDX Hybrid in Dedicated EV models based on Urban EV Concept will be launched in Europe (219) and Japan (22). 21

22 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 address cost and manufacturability PHEV: Benefits of both Hybrids and BEVs BEV: Affordable model for daily use FCV: Supreme environmental technology - The Clarity Fuel Cell, only five-passenger FCV sedan in the industry, launched in Japan in March 216 and in U.S. in December 216, respectively - Clarity Plug-in Hybrid, which earned a class-leading 47-mile EV driving range rating and 34-mile extended range rating, will be launched in the U.S.(217) and in Japan (218). 22

23 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 23

24 Automated Driving Vision Realize collision-free society (zero human error) Provide freedom of mobility for everyone whenever it is needed Create freedom of time and space, make traveling enjoyable Serve people worldwide with the joy and freedom of collision-free mobility 24

25 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 22 - Strive to achieve the technological establishment of level 4 automated driving for use in personal cars by around

26 Global Production Capacity Unit (thousand) Other China Asia Europe North America 5, ,8 +5 (Export only) -15 5, , ,2 +5 1,8 FY Thailand (Export only) +12 5,52-25 Plan China Dongfeng ,923 1,923 1,923 (Export only) Plan Japan Saitama -25 5, , ,923 (Export only) Japan 1,66 1,66 1, as of Mar '16 Apr '17 Plan '19 Plan '22 26

27 Flexible Global Production Infrastructure Utilization Image Japan (Units) Europe 2, Primarily Civic 5D production Middle East and Africa 1, Accord & L/T models Civic 5D Jazz CR-V, HR-V (plan) 1.6 mil <Export> Global Models & Electrified models Civic 5D 1-2% for Other regions 8-9% for Local markets Electrified models Clarity Series Civic (option) City Acura North America 1.92 mil <Export> Acura, L/T models, Accord & CR-V CR-V South America Asia 93, China 15, <Export> Strengthen mutual parts/model sharing within Asia Export to Africa 1.13 mil <Export> Leverage local cost benefit for next markets (Africa) Total Capacity approx. 5.4 mil units (Since April 217) Capacity increase to 5.7 mil Establish stable production structure leveraging regional capacity + mutual parts/model sharing 27

28 Automobile Operations by Regions <Industry> 2, 15, 1,43 Passenger Cars Light Trucks 11,588 12,777 United States 14,491 15,6 16,522 17,479 17,55 <Industry> 7,5 5, 4,88 Registered vehicles Mini vehicles 4,61 4,753 Japan 5,211 5,692 5,297 4,937 5,78 Unit (thousands) 1, 5, 2,5 CY Source: Autodata <Honda> 2, 1,5 1, Acura Honda Passenger Cars Honda Light Trucks 1,423 1,259 1,151 1,147 1,525 1,541 1,587 1,638 FY Source: MUMSS <Honda> 1, Registered vehicles Mini vehicles CY Source: Honda FY Source: Honda Increase production capacity of light truck models to meet industry demand Improve capacity utilization through exporting global models 28

29 Automobile Operations by Regions <Industry> 2, 15, 1, 5, 14,58 13,743 13,542 Europe (EU+EFTA) (excluding commercial vehicles) 12,452 12,24 12,913 14,95 15,132 <Industry> China (excluding commercial vehicles) 3, Minivan SUV MPV Sedan 21,146 19,71 2, 17,929 15,495 13,757 14,473 1,331 1, Unit (thousands) 24,378 CY <Honda> Source: ACEA / Honda 4 (EU and EFTA) CY Source: Honda <Honda> 1,5 1, 5 Acura MPV 58 SUV Sedan Wholesale Retail ,1 1,256 CY Source: ACEA / Honda CY Source: Honda U.K. has been designated to serve as global supply base of the Civic Series. Further expand sister models strategy. 29

30 Automobile Operations by Regions <Industry> 8, 4, Malaysia Indonesia India 3,39 4,493 Asia (Five main market in Asia) Thailand Philippines 5,696 4,796 5,748 * India: excluding commercial vehicles and pickups 5,477 5,464 5,478 <Industry> 5, 3,8 2,5 Brazil (Main market in Other Region) 3,634 3,58 3,329 3,426 3,333 * excluding trucks 2,481 Unit (thousands) 1,989 CY Source: Honda <Honda> CY Source: ANFAVEA <Honda> 75 5 Malaysia Indonesia India Thailand Philippines CY Source: Honda CY Source: Honda Introduce new models to meet specific market needs in each Asian market. Improve Forex toughness by increasing local procurement and localization of development. 3

31 Automobile New Model Introductions (global models only) North America Japan Europe Civic CY215 CY216 CY217 November Sedan Coupe Hatchback Type R Sedan Hatchback Type R Sedan Hatchback March September June Sep April March Sep Sep Civic Sedan Civic Hatchback Type R Asia Sedan March~ China Brazil Sedan Sedan April August Civic Type R North America Asia China CR-V CY215 CY216 CY217 Gas Gas Gas HEV December March~ July Sep Civic has already been launched in most regions. CR-V is currently being introduced in many regions as well. CR-V 31

32 Automobile New Model Introductions (main models only) Already Launched in 217 To be launched UR-V: China WR-V: Brazil, India Accord: N.A. Mar Apr May Jun Jul Aug Sep Oct Clarity PHEV: U.S., Japan 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. 32

33 Honda Corporate Update Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Other Topics Financial Highlights 33

34 Overview of Motorcycle Business Yen (billion) 3 Operating Profit and Margin % 7.1% 5.2% 1.8% 1.6% 8.2% 1.5% 1.4% 1.1% 9.9% FY *Operating profit and margin until FY13 are based on US GAAP while FY14 and after are based on IFRS Honda M/C Business = High Profitability + Stability + Growth Potential Unit (thousand) 16, Honda Global Unit Sales 12, 8, 4, *excluding sales by Hero Honda 34

35 Overview of Motorcycle Business Mega Models Annual sales of each of these Mega Models has grown to approximately 3 million units. By leveraging the scale merit of this sales volume we will further enhance the efficiency of our parts procurement activities. Cub 11/125cc 2.3 mil Light Motorcycle /125cc mil 1.9 mil FY217 ACTIVA 11cc 2.4 mil Scooter 11cc 3.6mil 35

36 Motorcycle Market Size and Honda Share (CY216) Motorcycle production at 35 plants in 21 countries Thailand 1.7 mil Vietnam 3.1 mil Europe.9 mil Italy 16% China Pakistan Bangladesh India 79% Vietnam Japan.4 mil 69% 47 % 21% U.S.A (MC+ATV).7 mil Mexico U.S.A (ATV, S S) Nigeria Kenya Thailand Malaysia Philippines Peru India 17.7 mil 27% Indonesia Indonesia 5.9 mil 74% Brazil Argentine 71% Brazil 1. mil *Market share excluding 5cc Annual Production Capacity in India 5.8mil in mil in

37 Growth in Motorcycle Popularity GDP per capita (USD) 1.7mil Thailand (CY216) 4, 3, 2, 1, Nigeria.4mil Kenya.1mil Myanmar Bangladesh.8 mil.2mil Philippines 1mil 1.4mil Pakistan India 17.7 mil Indonesia 5.9mil 3.1mil Vietnam Next Markets Growing Markets Mature Markets Motorcycle Market Penetration in Asia India 8% (millions) 1,292 Source: Honda & IMF Indonesia 25% 255 Significant growth expected Vietnam Thailand 33% 91 4% 68 Number of motorcycles units in operation Population 37

38 Motorcycle Market Share Trend in India 5% 45% 4% 35% Hero Honda India Company A (Wholesale) Fast Growing Segment Scooter / Motorcycle Sales Ratio (Industry) In CY211 SC 18% In CY216 MC MC 68% 82% SC 32% 3% 25% 2% 15% Company B Honda Company C Scooter Unit Sales of Honda / Competitors and Honda Share in Scooter Market 7, 6, 5, Competitors (Unit) Honda (Unit) Honda Share(%) 7% 6% 5% 1% 4, 4% 5% Company D 3, 3% % , 2% Honda has gained the No.2 market share position. 1, % % 38

39 India Motorcycle Operations Capacity Expansion 4th 1 st 2 nd Gujarat Manesar Rajasthan Expanded annual production capacity to 6.4 mil. 4.6mil 4.6mil 4.mil 5.8mil mil th 3 rd 3 rd Karnataka nd 1 st CY13 CY14 CY15 CY16 CY17 Product Line-up 11cc AT-Scooter Activa 11cc AT-Scooter Dio 125cc Motorcycle CB Shine 11cc Motorcycle Dream Yuga 39

40 Motorcycle Business Operations in Next Markets Unit (thousands) 2, Pakistan 7% Unit (thousands) 2, Myanmar 7% 1,5 47% 48% 48% 51% 52% 6% 5% 1,5 Others Honda Share 6% 5% 1, 4% 3% 1, 4% 3% 5 FY % 1% % CD7 Others Honda Share 5 9% 12% % 1% 1% FY % 1% % Unit (thousands) 1, Bangladesh Others Honda Share 4% 5% 6% % % FY % 6% 5% 4% 3% 2% 1% % Honda Business Strategy < Pakistan > Local production capacity was increased to 1.35 million units in 216 Increase dealer network and number of service shops Expand model line-up by strengthening the competitiveness of core 7cc models as well as introducing larger sized 125cc to 15cc models < Myanmar > Expand model Line-up Expand dealership network < Bangladesh> Construct new plant (1k units in 218 and 2k units in 221) Expand dealership network Cost reductions through increase in local procurement 4

41 Electrification in Motorcycle and Mobile Battery Introduce PCX ELECTRIC / PCX HYBRID in the Asia region including Japan (218). 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 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Other Topics Financial Highlights 42

43 Transition to the Company with Audit and Supervisory Committee - 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 43

44 HondaJet The HondaJet is the world s most advanced light jet. The aircraft is the fastest, highest-flying, most fuel-efficient, and achieves 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 Natural laminar Flow Wings and Nose Aerodynamic Outstanding flight drag speed reduction and fuel efficiency - Composite Over-the-Wing Fuselage Mounted Engines Light-weight Faster flight speed, structure greater fuel efficiency, and more spacious cabin - Advanced Cockpit Minimized pilot workload, intuitive operation Certification Received - United States (Dec. 215) - Mexico (Mar. 216) - Europe (May. 216) - Canada (Jun. 217) - Brazil (Aug. 217) Sales Units - Delivered 54 units by the end of Sept HondaJet ranks as Most-delivered Jet in its category during first half of

45 Honda Corporate Update Business Status 23 Vision Business Strategy Automobile Business Operations Motorcycle Business Operations Other Topics Financial Highlights 45

46 Results Summary Outline of Six Months Results Summary (Consolidated) Operating profit was billion yen, a 14.7% decrease compared to the same period last year. Excluding FOREX effects, the multi-district class action litigation settlement and the reverse impact of the pension accounting treatment during the same period last year, robust motorcycle sales, cost reduction efforts and other factors resulted in a real term profit increase of 53.1 billion yen. Profit for the quarter attributable to owners of the parent increased billion yen, an 8.4% increase compared to the same period a year ago, due to an increase in share of profit of investments accounted for using the equity method. 6, 4, 2, Consolidated Unit Sales 5,873 6,691 2, 1,5 1, 5 3, 2, 1, Unit (Thousand) 8, 1,798 1,87 2,728 2,589 6, , 4, 2, Sales Revenue / Operating Profit / Profit for the Period 7, incl. Pension impact 84.(profit) incl. litigation settlement 53.7(loss) Yen (billion) Motorcycles Sales Revenue Operating Profit Profit for the Period attributable to owners of the parent 46

47 Honda Group Unit Sales < Six Months> Motorcycles 9,937 8,89 Power Automobiles Products 2,559 2,728 2,431 2,589 Unit (Thousand) + 1,47 ( %) ( %) ( %) Six Months Six Months Six Months Six Months Change Six Months Six Months Six Months Six Months Change Six Months Six Months Six Months Six Months Change Japan North America ,291 1, Europe Asia 8,1 9,23 + 1, , Other Regions Total 8,89 9, ,47 2,431 2, ,728 2, Honda Group Unit sales include those of Honda, its subsidiaries and affliates which are acounted for using the equity method (mainly wholesale basis). 47

48 Main Market (Automobiles Japan) Japan Retail Unit (Thousand) Industry Demand: 2,482 Unit Sales : 333 Vs. (17.6%) (13.6%) (Source:Japan Automobile Dealers Association) N-Box series was the best-selling model in Japan in fiscal first half - 94 thousand units sold making it the best-selling model in Japan, even including registered vehicles -The new edition, launched in September generated over 52 thousand unit orders in first month on the market New Civic launched (Sept.) Unit (Thousand) Expansion of Honda SENSING as standard equipment across all trim levels - starting with N-Box followed by Shuttle (Sept.) and Step WGN models (Sept.) % Six Months Six Months N-BOX 48

49 Main Market (Automobiles U.S.) Industry Demand: Unit Sales : U.S Retail Unit (Thousand) 8,842 (98.1%) 866 (99.5%) vs. (Source:Autodata) Unit (Thousand) Despite decrease in industry demand, Honda s retail sales were on par with the same period last year. -Strong sales of Civic, HR-V and Acura RDX Production of the brand-new Accord began(sept.) Enhancing Honda s supply network for light truck models -Production of Acura MDX was shifted from Alabama plant to East Liberty Plant in Ohio(May) -.5 % Acura RDX Six Months Six Months Civic Hatchback 49

50 Main Market (Automobiles China) China Retail 729 thousand unit sales in fiscal first half is the highest in history -Strong sales of Civic, UR-V and Avancier Industry Demand * : 13,218 Unit Sales : 729 Unit (Thousand) 613 Unit (Thousand) 729 vs. (13.5%) (118.9%) *Industry demand is wholesale basis (source:china Association of Automobile Manufactures) CR-V Sports Hybrid model launched (Sept.) Announced joint development of EVs for the Chinese market with a local IT company named Neusoft (Sept.) % Avancier Six Months Six Months CR-V 5

51 Main Market (Motorcycle India) Industry Demand : 1,54 Unit Sales : 3,146 Unit (Thousand) India Wholesale 2,673 Unit (Thousand) 3,146 vs. ( 11.2%) ( 117.7%) (Source:Honda) Sales surpass pace of overall market for fiscal first half (vs. :117.7%) -Strong sales of scooters such as Activa and DIO Expantion of production at Number 4th line of the Number 3rd plant in Narsapura, Karnataka -Honda s overall motorcycle production capacity in India increased to 6.4 million units % Six Months Six Months Line-off ceremony of the Number 4th line at the 3rd plant 51

52 News Topics Announced evolution of automobile production system to further enhance Mono-zukuri (the art of makingthings/manufacturing) in Japan - To produce new technologies such as for the electrification of vehicles, automobile production at the Sayama Plant and Yorii Plant will be consolidated at the Yorii Plant by the fiscal year ending March 31, Within the Yorii Plant, a function to create, standardize and globally share new automotive production technologies, including electrification, to be established 1 Million-Unit Cumulative Global Production Milestone for Super Cub Series (Oct.) -Production of Super Cub 11 began at Yamato Plant in Saitama in August,1958 -Currently produced at 16 plants in 15 countries and sold in more than 16 countries Super Cub 11 commemoration model Yorii Plant Selected as a component of the Dow Jones Sustainability World Index (Sept.) -Selected for the first time as a component of Dow Jones Sustainability World Index, which benchmarks for socially responsible companies -Selected for 3 rd cumulative year as a component of Dow Jones Sustainability Asia/Pacific Index, which targets companies in Asia/Pacific 52

53 Six Months Financial Results (Consolidated) Financial Results Yen (billion) Six Month Results Change Sales revenue 6, , % Operating profit % Operating margin 7.3% 5.6% - 1.7pt 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 % Earnings per share *1 attributable to owners of the parent For *1, please refer to footnote on page 43 Market average rates (Yen) (Yen) US Dollar Yen down by 6 yen 53

54 2nd Quarter Unit Sales Honda Group Unit Sales (Thousand) 2Q Results (3 Months) Change Motorcycles 4,538 5, % Automobiles 1,218 1, % Power Products 1,24 1, % Consolidated Unit Sales (Thousand) 2Q Results (3 Months) Change Motorcycles 3,42 3, % Automobiles % Power Products 1,24 1, % 6, 5, 4, 3, 2, 1, 4, 3, 2, 1, Honda Group Unit Sales 1,4 1, , 3, ,5 5,238 1,218 1,292 1,2 1,24 1,258 4,538 3,42 1, 5 1,5 1, 5 Unit (Thousand) Motorcycles Automobiles Power Products Consolidated Unit Sales Unit (Thousand) 1,24 1,258 Motorcycles Automobiles Power Products Honda Group Unit Sales - Increase in motorcycle unit sales due mainly to sales growth in India, Indonesia and Vietnam. - Increase in automobile unit sales due mainly to sales growth in China and Japan despite a decline in sales in North America 54

55 3 2 1 Financial Results 2Q Results (3 Months) Change Sales revenue 3, , % Operating profit % Operating margin 7.% 4.1% - 2.9pt Share of profit of investments accounted for using the equity method Earnings per share *1 attributable to owners of the parent Market average rates (Yen) For *1, please refer to the footnote on page % Profit before income taxes % Profit for the period (Yen) attributable to owners of the parent % US Dollar Yen (billion) Operating Profit nd Quarter Financial Results (Consolidated) 27.6 Yen (billion) Yen down by 9 yen 1% 8% 6% 4% 2% Financial Summary Sales revenue increased by 15.7% primarily due to sales increases in all business operations and positive foreign currency translation effects. Operating profit decreased by 32.9% due primarily to the multi-discrict class action litigation settlement and the impact of the pension accounting treatment during the same period last year, despite the positive impact from revenue and model mix and a decline in SG&A expenses. Operating Margin 7.7% 7.3% (excl. pension impact 4.4%) 7.% 4.1% 5.9% (excl. litigation settlement 5.5%) 3.7% 1Q 2Q 3Q 4Q % 1Q 2Q 3Q 4Q 55

56 Motorcycles - Honda Group Unit Sales (Motorcycles, All-Terrain Vehicles, Side-by-Side etc.) 6, 5, Rebel 5 (U.S.) <Asia> Increased sales in India, Indonesia and Vietnam <North America> Increased sales of GROM125 and other sports motorcycles Positive effect of Rebel 5 new model introduction Unit (Thousand) + 7 ( % ) 4, 3, 2, 4,352 4,538 4,523 4,248 4,699 5,238 1, 1Q 2Q 3Q 4Q 1Q 2Q Japan North America Europe Asia 3,885 4,125 4,115 3,812 4,219 4,84 Other Regions Total 4,352 4,538 4,523 4,248 4,699 5,238 56

57 Automobiles - Honda Group Unit Sales 1,5 Freed (Japan) <Asia> China:increased sales of Civic and Avancier <Japan> Increased sales of Freed and N-Box <North America> Decreased sales in the sedan segment Unit (Thousand) + 74 ( % ) 1, 5 1,213 1,218 1,312 1,285 1,267 1,292 1Q 2Q 3Q 4Q 1Q 2Q Japan North America Europe Asia Other Regions Total 1,213 1,218 1,312 1,285 1,267 1,292 57

58 Power Products - Honda Group Unit Sales 2,5 EU2i (generator) <North America> Increased sales of generators in the U.S. <Japan> Decreased sales of OEM engines Unit (Thousand) + 18 ( % ) 2, 1,5 1, 5 1,488 1,24 1,175 2,218 1,331 1,258 1Q 2Q 3Q 4Q 1Q 2Q Japan North America , Europe Asia Other Regions Total 1,488 1,24 1,175 2,218 1,331 1,258 58

59 Six Months Cash Flows of Non-financial Services Businesses ,666.8 Cash flows from ,596.4 Cash flows from operating activities Free cash flow investing activities Net Change -7.4 Cash flows from financing activities Effect of exchange rate changes Yen (billion) Net Cash 1,171.5 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 Net Cash 1,179.9 Cash & Cash equivalents at beginning of Cash & Cash equivalents at end of period Six Months Free cash flow Net Change , ,12.9 Net Cash 1,524.8 Cash & Cash equivalents at beginning of 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 Cash flows from financing activities * Depreciation, amortization and impairment losses excluding equipment on operating leases Dividends paid Others Effect of exchange rate changes Net Cash 1,627.9 Cash & Cash equivalents at end of period 59

60 Change in Profit before Income Taxes < 2nd Qtr> Profit before Income Taxes ( % ) Yen (billion) Operating Profit ( % ) Excluding currency effects, pension impact and litigation settlement Operating Profit Q Revenue, model mix, etc Cost Reduction, etc Decrease in SG&A <Increase Factors> - Cost reduction efforts, etc. <Decrease Factors> - Raw material price increase, etc. <Increase Factors> - Positive impact from sales volume and model mix, etc <Decrease Factors> - Increased incentives, etc Increase in R&D Currency Effects Impact of Pension Accounting Treatment Litigation Settlement Share of profit of investments accounted for using the equity method -JPY / USD USD / Others +7. (BRL, CAD, MXN) -JPY / Asian Currencies (INR, THB, VND, CNY, IDR) -Others Currency Effects Interest rate swap /currency swap Others +4.2 Finance income and finance costs Operating Profit Q 6

61 Change in Profit before Income Taxes < Six Months> Profit before Income Taxes ( % ) Yen (billion) Operating Profit ( % ) Increase in Cost SG&A Increase in Currency Operating Profit Excluding currency effects, pension impact and litigation settlement Revenue, model mix, etc. Reduction, etc. <Increase Factors> - Cost reduction efforts, etc < Decrease Factors> - Raw material price increase, etc. R&D Effects Impact of Pension Accounting Treatment Litigation Settlement -JPY / USD USD / Others +3.5 (BRL, CAD, MXN) -JPY / Asian Currencies +14. (INR, THB, VND, CNY, IDR) -Others Share of profit of investments accounted for using the equity method Finance income and finance costs - Currency Effects Interest rate swap/currency swap Others Operating Profit Six Months Six Months 61

62 Motorcycle Business Sales Revenue /Operating Profit (Margin) Unit (Thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) 1Q 2Q 3Q 4Q 1Q 2Q 4,352 (2,831) 4,538 (3,42) 4,523 (2,675) 4,248 (2,689) 4,699 (3,245) 5,238 (3,446) Sales Revenue Yen (billion) % Operating Profit Operating Margin 14.5% (excl. pension impact :12.9%) 1.% ( % ) (Currency effect ) 8.4% 15.5% 13.4% 2% 15% 1% <Increase Factors> Positive impact from sales volume and model mix, etc. <Decrease Factors> The impact of the pension accounting treatment, etc. ( % ) 5% % -5% % -15% -2% 1Q 2Q 3Q 4Q 1Q 2Q 62

63 Automobile Business Sales Revenue/Operating Profit (Margin) Unit (Thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) Yen 5 (billion) 4 7.3% 1Q 2Q 3Q 4Q 1Q 2Q 1,213 (98) 1,218 (89) 5.5% 1,312 (925) 5.% 1,285 (96) 2.% 1,267 (9) 1,292 Sales Revenue 2, , , , , ,693. Operating Profit Operating Margin (excl. pension impact :2.4%) ( % ) (Currency effect ) (97) 5.3% 1.5% 2% 1% (excl. litigation settlement : 3.4%) 3 2 <Increase Factors> Decrease in SG&A expenses, etc. <Decrease Factors> The impact of the pension accounting treatment The multi-district class action litigation settlement, etc. ( % ) % -1% -2% % -4% 1Q 2Q 3Q 4Q 1Q 2Q 63

64 Unit (Thousand) Yen (billion) Honda Group * Unit Sales (Consolidated Unit Sales) Yen 1. (billion) Q 2Q 3Q 4Q 1Q 2Q 1,488 (1,488).5.7% 1,24 (1,24) % (excl. pension impact :- 4.4%) 1,175 (1,175) ,218 (2,218) % 1,331 (1,331).1.2% 1,258 (1,258) Sales Revenue Operating Profit Operating Margin Power Product & Other Businesses Sales Revenue/Operating Profit (Margin) ( % ) (Currency effect + 5.2) <Increase Factors> Positive impact from sales volume and model mix, etc. <Decrease Factors> The impact of the pension accounting treatment Increased expenses in other businesses operations etc. *Honda Group Unit Sales and Consolidated Unit Sales include only power product units 1% % 5% % -5% (For reference) Operating profit from aircraft and aircraft engines -7.9% 1Q 2Q 3Q 4Q 1Q 2Q % 64

65 Financial Services Business Total Assets/Sales Revenue/Operating Profit (Margin) Yen (billion) Total Assets of Finance Subsidiaries 1Q 2Q 3Q 4Q 1Q 2Q 8, ,44.3 9, ,437. 9, ,688.7 Sales Revenue Yen (billion) 12 1 ( % ) Operating Profit (Currency effect + 37.) Operating Margin 1.8% 8.5% 9.3% 9.2% 9.2% 8.8% 2% 15% 1% 8 6 <Increase Factors> Increased in operationg lease revenues,etc. ( % ) 5% % -5% % -15% -2% 1Q 2Q 3Q 4Q 1Q 2Q 65

66 Unit (Thousand) Yen (billion) Honda Group Unit Sales (Consolidated Unit Sales) Motorcycle Business Six Months Six Months Sales Revenue/Operating Profit (Margin) by Business Segment < Six Months > Automobile Business Six Months Six Months Power Product and Other Businesses Six Months Six Months Financial Services Business Six Months Six Months 8,89 9,937 2,431 2,559 2,728 2, (5,873) (6,691) (1,798) (1,87) (2,728) (2,589) (-) (-) Sales Revenue ,18.6 4, , , Operating Profit : Yen (billion) Operating Margin : (%) (1.8 %) (14.5 %) (6.4 %) (3.4 %) (-.3 %) (-1.1 %) (9.7 %) (9. %) % % % Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months 66

67 Sales Revenue/Operating Profit by Geographical Segment < 2nd Qtr> Japan North America Europe Asia Other Regions Yen (billion) 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q Sales Revenue ,58.2 1, , , Operating Profit: Yen (billion) incl. pension impact 84.(profit) % incl. litigation settlement 53.7(loss) % % 12. 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 2Q 67

68 Sales Revenue/Operating Profit (Margin) by Geographical Segment < Six Months> Yen (billion) Japan North America Europe Asia Other Regions Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months Sales Revenue 1, ,83.2 3,98. 4, , , Operating Profit: Yen (billion) incl. pension impact 84.(profit) incl. litigation settlement 53.7(loss) % % % -3.7 % 26.7 Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months Six Months 68

69 Share of Profit of Investments Accounted for Using the Equity Method Yen (billion) ( % ) Q 2Q 3Q 4Q 1Q 2Q From Asia Yen (billion) 69

70 : Honda Group Unit Sales Motorcycles Automobiles Power Products Unit (Thousand) 17,661 18,77 19,18 5,28 5,8 5,13 6,121 6,165 6, ( %) + 5 ( + 1. %) ± ( ± %) Results Previous Previous Revised Revised Change Results Previous Previous Revised Revised Change Results Previous Previous Revised Revised Change Japan North America ,92 1,92-3,1 3,1 - Europe ,3 1,15-15 Asia 17,15 17, ,6 2, ,46 1,455-5 Other Regions 1,5 1, Total 18,77 19, ,8 5, ,165 6,165-7

71 : Consolidated Unit Sales Motorcycles Automobiles Power Products Unit (Thousand) 11,237 12,22 12,62 3,683 3,685 3,69 6,121 6,165 6, ( %) + 5 ( +.1 %) ± ( ± %) Results Previous Previous Revised Revised Change Results Previous Previous Revised Revised Change Results Previous Previous Revised Revised Change Japan North America ,92 1,92-3,1 3,1 - Europe ,3 1,15-15 Asia 1,465 1, ,46 1,455-5 Other Regions 1,5 1, Total 12,22 12, ,685 3, ,165 6,165-71

72 Financial s (Consolidated) Yen (billion) Results Change Amount % Change from previous forecast Sales revenue 13, ,5. + 1, % Operating profit % + 2. Operating margin 6.% 5.% - 1.pt - Share of profit of investments accounted for using the equity method Earnings per share % Profit before income taxes 1, % Profit for the year attributable to owners of the parent *1 (Yen) % + 4. attributable to owners of the parent For *1, please refer to the footnote on page 43 Market average rates (Yen) US Dollar (1H 111 / 3Q 11 / 4Q 15 ) Yen down by 1 yen Yen down by 2 yen 72

73 : Change in Profit before Income Taxes Profit before Income Taxes ( % ) Operating Profit ( % ) Yen (billion) 1, Revenue, model mix, etc Cost Reduction, etc. Increase in SG&A Increase in R&D -11. Currency Effects Impact of Pension Accounting Treatment Litigation Settlement Share of profit of investments accounted for using the equity method Finance income and finance costs 955. Operating Profit JPY / USD - USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies (INR, THB, VND, CNY, IDR) -Others Operating Profit 745. Results Revised 73

74 : Change in Profit before Income Taxes Profit before Income Taxes ( % ) Operating Profit + 2. ( % ) Yen (billion) Revenue, model mix, etc. Excl. currency effects and litigation settlement Cost Reduction, etc. Increase in SG&A - R&D Currency Effects Litigation Share of profit of settlement investments accounted for using the equity method + 1. Finance income and finance costs 955. Operating Profit JPY / USD - USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies (INR, THB, VND, CNY, IDR) -Others Operating Profit 745. Previous Revised 74

75 : Capital Expenditures, Depreciation and R&D 8 * Capital expenditures as well as Depreciation and amotization n results and forecast aforementioned exclude investment in operating leases, finance leases and intangible assets. ** Research and development expenditures are research and development activity related costs incurred during the reporting period. In accordance with IFRS, a portion of research and development expenditures is recognized as an intangible asset and amortized over its estimated useful life. As such, this amount is not in conformity with "Research and development" on our Consolidated Statement of Income. Research and development expenditures aforementioned exclude decrease of 25.4 billion yen due to the impact of pension accounting treatment in 2 nd quarter. Capital Expenditures 8% 8 Depreciation 8% 8 R&D Expenditures 8% 6 6% 6 6% 6 6% 4 4% 4 4% 4 4% 2 2% 2 2% 2 US GAAP IFRS US GAAP IFRS US GAAP IFRS % % FY P FY FY P Actual Amounts % against Sales 2% % 75

76 Shareholders return (Yen) Dividend per Share (Expectation) Acquisition of the Company s Own Shares Total number of shares to be acquired : Up to 24 million shares (shares of common stock) (1.3% of total number of issued shares (excluding treasury stock)) Total amount of shares to be acquired : Up to 9 billion yen Period of acquisition: Starting on November 2, 217 and ending on January 31, 218 Method of acquisition: Market purchases on the Tokyo Stock Exchange change 1 st Quarter End nd Quarter End rd Quarter End 24 ( 24 ) ( - ) 4 th Quarter End 24 ( 24 ) ( - ) Fiscal Year 92 ( 96 ) ( + 4 ) 1.Purchases through the Tokyo Stock Exchange Trading Network Off-Auction Own Share Repurchase Trading System (ToSTNeT-3) 2.Market purchases based on the discretionary investment contracts regarding acquisition of own shares 76

77 Recent Shareholders Return Summary Trend % FY11 Actual 51.1% FY12 Actual 37.3% FY13 Actual 25.7% FY14 Actual 32.2% FY15 Actual 46.% FY16 Actual Actual 26.9% (Estimated) 1 st Quarter End nd Quarter End Dividend (Yen) 3 rd Quarter End ( 24 ) 4 th Quarter End ( 24 ) Fiscal Year ( 96 ) Dividends ratio* 18.3% 51.1% 37.3% 25.7% 32.2% 46.% 26.9% ( 29.4% ) Acquisition of the (billion) Company s Own Shares (billion Yen) Acquisition of the Company s Own Shares 25. ( 9 ) Total Dividend Dividends Ratio 29.4% FY11 FY12 FY13 FY14 FY15 FY16 * US GAAP up to FY15, IFRS from FY16 77

78 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. 78

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