Honda Corporate Update 215 Autumn CIVIC (North America) 1
Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations Other Operations FY16 2Q Financial Highlights 2
Profit Structure Profile over Past Decade and FY16 Forecast 1,8 8.8% Yen (billions) 1,6 7.7% 7.9% US GAAP IFRS 1,4 Automobile Motorcycle 6.4% 6.6% 7% 1,2 1, 868 * Finance O/P Margin 851 953 4.2% Earthquake Thai flood 5.5% 823 5.% 4.7% 5% 8 6 4 1.9% 363 569 2.9% 544 461 67 28 685 3% 2 189 231 177 192 1% 183 23-2 FY3/6 FY3/7 FY3/8 FY3/9 FY3/1 FY3/11 FY3/12 FY3/13 FY3/14 FY3/15 FY3/16P FY3/12 *Includes gain on return of the substitutional portion of the Employees Pension Funds to the Japanese government (138 bil ). -1% 3
Current Fiscal Year Projection (Apr-28 vs. Nov-4) Consolidated Unit Sales Unit (thousands) Operating Income Yen (billions) (Motorcycles) (Automobiles) 11,75 1,86 3,715 3,68 ± +5. -22. 685. - -36. +8. 685. - 215 ( - 1.9 %) -35 ( -.9 %) ROS 4.7% Forex Vol/Mix Cost reduction SGA R&D ROS 4.7% FY16 Previous Forecast (Apr-28) FY16 Revised Forecast (Nov-4) Difference FY16 Previous Forecast (Apr-28) FY16 Revised Forecast (Nov-4) Difference Japan 2 2-69 64-5 North America 325 335 + 1 1,89 1,91 + 2 Europe 19 2 + 1 16 175 + 15 Asia 8,915 8,79-125 75 75 - Other Region 1,445 1,335-11 27 25-2 Total 11,75 1,86-215 3,715 3,68-35 Motorcycle : Reductions in Asia (mainly Thailand and India) and Other Region (mainly Brazil). Automobile : Mainly reduction in Japan. Previous Forecast (Apr-28) Main Reasons for revision of forecast Forex ±. JPY/USD +34. USD/Others -49. (BRL,CAD,MXN) Others +15. Revised Forecast (Nov-4) SG&A -22. Icrease of quality related cost despite reductions of Selling and GA expenses Vol/Mix -36. Cost Reduction +5. New model VA, changes in sales prices, changes in raw material prices, etc. 4
Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations Other Operations FY16 2Q Financial Highlights 5
Core Automobile Strategies Business for Honda Growth - Civic in FY211 Automobile Rating Operations Review Resilient Product Line-up Flexible Global Production Infrastructure Sustainable & Profitable Growth 6
Global Automobile Production Business Capacity - Civic (thousand units) Honda FY211 Rating Review Other China 5,189 15 84+5 (Export only) +361 FY216(P) 5,55 151 1,8+5 (Export only) Asia Europe North America China +24 96 1,8 Guangqi +12 Dongfeng +12 2 2 Thailand +12 Nigeria +1 1,923 1,923 Japan 1,66 1,66 as of Mar '15 Mar '16 (P) 7
18 16 14 12 1 8 6 11% 94% 1% 4 88% 81% 2 Apr May Jun Jul Aug Sep Oct Nov Dec Jan-14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar 18 16 14 12 1 8 6 96% 96% 4 77% 7% 2 Apr May Jun Jul Aug Sep Oct Nov Dec Jan-14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar 18 16 14 12 1 8 6 4 2 Apr May Jun Jul Aug Sep Oct Nov Dec Jan-14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar Auto Capacity Utilization by Region FY14 FY16 1H 61% FY14 FY16 1H Increase exports (Excluding export factory) 113% 73% FY14 FY16 1H FY14 FY16 1H New models Optimal shift management 5% 61% 65% FY14 FY16 1H 95% 95% 19% FY14 FY16 1H 8
Global Automobile Production Utilization Image Japan (Units) Europe 2, Dedicating to produce Civic and CR-V Middle East and Africa Accord & L/T models Accord Jazz 1.6 mil <Export> Compact & Hybrid models CR-V from Canada (Plan) Civic 5D from UK (Plan) 8-9% for Local markets 1-2% for Other regions Fit Hybrid models Acura North America 1.92 mil <Export> Acura & L/T models Fit & CR-V CR-V Asia South America 96, China 15, <Export> Strengthen mutual parts/production sharing among Asia Exporting to Africa 89, <Export> Utilizing the cost benefit for the next market (Africa) Total Capacity approx. 5.2 mil units (end of FY215) Establish stable production structure Capacity leveraging increase regional to capacity 5.7 mil + mutual parts/product sharing 9
Automobile Business - Civic Honda FY211 Rating Review U.S. Light Vehicle Monthly Sales (SAAR) (million units) Total SAAR 19 17 15 13 14. 14.5 14.5 14.4 14.1 14.1 14.1 14. 14.9 17.7 17.5 16.8 17. 17.2 17.2 16.9 17. 16.7 16.7 16.4 16.4 16.5 16.416.5 16.2 16. 16.1 16. 15.5 15.7 15.415.3 15.4 15.3 15.3 15.3 15.4 15.2 15.2 15.3 14.9 14.3 (left axis) 18.2 18.2 18.2 17.6 17.8 LIGHT TRUCK (right axis) 11 1 9 8 11 PASSENGER CAR (right axis) 7 6 9 5 7 4 5 Jan'12 Mar May July Sep Nov Jan'13 Mar May July Sep Nov 14-Jan Mar May July Sep Nov Jan-15 Mar May July Sep Nov 3 (Source: Autodata) 1
New Models in North America All Honda SUVs and Light Trucks to be newly launched within 2 years SUVs and Light Trucks New CR-V 216 Pilot (June 215) Ridgeline HR-V (May 215) New Odyssey 215 216 ~ Sedans 216 Civic (November 215) Accord 11
Production in North America Canada Ohio ELP MDX dual-source production will start in 217 Civic CR-V RDX Alabama Fit MDX Pilot Leverage Japan production base to enhance Fit supply Mexico Celaya (thousand units) 24 Ridgeline Odyssey Monthly Production Profile 16 Fit Increase HR-V production 8 HR-V Fit HR-V - 214 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 215 Feb Mar Apr May Jun Jul Aug Sep Oct (Source: Honda) 12
Automobile Market in Japan 25% Market Trend in Japan % -8% 5% 1% 5% -1% 2% -3% % % Mini vehicle (YoY) -25% -19% -14% -19% -15% -13% -23% -2% -13% -18% -9% -15% -11% -16% Registered vehicle (YoY) 8 7 (thousand units) Industry Auto Sales 6 5 4 3 2 1 496 41 565 482 783 695 345 319 363 336 453 443 46 425 333 327 519 479 396 38 416 389 432 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 214 215 13
Automobile Business in Japan Honda FY211 Rating Review Strengthen Model Line-up in Japan Increase Exports from Japan Odyssey Hybrid to be launched in Spring 216 (Odyssey) 12 1 (thousand units) 4 (thousand units) 3 2 1 Monthly Production Units in Japan 31 253 Fit / Jazz Accord Hybrid 163 97 9 3 FY11 FY12 FY13 FY14 FY16 P FY17 P FY213 FY214 FY215 FY216-8 6 4 2 Launch new models + Increase exports from Japan 98 116 12 87 74 92 88 69 72 8 72 6 59 6 62 57 53 59 66 62 8 91 97 94 97 85 95 79 8 88 85 59 77 76 62 75 6 64 63 52 44 54 61 46 69 75 JanFebMarAprMayJun Jul AugSepOctNovDecJanFebMarAprMayJun Jul AugSepOctNovDecJanFebMarAprMayJun Jul AugSepOctNovDecJanFebMarAprMayJun Jul AugSepOctNovDecJanFebMarAprMayJun Jul AugSepOctNovDec 14
Automobile Market in China 25% % 13% 8% 12% Market Trend in China 6% 3% -2% -2% -6% 6% 15% Volume change (YoY) -25% 2,5 2, (thousand units) Industry Auto Sales (Wholesale) SUV+MUV+Sedan/hatchback 1,5 1, 5 1,71 1,935 1,22 1,298 1,559 1,746 1,479 1,561 1,458 1,57 1,447 1,42 1,27 1,194 1,368 1,347 1,592 1,679 1,624 1,869 1,69 1,969 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 214 215 15
Automobile Business in China 8 (Guangqi Honda) 2% 7 6 5 4 3 2 1 8 7 6 5 4 3 2 1 (thousand units) 59-5% 3 +26% +137% +69% 4 +22% 22 5 +26% 35 +27% 44-6% 28 +43% 5 +18% 3 +37% +37% 45 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (thousand units) (Dongfeng Honda) Vezel 1.8L (Oct 14) 1.5L (Apr 15) CR-V (Mar 12) MMC(Apr 15) +12% 28 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YoY change 42 31 +75% City (Aug 15) +49% 45 33 +53% +6% XR-V 1.8L (Dec 14) 1.5L (Jul 15) 37 +74% 37 +55% 41 +84% 214 215 Source: Company 45 +9% 46 5 +8% Total retail sales increased by 33% (Jan-Nov) 15% 1% 5% % -5% -1% +2% +15% +1% +5% +% -5% -1% 16
New Model Strategy in China Segment SDN(4D/5D) SUV MUV Guangqi Accord (213 FMC) Crosstour Odyssey (Aug 214) D Dongfeng Spirior (Dec 214) Concept D Elysion (Jan 216) Guangqi Crider (213) C Dongfeng Civic (211) CR-V MMC (Apr 215) Jade (213) Guangqi Fit (May 214) B City (Aug 215) Vezel 1.8L (Oct 214) Vezel 1.5L (Mar 215) Dongfeng Concept B (in 216)* Greiz (Nov 215) *the joint venture company to sell concept B is TBA XR-V 1.8L (Dec 214) XR-V 1.5L (Jul 215) By utilizing common platforms and strengthening local procurement and R&D functions, cost competitive models will continue to be launched 17
Automobile Market in Asian Countries 3% % -3% 12 1 8 6 4 2 Market Trend in Thailand Volume change (YoY) -13% -11% -12% -26% -18% -18% -12% -1% -11% 69 6 72 64 84 74 73 54 7 57 74 6 7 61 69 62 69 62 71 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 214 215 3% % -3% 3 25 2 15 1 5 73 5% 6% 3% 9 2% -1% -4% 12 1 8 6 4 2 Market Trend in India Passenger + UVs/ MUVs 16% 5% -1% 22 231 218 231 238 244 189 218 28 218 219 218 199 222 214 222 224 232 221 269 212-9% -21% -12% -23% -18% -6% -9% -26% -39% 14 94 112 89 113 99 16 82 97 79 111 82 91 56 97 91 13 93 15 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 214 215 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 11% 4% 4% 21% Market Trend in Indonesia 214 215 29 (thousand units) 91 79 18
Automobile Business in Asian Countries 3 25 2 15 1 5 211 212 India 213 City Global Compact Series Fit / Jazz Brio Series Brio Amaze Mobilio Volume Honda Share FY13 FY14 FY16 Apr-Oct 214 1% % 215 HR-V BR-V (Jan 216) Indonesia 3 25 2 15 1 5 12 1 8 6 4 2 2 15 1 5 *First car incentive Thailand Volume Indonesia Honda Share (thousand units) 16% FY13 FY14 FY16 Apr-Sep Volume Honda share FY13 FY14 FY16 Apr-Sep Volume Honda Share Malaysia FY13 FY14 FY16 Apr-Sep 15% 14% 13% 12% 2% 15% 1% 5% % 2% 15% 1% 5% % 19
Automobile Business in Europe +2% +% -+2% 2, 1,6 1,2 8 Market trend in EU15 + EFTA (YoY) +8% +11% +6% +7% +1% +15% +9% +11% +1% Volume change (YoY) (thousand units) 214 215 +2% 4 897 947 824 886 1,46 1,561 1,53 1,125 1,61 1,71 1,151 1,32 1,2 1,94 64 79 1,21 1,317 1,31 1,57 919 923 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 3 (thousand units) Monthly production in the U.K factory FY214 FY215 FY216-25 2 15 Production discontinued on No.1 Line Improve efficiency by concentrating on the production of a few models 1 5 Improve flexibility by increasing exports from U.K. 19 17 12 7 7 9 12 6 13 13 15 11 14 14 13 12 7 9 1 4 8 7 11 1 12 11 13 11 7 11 13 5 11 9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2
Automobile Business in Brazil 5% % -16% -26% % Market Trend in Brazil -23% -23% Volume change (YoY) -5% 35 3 25 2 15 1 5-16% -2% -21% -31% -35% -31% 214 215 236 199 199 148 19 189 231 177 226 173 24 172 228 182 21 167 231 161 24 156 232 161 292 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec (thousand units) 18 16 14 12 1 8 6 4 2 Honda Auto Sales in Brazil 214 215 Sales increased by 15% (Jan-Oct) 11 1 9 1 9 13 11 14 11 13 1 14 11 12 11 13 12 14 13 13 12 13 17 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec (thousand units) 18 16 14 12 1 8 6 4 2 214 215 Honda Auto Production in Brazil 1 12 1 12 1 14 1 13 9 13 1 13 8 1 13 13 13 14 13 14 12 Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 9 21
Automobile Business in Africa 4, Market Trend in Africa and Middle East 2.3% 2.% 1.8% Honda share 2.2% (thousand units) 3.% 2.% 1.% 2, Africa.% -1.% Middle East -2.% '11 '12 '13 '14-3.% Automobile production started in Nigeria in July 215 22
Capital Expenditures (billion yen) 8 8% Capital Expenditures (billion yen) Capex / Sales (%) 6 5.7% 5.4% 6.% 6.% 6.% 6% 5.1% 4.9% 4.6% 4.6% 4 3.9% 3.8% 3.5% 4% 3.2% 2 2% FY4 5 6 7 8 9 1 11 12 13 14 15 16P 17P 18P % 23
Global Compact Series Honda s Global Compact Series is Being Rolled Out to Global Markets with best-in class Fun to Drive, Fuel Economy, Packaging and Safety (Fit / Jazz) 14 (thousands) 12 (City / Grace) Global Compact Series More than 95K units (Vezel / HR-V / XR-V) 1 (Jan-Sep 215) 8 6 City / Grace 4 2 Fit / Jazz Vezel / HR-V / XR-V Vezel/HR-V/XR-V More than 35K units (Jan-Sep 215) 24
Global Models; New Civic Competitiveness Two all-new engines New platform and package yields largest cabin in compact class Honda Sensing Apple CarPlay and Android Auto New Cost Reduction Strategy New Model line-up Sedan, Coupe, Si models, 5D hatch, Type R Mexico sourced parts P/F commonality with other global model Increased parts commonality Global suppliers 25
Global Models CR-V 4.45 mil CY214 Fit / City / Vezel 21% Accord 16% 14% Civic 14% CR-V and Accord represents about 3% of 214 global Honda units sales 26
Earth Dreams Technology Engines Turbo engines Transmissions Hybrid Powertrains Targeting best Fuel Efficiency and Fun of Driving in all categories 27 27
Roadmap for Environmental Technologies Honda s Environmental and Safety Vision Enable people to experience the joy and freedom of mobility and contribute to the creation of a sustainable society where people can enjoy more harmonious lifestyles (CO2(g/km) FCX FCX CLARITY (22) (28) One-motor Hybrid system CLARITY FUEL CELL ACCORD PHEV (213) (216) Three-motor Hybrid system Two-motor Hybrid system (22) New BEV New PHEV Turbo engine New FCV Global expansion Looking towards zero emissions with the development of ZEV and PHEV ZERO emissions technology Technologies to increase electrical efficiency Technologies to increase thermal efficiency DI engine CVT / DCT Global expansion 2 21 22 23 28
Roadmap for Safety Technologies Toward Zero Collisions Aiming for practical application of autonomous driving on highways around 22 29
Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations Other Operations FY16 2Q Financial Highlights 3
Overview of Motorcycle Business (billion yen) 3 Operating Profit and Margin 25 2 6.3% 9.3% 7.3% 9.7% 7.1% 5.2% 1.8% 1.6% 8.2% 1.5% 1.4% 15 1 5 69 114 11 151 1 59 139 143 11 177 192 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 *Operating profit and margin from FY5 to FY13 are based on US GAAP while FY14 and are based on IFRS Honda M/C Business = High Profitability + Stability + Growth Potential (thousand units) 16, Honda Global Unit Sales 12, 8, 4, 24 25 26 27 28 29 21 211 212 213 214 *excluding sales by Hero Honda 31
Motorcycle Market Size and Honda Share (CY214) Nigeria Europe.6 mil Italy Pakistan 1.3 mil 18% Kenya 48% Thailand 1.7 mil Japan China Pakistan.4 mil Bangladesh India Vietnam Thailand Philippines Malaysia India 16 mil 91% 79% Cambodia.3mil 26% 45 % Philippines.8mil Indonesia Vietnam 2.7 mil 7% 49 % Motorcycle sales in more than 15 countries Indonesia 7.8 mil U.S.A (MS+ATV).7 mil 64% 22% Mexico U.S.A (ATV, S S) Peru 81% Brazil 1.4 mil Motorcycle production at 34 plants in 22 countries Brazil Argentine 32
Growth in Motorcycle Popularity GDP per capital (USD) 1.7mil Thailand 4, 3, Philippines 1mil Indonesia 7.8mil 2.7mil 2, 1, 3.mil Africa 1mil Bangladesh Myanmar 1mil 1.4mil Pakistan India 16. mil Vietnam Next Markets Growing Markets Mature Markets Further growth in India 15 new models - including 7 brand new and fully remodeled models in 215 CB Unicorn16 (Jan) / Activa 3G (Feb)) / Dream Yuga and Neo (Feb) Dio (Mar) / CB shine (Mar) and more! 33
Side by Side in the U.S. U.S. Market by Business Segment (units sales in 214 (vs. 213)) M/C 484k +4% ATV 23k S S 372k +1% +18% (thousand units) Side by Side (S x S) Segments (units sales in 213 and 214) Work Sport Multi 372 19 89 174 4 3 2 1 213 214 (Source: M/C and ATV: Motorcycle Industry Council / S S:Honda estimate) Honda S x S Unit Sales (thousand units) 3 2 Pioneer 7 (Sep 13) Pioneer 5 (Jul 14) 1 + 9% + 89% 212 213 214 215P Pioneer 1 (Oct 15) 34
Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations Other Operations FY16 2Q Financial Highlights 35
Robotics Honda is creating advanced, experimental technologies that can aid human mobility ASIMO Designed to someday assist people in their homes, ASIMO is being used today to encourage young students to consider studies in math and science Available for lease in Japan only UNI-CUBβ The UNI-CUBβ is the newest generation of Honda s personal mobility devices, offering hands-free movement in all directions > Less than 6 lbs > Indoor/Outdoor > +6mins operating time > Lengthens stride > Regulates walking pace Lease sales to begin soon Walk-Assist Device (Stride Management Assist) Designed to support walking for people with weakened leg muscles, but who can still walk on their own High-Access Survey Robot and the Task-Performing Robot Arm Designed to be utilized at places too dangerous for people to work in Honda will continue robotics research. In addition, Honda will proactively pursue practical product applications 36
Aviation Honda enters a new dimension of mobility Advanced light jet that uses innovative technologies and concepts; patented Over-The-Wing Engine Mount (OTWEM) configuration natural-laminar flow wing and fuselage nose composite fuselage structure These innovations combined help the HondaJet deliver a superior combination of high-speed performance and high fuel efficiency FAA maintenance / overhaul requirements form base of long-term business model HF12 engine received FAA certification in December 213 HondaJet expecting FAA type certification very soon www.hondajet.com HF12 37
Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations Other Operations FY16 2Q Financial Highlights 38
Outline of FY16 Six Months Results Summary (Consolidated) Results Summary Operating profit for the first half of the 216 fiscal year increased 7.9% to 44.1 billion yen compared to the same period last year. This was mainly due to strong automobile sales in North America, the positive effect of regional introductions of the all-new HR-V as well as cost reduction efforts, despite increased SG&A expenses, including quality related costs. First Half Results and FY16 FY16 Consolidated Unit Sales Sales Revenue / Operating Profit / Profit for the Period 6, 4,5 5,197 2, 5,285 1,76 1,777 1,75 1,5 3, 2,5 Unit (thousand) 2,823 2,833 8, 6, 4, 6,338.6 7,326. 5 4 3 374.5 44.1 5 4 3 275.1 Yen (billion) 313.7 2 2 1,25 2, 1 1 3, 1, 2, Motorcycles Automobiles Power Products Sales Revenue Operating Profit Profit for the Period attributable to owners of the parent 39
FY16 2nd Quarter Financial Results (Consolidated) 2Q Results (3 Months) Financial Results FY16 Change Sales revenue 3,131.9 3,621.2 + 15.6% Operating profit 168.9 164.8-2.5% Operating margin 5.4% 4.6% -.8 pt Share of profit of investments accounted for using the equity method 5.1 34.1 + 567.4% Profit before income taxes 19.5 21.9 + 1.7% Profit for the period attributable to owners of the parent 119.5 127.7 + 6.9% *1 Earnings per share (Yen) attributable to owners of the parent 66.32 7.88 + 4.56 Market average rates (Yen) US Dollar 14 122 Yen down by 18 yen Financial Summary - Sales revenue increased 15.6% due primarily to increased revenue in all business operations as well as favorable foreign currency translation effects. - Operating profit decreased 2.5% due primarily to increased SG&A expenses, including quality related costs, despite an increase in sales volume and model mix and continuing cost reduction efforts. For *1, please refer to footnotes on page 54 3 25 2 15 1 5 Operating Profit 239.2 25.5 168.9 164.8 21. Yen (billion) 86. FY16 1% 8% 6% 4% 2% Operating Margin 6.5% 5.4% 6.4% 4.6% 6.% FY16 2.5% 1Q 2Q 3Q 4Q % 1Q 2Q 3Q 4Q 4
Change in Profit before Income Taxes <FY16 2nd Qtr> Profit before Income Taxes + 2.3 ( + 1.7 % ) Yen (billion) Operating Profit -4.1 ( - 2.5 % ) + 25.9-87.5 19.5 + 54.2 Revenue, model mix, etc. Cost Reduction, etc. Increase in SG&A <Increase Factors> - Cost reduction efforts, - Raw material price decrease, etc. +11.4-8.3 Decrease in R&D Currency Effects - JPY / USD + 41.2 - USD / Others - 48.4 (BRL, CAD, MXN) -Others - 1.1 + 29. -4.5 Share of profit of investments accounted for using the equity method Finance income and finance costs 21.9 Operating Profit 168.9 <Decrease Factors> - Increased product warranty expenses, - Increased advertisement expenses, etc. - Currency Effects -.9 - Interest rate swap/currency swap - 4.4 - Others +.8 Operating Profit 164.8 2Q FY16 2Q 41
Cash Flows of Non-financial Services Businesses Six Months Free cash flow + 64.4 + 472.1-47.7 Net Change - 39. Yen (billion) 1,171.9-14.5 + 37. 1,132.9 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes Cash & Cash equivalents at beginning of Profit before income taxes + 326.3 Share of profit of investment accounted for using the equity method - 41.3 Depreciation *1 + 293.1 Other - 15.9 Capital expenditures - 313.5 Intangible assets - 93. Other - 1.1 Dividends paid - 79.3 Others - 61.2 Cash & Cash equivalents at end of period FY16 Six Months 1,378.5 Free cash flow + 411.5 + 768.1-356.6 Cash flows from operating activities Cash flows from investing activities Net Change + 163.9-187.4 Cash flows from financing activities - 6. Effect of exchange rate changes 1,542.4 Cash & Cash equivalents at beginning of FY16 Profit before income taxes + 385.2 Share of profit of investment accounted for using the equity method - 72.5 Depreciation + 324.6 Other + 13.7 Capital expenditures - 314.5 Intangible assets - 113.4 Other + 71.3 *1 Depreciation, amortization and impairment losses excluding equipment on operating leases Dividends paid - 79.3 Others - 18.1 Cash & Cash equivalents at end of period 42
Honda Consolidated Financial Results Motorcycle business Business Scale Annual Profit Quarterly Profit Finance Power Products 14% Revenue Auto Finance 29% O/P Auto M/C 3 25 2 15 M/C 1 5 Automobile business 6% Operating Margin (8%)* 9% 7% (99)* 1% US GAAP 7% Operating Income 5% 11% 11% 1% 1% 15 69 114 11 151 1 59 139 143 11 177 192 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 * (excluding one time profit) 8% IFRS 2 1 5 9.8% 1.2% 11.2% 1.4% 11.8% 1.8% 42 44 53 53 56 49 1Q IFRS Positive Vol/Mix Cost Reductions 2Q 3Q 4Q 1Q FY16 Yen (billions) 2Q 3Q 4Q Power Finance Products M/C Finance Revenue 73% O/P M/C Auto 42% Auto 1 8 6 4 2-2 Operating Margin Operating Income 8% (6%)* 6% 7% 7% 5% 4% 4% 3% 2% (512)* % 452 628 6 662 25 127 265-77 286 461 28 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14-1% * (excluding one time profit) US GAAP IFRS 4.7% 3.4% 4.2% 4.8% 2.6% -.7% 111 77 11-18 131 68 1Q IFRS Increase SG&A Negative FX 2Q 3Q 4Q 1Q FY16 Yen (billions) 2Q 3Q 4Q 43
Honda Consolidated Financial Results Power Products 2% Power Product & Other Business Business Scale Finance Finance M/C Revenue 5-5 Financial Business Finance 11% Power M/C Products Revenue Finance O/P Auto Auto 3% M/C O/P Auto M/C 3 25 2 15 1 6% Operating Margin 9% 8% 5% Annual Profit Operating Income 19 36 36 22-15 -17-6 -4-1 -4% -5% -2% -1% -3% 1% 3-4 -1% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 Operating Margin 35% 29% 28% 21% US GAAP US GAAP 14% Operating Income 31% 32% 32% 28% * IFRS IFRS 14% 13% 4.1% 3-1 -3-3 1-1.4% -3.2% -3.4%.6% 13.5% 13.4% 13.% 11.9% 11.% 11.1% 5 9 91 116 118 81 195 186 17 158 183 23 5 49 5 54 52 52 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 2Q 3Q 4Q FY16 2Q 3Q 4Q 1Q 1Q * Under IFRS, when P.P.E held for lease to others is routinely sold in the course of the ordinary activities, the sale for these items is recognized on a gross basis (recognize Revenue and Cos), while it is presented on a net basis under US GAAP 1Q Quarterly Profit IFRS 2Q 3Q 4Q FY16 1Q IFRS -4-4.4% Yen (billions) 2Q 3Q 4Q Yen (billions) 44
Honda Consolidated Financial Results Japan Business Scale Annual Profit Quarterly Profit Asia Europe Other Regions Asia Revenue North America Other Regions O/P Europe Japan 16% 31% Japan North America Yen (billions) 5 4 3 2 1-1 -2 4% North America 8% Operating Margin (233)* (5%)* 5% 4% 185 371 228 193-162 US GAAP -1% -29 Operating Income 66-11 178 246 21-4% -3% * (excluding one time profit) FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 2% 5% IFRS 6% 5% 6.4% 6.5% 3.% 2.7% 63 63 28 26 1Q IFRS Negative Vol/Mix Increase SG&A 2Q 3Q 4Q FY16 1Q 2Q 3Q 4Q Other 5 Regions Japan 45 Asia 4 Revenue 35 Europe 3 52% North 25 America Other 2 Regions Japan 15 Asia 1 O/P 5 Europe 26% North America Yen (billions) Operating Margin 7% 6% 7% 7% US GAAP 2% 6% 7% Operating Income 6% 4% 5% IFRS 3% 321 354 457 433 8 236 31 223 29 336 182 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 3.9% 2.6% 5.% 1.8% 67 43 19 37 1Q IFRS Increase SG&A Negative FX (USD/CAD, MXN) 2Q 3Q 4Q FY16 1Q 2Q 3Q 4Q 45
Honda Consolidated Financial Results Asia (China JVs are not included) Asia Europe Business Scale Asia 41% Other Regions 2% Revenue Other Regions Europe O/P Japan North America Japan North America Europe 4 35 3 25 2 15 1 5 Operating Margin Operating Income 7% 7% 6% 8% Annual Profit US GAAP 7% 8% 6% 6% 5% IFRS 8% 8% 61 65 77 131 14 113 151 77 147 232 279 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 9.2% Quarterly Profit 69 61 96 86 1Q 7.8% (Y on Y) IFRS 1.6% 9.8% Yen (billions) Positive Vol/Mix, Cost Reduction, FX 2Q 3Q 4Q FY16 1Q 2Q 3Q 4Q Asia 5% Europe Asia Other Regions Revenue North America Other Regions Japan O/P Japan 2 15 1 5-5 Operating Margin Operating Income US GAAP IFRS 4% 2% 2% 3% 41 26 32 52 1-11 -1-12 -34-23 1% -1% -1% -2% % -3% -4% IFRS 2-6 -1.9% -.6% -3.2% 3 1.7% Yen (billions) Europe North America -1 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 1Q 2Q 3Q 4Q FY16 1Q 2Q 3Q 4Q 46
Honda Consolidated Financial Results Other region Business Scale Other Asia Europe Other Asia Europe 7% Revenue 6% O/P Japan North America 3 25 2 15 1 5 Equity Income Affiliates Japan North America China Guangqi Honda Dongfeng Honda Indonesia P.T Astra Honda Pakistan Atlas Honda Japan Showa, Keihin, etc 2 1 7% Operating Margin Annual Profit 1% 9% 11% 12% Operating Income 5% 7% 6% 4% 4% 4% 33 57 72 116 135 46 7 57 36 38 4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 Yen (billions) US GAAP 96 1 13 119 99 33 18 27 31 2 93 78 73 73 86 98 91 111 88 78 2 US GAAP * 14 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 29 1 13 83 *Discontinued JV with Hero at Dec 21 5 IFRS 131 IFRS 96 3.6% 5.8% 1.9% 3.4% 9 14 5 7 Q1 Quarterly Profit Q2 Q3 Q4 FY16 Q1 36 5 37 18 38 34 1Q Negative FX (USD/BRL) IFRS IFRS (3.6) (15.8) (3.4) (16.) (32.5) (28.9) 2Q 3Q 4Q FY16 1Q Yen (billions) Q2 Q3 Q4 (from Asia) 2Q 3Q 4Q 47
FY16 Financial Forecasts (Consolidated) Yen (billion) Results FY16 Forecast Change amount % Change from previous forecast Sales revenue 13,328. 14,6. +1,271.9 + 9.5% + 1. Operating profit 67.6 685. + 14.3 + 2.1% - Operating margin 5.% 4.7% -.3 pt -. pt Share of profit of investments accounted for using the equity method 96. 135. + 38.9 + 4.5% - Profit before income taxes 86.2 85. - 1.2 -.2% - Profit for the year attributable to owners of the parent 59.4 525. + 15.5 + 3.1% - Earnings per share attributable to owners of the parent For *1, please refer to the footnote on page 54 *1 282.66 291.3 + 8.64 - Market average rates (Yen) US Dollar 11 118 ( 1H 122 / 2H 115 ) Yen down by 8 yen Yen down by 3 yen 48
FY16 Guidance: Units Sales by Business Segment [IFRS] "Honda Group Unit Sales" (thousands) FY16 Previous Forecast Global Honda group unit sales including affiliates, such as China Auto and Motorcycle in Indonesia Motorcycles Automobiles Power Products FY16 Revised Forecast Change FY16 Previous Forecast FY16 Revised Forecast Change FY16 Previous Forecast FY16 Revised Forecast (-.4%) (+8.3%) (-.6%) Change Japan 2 2-74 69-5 34 355 + 15 325 335 + 1 1,89 1,91 + 2 2,88 2,8-8 North America Europe 19 2 + 1 16 175 + 15 1,9 1, -9 Asia 16,65 15,445-62 1,655 1,75 + 5 1,57 1,325-245 Other Region 1,445 1,335-11 27 25-2 48 465-15 Total 18,225 17,515-71 4,715 4,73 + 15 6,36 5,945-415 (vs last FY) Consolidated Unit Sales" Consolidated unit sales do not include sales units in affiliates (thousands) FY16 Previous Forecast Motorcycles Automobiles Power Products FY16 Revised Forecast Change FY16 Previous Forecast FY16 Revised Forecast Change FY16 Previous Forecast FY16 Revised Forecast Change Japan 2 2-69 64-5 34 355 + 15 325 335 + 1 1,89 1,91 + 2 2,88 2,8-8 North America Europe 19 2 + 1 16 175 + 15 1,9 1, -9 Asia 8,915 8,79-125 75 75-1,57 1,325-245 Other Region 1,445 1,335-11 27 25-2 48 465-15 Total 11,75 1,86-215 3,715 3,68-35 6,36 5,945-415 (vs last FY) (+1.2%) (+4.7%) (-.6%) 49
FY16 Forecast: Change in Profit before Income Taxes Profit before Income Taxes -1.2( -.2 % ) Yen (billion) + 143.3 Operating Profit + 14.3 ( + 2.1 % ) + 92. - 82. - 51. - 88. + 38.9-54.5 etc. SG&A Increase in 86.2 85. Revenue, model mix, etc. Cost Reduction, Increase in R&D Currency Effects - JPY / USD + 12. - USD / Others - 153. (BRL, CAD, MXN) -Others - 37. Share of profit of investments accounted for using the equity method Finance income and finance costs Operating Profit 67.6 Operating Profit 685. Results FY16 Revised Forecast 5
FY16 Forecast: Change in Profit before Income Taxes Profit before Income Taxes ± (± % ) Yen (billion) Operating Profit ± (± % ) 85. - 36. + 5. - 22. + 8. - - - 85. Revenue, Cost Reduction, model mix, etc. etc. Increase in SG&A Decrease in R&D Currency Effects - JPY / USD + 34. - USD / Others - 49. (BRL, CAD, MXN) -Others + 15. Share of profit of investments accounted for using the equity method Finance income and finance costs Operating Profit 685. Operating Profit 685. FY16 Previous Forecast FY16 Revised Forecast 51
FY16 Forecast: Capital Expenditures, Depreciation, R&D Expenditures 8 Capital Expenditures Depreciation / Amortization R&D 67 8% 8 8% 8 735 8% 6 6% 6 455 6% 6 6% 4 4% 4 4% 4 4% 2 2% 2 2% 2 US GAAP IFRS US GAAP IFRS US GAAP IFRS 2% % % % FY4 5 6 7 8 9 1 11 12 13 14 15 16P FY4 5 6 7 8 9 1 11 12 13 14 15 16P FY4 5 6 7 8 9 1 11 12 13 14 15 16P Actual Amounts (billion Yen) % against Sales 52
Dividend Yen Dividend per Share FY16 (Expectation) Increase / Decrease from 1 st Quarter End 22 22-2 nd Quarter End 22 22-3 rd Quarter End 22 ( 22 ) ( - ) 4 th Quarter End 22 ( 22 ) ( - ) Fiscal Year 88 ( 88 ) ( - ) 53
Caution with Respect to Forward-Looking Statements: This slide contains forward-looking statements about the performance of Honda, which are based on management s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that Honda s actual results could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in Honda s principal markets and fluctuation of foreign exchange rates, as well as other factors detailed from time to time. Accounting standards: Our consolidated financial standards are prepared in conformity with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) Notice on the Factors for Increases and Decreases in Income: With respect to the discussion above of the change in Operating profit, management has identified the factors set forth below and used what it believes to be a reasonable method to analyze the respective changes in such factors. Each of these factors is explained below. Management has analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries. (1) Currency effects consist of translation adjustments, which come from the translation of the currency of foreign subsidiaries financial statements into Japanese Yen, and foreign currency adjustments, which result from foreigncurrency-denominated sales, which, at the levels of the Company and those consolidated subsidiaries which have been analyzed, primarily relate to the following currencies: U.S. dollar, Canada dollar, Euro, GBP, BRL and Japanese Yen. (2) With respect to Cost reduction, etc, management has analyzed cost reduction and effects of raw material cost fluctuations at the levels of the Company and its material foreign manufacturing subsidiaries in North America, Europe and other regions. (3) With respect to Revenue, model mix, etc, management has analyzed changes in sales volume and in the mix of product models sold in major markets which have resulted in increases/decreases in profit, as well as certain other reasons for increases/decreases in sales revenue and cost of sales. (4) With respect to Selling, General and Administrative expenses, management has analyzed reasons for an increase/decrease in selling, general and administrative expenses from the previous fiscal year net of currency translation effects. (5) With respect to Research and Development expenses, management has analyzed reasons for an increase/decrease in research and development expenses from the previous fiscal year net of currency translation effects. *1 Earnings per share attributable to owners of the parent is calculated based on weighted average number of shares outstanding as shown below: - 2nd Quarter : 1,82,29, (approx), FY16: 1,82,285, (approx) (page 4) - Fiscal Year : 1,82,289, (approx), FY16 forecasts: 1,82,285, (approx) (pages 48) 54
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