TOKYO, July 25 /PRNewswire-FirstCall/ -- Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal first quarter ended June 30, 2008.
First Quarter Results
Honda's consolidated net income for the fiscal first quarter ended June 30, 2008 totaled JPY 179.6 billion (USD 1,688 million), an increase of 8.1% from the same period in 2007. Net income set a record high for the fiscal first quarter. Basic net income per common share for the quarter amounted to JPY 98.98 (USD 0.93), an increase of JPY 7.6 from JPY 91.38 for the corresponding period last year. One Honda 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 2,867.2 billion (USD 26,943 million), a decrease of 2.2% from the same period in 2007, resulting primarily from currency translation effects. Honda estimates that if calculated at the same exchange rate as the corresponding period in 2007, revenue for the quarter would have increased by approximately 7.1%.
Consolidated operating income for the quarter totaled JPY 221.3 billion (USD 2,080 million), approximately the same level compared to the same period last year, due primarily to the positive impact of decreased sales incentives in the automobile business in North America, increased profit attributable to increased unit sales in the automobile business and continuing cost reduction efforts despite the negative impact of currency effects caused by the appreciation of the Japanese yen, increased SG&A expenses and increased raw material costs.
Consolidated income before income taxes, minority interest and equity in income of affiliates for the quarter totaled JPY 235.0 billion (USD 2,209 million), an increase of 7.7% from the same period in 2007. Income before income taxes, minority interest and equity in income of affiliates set a record high for the fiscal first quarter.
Equity in income of affiliates amounted to JPY 38.1 billion (USD 359 million) for the quarter, an increase of 3.2% from the corresponding period last year. Equity in income of affiliates set a record high for the quarter.
Business Segment
With respect to Honda's sales for the fiscal first quarter by business segment, motorcycle unit sales totaled 2,715 thousand units, an increase of 20.5% from the same period last year. Unit sales in Japan totaled 58 thousand units, a decrease of 31.0% compared to the same period last year. Overseas unit sales was 2,657 thousand units, an increase of 22.5% from the same period in 2007, due mainly to increased unit sales in Asia and Brazil and an increase in sales of motorcycle knocked-down parts for local production at Asian affiliates accounted for under the equity method in Indonesia and India.
Revenue from external customers increased 6.7%, to JPY 393.0 billion (USD 3,693 million) from the same period last year, due mainly to increased revenue in Asia and other regions. Operating income was JPY 31.1 billion (USD 293 million), the level of the same period last year, due mainly to increased revenue, offsetting increased SG&A expenses and increased raw material costs.
Honda's automobile unit sales totaled 962 thousand units, an increase of 1.7% from the same period last year. In Japan, unit sales amounted to 128 thousand units, a decrease of 5.9% from the same period last year. Overseas unit sales increased 3.0% to 834 thousand units from the corresponding period last year, due mainly to increased unit sales in Asia and other regions including Brazil and an increase in sales of automobile knocked-down parts for local production at Chinese affiliates accounted for under the equity method, more than offsetting a decrease of unit sales in Europe and North America.
Revenue from external customers decreased 4.3% to JPY 2,228.0 billion (USD 20,936 million) from the same period in 2007, due mainly to the negative impact of currency translation effect, offsetting the positive impact of increased overseas unit sales. Operating income increased 8.7% to JPY 161.2 billion (USD 1,515 million) from the same period last year, due primarily to decreased sales incentives in North America, the change in sales price for the new model year, increased profit attributable to increased unit sales particularly in Asia and South America and continuing cost reduction efforts, more than offsetting the negative currency effects caused by appreciation of the Japanese yen, increased SG&A expenses and increased raw material costs.
Revenue from customers in the financial services business increased 15.9% to JPY 145.8 billion (USD 1,370 million) from the same period in 2007, due mainly to an increase in operating lease revenues. Operating income decreased 15.9% to JPY 28.7 billion (USD 270 million) from the same period in 2007, due primarily to the increased expenses related to allowance for losses on lease residual values, more than offsetting increased profit attributable to increased revenue.
Honda's power product unit sales totaled 1,339 thousand units, a decrease of 12.4% from the same period in 2007. In Japan, unit sales totaled 159 thousand units, an increase of 17.8% from the same period last year. Overseas unit sales totaled 1,180 thousand units, a decrease of 15.4% from the corresponding period last year, due primarily to a decline of unit sales in Europe, and of general-purpose engines for OEM* production in North America, which more than offset increased unit sales of general-purpose engines in Asia.
Revenue from external customers in the power product and other businesses decreased by 8.6% to JPY 100.3 billion (USD 943 million) from the same period last year, due mainly to decreased unit sales of power products. Operating income decreased 97.4% to JPY 200 million (USD 2 million) from the same period in 2007. This was primarily due to decreased profit attributable to decreased revenue and increased R&D expenses of other businesses.
* OEM (Original equipment manufacturing)
OEM refers to a manufacturing of products and components supplied for sale under a third-party brand.
Geographical Information
With respect to Honda's sales for the fiscal first quarter by geographic area, in Japan, revenue for domestic and exports sales amounted to JPY 1,149.6 billion (USD 10,802 million), down 2.3% compared to the same period last year, due primarily to decreased revenue in motorcycle and automobile businesses in Japan. Operating income totaled JPY 37.9 billion (USD 356 million), down 37.5% from the same period last year due primarily to the negative impact of the currency effects caused by the appreciation of the Japanese yen and decreased revenue, more than offsetting the positive impact of decreased warranty-related expenses.
In North America, revenue decreased by 5.7% to JPY 1,493.1 billion (USD 14,031 million) from the same period in 2007 due mainly to the negative impact of the currency translation effects. Operating income decreased by 2.5% to JPY 94.5 billion (USD 889 million) from the same period last year due primarily to the negative impact of currency effects caused by appreciation of the Japanese yen, increased SG&A expenses related to allowance for losses on lease residual values and increased raw material costs, more than offsetting the positive impact of decreased sales incentives in the automobile business, change in sales price for the new model year and continuing cost reduction efforts.
In Europe, revenue decreased by 8.9% to JPY 364.5 billion (USD 3,425 million), from the same period in 2007 due primarily to decreased revenue in the automobile business. Operating income increased by 9.5% to JPY 11.2 billion (USD 106 million) from the same period last year due primarily to continuing cost reduction efforts and the change in model mix, more than offsetting decreased revenue and increased SG&A expenses.
In Asia, revenue increased by 10.9% to JPY 436.2 billion (USD 4,099 million) from the same period last year due to increased revenue in all business segments, offsetting the negative impact of the currency translation effects. Operating income increased by 30.7% to JPY 48.3 billion (USD 454 million) from the corresponding period last year due mainly to increased profit attributable to increased revenue, more than offsetting the negative impact of currency effects caused by appreciation of the Japanese yen and increased SG&A expenses.
In other regions, revenue increased by 29.8% to JPY 293.7 billion (USD 2,761 million) compared to the same period last year due mainly to increased revenue in all business segments. Operating income increased by 67.1% to JPY 36.3 billion (USD 341 million) from the corresponding period in 2007 due mainly to increased profit attributable to increased revenue and the positive currency effects caused by depreciation of the Japanese yen, more than offsetting increased SG&A expenses.
United States dollar amounts have been translated from yen solely for the convenience of the reader at the rate of JPY106.42=U.S.$1, the mean of the telegraphic transfer selling exchange rate and the telegraphic transfer buying exchange rate prevailing on the Tokyo foreign exchange market on June 30, 2008.
Forecasts for the Fiscal Year Ending March 31, 2009
In regard to the forecasts of the financial results for the fiscal year ending March 31, 2009, Honda projects consolidated results to be as shown below:
FY2009 Forecasts for Consolidated Results
First half ending September 30, 2008
Yen Changes from
(billions) FY2008
Net sales and other operating revenue 5,750 - 2.6%
Operating income 350 - 31.1%
Income before income taxes, minority interest
and equity in income of affiliates 380 - 22.2%
Net income 280 - 25.3%
Yen
Basic net income per Common share 154.31
Fiscal year ending March 31, 2009
Yen Changes from
(billions) FY2008
Net sales and other operating revenue 12,130 + 1.1%
Operating income 630 - 33.9%
Income before income taxes minority interest
and equity in income of affiliates 660 - 26.3%
Net income 490 - 18.3%
Yen
Basic net income per Common share 270.04
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 103 and JPY 165, respectively, for the first half of the year ending March 31, 2009, and JPY 101 and JPY 162, respectively, for the full year ending March 31, 2009.
Projected unit sales for the full year ending March 31, 2009 are shown
below.
Unit Changes from FY2008
(thousands) (thousands)
Motorcycle business 10,455 + 1,135
Automobile business 4,080 + 155
Power product and other businesses 6,120 + 63
The reasons for the increases or decreases for forecasts of the operating income, and income before income taxes, minority interest and equity in income of affiliates for the fiscal year ending March 31, 2009 from the corresponding period last year are as follows.
Yen (billions)
Revenue, model mix, etc., excluding currency
effect 265.0
Cost reduction, the effect of raw material
cost fluctuations, etc. - 179.0
SG&A expenses, excluding currency effect - 141.0
R&D expenses - 27.1
Currency effect - 241.0
Operating income compared with fiscal year 2008 - 323.1
Fair value of derivative instruments 102.0
Others - 14.7
Income before income taxes, minority interest
and equity in income of affiliates compared
with fiscal year 2008 - 235.8
Dividend per Share of Common Stock
The Board of Directors of Honda Motor Co., Ltd., at its meeting held on July 25, 2008, resolved to make the quarterly dividend JPY 22 per share of common stock, the record date of which is June 30, 2008. The total expected annual dividend per share of common stock for the fiscal year ending March 31, 2009, is JPY 88 per share.
This announcement contains "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements 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 foreign exchange rates between the Japanese yen and the U.S. dollar, the Euro and other major currencies, as well as other factors detailed from time to time. The various factors for increases and decreases in income have been classified in accordance with a method that Honda considers reasonable.