Honda Motor Co., Ltd. Reports Consolidated Financial Results for the Fiscal Third Quarter and the Nine Months Ended December 31, 2004
TOKYO, Jan. 28, 2005 -- Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal third quarter and the nine months ended December 31, 2004.
Third Quarter Results
Honda's consolidated net income for the fiscal third quarter ended December 31, 2004 totaled JPY 150.7 billion (USD 1,447 million), almost the same level as the corresponding period in 2003. Basic net income per common share for the quarter amounted to JPY 161.78 (USD 1.55), compared with JPY 158.66 for the corresponding period in 2003. Two of Honda's American depositary shares represent one common share.
Consolidated net sales and other operating revenue (herein referred to as "revenue") for the fiscal third quarter amounted to JPY 2,133.8 billion (USD 20,476 million), an increase of 7.1% from the corresponding period in 2003. Revenue included currency translation effects, which had a negative impact 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 2003, revenue for the quarter would have increased by approximately 8.5%.
Consolidated operating income for the fiscal third quarter totaled JPY 157.6 billion (USD 1,513 million), a decrease of 6.9% compared with the corresponding period in 2003. This decrease in operating income was primarily due to the negative impacts of appreciation of the yen against the U.S. dollar, and to an increase in selling, general and administrative (SG&A) expenses, offsetting positive impacts of increased profit coming from higher revenue and Honda's ongoing cost reduction effects.
Consolidated income before income taxes for the fiscal third quarter totaled JPY 187.9 billion (USD 1,804 million), a decrease of 7.7% from the corresponding period in 2003.
Business Segment
With respect to Honda's sales in the fiscal third quarter by business category, motorcycle unit sales increased by 4.9% from the corresponding period in 2003 to 2,483 thousand units. Of them, unit sales in Japan decreased 9.3% to 78 thousand units, and overseas unit sales increased 5.4% to 2,405 thousand units, due mainly to increased unit sales of parts for local production in Indonesia, and favorable sales in Europe and Other regions, such as Brazil. Revenue from sales to unaffiliated customers increased 6.8%, to JPY 241.8 billion (USD 2,321 million). Operating income decreased by 28.6% to JPY 5.1 billion (USD 49 million), due primarily to a decrease in unit sales in North America, offsetting increased profit from higher revenue in Asia and Europe.
Honda's unit sales of automobiles increased by 9.4% from the corresponding period in 2003 to 817 thousand units. In Japan, unit sales of automobiles decreased 2.3% to 173 thousand units. Overseas unit sales increased 13.0% to 644 thousand units. Increased unit sales of parts for local production in China, and continued favorable sales in Europe and Other regions, such as Brazil were the major contributing factors for this increase in unit sales. Revenue from sales to unaffiliated customers increased 7.0%, to JPY 1,744.6 billion (USD 16,741 million) during the quarter, due to increased unit sales, offsetting the negative currency translation effects. Operating income decreased 7.0% to JPY 126.0 billion (USD 1,209 million) due mainly to negative currency effects caused by the appreciation of the yen against the U.S. dollar, which offset positive impacts of higher profit from increased revenue and ongoing cost reduction effects.
Revenue from sales to unaffiliated customers in financial services increased 15.0% to JPY67.6 billion (USD 649 million), due to the growth of the automobile business in North America. Operating income decreased 2.4% to JPY 23.9 billion (USD 230 million), due primarily to negative currency translation effects caused by the appreciation of the yen against the U.S. dollar and increase in interest rates.
Unit sales of power products in Japan totaled 95 thousand units, a decrease by 12.8%, and overseas unit sales was 949 thousand units, which was almost the same level as the third quarter in 2003. Total unit sales of power products were 1,044 thousand units, a decrease of 1.9% compared to the corresponding period in 2003, due primarily to decreased sales of general- purpose engines in Europe, offsetting increased sales of general-purpose engines for OEM, generators and water pumps in North America. Revenue from sales to unaffiliated customers in power product and other businesses increased by 4.1% to JPY 79.7 billion (USD 765 million), due mainly to changes in the model mix. Operating income increased 22.1% to JPY 2.4 billion (USD 24 million).
Geographic Segment
With respect to Honda's sales for the third quarter by geographic segment, in Japan, revenue was JPY 1,066.8 billion (USD 10,237 million), up by 10.9% compared to the corresponding period in 2003, due primarily to increased unit sales for export in motorcycle and automobile businesses. Operating income in Japan was JPY 47.4 billion (USD 456 million), up by 62.1%, mainly due to higher profit from increased revenue, and ongoing cost reduction effects.
In North America, revenue increased by 1.2% from the previous year to JPY 1,188.0 billion (USD 11,400 million), due mainly to improved model mix in automobile business, offsetting negative impact of the currency translation effects.
Operating income in North America decreased by 26.2% to JPY 81.7 billion (USD 784 million) from the corresponding period of the previous year, due primarily to the negative impact of the appreciation of the yen against the U.S. dollar, offsetting the positive impacts of increased profit from higher sales and ongoing cost reduction effects.
In Europe, revenue for the quarter increased by 30.7% to JPY 243.8 billion (USD 2,340 million) compared to the corresponding period of the previous year, due primarily to increased unit sales in motorcycle and automobile businesses, and a positive impact of currency translation effects. Operating income in Europe increased by 263.6% to JPY 5.5 billion (USD 53 million), due mainly to positive currency effects caused by the depreciation of the yen against Euro and increased profit from higher revenue.
In Asia, revenue increased by 28.0% to JPY 205.3 billion (USD 1,970 million) from the previous year, due mainly to increases in unit sales in motorcycle and automobile businesses. Operating income also increased by 48.5% to JPY 16.2 billion (USD 156 million) from the corresponding period of the previous year, due mainly to increased profit from higher revenue and ongoing cost reduction effects.
In Other regions, unit sales increased in all business segments, namely motorcycle, automobile and power product, and revenue for the third quarter increased by 19.4% to JPY 114.1 billion (USD 1,095 million) compared to the corresponding period of the previous year. Increased unit sales in Latin America was a major contributing factor to this increase in revenue. Operating income increased by 14.2% from the corresponding period of the previous year to JPY 9.2 billion (USD 89 million).
Nine-Month Results
Honda's consolidated net income for the fiscal nine months ended December 31, 2004 totaled JPY 392.1 billion (USD 3,763 million), an increase of 0.5% from the previous year. Basic net income per common share for the fiscal nine months amounted to JPY 418.99(USD 4.02), compared with JPY 407.87 for the corresponding period a year ago.
Revenue for the fiscal nine months amounted to JPY 6,300.5 billion (USD 60,460 million), an increase of 4.7% from last year.
Revenue included the negative effect of currency translation, and Honda estimates that if the exchange rate of the yen had not changed from the previous year, revenue for the year would have increased by approximately 8.1%.
Consolidated operating income for the fiscal nine months totaled JPY 490.5 billion (USD 4,707 million), an increase of 0.7% compared with the corresponding period last year. This increase in operating income was primarily due to increased profit from higher revenue and continuing cost reduction effects, offsetting negative impacts, such as appreciation of the yen against the U.S. dollar, and an increase in SG&A expenses and research and development (R&D) expenses.
Consolidated income before income taxes for the fiscal nine months totaled JPY 527.6 billion (USD 5,063 million), a decrease of 1.5% compared with the previous year.
Business Segment
With respect to Honda's sales for the fiscal nine months by business category, motorcycle unit sales increased 17.9% to 7,766 thousand units. Of them, unit sales in Japan decreased 5.0% to 285 thousand units, while overseas unit sales increased 19.0% to 7,481 thousand, due mainly to strong sales in Asia, such as India and Indonesia. Revenue from sales to unaffiliated customers increased 10.1% to JPY 772.0 billion (USD 7,408 million), due primarily to increased unit sales, offsetting negative currency translation effects. Operating income increased 184.0% to JPY 42.3 billion (USD 406 million).
Unit sales related to automobiles for the fiscal nine months increased by 8.8% to 2,383 thousands units. In Japan, unit sales of automobiles increased 2.2% to 517 thousand units, and overseas unit sales increased 10.8% to 1,866 thousand units, due mainly to increased sales in Asia, such as China and Indonesia, and Europe. Revenue from sales to unaffiliated customers increased 4.0% to JPY 5,093.6 billion (USD 48,878 million), due mainly to increased unit sales, which offset negative currency translation effects. Operating income decreased 5.2% to JPY 361.7 billion (USD 3,472 million), due mainly to negative impact of the appreciation of the yen against the US dollar, which offset positive impacts of increased profit from higher revenue and cost reduction effects.
Revenue from sales to unaffiliated customers in financial services increased 3.2 % to JPY191.0 billion (USD 1,833 million). Operating income decreased 15.4% to JPY 71.7 billion (USD 689 million).
Unit sales of power products totaled 3,516 thousand units, an increase of 7.9% compared to the corresponding period of the previous year. Of them, unit sales in Japan totaled 315 thousand units, decreased by 11.0%, and overseas unit sales increased 10.2% to 3,201 thousand units, mainly contributed by increased unit sales in North America. Revenue from sales to unaffiliated customers increased by 4.5% to JPY 243.8 billion (USD 2,340 million). Operating income increased 145.5% to JPY 14.6 billion (USD 141 million).
Geographic Segment
With respect to Honda's sales for the fiscal nine months by geographic segment, in Japan, revenue was JPY 3,045.5 billion (USD 29,225 million), up by 6.9% from the corresponding period of the previous year, due mainly to increases in unit sales in automobile business. Operating income in Japan was JPY 134.2 billion (USD 1,289 million), up by 30.2% from the previous year.
In North America, revenue decreased by 3.7% from the fiscal nine months of the previous year to JPY 3,421.2 billion (USD 32,830 million), due mainly to decreased unit sales in motorcycle and automobile businesses, and negative currency translation effects. Operating income in North America decreased by 17.3% to JPY 247.5 billion (USD 2,375 million) from the corresponding period of the previous year.
In Europe, revenue for the fiscal nine months increased by 15.2% to JPY 758.4 billion (USD 7,278 million) compared to the corresponding period of the previous year, due mainly to increased unit sales in motorcycle, automobile and power product businesses, and positive impact of currency translation effects. Operating income in Europe increased by 55.4% to JPY 29.6 billion (USD 284 million).
In Asia, revenue increased by 24.4% to JPY 620.9 billion (USD 5,959 million) from the previous year, due primarily to increased unit sales in motorcycle and automobile businesses. Operating income also increased by 53.0% to JPY 53.6 billion (USD 515 million) from the corresponding period of the previous year.
Revenue from Other regions for the fiscal nine months increased by 30.7% to JPY 333.2 billion (USD 3,198 million) compared to the corresponding period of the previous year, due primarily to increased unit sales in motorcycle, automobile and power product businesses. Operating income increased by 47.1% to JPY 28.5 billion (USD 274 million) from the corresponding period of the previous year.
Forecasts for the fiscal year ending March 31, 2005
FY2005 Forecasts for consolidated results
Yen (billions) Changes from FY 2004
Net sales and other
operating revenue 8,650 +6.0%
Operating income 625 +4.1%
Income before income taxes 640 -0.3%
Net income 480 +3.4%
FY2005 Forecasts for unconsolidated results
Yen (billions) Changes from FY 2004
Net sales 3,480 +4.8%
Operating income 130 -29.6%
Ordinary profit 208 -33.2%
Net income 143 -36.9%
These forecasts are based on the assumption that the exchange rates for the yen to the U.S. dollar and the euro for the fourth quarter will average JPY 103 and JPY 135, and for the current fiscal year, JPY 107 and JPY 135, respectively.