Honda Motor Co., Ltd. Reports Consolidated Financial Results for the Fiscal Second Quarter and the First Half Ended September 30, 2007
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TOKYO, Oct. 25, 2007 -- Honda Motor Co., Ltd. , today announced its consolidated financial results for the fiscal second quarter and the fiscal first half ended September 30, 2007.
Second Quarter Results
Honda's consolidated net income for the fiscal second quarter ended September 30, 2007 totaled JPY 208.4 billion (USD 1,806 million), an increase of 63.0% from the same period in 2006. Basic net income per Common Share for the quarter amounted to JPY 114.94 (USD 1.00), an increase of JPY 44.89 from JPY 70.05 for the corresponding period in 2006. One Honda's American Depository Share represents one Common Share.
Consolidated net sales and other operating revenue (herein referred to as "revenue") for the quarter amounted to JPY 2,971.3 billion (USD 25,742 million), an increase of 12.9% from the same period in 2006. Honda estimates that if calculated at the same exchange rate as the corresponding period in 2006, revenue for the quarter would have increased by approximately 7.9%.
Consolidated operating income for the quarter totaled JPY 286.3 billion (USD 2,481 million), an increase of 48.3% compared to the same period in 2006. This increase in operating income was primarily due to the increased profit attributable to higher revenue, continuing cost reduction efforts and the positive impact of the currency effects caused by the depreciation of the Japanese yen which offset the negative impact of increased raw material costs and the increased depreciation expenses, SG&A expenses and R&D expenses.
Consolidated income before income taxes, minority interest and equity in income of affiliates for the quarter totaled JPY 269.9 billion (USD 2,339 million), an increase of 65.0% from the same period in 2006.
Equity in income of affiliates amounted to JPY 26.2 billion (USD 227 million) for the quarter, a decrease of 4.4% from the same period in 2006.
Business Segment
With respect to Honda's sales for the fiscal second quarter by business segment, unit sales of motorcycles totaled 2,333 thousand units, which was a decrease of 17.2% from the same period in 2006. Unit sales in Japan totaled 107 thousand units, an increase of 9.2% from the same period in 2006. Overseas unit sales was 2,226 thousand units, a decrease of 18.1% from the same period in 2006, due mainly to the decreased unit sales of parts for local production at Honda's affiliates accounted for under the equity method in Asia, more than offsetting an increase in unit sales in other regions especially in Latin America. Revenue from external customers increased 13.8%, to JPY 381.6 billion (USD 3,306 million) from the same period in 2006, due mainly to the positive impact of the currency translation effects, offsetting the negative impact of the decreased unit sales. Operating income increased by 15.4% to JPY 37.0 billion (USD 321 million) from the same period in 2006, due mainly to the positive currency effects caused by the depreciation of the Japanese yen, offsetting the negative impact of the increased sales incentives in North America, the increased SG&A expenses and R&D expenses.
Honda's automobile unit sales totaled 937 thousand units, an increase of 6.0% from the same period in 2006. In Japan, unit sales amounted to 143 thousand units, a decrease of 16.4% from the same period in 2006. Overseas unit sales increased 11.4% to 794 thousand units from the same period in 2006, due mainly to the increased unit sales of the CR-V in North America, Europe, Asia and the increased unit sales in other regions. Revenue from external customers increased 12.3% to JPY 2,356.4 billion (USD 20,415 million) from the same period in 2006, due mainly to the increased unit sales and the positive impact of the currency translation effects. Operating income increased 62.8% to JPY 213.0 billion (USD 1,846 million) from the same period in 2006, due mainly to the positive impact of the increased profit attributable to higher revenue, continuing cost reduction efforts and the positive currency effects caused by the depreciation of the Japanese yen, offsetting the negative impact of the increase of sales incentives in North America, increased raw material costs, the increased depreciation expenses, SG&A expenses and R&D expenses.
Revenue from external customers in financial services business increased 36.4% to JPY 133.7 billion (USD 1,159 million) from the same period in 2006, due mainly to the increased finance receivables, the positive impact of the currency translation effects and the increased operating lease revenues. Operating income increased 29.7% to JPY 29.3 billion (USD 254 million) from the same period in 2006, due primarily to the increased profit attributable to higher revenue, the decreased SG&A expenses and the positive currency effects caused by the depreciation of the Japanese yen.
Honda's power products unit sales totaled 1,258 thousand units, an increase of 6.0% from the same period in 2006. In Japan, unit sales totaled 141 thousand units, an increase of 11.0% from the same period in 2006. Overseas unit sales totaled 1,117 thousand units, an increase of 5.4% from the same period in 2006, due mainly to increased unit sales of lawnmowers in Europe, general-purpose engines in China, and increased unit sales in Asia and other regions, offsetting decreased unit sales of lawnmowers in the United States. Revenue from external customers in power product and other businesses increased by 1.0% to JPY 99.4 billion (USD 862 million) from the same period in 2006, due mainly to the increased unit sales of power products and the positive impact of the currency translation effects. Operating income decreased 6.5% to JPY 6.9 billion (USD 60 million) from the same period in 2006. This was primarily due to the increased R&D expenses, offsetting the positive impact of the decreased SG&A expenses and the currency effects caused by the depreciation of the Japanese yen.
Geographical Segment
With respect to Honda's sales for the fiscal second quarter by geographic areas, in Japan, revenue for domestic and exports sales totaled JPY 1,215.5 billion (USD 10,530 million), up by 3.4% compared to the same period in 2006, due primarily to the increased revenue from exports in automobile business and the positive currency effects caused by the depreciation of the Japanese yen, which offset the negative impact of the decreased unit sales of automobiles in Japan. Operating income totaled JPY 73.3 billion (USD 635 million), up by 6.3% from the same period in 2006, due primarily to the increased profit attributable to higher revenue, continuing cost reduction efforts, the decreased SG&A expenses and the positive currency effects caused by the depreciation of the Japanese yen, offsetting increased raw material costs, the increased depreciation expenses and R&D expenses.
In North America, revenue increased by 9.6% to JPY 1,557.1 billion (USD 13,490 million) from the same period in 2006, due mainly to the increased unit sales in automobile business and the positive impact of the currency translation effects. Operating income increased by 21.2% to JPY 116.0 billion (USD 1,005 million) from the same period in 2006, due primarily to the positive impact of increased profit attributable to higher revenue mainly in automobile and financial services businesses, continuing cost reduction efforts and the currency effects caused by the depreciation of the Japanese yen, which offset the negative impact of the change in model mix, the increased sales incentives in motorcycle and automobile business, increased raw material costs and the increased depreciation expenses.
In Europe, revenue increased by 25.8% to JPY 390.8 billion (USD 3,386 million), from the same period in 2006, due primarily to the increased unit sales in automobile business and the positive impact of the currency translation effects. Operating income increased by 84.7% to JPY 16.7 billion (USD 145 million) from the same period in 2006, due primarily to the increased profit attributable to higher revenue, continuing cost reduction efforts and the positive currency effects caused by the depreciation of the Japanese yen, which offset the increased SG&A expenses.
In Asia, revenue increased by 32.6% to JPY 415.6 billion (USD 3,601 million) from the same period in 2006, due primarily to the increased unit sales in automobile business and the positive impact of the currency translation effects. Operating income increased by 82.9% to JPY 33.4 billion (USD 289 million) from the same period in 2006, due mainly to the increased profit attributable to higher revenue and the positive currency effects caused by the depreciation of the Japanese yen, which offset the negative impact of increased SG&A expenses.
In Asia, in addition to subsidiaries, many affiliates accounted for under the equity method manufacture and sell Honda-brand products. Operating income does not include income from these affiliates. Income from these affiliates is recorded as equity in income of affiliates and reflected in net income. Also, accounting terms of some of the affiliates differ from the Company's.
In other regions, revenue increased by 36.4% to JPY 267.9 billion (USD 2,321 million) compared to the same period in 2006, due mainly to the increased unit sales in all of the business segments and the positive impact of the currency translation effects. Operating income increased by 40.7% to JPY 30.1 billion (USD 261 million) from the same period in 2006, due mainly to the increased profit attributable to higher revenue, continuing cost reduction efforts and the positive currency effects caused by the depreciation of the Japanese yen, offsetting the negative impact of the increased SG&A expenses.
First Half-Year Results
Honda's consolidated net income for the fiscal first half year ended September 30, 2007 totaled JPY 374.6 billion (USD 3,245 million), an increase of 38.1% from the same period in 2006. Basic net income per Common Share for the period amounted to JPY 206.26 (USD 1.79), an increase of JPY 57.74 from JPY 148.52 for the same period in 2006.
Consolidated revenue for the period amounted to JPY 5,902.4 billion (USD 51,135 million), an increase of 12.8% from the same period in 2006. Honda estimates that if calculated at the same exchange rate as the corresponding period in 2006, revenue for the period would have increased by approximately 6.9%.
Consolidated operating income for the period totaled JPY 508.0 billion (USD 4,401 million), an increase of 28.1% compared to the same period in 2006. This increase in operating income was primarily due to the increased profit attributable to higher revenue, continuing cost reduction efforts and the positive currency effects caused by the depreciation of the Japanese yen, which offset increased raw material costs, the increased depreciation expenses, SG&A expenses and R&D expenses.
Consolidated income before income taxes, minority interest and equity in income of affiliates for the period totaled JPY 488.2 billion (USD 4,230 million), an increase of 37.5% from the same period in 2006.
Equity in income of affiliates amounted to JPY 63.2 billion (USD 548 million) for the period, an increase of 9.8% from the same period in 2006.
Forecasts for Fiscal Year Ending March 31, 2008
In regard to the forecasts of the financial results for the fiscal year ending March 31, 2008, Honda projects consolidated results to be as shown below:
FY2008 Forecasts for Consolidated Results
First year ending March 31, 2008
Yen Changes
(billions) from FY2007
Net sales and other operating revenue 12,300 + 10.9%
Operating income 880 + 3.3%
Income before income taxes, minority interest and
equity in income of affiliates 870 + 9.7%
Net income 640 + 8.0%
Yen
Basic net income per Common Share 352.85 -
These forecasts are based on the assumption that the average exchange rates for the Japanese yen to the U.S. dollar and the Euro will be JPY 113 and JPY 148, respectively, for the second half of the year ending March 31, 2008, and JPY 116 and JPY 155, respectively, for the full year ending March 31, 2008.
Quarterly Dividend per Share of Common Stock for Fiscal Year 2008
The Board of Directors of Honda Motor Co., Ltd., at its meeting held on October 25, 2007, resolved to make the quarterly dividend of JPY 22 per share of common stock, the record date of which is September 30, 2007. It also intends to distribute third quarter and the year-end cash dividends of JPY 22 per share, the record date of which will be December 31, 2007 and March 31, 2008, respectively. The total projected annual dividend per share of common stock for the fiscal year ending March 31, 2008, is JPY 86 per share, an increase of JPY 19 per share from the annual dividends paid for the year ended March 31, 2007.
More information can be found at http://world.honda.com/investors/financialresult/