Honda Motor Co., Ltd. Reports Consolidated Financial Results

TOKYO, Oct. 30 -- Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal second quarter and the first half ended September 30, 2001.

Second Quarter Results

Honda's consolidated net income for the fiscal second quarter ended September 30, 2001 totaled 84.3 billion yen ($707 million), an increase of 45.2% from the same period in 2000. Basic net income per Common Share for the quarter amounted to 86.58 yen ($0.73), compared to 59.63 yen for the same period in 2000. Each of Honda's American Depositary Shares represents two Common Shares.

Consolidated net sales and other operating revenue (herein referred to as ``revenue'') for the fiscal second quarter amounted to 1,744.5 billion yen ($14,611 million), an increase of 16.1% over the corresponding period in 2000. This increase in revenue was primarily due to increased unit sales in motorcycles and automobiles, together with positive currency translation effects, which impacted on foreign currency-denominated revenue from Honda's overseas subsidiaries, translated into yen.

Honda estimates that had the exchange rate of yen remained unchanged from the same period in 2000, revenue for the quarter would have increased by approximately 7.4%.

Consolidated operating income for the fiscal second quarter totaled 163.7 billion yen ($1,372 million), an increase of 68.7% compared to the corresponding period in 2000.

This increase in operating income was primarily due to an increase in revenue, the positive impact of the depreciation of the yen and Honda's ongoing cost reduction efforts, which offset increases in selling, general and administrative expenses and research and development expenses.

Consolidated income before income taxes for the quarter totaled 134.3 billion yen ($1,125 million), an increase of 48.8% from the corresponding period in 2000.

With respect to Honda's sales in the fiscal second quarter by business category, motorcycle unit sales increased by 8.9% to 1,436,000 units, and revenue increased 12.7%, to 218.7 billion yen ($1,832 million). These increases in unit sales and revenue were due primarily to higher sales in Indonesia and India, as well as Brazil.

Honda's unit sales of automobiles increased by 7.3% to 650,000 units, due to robust sales in Japan and North America. In Japan, strong sales of the Fit, a new compact car and the Stream minivan contributed to this increase. In North America, favorable sales of the Civic and Acura MDX contributed to boosted unit sales. Revenue increased 17.4%, to 1,417.6 billion yen ($11,873 million) during the quarter.

Unit sales of power products totaled 769,000 units, a decrease of 3.1% compared to the corresponding period in 2000. Lower sales of general-purpose engines in Europe were the major factor for this decrease in unit sales. Revenue from other businesses, including the power product business and financial services business, increased by 7.5% to 108.1 billion yen ($906 million) due mainly to higher revenue from Honda's finance subsidiaries.

First Half-Year Results

Honda's consolidated net income for the first six months ended September 30, 2001 totaled 173.7 billion yen ($1,455 million), an increase of 42.5% from the previous year. Basic income per Common Share for the fiscal first half amounted to 178.30 yen ($1.49), compared to 125.11 yen of the corresponding period a year ago.

Unit sales in motorcycles and automobiles increased and consolidated net sales and other operating revenue (herein referred to as ``revenue'') for the six months amounted to 3,504.9 billion yen ($29,355 million), an increase of 14.8% from last year.

Revenue included the positive effect of currency translation, and Honda estimates that had the exchange rate of the yen remained unchanged from the previous year, revenue for the year would have increased by approximately 6.1%.

Consolidated operating income for the fiscal first half totaled 315.2 billion yen ($2,640 million), an increase of 56.5% compared to the corresponding period last year. This increase in operating income was primarily due to an increase in revenue, the positive impact of the depreciation of the yen and Honda's ongoing cost reduction efforts, which offset increases in selling, general and administrative expenses and research and development expenses.

Consolidated income before income taxes for the fiscal first half totaled 269.9 billion yen ($2,261 million), an increase of 40.6% compared to the previous year.

With respect to Honda's sales for the fiscal first half by business category, motorcycle unit sales increased 10.3% to 2,806,000 units, and revenue increased 13.2% to 443.4 billion yen ($3,714 million). Favorable sales in Indonesia and India, as well as in Brazil contributed to this increase.

Both Honda's unit sales and revenue of automobiles for the fiscal first half increased by 3.7% to 1,288,000 units, and 15.6% to 2,839.5 billion yen ($23,871 million), respectively. Strong sales of the Fit and Step WGN in Japan, together with the Civic and Acura MDX in North America were the major contributing factors to this increase in unit sales.

Unit sales of power products totaled 1,710,000 units, representing a decrease of 6.2% compared to the previous year. Lower sales of general-purpose engines in Europe were the major factor in this decrease in unit sales, while revenue from other businesses, including the power product business and financial services business, increased by 9.5% to 222.0 billion yen ($1,860 million) due mainly to higher revenue from Honda's finance subsidiaries.

Forecasts for the fiscal year ending March 31, 2002

Looking at the current business environment surrounding Honda, economic slowdown in the United States and Asian countries outside of Japan will continue and the European economy will become unpredictable. In Japan, severe economic condition will continue and as a whole, Honda predicts that global economy will be more unforeseeable. Under such circumstances, in regards to the forecasts of the financial results for the fiscal year ending March 31, 2002, Honda projects the consolidated and unconsolidated results as below:

    Forecasts for consolidated results
                                In billions of yen     Changes from FY 2001

    Net sales and other
     operating revenue                   7,170 yen                   +10.9%
    Income before income taxes                 510                   +32.5%
    Net income                                 330                   +42.1%

    Forecasts for unconsolidated results

                                In billions of Yen     Changes from FY 2001

    Net sales                            3,130 yen                    +2.9%
    Ordinary profit                            205                   +49.2%
    Net income                                 125                +1,003.6%

These forecasts are based on the assumption that the exchange rates for the yen to the U.S. dollar and the euro for the current fiscal year will average 119 yen and 105 yen, respectively.

Honda projects that the year-end cash dividend will be 13 yen per share of common stock. Total cash dividends for the term will be 26 yen.