6-K 1 d324535d6k.htm FORM 6-K FORM 6-K
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No.1-7628

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF FEBRUARY 2017

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒    Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


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Contents

Exhibit 1:

DETROIT, January  30, 2017 General Motors Co. (NYSE: GM) and Honda (NYSE: HMC) today announced establishment of the auto industry’s first manufacturing joint venture to mass produce an advanced hydrogen fuel cell system that will be used in future products from each company.

Exhibit 2:

On February 3, 2017, Honda Motor Co., Ltd. (the “Company”) announced its consolidated financial results for the fiscal third quarter and the fiscal nine-month period ended December 31, 2016.

Exhibit 3:

On February 3, 2017, the Company revises its forecast for consolidated financial results for the fiscal year ending March  31, 2017, which was announced on October 31, 2016.

Exhibit 4:

The Board of Directors of the Company, at its meeting held on February 3, 2017, resolved to make a distribution of surplus (quarterly dividends), the record date of which is December 31, 2016, and revised the amount of the projected dividend per share of common stock for the year ending March 31, 2017.


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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

HONDA GIKEN KOGYO KABUSHIKI KAISHA (HONDA MOTOR CO., LTD.)

/s/ Shinji Suzuki

Shinji Suzuki
General Manager
Finance Division
Honda Motor Co., Ltd.

Date: February 7, 2017


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GM and Honda to Establish Industry-First Joint Fuel Cell System Manufacturing Operation in Michigan

Advanced fuel cell technology will be applied to each company’s future products

DETROIT, January 30, 2017 — General Motors Co. (NYSE: GM) and Honda (NYSE: HMC) today announced establishment of the auto industry’s first manufacturing joint venture to mass produce an advanced hydrogen fuel cell system that will be used in future products from each company.

Fuel Cell System Manufacturing, LLC will operate within GM’s existing battery pack manufacturing facility site in Brownstown, Michigan, south of Detroit. Mass production of fuel cell systems is expected to begin around 2020 and create nearly 100 new jobs. The companies are making equal investments totaling $85 million in the joint venture.

Honda and GM have been working together through a master collaboration agreement announced in July 2013. It established the co-development arrangement for a next-generation fuel cell system and hydrogen storage technologies. The companies integrated their development teams and shared hydrogen fuel cell intellectual property to create a more affordable commercial solution for fuel cell and hydrogen storage systems.

For details, please refer to the website of Honda Motor Co., Ltd.

http://world.honda.com/news/2017/c170131eng.html


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February 3, 2017

HONDA MOTOR CO., LTD. REPORTS

CONSOLIDATED FINANCIAL RESULTS

FOR THE FISCAL THIRD QUARTER AND

THE FISCAL NINE-MONTH PERIOD ENDED DECEMBER 31, 2016

Tokyo, February 3, 2017 — Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal third quarter and the fiscal nine-month period ended December 31, 2016.

Third Quarter Results

Honda’s consolidated profit for the period attributable to owners of the parent for the fiscal third quarter ended December 31, 2016 totaled JPY 168.8 billion (USD 1,449 million), an increase of 35.9% from the same period last year. Earnings per share attributable to owners of the parent for the quarter amounted to JPY 93.67 (USD 0.80), an increase of JPY 24.76 (USD 0.21) from JPY 68.91 for the corresponding period last year. One Honda American Depository Share represents one common share.

Consolidated sales revenue for the quarter amounted to JPY 3,501.0 billion (USD 30,055 million), a decrease of 3.2% from the same period last year, due primarily to unfavorable foreign currency translation effects, despite increased revenue in automobile business, financial services business and motorcycle business operations.

Consolidated operating profit for the quarter amounted to JPY 207.6 billion (USD 1,783 million), an increase of 27.4% from the same period last year, due primarily to decreased SG&A expenses, including quality related expenses and continuing cost reduction efforts, despite unfavorable foreign currency effects.

Share of profit of investments accounted for using the equity method for the quarter amounted to JPY 49.1 billion (USD 422 million), an increase of 8.9% from the corresponding period last year.

Consolidated profit before income taxes for the quarter totaled JPY 260.9 billion (USD 2,240 million), an increase of 29.9% from the same period last year.

 

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Business Segment

Motorcycle Business

For the three months ended December 31, 2015 and 2016

 

     Unit (Thousands)  
     Honda Group Unit Sales      Consolidated Unit Sale  
     Three months
ended

Dec. 31, 2015
     Three months
ended
Dec. 31, 2016
     Change      %      Three months
ended
Dec. 31, 2015
     Three months
ended

Dec. 31, 2016
     Change      %  

Motorcycle business

     4,407        4,523        116        2.6        2,654        2,675        21        0.8  

Japan

     41        49        8        19.5        41        49        8        19.5  

North America

     69        68        - 1        - 1.4        69        68        - 1        - 1.4  

Europe

     33        31        - 2        - 6.1        33        31        - 2        - 6.1  

Asia

     3,968        4,115        147        3.7        2,215        2,267        52        2.3  

Other Regions

     296        260        - 36        - 12.2        296        260        - 36        - 12.2  

 

Note: Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

 

With respect to Honda’s sales for the fiscal third quarter by business segment, in motorcycle business operations, sales revenue from sales to external customers decreased 4.9%, to JPY 420.6 billion (USD 3,611 million) from the same period last year due mainly to unfavorable foreign currency translation effects, despite increased consolidated unit sales. Operating profit totaled JPY 41.8 billion (USD 359 million), a decrease of 15.4% from the same period last year, due primarily to unfavorable foreign currency effects, despite continuing cost reduction efforts.

 

Automobile Business

 

For the three months ended December 31, 2015 and 2016

 

 

 

 

     Unit (Thousands)  
     Honda Group Unit Sales      Consolidated Unit Sales  
     Three months
ended
Dec. 31, 2015
     Three months
ended
Dec. 31, 2016
     Change      %      Three months
ended
Dec. 31, 2015
     Three months
ended
Dec. 31, 2016
     Change      %  

Automobile business

     1,228        1,312        84        6.8        879        925        46        5.2  

Japan

     151        170        19        12.6        140        154        14        10.0  

North America

     466        510        44        9.4        466        510        44        9.4  

Europe

     43        43        0        0.0        43        43        0        0.0  

Asia

     503        527        24        4.8        165        156        - 9        - 5.5  

Other Regions

     65        62        - 3        - 4.6        65        62        - 3        - 4.6  

Note: Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

In automobile business operations, sales revenue from sales to external customers decreased 3.7%, to JPY 2,555.1 billion (USD 21,934 million) from the same period last year due mainly to unfavorable foreign currency translation effects, despite increased consolidated unit sales. Operating profit totaled JPY 129.8 billion (USD 1,115 million), an increase of 86.6% from the same period last year, due primarily to decreased SG&A expenses, including quality related expenses, and continuing cost reduction efforts, despite unfavorable foreign currency effects.

 

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Financial Services Business

Sales revenue from customers in the financial services business operations increased 1.8%, to JPY 452.5 billion (USD 3,884 million) from the same period last year due mainly to an increase in revenue from operating leases and sales of returned lease vehicles, despite unfavorable foreign currency translation effects. Operating profit decreased 17.7% to JPY 42.3 billion (USD 364 million) from the same period last year due mainly to increased SG&A expenses and unfavorable foreign currency effects.

Power Product and Other Businesses

For the three months ended December 31, 2015 and 2016

 

     Unit (Thousands)  
     Honda Group Unit Sales/ Consolidated Unit Sales  
     Three months
ended
Dec. 31, 2015
     Three months
ended
Dec. 31, 2016
     Change      %  

Power product business

     1,177        1,175        - 2        - 0.2  

Japan

     62        54        - 8        - 12.9  

North America

     469        521        52        11.1  

Europe

     190        190        0        0.0  

Asia

     344        311        - 33        - 9.6  

Other Regions

     112        99        - 13        - 11.6  

Note: Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In power product business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales for the three months ended December 31, 2015 and 2016, since no affiliates and joint ventures accounted for using the equity method were involved in the sale of Honda power products.

Sales revenue from sales to external customers in power product and other businesses decreased 6.6%, to JPY 72.8 billion (USD 625 million) from the same period last year, due mainly to unfavorable foreign currency translation effects. Honda reported an operating loss of JPY 6.3 billion (USD 55 million), an improvement of JPY 1.1 billion (USD 10 million) from the same period last year, due mainly to decreased expenses related to other businesses. Operating loss for aircraft and aircraft engines, included in Power product and other businesses, totaled JPY 12.3 billion (USD 106 million), an improvement of JPY 4.8 billion (USD 42 million) from the same period last year.

Explanatory note:

United States dollar amounts have been translated from yen solely for the convenience of the reader at the rate of JPY 116.49=USD 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 December 31, 2016.

 

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Nine Months Results

Honda’s consolidated profit for the period attributable to owners of the parent for the fiscal nine months ended December 31, 2016 totaled JPY 520.6 billion, an increase of 18.9% from the same period last year. Earnings per share attributable to owners of the parent for the fiscal nine months amounted to JPY 288.86, an increase of JPY 45.85 from JPY 243.01 for the same period last year.

Consolidated sales revenue for the fiscal nine months amounted to JPY 10,235.7 billion, a decrease of 6.5% from the same period last year, due primarily to unfavorable foreign currency translation effects, despite increased revenue in automobile business, financial services business, and motorcycle business operations.

Consolidated operating profit for the fiscal nine months amounted to JPY 702.6 billion, an increase of 23.9% from the same period last year, due primarily to continuing cost reduction efforts, decreased SG&A expenses, including quality related expenses, increased sales revenue and model mix, and the impact of pension accounting treatment, despite the effects of the 2016 Kumamoto Earthquake and unfavorable foreign currency effects.

Share of profit of investments accounted for using the equity method for the fiscal nine months amounted to JPY 116.2 billion, a decrease of 1.2% from the corresponding period last year.

Consolidated profit before income taxes for the fiscal nine months totaled JPY 819.9 billion, an increase of 18.1% from the same period last year.

 

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Business Segment

Motorcycle Business

For the nine months ended December 31, 2015 and 2016

 

     Unit (Thousands)  
     Honda Group Unit Sales      Consolidated Unit Sales  
     Nine months
ended
Dec.  31, 2015
     Nine months
ended
Dec. 31, 2016
     Change      %      Nine months
ended
Dec. 31, 2015
     Nine months
ended
Dec. 31, 2016
     Change      %  

Motorcycle business

     12,882        13,413        531        4.1        7,939        8,548        609        7.7  

Japan

     138        111        - 27        - 19.6        138        111        - 27        - 19.6  

North America

     219        217        - 2        - 0.9        219        217        - 2        - 0.9  

Europe

     147        151        4        2.7        147        151        4        2.7  

Asia

     11,390        12,125        735        6.5        6,447        7,260        813        12.6  

Other Regions

     988        809        - 179        - 18.1        988        809        - 179        - 18.1  

 

Note: Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

With respect to Honda’s sales for the fiscal nine months by business segment, in motorcycle business operations, sales revenue from sales to external customers decreased 7.7%, to JPY 1,262.4 billion from the same period last year, due mainly to unfavorable foreign currency translation effects, despite increased consolidated unit sales. Operating profit totaled JPY 132.5 billion, a decrease of 14.0% from the same period last year, due primarily to a decrease in profit attributable to decreased sales volume and model mix, including the effect of the 2016 Kumamoto Earthquake and unfavorable foreign currency effects, despite continuing cost reduction effects and the impact of pension accounting treatment.

Automobile Business

For the nine months ended December 31, 2015 and 2016

 

     Unit (Thousands)  
     Honda Group Unit Sales      Consolidated Unit Sales  
     Nine months
ended
Dec. 31, 2015
     Nine months
ended
Dec. 31, 2016
     Change      %      Nine months
ended
Dec. 31, 2015
     Nine months
ended
Dec. 31, 2016
     Change      %  

Automobile business

     3,514        3,743        229        6.5        2,656        2,723        67        2.5  

Japan

     466        472        6        1.3        430        429        - 1        - 0.2  

North America

     1,436        1,499        63        4.4        1,436        1,499        63        4.4  

Europe

     117        133        16        13.7        117        133        16        13.7  

Asia

     1,303        1,462        159        12.2        481        485        4        0.8  

Other Regions

     192        177        - 15        - 7.8        192        177        - 15        - 7.8  

Note: Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

In automobile business operations, sales revenue from sales to external customers decreased 7.0%, to JPY 7,395.7 billion from the same period last year due mainly to unfavorable foreign currency translation effects, despite increased consolidated unit sales. Operating profit totaled JPY 446.1 billion, an increase of 66.4% from the same period last year, due primarily to decreased SG&A expenses, including quality related expenses, continuing cost reduction efforts, an increase in sales volume and model mix, and the impact of pension accounting treatment, despite unfavorable foreign currency effects.

 

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Financial Services Business

Sales revenue from customers in the financial services business operations decreased 1.4%, to JPY 1,360.3 billion from the same period last year due mainly to unfavorable foreign currency translation effects, despite an increase in revenue from operating leases and sales of returned lease vehicles. Operating profit decreased 16.1% to JPY 130.7 billion from the same period last year due mainly to increased SG&A expenses and unfavorable foreign currency effects.

Power Product and Other Businesses

For the nine months ended December 31, 2015 and 2016

 

     Unit (Thousands)  
     Honda Group Unit Sales/ Consolidated Unit Sales  
     Nine  months
ended
Dec. 31, 2015
     Nine  months
ended
Dec. 31, 2016
     Change      %  

Power product business

     4,010        3,903        - 107        - 2.7  

Japan

     262        200        - 62        - 23.7  

North America

     1,805        1,812        7        0.4  

Europe

     595        580        - 15        - 2.5  

Asia

     1,030        1,047        17        1.7  

Other Regions

     318        264        - 54        - 17.0  

Note: Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In power product business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales for the nine months ended December 31, 2015 and 2016, since no affiliates and joint ventures accounted for using the equity method were involved in the sale of Honda power products.

Sales revenue from sales to external customers in power product and other businesses decreased by 11.3% to JPY 217.2 billion from the same period last year, due mainly to decreased consolidated unit sales in Power Product business operations. Honda reported an operating loss of JPY 6.8 billion, an improvement of JPY 3.9 billion from the same period last year, due mainly to decreased expenses related to other businesses and the impact of pension accounting treatment. Operating loss for aircraft and aircraft engines, included in Power product and other businesses, totaled JPY 31.7 billion, an improvement of JPY 9.9 billion from the same period last year.

 

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Consolidated Statements of Financial Position for the Fiscal Nine Months Ended December 31, 2016

Total assets increased by JPY 642.5 billion, to JPY 18,871.8 billion from March 31, 2016, mainly due to an increase in Equipment of operating leases and foreign currency translation effects. Total liabilities increased by JPY 92.8 billion, to JPY 11,290.3 billion from March 31, 2016, mainly due to an increase in Financing liability and foreign currency translation effects, despite a decrease in Retirement benefit liabilities. Total equity increased by JPY 549.6 billion, to JPY 7,581.4 billion from March 31, 2016 due mainly to increased Retained earnings attributable to increased Profit for the period and foreign currency translation effects.

 

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Consolidated Statements of Cash Flows for the Fiscal Nine Months Ended December 31, 2016

Consolidated cash and cash equivalents on December 31, 2016 increased by JPY 42.5 billion from March 31, 2016, to JPY 1,800.0 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the same period of the previous fiscal year, are as follows:

Cash flows from operating activities

Net cash provided by operating activities amounted to JPY 458.2 billion for the fiscal nine months ended December 31, 2016. Cash inflows from operating activities decreased by JPY 500.3 billion compared with the same period of the previous fiscal year due mainly to a decrease in cash received from customers, including unfavorable foreign currency translation effects, despite decreased payments for parts and raw materials.

Cash flows from investing activities

Net cash used in investing activities amounted to JPY 531.9 billion. Cash outflows from investing activities decreased by JPY 150.8 billion compared with the same period of the previous fiscal year, due mainly to a decrease in Payments for additions to property, plant and equipment.

Cash flows from financing activities

Net cash provided by financing activities amounted to JPY 89.1 billion. Cash inflows from financing activities increased by JPY 137.9 billion compared with the same period of the previous fiscal year, due mainly to a decrease in repayments of financing liabilities.

 

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Forecasts for the Fiscal Year Ending March 31, 2017

In regard to the forecasts of the financial results for the fiscal year ending March 31, 2017, Honda projects consolidated results to be as shown below:

Fiscal year ending March 31, 2017

 

     Yen (billions)      Changes from FY 2016  

Sales revenue

     13,800.0        - 5.5

Operating profit

     785.0        + 55.9

Profit before income taxes

     925.0        + 45.6

Profit for the year attributable to owners of the parent

     545.0        + 58.2
     Yen         

Earnings per share attributable to owners of the parent

     

Basic and diluted

     302.39     

Note: The forecasts are based on the assumption that the average exchange rates for the Japanese yen to the U.S. dollar will be JPY 107 for the full year ending March 31, 2017.

The reasons for the increases or decreases in the forecasts of the operating profit, and profit before income taxes for the fiscal year ending March 31, 2017 from the previous year are as follows.

 

     Yen (billions)  

Revenue, model mix, etc.

     + 4.6  

Cost reduction, the effect of raw material cost fluctuations, etc.

     + 193.0  

SG&A expenses

     + 364.0  

R&D expenses

     - 65.0  

Currency effect

     - 299.0  

The impact of pension accounting treatment

     + 84.0  
  

 

 

 

Operating profit compared with fiscal year ended March 31, 2016

     + 281.6  
  

 

 

 

Share of profit of investments accounted for using the equity method

     + 23.9  

Finance income and finance costs

     - 16.0  
  

 

 

 

Profit before income taxes compared with fiscal year ended March 31, 2016

     + 289.5  
  

 

 

 

 

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Dividend per Share of Common Stock

The Board of Directors of Honda Motor Co., Ltd., at its meeting held on February 3, 2017, resolved to make the quarterly dividend JPY 24 per share of common stock, the record date of which is December 31, 2016. The total expected annual dividend per share of common stock for the fiscal year ending March 31, 2017, is JPY 92 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 the actual results of the Company could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in the principal markets of the Company, its consolidated subsidiaries and its affiliates accounted for by the equity-method, and fluctuation of foreign exchange rates, as well as other factors detailed from time to time.

 

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Consolidated Financial Summary

For the three months and nine months ended December 31, 2015 and 2016

Financial Highlights

 

     Yen (millions)  
     Three months ended
Dec. 31, 2015
     Three months ended
Dec. 31, 2016
     Nine months ended
Dec. 31, 2015
     Nine months ended
Dec. 31, 2016
 

Sales revenue

     3,617,223        3,501,068        10,943,262        10,235,766  

Operating profit

     163,079        207,685        567,207        702,609  

Profit before income taxes

     200,890        260,935        694,156        819,993  

Profit for the period attributable to owners of the parent

     124,187        168,815        437,975        520,610  
     Yen  

Earnings per share attributable to owners of the parent

           

Basic and diluted

     68.91        93.67        243.01        288.86  
     U.S. Dollar (millions)  
            Three months ended
Dec. 31, 2016
            Nine months ended
Dec. 31, 2016
 

Sales revenue

        30,055           87,868  

Operating profit

        1,783           6,031  

Profit before income taxes

        2,240           7,039  

Profit for the period attributable to owners of the parent

        1,449           4,469  
     U.S. Dollar  

Earnings per share attributable to owners of the parent

        0.80           2.48  

Basic and diluted

           

 

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[1] Condensed Consolidated Statements of Financial Position

 

     Yen (millions)  
     Mar. 31, 2016     Dec. 31, 2016  

Assets

    

Current assets:

    

Cash and cash equivalents

     1,757,456       1,800,011  

Trade receivables

     826,714       714,973  

Receivables from financial services

     1,926,014       1,922,220  

Other financial assets

     103,035       202,798  

Inventories

     1,313,292       1,386,055  

Other current assets

     315,115       309,554  
  

 

 

   

 

 

 

Total current assets

     6,241,626       6,335,611  
  

 

 

   

 

 

 

Non-current assets:

    

Investments accounted for using the equity method

     593,002       564,571  

Receivables from financial services

     3,082,054       3,167,587  

Other financial assets

     335,203       357,891  

Equipment on operating leases

     3,678,111       4,160,460  

Property, plant and equipment

     3,139,564       3,205,523  

Intangible assets

     824,939       797,314  

Deferred tax assets

     180,828       124,802  

Other non-current assets

     153,967       158,058  
  

 

 

   

 

 

 

Total non-current assets

     11,987,668       12,536,206  
  

 

 

   

 

 

 

Total assets

     18,229,294       18,871,817  
  

 

 

   

 

 

 

Liabilities and Equity

    

Current liabilities:

    

Trade payables

     1,128,041       996,623  

Financing liabilities

     2,789,620       3,032,889  

Accrued expenses

     384,614       346,448  

Other financial liabilities

     89,809       111,378  

Income taxes payable

     45,872       35,994  

Provisions

     513,232       404,507  

Other current liabilities

     519,163       479,926  
  

 

 

   

 

 

 

Total current liabilities

     5,470,351       5,407,765  
  

 

 

   

 

 

 

Non-current liabilities:

    

Financing liabilities

     3,736,628       3,892,909  

Other financial liabilities

     47,755       45,595  

Retirement benefit liabilities

     660,279       567,758  

Provisions

     264,978       229,343  

Deferred tax liabilities

     789,830       901,959  

Other non-current liabilities

     227,685       245,054  
  

 

 

   

 

 

 

Total non-current liabilities

     5,727,155       5,882,618  
  

 

 

   

 

 

 

Total liabilities

     11,197,506       11,290,383  
  

 

 

   

 

 

 

Equity:

    

Common stock

     86,067       86,067  

Capital surplus

     171,118       171,118  

Treasury stock

     (26,178     (26,185

Retained earnings

     6,194,311       6,612,800  

Other components of equity

     336,115       459,935  
  

 

 

   

 

 

 

Equity attributable to owners of the parent

     6,761,433       7,303,735  

Non-controlling interests

     270,355       277,699  
  

 

 

   

 

 

 

Total equity

     7,031,788       7,581,434  
  

 

 

   

 

 

 

Total liabilities and equity

     18,229,294       18,871,817  
  

 

 

   

 

 

 

 

—12—


Table of Contents

[2] Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Income

For the three months ended December 31, 2015 and 2016

 

     Yen (millions)  
     Three months ended
Dec. 31, 2015
    Three months ended
Dec. 31, 2016
 

Sales revenue

     3,617,223       3,501,068  

Operating costs and expenses:

    

Cost of sales

     (2,789,606     (2,736,728

Selling, general and administrative

     (497,167     (380,356

Research and development

     (167,371     (176,299
  

 

 

   

 

 

 

Total operating costs and expenses

     (3,454,144     (3,293,383
  

 

 

   

 

 

 

Operating profit

     163,079       207,685  
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     45,097       49,129  

Finance income and finance costs:

    

Interest income

     7,218       8,331  

Interest expense

     (4,406     (2,593

Other, net

     (10,098     (1,617
  

 

 

   

 

 

 

Total finance income and finance costs

     (7,286     4,121  
  

 

 

   

 

 

 

Profit before income taxes

     200,890       260,935  

Income tax expense

     (61,769     (74,457
  

 

 

   

 

 

 

Profit for the period

     139,121       186,478  
  

 

 

   

 

 

 

Profit for the period attributable to:

    

Owners of the parent

     124,187       168,815  

Non-controlling interests

     14,934       17,663  
     Yen  

Earnings per share attributable to owners of the parent

    

Basic and diluted

     68.91       93.67  

 

—13—


Table of Contents

Condensed Consolidated Statements of Comprehensive Income

For the three months ended December 31, 2015 and 2016

 

     Yen (millions)  
     Three months ended
Dec. 31, 2015
    Three months ended
Dec. 31, 2016
 

Profit for the period

     139,121       186,478  

Other comprehensive income, net of tax:

    

Items that will not be reclassified to profit or loss

    

Remeasurements of defined benefit plans

     —         —    

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

     10,325       17,135  

Share of other comprehensive income of investments accounted for using the equity method

     1,874       2,442  

Items that may be reclassified subsequently to profit or loss

    

Exchange differences on translating foreign operations

     13,508       588,833  

Share of other comprehensive income of investments accounted for using the equity method

     (10,048     25,597  
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     15,659       634,007  
  

 

 

   

 

 

 

Comprehensive income for the period

     154,780       820,485  
  

 

 

   

 

 

 

Comprehensive income for the period attributable to:

    

Owners of the parent

     137,541       778,852  

Non-controlling interests

     17,239       41,633  

 

—14—


Table of Contents

Condensed Consolidated Statements of Income

For the nine months ended December 31, 2015 and 2016

     Yen (millions)  
     Nine months ended
Dec.  31, 2015
    Nine months ended
Dec.  31, 2016
 

Sales revenue

     10,943,262       10,235,766  

Operating costs and expenses:

    

Cost of sales

     (8,503,957     (7,937,259

Selling, general and administrative

     (1,410,722     (1,126,640

Research and development

     (461,376     (469,258
  

 

 

   

 

 

 

Total operating costs and expenses

     (10,376,055     (9,533,157
  

 

 

   

 

 

 

Operating profit

     567,207       702,609  
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     117,611       116,212  

Finance income and finance costs:

    

Interest income

     21,312       23,139  

Interest expense

     (13,538     (8,784

Other, net

     1,564       (13,183
  

 

 

   

 

 

 

Total finance income and finance costs

     9,338       1,172  
  

 

 

   

 

 

 

Profit before income taxes

     694,156       819,993  

Income tax expense

     (208,818     (251,911
  

 

 

   

 

 

 

Profit for the period

     485,338       568,082  
  

 

 

   

 

 

 

Profit for the period attributable to:

    

Owners of the parent

     437,975       520,610  

Non-controlling interests

     47,363       47,472  
     Yen  

Earnings per share attributable to owners of the parent

    

Basic and diluted

     243.01       288.86  

 

—15—


Table of Contents

Condensed Consolidated Statements of Comprehensive Income

For the nine months ended December 31, 2015 and 2016

 

     Yen (millions)  
     Nine months ended
Dec.  31, 2015
    Nine months ended
Dec.  31, 2016
 

Profit for the period

     485,338        568,082   

Other comprehensive income, net of tax:

    

Items that will not be reclassified to profit or loss

    

Remeasurements of defined benefit plans

     —          11,561   

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

     (2,303     18,042   

Share of other comprehensive income of investments accounted for using the equity method

     (319     1,643   

Items that may be reclassified subsequently to profit or loss

    

Exchange differences on translating foreign operations

     (185,534     135,535   

Share of other comprehensive income of investments accounted for using the equity method

     (18,452     (32,088
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     (206,608     134,693   
  

 

 

   

 

 

 

Comprehensive income for the period

     278,730        702,775   
  

 

 

   

 

 

 

Comprehensive income for the period attributable to:

    

Owners of the parent

     247,632        661,259   

Non-controlling interests

     31,098        41,516   

 

—16—


Table of Contents

[3] Condensed Consolidated Statements of Changes in Equity

As of and for the nine months ended December 31, 2015

 

     Yen (millions)  
     Equity attributable to owners of the parent              
     Common
stock
     Capital
surplus
     Treasury
stock
    Retained
earnings
    Other
components
of equity
    Total     Non-
controlling
interests
    Total
equity
 

Balance as of April 1, 2015

     86,067        171,118        (26,165     6,083,573       794,034       7,108,627       274,194       7,382,821  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                  

Profit for the period

             437,975         437,975       47,363       485,338  

Other comprehensive income, net of tax

               (190,343     (190,343     (16,265     (206,608
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

             437,975       (190,343     247,632       31,098       278,730  

Reclassification to retained earnings

             (253     253       —           —    

Transactions with owners and other

                  

Dividends paid

             (118,950       (118,950     (35,251     (154,201

Purchases of treasury stock

           (11         (11       (11

Equity transactions and others

                   (2,815     (2,815
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

           (11     (118,950       (118,961     (38,066     (157,027
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2015

     86,067        171,118        (26,176     6,402,345       603,944       7,237,298       267,226       7,504,524  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
As of and for the nine months ended December 31, 2016  
     Yen (millions)  
     Equity attributable to owners of the parent              
     Common
stock
     Capital
surplus
     Treasury
stock
    Retained
earnings
    Other
components
of equity
    Total     Non-
controlling
interests
    Total
equity
 

Balance as of April 1, 2016

     86,067        171,118        (26,178     6,194,311       336,115       6,761,433       270,355       7,031,788  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                  

Profit for the period

             520,610         520,610       47,472       568,082  

Other comprehensive income, net of tax

               140,649       140,649       (5,956     134,693  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

             520,610       140,649       661,259       41,516       702,775  

Reclassification to retained earnings

             16,829       (16,829     —           —    

Transactions with owners and other

                  

Dividends paid

             (118,950       (118,950     (34,172     (153,122

Purchases of treasury stock

           (7         (7       (7

Equity transactions and others

                  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

           (7     (118,950       (118,957     (34,172     (153,129
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2016

     86,067        171,118        (26,185     6,612,800       459,935       7,303,735       277,699       7,581,434  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

—17—


Table of Contents

[4] Consolidated Statements of Cash Flows

 

     Yen (millions)  
     Nine months ended
Dec. 31, 2015
    Nine months ended
Dec. 31, 2016
 

Cash flows from operating activities:

    

Profit before income taxes

     694,156        819,993   

Depreciation, amortization and impairment losses excluding equipment on operating leases

     493,836        491,994   

Share of profit of investments accounted for using the equity method

     (117,611     (116,212

Finance income and finance costs, net

     (10,947     (47,547

Interest income and interest costs from financial services, net

     (120,419     (89,139

Changes in assets and liabilities

    

Trade receivables

     60,095        108,895   

Inventories

     51,020        (57,852

Trade payables

     (51,047     (136,278

Accrued expenses

     (34,993     (34,530

Provisions and retirement benefit liabilities

     105,749        (224,411

Receivables from financial services

     328,043        45,959   

Equipment on operating leases

     (424,387     (358,848

Other assets and liabilities

     (61,480     2,583   

Other, net

     1,368        (5,353

Dividends received

     61,433        66,158   

Interest received

     178,208        161,616   

Interest paid

     (71,223     (69,291

Income taxes paid, net of refunds

     (123,146     (99,461 ) 
  

 

 

   

 

 

 

Net cash provided by operating activities

     958,655        458,276   

Cash flows from investing activities:

    

Payments for additions to property, plant and equipment

     (485,311     (384,071

Payments for additions to and internally developed intangible assets

     (177,354     (115,128

Proceeds from sales of property, plant and equipment and intangible assets

     19,984        15,585   

Payments for acquisitions of subsidiaries, net of cash and cash equivalents acquired

     —          (2,835

Proceeds from sales of investments accounted for using the equity method

     —          6,466   

Payments for acquisitions of other financial assets

     (129,871     (169,010

Proceeds from sales and redemptions of other financial assets

     91,664        117,439   

Other, net

     (1,977     (435
  

 

 

   

 

 

 

Net cash used in investing activities

     (682,865     (531,989

Cash flows from financing activities:

    

Proceeds from short-term financing liabilities

     6,180,654        6,270,259   

Repayments of short-term financing liabilities

     (6,454,410     (6,001,894

Proceeds from long-term financing liabilities

     1,413,771        1,247,002   

Repayments of long-term financing liabilities

     (1,001,637     (1,240,192

Dividends paid to owners of the parent

     (118,950     (118,950

Dividends paid to non-controlling interests

     (33,044     (32,597

Purchases and sales of treasury stock, net

     (11     (7

Other, net

     (35,168     (34,497
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (48,795     89,124   

Effect of exchange rate changes on cash and cash equivalents

     (65,272     27,144   
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     161,723        42,555   

Cash and cash equivalents at beginning of year

     1,471,730        1,757,456   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

     1,633,453        1,800,011   
  

 

 

   

 

 

 

 

—18—


Table of Contents

[5] Assumptions for Going Concern

None

 

—19—


Table of Contents

[6] Segment Information

Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Power product and other businesses, which are based on Honda’s organizational structure and characteristics of products and services. Operating segments are defined as components of Honda for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for these reportable segments are consistent with the accounting policies used in the Company’s condensed consolidated financial statements.

Principal products and services, and functions of each segment are as follows:

 

Segment

 

Principal products and services

 

Functions

Motorcycle Business

  Motorcycles, all-terrain vehicles (ATVs) and relevant parts   Research and Development, Manufacturing, and Sales and related services

Automobile Business

  Automobiles and relevant parts   Research and Development, Manufacturing, and Sales and related services

Financial Services Business

  Financial services   Retail loan and lease related to Honda products, and Others

Power Product and Other Businesses

  Power products and relevant parts, and others   Research and Development, Manufacturing, Sales and related services, and Others

1. Segment information based on products and services

For the three months ended December 31, 2015

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and  Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

     442,182        2,652,491        444,590        77,960       3,617,223        —         3,617,223  

Intersegment

     —          32,065        3,232        4,097       39,394        (39,394     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     442,182        2,684,556        447,822        82,057       3,656,617        (39,394     3,617,223  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     49,507        69,577        51,494        (7,499     163,079        —         163,079  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

For the three months ended December 31, 2016

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and  Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

     420,630        2,555,102        452,503        72,833       3,501,068        —         3,501,068  

Intersegment

     —          41,315        3,282        7,492       52,089        (52,089     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     420,630        2,596,417        455,785        80,325       3,553,157        (52,089     3,501,068  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     41,874        129,835        42,354        (6,378     207,685        —         207,685  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

—20—


Table of Contents

As of and for the nine months ended December 31, 2015

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and  Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

     1,368,176        7,950,031        1,380,268        244,787       10,943,262        —         10,943,262  

Intersegment

     —          96,151        9,600        13,766       119,517        (119,517     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     1,368,176        8,046,182        1,389,868        258,553       11,062,779        (119,517     10,943,262  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     154,145        268,104        155,803        (10,845     567,207        —         567,207  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

     1,387,628        7,520,141        9,431,907        356,017       18,695,693        (107,448     18,588,245  

Depreciation and amortization

     55,122        421,891        460,640        10,157       947,810        —         947,810  

Capital expenditures

     49,681        581,905        1,474,286        12,284       2,118,156        —         2,118,156  

 

As of and for the nine months ended December 31, 2016

 

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and  Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

     1,262,410        7,395,747        1,360,378        217,231       10,235,766        —         10,235,766  

Intersegment

     —          114,181        9,751        17,580       141,512        (141,512     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     1,262,410        7,509,928        1,370,129        234,811       10,377,278        (141,512     10,235,766  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     132,582        446,198        130,709        (6,880     702,609        —         702,609  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

     1,388,175        7,547,247        9,643,394        346,414       18,925,230        (53,413     18,871,817  

Depreciation and amortization

     54,563        425,096        483,903        10,128       973,690        —         973,690  

Capital expenditures

     34,651        443,014        1,417,986        7,973       1,903,624        —         1,903,624  

Explanatory notes:

 

1. Intersegment sales revenues are generally made at values that approximate arm’s-length prices.

 

2. Unallocated corporate assets, included in reconciling items, amounted to JPY 402,463 million as of December 31, 2015 and JPY 409,969 million as of December 31, 2016 respectively, which consist primarily of cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

 

—21—


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In addition to the disclosure required by IFRS, Honda provides the following supplemental information for the financial statements users:

2. Supplemental geographical information based on the location of the Company and its subsidiaries

For the three months ended December 31, 2015

 

     Yen (millions)  
     Japan      North
America
     Europe     Asia      Other
Regions
    Total      Reconciling
Items
    Consolidated  

Sales revenue:

                    

External customers

     474,543        2,028,572        161,236       759,658        193,214       3,617,223        —           3,617,223  

Inter-geographic areas

     558,258        118,133        25,257       154,205        772       856,625        (856,625     —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     1,032,801          2,146,705        186,493          913,863        193,986         4,473,848        (856,625     3,617,223  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     27,795        37,905        (5,306     88,234        (303     148,325              14,754        163,079  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
For the three months ended December 31, 2016      
     Yen (millions)  
     Japan      North
America
     Europe     Asia      Other
Regions
    Total      Reconciling
Items
    Consolidated  

Sales revenue:

                    

External customers

     551,837        1,928,816        131,812       702,134        186,469       3,501,068        —           3,501,068  

Inter-geographic areas

     601,336        127,122        56,094       145,005        705       930,262        (930,262     —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     1,153,173          2,055,938        187,906          847,139        187,174         4,431,330        (930,262     3,501,068  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     80,383        83,771        (4,642     82,096        (762     240,846        (33,161     207,685  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

—22—


Table of Contents

As of and for the nine months ended December 31, 2015

 

     Yen (millions)  
     Japan      North
America
     Europe     Asia      Other
Regions
    Total      Reconciling
Items
    Consolidated  

Sales revenue:

                    

External customers

     1,463,373        6,133,622        479,375       2,224,302        642,590       10,943,262        —         10,943,262  

Inter-geographic areas

     1,467,982        300,851        66,868       469,948         2,582        2,308,231        (2,308,231     —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     2,931,355        6,434,473        546,243       2,694,250        645,172       13,251,493        (2,308,231     10,943,262  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     81,766        184,394        (3,127     269,807        11,414       544,254        22,953       567,207  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Assets

     4,259,603        10,690,637        642,390       2,505,803        596,279       18,694,712        (106,467     18,588,245  

Non-current assets other than financial instruments and deferred tax assets

     2,353,689        4,522,481        111,624       741,779        174,739       7,904,312        —         7,904,312  
As of and for the nine months ended December 31, 2016      
     Yen (millions)  
     Japan      North
America
     Europe     Asia      Other
Regions
    Total      Reconciling
Items
    Consolidated  

Sales revenue:

                    

External customers

     1,529,395        5,638,046        443,951       2,092,797        531,577       10,235,766        —         10,235,766  

Inter-geographic areas

     1,507,016        325,940        88,046       416,916        2,114       2,340,032        (2,340,032     —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     3,036,411        5,963,986        531,997       2,509,713        533,691       12,575,798        (2,340,032     10,235,766  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     146,449        293,154        (3,291     263,699        26,990       727,001        (24,392     702,609  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Assets

     4,216,681        10,908,222        623,919       2,591,532        668,010       19,008,364        (136,547     18,871,817  

Non-current assets other than financial instruments and deferred tax assets

     2,428,822        4,900,395        109,938       692,492        189,708       8,321,355        —         8,321,355  

Explanatory notes:

 

1. Major countries or regions in each geographic area:

 

North America

   United States, Canada, Mexico

Europe

   United Kingdom, Germany, France, Belgium, Turkey

Asia

   Thailand, Indonesia, China, India, Vietnam

Other Regions

   Brazil, Australia

 

2. Sales revenues between geographic areas are generally made at values that approximate arm’s-length prices.

 

3. Unallocated corporate assets, included in reconciling items, amounted to JPY 402,463 million as of December 31, 2015 and JPY 409,969 million as of December 31, 2016 respectively, which consist primarily of cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

 

—23—


Table of Contents

[7] Other

1. Loss related to airbag inflators

Honda has been conducting market-based measures in relation to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to the product recalls arise, however, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

In the United States and Canada, various class action lawsuits and civil lawsuits related to the above mentioned market-based measures have been filed against Honda. The plaintiffs have claimed for properly functioning airbag inflators, compensation of economic losses including incurred costs and the decline in the value of vehicles, as well as punitive damages. Most of the class action lawsuits in the United States were transferred to the United States District Court for the Southern District of Florida and consolidated into a multidistrict litigation.

Honda did not recognize a provision for loss contingencies because the conditions for a provision have not been met as of the date of this report. Therefore, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses, if any, as of the date of this report because there is uncertainty.

2. Transfer pricing tax refund

In May 2015, the lawsuit related to transfer pricing involving the Company’s transactions with certain consolidated subsidiaries in Brazil was concluded, and it was ruled that the Company shall receive a tax refund with corresponding interest in Japan. As a result, income tax expense decreased by JPY 19,145 million for the nine months ended December 31, 2015.

3. Impairment loss on investments accounted for using the equity method

For the nine months ended December 31, 2016, the Company recognized impairment losses of JPY12,871 million on certain investments accounted for using the equity method because there is objective evidence of impairment from declines in quoted market values. The impairment losses are included in share of profit of investments accounted for using the equity method in the condensed consolidated statements of income.

4. Impact of the pension plan amendment on the Company’s consolidated financial position and results of operations

In August 2016, the Company and its certain subsidiaries in Japan decided, effective April 1, 2017, to extend mandatory retirement age from 60 years old to 65 years old and introduce a flexible retirement scheme that enables employees to choose retirement age between 60 years old and 65 years old, along with amendments to their defined benefit pension plans to align with the postponement of the retirement age, to fulfill diversifying needs of individual employees. The plan amendments include the revision of the benefit curve, to make the lump-sum benefit payment at the retirement age between 60 years old and 65 years old under the new plan consistent with that at the mandatory retirement age, 60 years old, under the existing plan. In addition, one of the defined benefit pension plans will be replaced by a defined contribution plan.

This plan amendment resulted in a reduction of the defined benefit obligation and recognition of the past service cost through profit or loss. Honda recognized JPY 84,024 million of past service cost (credit), of which JPY 37,197 million is presented in cost of sales, JPY 21,385 million is presented in selling, general and administrative and JPY 25,442 million is presented in research and development in the condensed consolidated statements of income for the nine months ended December 31, 2016. The defined benefit obligation and plan asset were remeasured.

 

—24—


Table of Contents

[Translation]

February 3, 2017

To:       Shareholders of Honda Motor Co., Ltd.

From:   Honda Motor Co., Ltd.

1-1, Minami-Aoyama 2-chome,

Minato-ku, Tokyo, 107-8556

Takahiro Hachigo

President and Representative Director

Notice Concerning Revision of Forecast for Consolidated Financial Results

for the Fiscal Year Ending March 31, 2017

Honda Motor Co., Ltd. (the “Company”) revises its forecast for consolidated financial results for the fiscal year ending March 31, 2017, which was announced on October 31, 2016.

Particulars

Revision of Forecast for Consolidated Financial Results for the Fiscal Year Ending March 31, 2017

 

     Sales revenue
(Million Yen)
     Operating profit
(Million Yen)
     Profit before
income taxes

(Million Yen)
     Profit for the
year attributable
to owners of the
parent

(Million Yen)
     Basic earnings
per share
attributable to
owners of the
parent

(Yen)
 

Forecast previously announced on October 31, 2016 (A)

     13,400,000        650,000        770,000        415,000        230.26  

Forecast revision as of February 3, 2017 (B)

     13,800,000        785,000        925,000        545,000        302.39  

Change (B-A)

     400,000        135,000        155,000        130,000     

Percentage change (%)

     3.0        20.8        20.1        31.3     

(Reference)

Results of the fiscal year ended March 31, 2016

     14,601,151        503,376        635,450        344,531        191.16  

Reason for Revision of Forecast for Consolidated Financial Results for the Fiscal Year Ending March 31, 2017

The Company upwardly revises its sales revenue forecast for the fiscal year ending March 31, 2017, which was announced on October 31, 2016, due mainly to favorable foreign currency translation effects, despite a downward revision of unit sales attributable to unfavorable changes in the business environment surrounding the Company. The Company also upwardly revises its forecast for operating profit, profit before income taxes, and profit for the year attributable to owners of the parent for the fiscal year ending March 31, 2017, which were announced on October 31, 2016, mainly due to decreased SG&A expenses and favorable foreign currency effects.


Table of Contents

* Basic earnings per share attributable to owners of the parent is calculated based on profit for the year attributable to owners of the parent.

* These forecasts for consolidated and unconsolidated financial results of the Company are based on management’s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that the actual results of the Company could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in the principal markets of the Company, its consolidated subsidiaries and its affiliates accounted for by the equity-method, and fluctuation of foreign exchange rates, as well as other factors detailed from time to time.

* For more details, please refer to the Company’s investor relations website

(URL http://world.honda.com/investors/).


Table of Contents

[Translation]

February 3, 2017

 

To: Shareholders of Honda Motor Co., Ltd.
From: Honda Motor Co., Ltd.

1-1, Minami-Aoyama 2-chome,

Minato-ku, Tokyo, 107-8556

Takahiro Hachigo

President and Representative Director

Notice of Resolution by the Board of Directors

Concerning Distribution of Surplus (Quarterly Dividends)

and Revision of Dividend Forecast for the Fiscal Year Ending March 31, 2017

The Board of Directors of Honda Motor Co., Ltd. (the “Company”), at its meeting held on February 3, 2017, resolved to make a distribution of surplus (quarterly dividends), the record date of which is December 31, 2016, and revised the amount of the projected dividend per share of common stock for the year ending March 31, 2017 as follows:

Particulars

1. Details of Distribution of Surplus (Quarterly Dividends)

 

     Resolution    Previous  Dividends
Forecast

(Announced on
October 31, 2016)
   Dividends Paid for the
Third Quarter in Fiscal
2016

Record Date

   December 31, 2016    December 31, 2016    December 31, 2015

Dividends per Share of Common Stock (yen)

   24    22    22

Total Amount of Dividends (million yen)

   43,254       39,650

Effective Date

   February 28, 2017       February 26, 2016

Source of Funds for Dividends

   Retained Earnings       Retained Earnings


Table of Contents

2. Details of the Revised Dividend Payments

 

     Dividends per Share (yen)  

Record Date

   End of
First
Quarter
     End of
Second
Quarter
     End of
Third
Quarter
     Fiscal
Year-end
     Total  

Latest Dividend Forecast

(Announced on October 31, 2016)

     —          —          —          22        88  

Projected Dividends

     —          —          —          24        92  

Dividends Paid in Fiscal 2017

     22        22        24        —          —    

Dividends Paid in Fiscal 2016

     22        22        22        22        88  

3. Basis of the Distribution of Surplus

The Company considers the redistribution of profits to its shareholders to be one of its most important management issues, and makes distributions after taking into account its consolidated earnings performance from a long-term perspective. The Company resolved that a third quarter dividend payment of ¥24 per share of common stock is to be paid considering its forecast for consolidated financial results for the fiscal year ending March 31, 2017. The Company also revised the amount of the projected dividend per share of common stock for the year ending March 31, 2017 that was announced on October 31, 2016.