Honda Corporate Update 2016 Spring. Clarity Fuel Cell

Transcription

1 Honda Corporate Update 216 Spring Clarity Fuel Cell

2 Main discussion points 1. FY16 Results FY16 Operating profit / Results (Operating profit: 53.3 billion yen(ros 3.4%) Excluding the impact of airbag inflators, profitability improved versus last FY FMC of core models in N.A. as well as cost reduction efforts have certainly improved business fundamentals Airbag Inflators A modification of expense estimates resulted in additional product quality expense provisions (4Q:approx. 267 billion yen, FY16 Total:approx. 436 billion yen) Financial provisions have now been made for all non-desiccant inflators (cumulative total of approx. 51 million units) 2.FY17 Budget Analysis of factors underlying Operating profit of 6 billion yen (ROS 4.4%) (+)Reverse accounting effect for quality related expenses (+)Profit contribution due to improvement in model profitability (-)FOREX effects (-)SG&A(including preparatory expenses) Additional impact due to accounting measures (-)Reverse accounting effect of one-off items from last FY (-)Increase in R&D expenses due to IFRS 3.Mid-term business plan

3 Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations FY16 Financial Highlights 3

4 Profit Structure Profile over Past Decade and FY17 Forecast Yen (billions) 8.8% * 1,8 1,6 7.4% 7.7% 7.9% US GAAP IFRS 1,4 1,2 1, * Automobile Motorcycle Finance O/P Margin % % % 569 Earthquake Thai flood 2.9% 5.5% 6.6% % % % FY3/6 FY3/7 FY3/8 FY3/9 FY3/1 FY3/11 FY3/12 FY3/13 FY3/14 FY3/15 FY3/16 FY3/17P FY3/12 *Includes gain on return of the substitutional portion of the Employees Pension Funds to the Japanese government (138 bil ) % 5% 3% 1% -1% 4

5 Fiscal Year 217 Projection (FY16 results vs. FY17 forecast) Consolidated Unit Sales Unit (thousands) Operating Profit Yen (billions) (Motorcycles) (Automobiles) ,572 11,545 3,636 3, ( %) + 19 ( + 3. %) 53.3 ROS 3.4% -33. Forex Vol/Mix SG&A Cost reduction -54. R&D 6. ROS 4.4% FY16 Results FY17 Forecast Difference FY16 Results FY17 Forecast Difference FY16 Results FY17 Forecast Japan North America ,929 1, Europe Asia 8,65 9,78 + 1, Other Region 1,23 1, Total 1,572 11, ,636 3, Main Assumptions of Forecast Forex -33. JPY/USD USD/Others -14. (BRL,CAD,MXN) Main Asian currencies (INR, THB, VND, CNY, IND) Others SG&A Motorcycle : Mainly increased in Asia Automobile : Mainly increased in North America and Asia Vol/Mix Cost Reduction

6 Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations FY16 Financial Highlights 6

7 Core Automobile Strategies Business for Honda Growth - Civic in FY211 Automobile Rating Operations Review Advance the Six-region Global Operation Structure Develop Innovative Products Unique to Honda Strengthen global and regional models Flexible global production infrastructure Strong attention to product concept and further evolution of design and driving experience Electrification Technologies Improve quality of business for sustainable & profitable growth 7

8 Strengthen Global and Regional models Regional models : models developed and produced locally to meet specific needs of that region or market Ridgeline China specific models Brio series in Asia Light Trucks in U.S. Avancier (China) BR-V (Asia) Mini and compact models in Japan 4.6 CY215 mil 16% 14% Global models 68% Global models :core models developed for worldwide distribution Global Compact Series Civic CR-V Accord 8

9 Global models: Global Compact Series Honda s Global Compact Series is Being Rolled Out to Global Markets with best-in class Fun to Drive, Fuel Economy, Packaging and Safety (Fit / Jazz) 18 (City / Grace) 16 (thousands) 14 (Vezel / HR-V / XR-V) Global Compact Series 1.3 mil units in 215 (+41% vs LY) 385K units in Jan-Mar 216 (+21% vs LY) City / Grace 4 Vezel/HR-V/XR-V Fit / Jazz Mar Feb 216 Jan More than 6K units (FY3/216) Dec Sep Jul Aug Jun May Apr Mar Feb 215 Jan Dec Nov Oct Sep Jul Aug Jun May Apr Mar Feb 214 Jan Dec Nov Oct Sep Jul Aug Jun May Apr Mar Feb 213 Jan Vezel / HR-V / XR-V Oct 2 Nov 6 9

10 Global models: CIVIC Strong start in the US Car of the Year Award New Civic launch in Nov 15 One platform for all Civic models 5D hatch to be produced exclusively in the U.K. Launch of downsized turbo engine in global market Global launch schedule 5D hatch prototype Civic 5D Hatch Prototype 1 1

11 Global Models: CR-V and Accord New CR-V and Accord to be launched with new platform and downsized turbo engine CR-V 4.6 mil CY215 Accord 15% 12% Fit / City / Vezel 28% Civic 12% CR-V and Accord continue to be widely popular representing approx. 27% of CY215 global Honda unit sales 11

12 Regional Models in North America All Honda Light Trucks to undergo full-model change in short period Regional models New Odyssey 216 Pilot (June 215) Ridgeline Ridgeline (1H 216P) Global models ~ 2D Coupe (March 216) New CR-V New Accord HR-V (May 215) 216 Civic (November 215) 5D Hatchback (Autumn 216) 12

13 Production in North America Canada Civic CR-V RDX Ohio ELP Alabama MDX dual-source production will start in 217 Ohio MAP Accord TLX ILX Fit MDX Ridgeline Pilot Odyssey Leverage Japan production base to enhance Fit supply Indiana Civic CR-V Start CR-V production in 217 Mexico El Salto Production of HR-V in El Salto plant to start in 217 (Annual capacity : 63k) Mexico Celaya Increase HR-V production in Mexico Jan 14 Celaya Monthly Production Profile Fit HR-V Fit Mar May Jul Sep Nov Jan 15 HR-V Mar May Jul Sep Nov Jan 16 (thousand units) Mar 13

14 Regional Models in China Segment SDN(4D/5D) SUV MUV Guangqi Accord (213 FMC) Avancier (216) Odyssey D Dong Feng Spirior (Dec 214) All-new SUV (Aug 214) Elysion (Jan 216) Concept D Guangqi Crider (213) C Dong Feng New Civic (April 216) CR-V MMC (Apr 215) Jade (213) B Guangqi Fit (May 214) City (Aug 215) Vezel 1.8L (Oct 214) Vezel 1.5L (Mar 215) Dong Feng Concept B (in 216)* Greiz (Nov 215) *the joint venture company to sell concept B is TBA XR-V 1.8L (Dec 214) XR-V 1.5L (Jul 215) By utilizing common platforms and strengthening local procurement and R&D functions, successive launch of cost competitive models being realized 14

15 Regional Models in Asia City Global Compact Series Fit / Jazz HR-V Brio Series BR-V Brio Amaze Mobilio India Volume Honda Share CY % 1% 5% % Indonesia & Thailand (Jan 116) India (May 16) *First car incentive Thailand Volume CY Volume Honda share Indonesia Honda Share CY Volume Honda Share Malaysia CY (thousand units) 2% 15% 1% 5% % 2% 15% 1% 5% % 2% 15% 1% 5% % 15

16 Global Automobile Production Business Capacity - Civic (thousand units) Honda FY211 Rating Review Other China Asia Europe North America 5, (Export only) +361 FY216 5, ,8+5 1,8+5 China ,8 India +6 1,14 Guangqi +12 Dongfeng Thailand +12 Nigeria FY217(P) 5,61 1,923 1,923 1,923 (Export only) Japan 1,66 1,66 1,66 as of Mar '15 Mar '16 Mar '17 (P) 16

17 Flexible global production infrastructure Utilization Image Japan (Units) Europe 2, Primarily Civic 5D and CR-V production Middle East and Africa Jazz CR-V, HR-V (plan) Accord & L/T models 1.6 mil <Export> Global Models & Hybrid models Civic 5D from UK (plan) 1-2% for Other regions Fit Hybrid models North America 1.92 mil <Export> Acura & L/T models Fit & CR-V 1, Accord 8-9% for Local markets Acura CR-V Asia South America 1.8 mil China 15, <Export> Strengthen mutual parts/model sharing within Asia Export to Africa 1.13 mil <Export> Leverage local cost benefit for next markets (Africa) Total Capacity approx mil units (end of FY216) Establish stable production structure Capacity leveraging increase regional to 5.7 capacity mil + mutual parts/model sharing 17

18 Capacity Utilization by Region North America Japan Targeting 95K units annual production in Japan 11% 94% 1% 1% 88% 81% 61% 82% FY14 FY16 1H FY16 2H FY14 FY16 1H FY16 2H China (Excluding export factory) Asia 96% 96% 113% 19% 77% 7% 73% FY14 FY16 1H FY16 2H FY14 FY16 1H 74% FY16 2H Europe South America Civic 5D production will start in summer 216 5% 61% FY14 65% FY16 1H 63% FY16 2H 95% 95% FY14 19% FY16 1H 99% FY16 2H 18

19 Earth Dreams Technology Engines Turbo engines Transmissions Hybrid Powertrains Targeting best Fuel Efficiency and Fun to Drive in all categories 19 19

20 (CO2(g/km) Roadmap for Environmental Technologies Honda s Environmental and Safety Vision Enable people to experience the joy and freedom of mobility and contribute to the creation of a sustainable society where people can enjoy more harmonious lifestyles FCX FCX CLARITY (22) (28) One-motor Hybrid system CLARITY FUEL CELL ACCORD PHEV (213) (216) Three-motor Hybrid system Two-motor Hybrid system New BEV New PHEV Turbo engine New FCV (22) Global expansion Looking towards zero emissions with the development of ZEV and PHEV ZERO emissions technology Technologies to increase electrical efficiency Technologies to increase thermal efficiency DI engine CVT / DCT Global expansion

21 Roadmap for Environmental Technologies Honda Clarity series to Leverage Common Platform Clarity3 兄 弟 戦 略 The Clarity Fuel Cell, only five-passenger fuel cell sedan in the industry, launched in Japan in March 216 and will be launched in the U.S. and Europe within 216 The Clarity Electric and the Clarity Plug-in Hybrid will be launched in the U.S. in 217 All of the Clarity models will leverage the platform that has made the Clarity Fuel Cell s low, wide and aerodynamic proportions and spacious five-passenger cabin possible 21

22 Roadmap for Safety Technologies Toward Zero Collisions Aiming for practical application of autonomous driving on highways around 22 22

23 North America Automobile Operations Unit (thousands) Passenger Cars Industry Demand Light Trucks 2, , ,778 11,588 1,429 1, Unit (thousands) 2, 1,5 1, 1,551 Honda Unit Sales Acura Honda Passenger Cars Honda Light Trucks 1,428 1,15 1,259 1,147 1,422 1,525 1,541 1,586 5 CY Source: Honda CY Source: Honda Honda Topics New Model Launches/ FMC Improve cost competitiveness of core models - Increase commonality of platforms and parts - Leverage global suppliers - Utilize Mexican local suppliers to drive down overall North American costs Increase production capacity of Light Trucks - Start dual production of MDX in Ohio and Alabama plants from 217 Introduce Environmentally Friendly Vehicles - Accord Hybrid, FCX Clarity, PHEV, BEV and more Civic Coupe (Mar 216) Civic 5D (2H 216) Accord Hybrid (Spring 216) Acura NSX (216) Ridgeline (Spring 216) Clarity Fuel Cell (216) 23

24 Japan Automobile Operations Industry Demand 1,25 Honda Unit Sales Regular size vehicle Mini vehicle Registered vehicle 6, 1, Mini vehicle 4, , 25 FY9 FY1 FY11 FY12 FY13 FY14 FY16 Honda Topics Source: JAMA, Honda FY9 FY1 FY11 FY12 FY13 FY14 FY16 Source: Honda New Model Launches/ FMC Enhancement of product line-up - Strengthen minivan and hybrid line-up by introducing Odyssey Hybrid, Accord Hybrid and new Freed Improve capacity utilization - Fit (Jazz) export for North America and Europe started in Accord Hybrid exports began in 216 Odyssey Hybrid (Feb 216) Clarity Fuel Cell (Mar 216) New Freed Accord Hybrid (May 216) (216) 24

25 Europe Automobile Operations Unit (thousands) Industry Demand (EU+EFTA) (excluding commercial vehicles) Unit (thousands) 4 Honda Unit Sales (EU+EFTA) 15, , , 1 5 CY Source: ACEA / Honda CY Source: ACEA / Honda Honda Topics New Model Launches/ FMC New models with Earth Dream Technology powertrains - New CR-V, new JAZZ, brand new HR-V and Civic Type R with VTEC turbo engine were launched in 215 Restructuring of operations to improve efficiency - U.K factory to concentrate on producing 5D Civic hatchback to improve plant efficiency Civic Type R (July 215) JAZZ (August 215) HR-V (September215) 25

26 China Automobile Operations 24, China Industry Demand (excluding commercial vehicles) Wholesale Honda Unit Sales in China Wholesale 215 Retail 22, 2, 1, XR-V 18, 16, 8 Vezel 14, 12, 1, 8, 6, 6 4 Spirior Ciimo S1 Elysion Crider JADE Civic CR-V Crosstour Fit 4, 2, 2 City Odyssey CY Source: CAAM / Honda CY Source: Honda Accord Honda Topics New Model Launches/ FMC Introduce more new models to establish presence in all segments - New Civic and all-new SUV, Avancier, to be launched in All-new compact SUV, CDX, will debut in 216 as Acura model Elysion (Jan 216) Acura CDX (Jul 216) - Start of local hybrid engine production Accord Hybrid Strengthen cost structure - Increase local procurement to achieve further cost reductions Civic (April 216) Avancier (216) 26

27 Asia Automobile Operations Industry Demand 5 Honda Unit Sales Retail Sales 4, 45 3,5 Malaysia Indonesia Thailand Philippines 4 Malaysia Indonesia Thailand Philippines 3, 35 2,5 3 2, Indonesia 1,28 1, ,5 Thailand 15 1, Malaysia CY CY Source: Honda Source: Honda Honda Topics New Model Launches/ FMC New models launched to meet specific market needs in each Asian market - All new HR-V is rolling out in Asian markets - All-new BR-V will cultivate entry SUV market in Asia -1 th generation Civic to be launched in Asia in 216 HR-V Nov 214 Thailand Jan 215 Indonesia BR-V Jan 216 Indonesia Jan 216 Thailand Civic Mar 216 Thailand Apr 216 Indonesia Feb 215 Malaysia Apr 216 Malaysia 27

28 India Automobile Operations India Industry Demand 3 Honda Unit Sales in India Retail Sales 5, Commercial 25 Passenger+Uvs 4, 2 Mobilio 3, Amaze 2, 45 1 JAZZ 1, 1,77 2,32 2,44 2,753 2,553 2,571 2,771 5 Civic BRIO City CY Source: SIAM / Honda Accord CY Source: Honda Honda Topics New Model Launches/ FMC Profitability of automobile operations in Indian market has improved due to introduction of new models Launch of new models equipped with diesel engines - BR-V will be debuted in May 216 Expand dealer network New Jazz PE/DE (July 215) BR-V (May 216) 28

29 Other Regions Automobile Operations Industry Demand (excluding trucks) Honda Unit Sales 4, 3, 2, 2,671 3,8 3,329 3,426 3,634 3,58 Registration 3,333 2, Retail Sales , CY CY Source: ANFAVEA Source: Honda Honda Topics New Model Launches/ FMC Launch of Global Compact Series All-new HR-V launched in Mar 215 New Civic will be launched in 216 Enhance local R&D facilities and expand local parts procurement HR-V (Mar 215) Civic (216) 29

30 Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations FY16 Financial Highlights 3

31 Overview of Motorcycle Business (billion yen) 3 Operating Profit and Margin % 9.3% 7.3% 9.7% 7.1% 5.2% 1.8% 1.6% 8.2% 1.5% 1.4% 1.1% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 *Operating profit and margin from FY5 to FY13 are based on US GAAP while FY14 and are based on IFRS Honda M/C Business = High Profitability + Stability + Growth Potential (thousand units) 16, Honda Global Unit Sales 12, 8, 4, *excluding sales by Hero Honda 31

32 Motorcycle Market Size and Honda Share (CY215) Motorcycle Market Size and Honda Share (CY215) Annual Capacity in Pakistan Motorcycle production at 34 plants in 21 countries.6mil in mil in 3 years Pakistan 1.5 mil Thailand 1.7 mil Vietnam 2.8 mil Europe.8 mil Italy 17% 5% Cambodia.3mil 9% China Pakistan Bangladesh India 79% Philippines.8mil Vietnam 44 % Japan.4 mil 7% 47 % 21% U.S.A (MS+ATV).7 mil Mexico U.S.A (ATV, S S) Nigeria Kenya Thailand Malaysia Philippines Peru India 16.1 mil 27% Indonesia Indonesia 6.5 mil 69% 78% Brazil 1.3 mil Brazil Argentine *Market share excluding 5cc Annual Production Capacity in India 4.6mil in mil in

33 Growth in Motorcycle Popularity GDP per capital (USD) 1.7mil (CY214) 4, 3, Philippines 1mil Indonesia 7.8mil 2.7mil Thailand 2, 1, 3.mil Africa 1mil Bangladesh Myanmar 1mil 1.4mil Pakistan India 16. mil Vietnam Next Markets Growing Markets Mature Markets Motorcycle Market Penetration in Asia India 8% (millions) 1,259 Source: Honda Indonesia 27% 252 Significant growth expected Vietnam Thailand 33% 88 4% 67 Number of motorcycles units in operation Population 33

34 Asia Motorcycle Market Share Trend (India and Indonesia) 6% India (Wholesale) Indonesia (Wholesale) % 7% 5% Honda 6% 4% Hero Honda Company A 5% 3% Company B Honda 4% Company A 2% 3% 2% 1% Company D Company C 1% Others % Honda has gained the No.2 market share position % Honda is market leader, but is further expanding market share 34

35 India Motorcycle Operation 4th 1 st 2 nd Gujarat Manesar Rajasthan 3 rd Karnataka Capacity Expansion Expanded annual production capacity to 5.8 mil The 4 th plant to produce only automatic scooters to meet growing demand. 3 rd 2 nd 1 st 4.mil mil 4.6mil 4th 5.8mil Product Line-up CY cc AT-Scooter Activa 125cc Motorcycle CB Shine 11cc Motorcycle Dream Yuga 35

36 AT Scooter business operation in India Fast Growing Segment Scooter / Motorcycle Sales Ratio (Industry) In CY211 SC 18% In CY215 SC 3% MC 82% MC 7% Activa Monthly Scooter Unit Sales of Honda / Competitors and Honda Share in Scooter Market 6, 5, Competitors (Unit) Honda (Unit) Honda Share(%) 7% 6% 4, 3, 2, 5% 4% 3% 2% 1, 1% % 36

37 Side by Side in the U.S. U.S. Market by Business Segment (sales volume in 215 (vs. 214)) (thousand units) Side by Side (S x S) Segments (units sales in 214 and 215) ATV -1% Work M/C +2% Sport S S +8% Multi (Source: M/C and ATV: Motorcycle Industry Council / S S:Honda estimate) Honda S x S Unit Sales (thousand units) % Pioneer 7 (Sep 13) + 9% Pioneer 5 (Jul 14) + 48% Pioneer 1 (Oct 15) 37

38 Honda Corporate Update Honda Business Status Business Strategy Automobile Business Operations Motorcycle Business Operations FY16 Financial Highlights 38

39 Outline of FY16 Unit Sales (Consolidated) Honda Group Unit Sales (thousand) 12-Month Results FY16 Change Honda Group Unit Sales 2, 5, 4,743 17,592 17,55 4,367 7, FY16 Unit (thousand) Motorcycles 17,592 17,55-3.1% 15, 4, 6, 5,983 5,965 Automobiles 4,367 4, % 1, 3, 5, Power Products 5,983 5, % Consolidated Unit Sales (thousand) 12-Month Results FY16 Change Motorcycles 1,725 1, % Automobiles 3,513 3, % 5, 2, 15, 1, 1,7251,572 2, 5, 4, 3, 4, Motorcycles Automobiles Power Products Consolidated Unit Sales 7, 5,9835,965 6, 3,513 3,636 5, Unit (thousand) Power Products 5,983 5, % 5, 2, 4, Motorcycles Automobiles Power Products Honda Group Unit Sales - Decrease in motorcycle unit sales due mainly to decline in sales in Indonesia and South America, despite sales growth in Pakistan and Vietnam - Increase in automobile unit sales due primarily to new model launches and full model changes in China 39 and North America, despite decreased sales in Japan 39

40 FY16 Financial Results (Consolidated) Financial Results 12 Months FY16 Change Sales revenue 13, , % Operating profit % Operating margin 5.% 3.4% -1.6 pt Share of profit of investments accounted for using the equity method % Profit before income taxes % Profit for the period attributable to owners of the parent *1-32.4% Earnings per share attributable to owners of the parent Market average rates (Yen) US Dollar , 14, , 11, 9, 13,328. (Yen) 1, , Yen down by 1 yen Financial Summary Sales revenue increased 9.6% primarily due to increases in automobile and financial services business operations. Operating profit decreased by 24.9% due primarily to increased SG&A expenses, including quality related costs, and negative foreign currency effects, despite an increase in sales volume and model mix and continuing cost reduction efforts. 1, , FY16 Yen(billion) 7, , Sales Revenue Operating Profit Profit before Income Taxes Share of profit of investments accounted for using the equity method Profit for the period attributable to owners of the parent 4

41 Outline of FY16 4th Quarter Unit Sales (Consolidated) Honda Group Unit Sales (thousand) 4Q Results (3 Months) FY16 Change Motorcycles 4,37 4, % 5, 4, 3, Honda Group Unit Sales 4,37 4,173 1,4 1,2 1, 8 1,229 1,69 2,5 2, FY16 Unit (thousand) 2,22 1,955 Automobiles 1,69 1, % Power Products 2,22 1, % Consolidated Unit Sales (thousand) 4Q Results (3 Months) FY16 Change Motorcycles 2,777 2, % 2, 1, 5, 4, 3, 2,777 2, ,4 1,2 1, 8 1,5 1, Motorcycles Automobiles Power Products Consolidated Unit Sales 2, ,22 1,955 2, Unit (thousand) Automobiles % Power Products 2,22 1, % Honda Group Unit Sales - Decrease in motorcycle unit sales due mainly to decreased sales in Brazil and China, despite sales growth in Pakistan and Philippines - Automobile unit sales increased due to sales growth in North America and China, as well as the positive 41 impact of new model introductions in Indonesia. 2, 1, ,5 1, Motorcycles Automobiles Power Products 41

42 FY16 4th Quarter Financial Results (Consolidated) 4Q Results (3 Months) Financial Results Yen (billion) FY16 Change Sales revenue 3, , % Operating profit Operating margin 2.5% -1.7% -4.2 pt Share of profit of investments accounted for using the equity method % Profit before income taxes Profit for the period attributable to owners of the parent *1 Earnings per share attributable to owners of the parent Market average rates (Yen) (Yen) US Dollar Yen up by 4 yen Financial Summary Sales revenue increased 4.8% primarily due to an increase in automobile business operations despite negative foreign currency translation effects. Operating loss declined by JPY billion due primarily to increased SG&A expenses, including quality related costs, and negative foreign currency effects, despite an increase in sales volume and model mix and continuing cost reduction efforts Operating Profit Q 2Q 3Q 4Q Yen (billion) FY16 1% 8% 6% 4% 2% % -2% Operating Margin 6.5% 6.4% 5.4% 6.% 4.6% 4.5% -1.7% FY16 1Q 2Q 3Q 4Q 2.5% 42

43 Change in Profit before Income Taxes <FY16 Twelve Months> Profit before Income Taxes ( % ) Yen (billion) Operating Profit ( % ) <Decrease Factors> - Increased product warranty expenses, etc Operating Profit Revenue, model mix, etc. Cost Reduction, etc. Increase in SG&A <Increase Factors> - Cost reduction efforts, - Raw material price decrease, etc. <Increase Factors> - Increased sales volume and model mix, - Decreased Incentives, etc Increase in R&D Currency Effects - JPY / USD USD / Others (BRL, CAD, MXN) -Others Share of profit of investments accounted for using the equity method Finance income and finance costs - Currency Effects Interest rate swap/currency swap Others Operating Profit 53.3 Provisions made for warranty programs related to airbag inflators included in Product warranty expenses: : approximately 12. billion yen, FY16: approximately 436. billion yen FY16 43

44 Change in Profit before Income Taxes <FY16 4th Qtr> Profit before Income Taxes ( % ) Yen (billion) Operating Profit ( % ) Operating Profit 86. 4Q Revenue, model mix, etc. Cost Reduction, etc. Increase in SG&A <Increase Factors> - Cost reduction efforts, etc. <Decrease Factors> - Increased Depreciation and amortization, etc Increase in R&D - JPY / USD USD / Others (BRL, CAD, MXN) -Others Currency Effects Share of profit of investments accounted for using the equity method Finance income and finance costs Operating Profit FY16 4Q <Increase Factors> - Increased sales volume and model mix, - Decreased Incentives, etc. <Decrease Factors> - Increased product warranty expenses, etc. - Currency Effects Interest rate swap/currency swap Others

45 Cash Flows of Non-financial Services Businesses Twelve Months Free cash flow , Net Change Yen (billion) , Cash flows from 1,378.5 Cash flows from operating activities investing activities Cash flows from financing activities Effect of exchange rate changes Cash & Cash equivalents at beginning of Profit before income taxes Share of profit of investment accounted for using the equity method Depreciation Other Capital expenditures Intangible assets Other Dividends paid Others Cash & Cash equivalents at end of period FY16 Twelve Months Free cash flow , Net Change ,378.5 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes 1,666.8 Cash & Cash equivalents at beginning of FY16 Profit before income taxes Share of profit of investment accounted for using the equity method Depreciation Other Capital expenditures Intangible assets Other * Depreciation, amortization and impairment losses excluding equipment on operating leases Dividends paid Others Cash & Cash equivalents at end of period 45

46 Honda Consolidated Financial Results Motorcycle business Business Scale Annual Profit Quarterly Profit Finance Power Products 14% Revenue Auto Finance 29% O/P Auto M/C M/C 1 5 6% Automobile business Operating Margin (8%)* 9% 7% (99)* 1% 7% US GAAP 5% Operating Income 11% 11% 8% IFRS 1% 1% 1% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 * (excluding one time profit) IFRS 9.8% 1.2% 11.2% 1.4% 11.8% 1.8% 11.2% Yen (billions) 6.3% Q 3Q 4Q 2Q 3Q 4Q Power Finance Products M/C Finance Revenue 73% O/P M/C Auto 42% Auto Operating Margin Operating Income 8% (6%)* 6% 7% 7% 5% 4% 4% 3% 2% (512)* 1% % FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16-1% * (excluding one time profit) US GAAP IFRS 4.7% 3.4% 4.2% 4.8% 2.6% 2.6% -.7% Q IFRS 2Q 3Q 4Q 1Q FY16 Yen (billions) 2Q 3Q 4Q -4.2% 46

47 Honda Consolidated Financial Results Power Product & Other Business Power Products 2% Business Scale Finance Finance M/C Revenue O/P Auto M/C 5-5 Financial Business Operating Margin 9% 8% 6% 5% Annual Profit US GAAP Operating Income % -5% -2% -1% -3% 1% 3 IFRS -4-1%-31-9% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 4.1% IFRS Yen (billions) -1.4%.6% -3.2% -3.4% -4.4% % Q Quarterly Profit 2Q 3Q 4Q FY16 1Q -21.6% 2Q 3Q 4Q Finance 11% Power M/C Products Revenue Finance Auto 3% M/C O/P Auto Operating Margin 35% 29% 28% 21% 14% US GAAP Operating Income 31% 32% 32% 28% * IFRS 14% 13% 11% Yen (billions) 13.5% 13.4% 13.% 11.9% 11.% 11.1% 11.5% 9.5% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 2Q 3Q 4Q FY16 2Q 3Q 4Q 1Q 1Q * Under IFRS, when P.P.E held for lease to others is routinely sold in the course of the ordinary activities, the sale for these items is recognized on a gross basis (recognize Revenue and Cos), while it is presented on a net basis under US GAAP 47 IFRS

48 Honda Consolidated Financial Results Japan Business Scale Asia Europe Other Regions Asia Revenue North America Other Regions O/P Europe Japan 16% 31% Japan North America Yen (billions) % 8% (233)* Operating Margin (5%)* 5% 4% Annual Profit US GAAP -1% -29 Operating Income % -3% -3% * (excluding one time profit) FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 2% 5% IFRS 6% 5% 6.4% 6.5% 7.9%.8% Q Quarterly Profit IFRS 9 2Q 3Q 4Q FY16 1Q 3.% 2.7% 2.7% Q 3Q 4Q -18.1% North America Asia Europe Other Regions Asia Revenue Other Regions Japan 52% O/P Europe North 25 America 2 Japan 26% North America Yen (billions) 7% 6% 7% 7% Operating Margin 2% US GAAP 6% 7% Operating Income 6% 4% 5% IFRS 3% 2% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 3.9% 2.6% 4.1% Q -.4% -8 IFRS 5.% 2Q 3Q 4Q FY16 1Q 1.8% 1.8% 1.3% Q 3Q 4Q 48

49 Honda Consolidated Financial Results Asia (China JVs are not included) Asia Europe Business Scale Asia 41% Other Regions 2% Revenue Other Regions Europe O/P Japan North America Japan North America Europe Annual Profit Operating Margin Operating Income US GAAP IFRS 9% 8% 7% 7% 6% 6% 7% 8% 8% 8% 5% 6% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 9.2% 7.8% 8.8% 7.8% 1.6% 9.8% 9.7% 7.8% Q Quarterly Profit IFRS 2Q 3Q 4Q FY16 1Q Yen (billions) 2Q 3Q 4Q Asia 5% Europe Asia Other Regions Revenue North America Other Regions Japan O/P Japan Operating Margin Operating Income US GAAP IFRS 4% 2% 2% 3% 2% % 19-1% -1% % -3% -2% -4% 2.9% IFRS % -1.5% -8.9% -.6% 3 1.7% Yen (billions) % 9.5% 22 Europe North America -1 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 1Q 2Q 3Q 4Q FY16 1Q 2Q 3Q 4Q 49

50 Honda Consolidated Financial Results Other region Business Scale Other Asia Europe Other Asia Europe 7% Revenue 6% O/P Japan North America Japan North America Annual Profit Operating Margin Operating Income 1% 11% 12% US GAAP IFRS 9% 7% 7% 6% 5% 4% 4% 4% -1% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY16 3.6% 5.8% 4.2% 3.4% 1.9% 3.4% -.2% Q1 Quarterly Profit IFRS Q2 Q3 Q4 FY16 Q1 Yen (billions) Q2 Q3 Q4-12.1% Affiliates China Guangqi Honda Dongfeng Honda Indonesia P.T Astra Honda Pakistan Atlas Honda Japan Showa, Keihin, etc Equity Income 2 1 Yen (billions) US GAAP * 14 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY *Discontinued JV with Hero at Dec IFRS Q IFRS (3.6) (15.8) (3.4) (16.) (32.5) (28.9) (39.4) 2Q 3Q 4Q FY16 1Q 2Q 3Q 4Q (from Asia) (24.3) 5

51 FY17 Financial Forecasts (Consolidated) FY16 Results FY17 Forecast Change amount % Yen (billion) Sales revenue 14, , % Operating profit % Operating margin 3.4% 4.4% + 1. pt Share of profit of investments accounted for using the equity method % Profit before income taxes % Profit for the year attributable to owners of the parent % Earnings per share attributable to owners of the parent (Yen) For *1, please refer to the footnote on page 35 Market average rates (Yen) * US Dollar Yen up by 15 yen 51

52 FY17 Guidance: Units Sales by Business Segment [IFRS] "Honda Group Unit Sales" (thousands) Global Honda group unit sales including affiliates, such as China Auto and Motorcycle in Indonesia Motorcycles Automobiles Power Products FY16 Results FY17 Forecast Change FY16 Results FY17 Forecast Change FY16 Results FY17 Forecast Change Japan North America ,929 1, ,811 2, Europe ,8 1, Asia 15,133 16, ,462 1,723 1, ,349 1, Other Region 1,23 1, Total 17,55 18,36 + 1,35 4,743 4, ,965 6, (vs last FY) ( +7.7%) ( 3.6%) (+ 1.6%) Consolidated Unit Sales" Consolidated unit sales do not include sales units in affiliates (thousands) Motorcycles Automobiles Power Products FY16 Results FY17 Forecast Change FY16 Results FY17 Forecast Change FY16 Results FY17 Forecast Change Japan North America ,929 1, ,811 2, Europe ,8 1, Asia 8,65 9,78 + 1, ,349 1, Other Region 1,23 1, Total 1,572 11, ,636 3, ,965 6, (vs last FY) ( +9.2%) ( +3.%) ( +1.6%) 52

53 FY16 Forecast: Change in Profit before Income Taxes Profit before Income Taxes ( % ) Yen (billion) Operating Profit ( % ) Increase in R&D Operating Profit Revenue, model mix, etc Cost Reduction, etc. Decrease in SG&A - JPY / USD - USD / Others (BRL, CAD, MXN) - JPY / Asian Currencies (INR, THB, VND, CNY, IND) -Others Currency Effects Share of profit of investments accounted for using the equity method Finance income and finance costs 75. Operating Profit 6. FY16 Results FY17 Forecast 53

54 FY17 Forecast: Capital Expenditures, Depreciation, R&D Expenditures FY16 Results FY17 Forecast Change Capital expenditures * Depreciation and amortization * Research and development expenditures ** * Capital expenditures as well as Depreciation and amortization in results and forecast aforementioned exclude investment in operating leases, capital leases and intangible assets ** Research and development expenditures are research and development activity related costs incurred during the reporting period. In accordance with IFRS, a portion of research and development expenditures is recognized as an intangible asset and amortized over its estimated useful life. As such, this amount is not in conformity with "Research and development" on our Consolidated Statement of Income 8 Capital Expenditures Depreciation / Amortization R&D 8% 8 8% % 6 6% % 6 6% 4 4% 4 4% 4 4% 2 2% 2 2% 2 US GAAP IFRS US GAAP IFRS US GAAP IFRS 2% % % % FY P FY P FY P Actual Amounts (billion Yen) % against Sales 54

55 Dividend Yen Dividend per Share FY16 ( Projection) Increase/ Decrease from FY17 (Expectation) Increase/ Decrease from FY16 1 st Quarter End ( 22 ) ( - ) 2 nd Quarter End ( 22 ) ( - ) 3 rd Quarter End ( 22 ) ( - ) 4 th Quarter End 22 ( 22 ) ( - ) ( 22 ) ( - ) Fiscal Year 88 ( 88 ) ( - ) ( 88 ) ( - ) 55

56 Caution with Respect to Forward-Looking Statements: This slide contains forward-looking statements about the performance of Honda, which 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 fluctuation of foreign exchange rates, as well as other factors detailed from time to time. Accounting standards: Our consolidated financial standards are prepared in conformity with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) Notice on the Factors for Increases and Decreases in Income: With respect to the discussion above of the change in Operating profit, management has identified the factors set forth below and used what it believes to be a reasonable method to analyze the respective changes in such factors. Each of these factors is explained below. Management has analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries. (1) Currency effects consist of translation adjustments, which come from the translation of the currency of foreign subsidiaries financial statements into Japanese Yen, and foreign currency adjustments, which result from foreigncurrency-denominated sales, which, at the levels of the Company and those consolidated subsidiaries which have been analyzed, primarily relate to the following currencies: U.S. dollar, Canada dollar, Euro, GBP, BRL and Japanese Yen. (2) With respect to Cost reduction, etc, management has analyzed cost reduction and effects of raw material cost fluctuations at the levels of the Company and its material foreign manufacturing subsidiaries in North America, Europe and other regions. (3) With respect to Revenue, model mix, etc, management has analyzed changes in sales volume and in the mix of product models sold in major markets which have resulted in increases/decreases in profit, as well as certain other reasons for increases/decreases in sales revenue and cost of sales. (4) With respect to Selling, General and Administrative expenses, management has analyzed reasons for an increase/decrease in selling, general and administrative expenses from the previous fiscal year net of currency translation effects. (5) With respect to Research and Development expenses, management has analyzed reasons for an increase/decrease in research and development expenses from the previous fiscal year net of currency translation effects. 56

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