FY12 Financial Results

Transcription

1 Insight Financial Results Honda Motor Co., Ltd. April 27, 212 ACURA ILX (North America) 1

2 Financial Results & FY13 Financial Forecasts Fumihiko Ike Senior Managing Officer and Director Chief Financial Officer - Consolidated Financial Results - FY13 Financial Forecasts - Dividend Kohei Takeuchi Operating Officer, General Manager of Accounting Division - Consolidated Financial Results Net Sales and Other Operating Revenue Change in Income before Income Taxes Business Segment Information Geographical Information Change in Equity in Income of Affiliates Consolidated Capital Expenditures - FY13 Financial Forecasts 2

3 Outline of 4th Quarter Financial Results (Consolidated) Unit (Sales) Motorcycles Automobiles Power Products Financial results Net sales & other operating revenue Operating income (thousand) ( 千台 ) Income before income taxes Equity in income of affiliates Net income attributable to Honda Motor Co., Ltd. EPS attributable to Honda Motor Co., Ltd. () US Dollar Euro Note : Shares which are based on calculation of EPS Average Rates () Results (Three Months) 2, , , ,1 Results (Three Months) 2, approx. 1,82,32, shares (weighted average number of shares outstanding ) , approx. 1,82,32, shares (weighted average number of shares outstanding ) 8 14 Change % % % Change + 8.7% % % % + 6.7% up by 2 yen up by 9 yen Financial Summary A swift recovery in auto production after the earthquake and flood, along with new model momentum mainly in Japan and N.A., led to a big rise in sales. A new motorcycle unit sales record for a quarter and earnings from stable financial services business led to much higher income in each category. Financial Highlights Unit Sales: Motorcycle: Increased in Asia and Other regions including South America Record high for a quartre Automobile: Increased in North America and Japan Decreased mainly in Asia due to Thailand flood Power Products: Increased mainly in North America and Asia Net sales & other operating revenue -Increased in motorcycle and automobile businesses -Negative currency translation effects Operating income -Increased R&D expenses -Negative currency effects due to appreciation of the Japanese yen -Positive change in sales volume and model mix -Decreased SG&A expenses 3

4 Outline of Financial Results (Consolidated) Unit (Sales) (thousand) ( 千台 ) Motorcycles Results (Three Months) 2,934 3,456 Change % Twelve Months 11,445 12,559 Change + 9.7% Automobiles % 3,512 3, % Power Products 1,746 2, % 5,59 5, % Financial results Net sales & other operating revenue Results (Three Months) 2,213. 2,45. Change + 8.7% Twelve Months 8, ,948. Change % Operating income % % Income before income taxes % % Equity in income of affiliates % % Net income attributable to Honda Motor Co., Ltd % % EPS attributable to Honda Motor Co., Ltd. () Note : Shares which are based on calculation of EPS Average Rates () approx. 1,82,32, shares (weighted average number of shares outstanding ) approx. 1,82,32, shares (weighted average number of shares outstanding ) approx. 1,86,36, shares (weighted average number of shares outstanding ) approx. 1,82,3, shares (weighted average number of shares outstanding ) US Dollar 82 8 up by 2 yen up by 7 yen Euro up by 9 yen up by 6 yen 4

5 FY13 Financial Forecasts (Consolidated) Results FY13 Forecasts amount Change % Net sales & other operating revenue 7,948. 1,3. + 2, % Operating income % Income before income taxes % Equity in income of affiliates % Net income attributable to Honda Motor Co., Ltd % EPS attributable to Honda Motor Co., Ltd. () Note : Shares which are based on calculation of EPS approx. 1,82,3, shares (weighted average number of shares outstanding ) approx. 1,82,299,559 shares (weighted average number of shares outstanding ) Average Rates () US Dollar 79 8 down by 1 yen Euro up by 3 yen 5

6 Financial Results and FY13 Financial Forecasts (Unconsolidated) Results FY13 Forecasts amount Change % Net sales 2,74. 3, % Operating income (loss) Ordinary income % Net income % Average Rates () US Dollar 79 8 down by 1 yen Euro up by 3 yen 6

7 Dividend () Dividend per share Results Results & Projection Increase/Decrease from Results FY13 Projection Increase/Decrease from 1 st quarter End ( 19 ) ( + 4 ) 2 nd quarter End ( 19 ) ( + 4 ) 3 rd quarter End ± ( 19 ) ( + 4 ) 4 th quarter End 15 ( 15 ) ( ± ) ( 19 ) ( + 4 ) Fiscal Year 54 ( 6 ) ( + 6 ) ( 76 ) ( + 16 ) 7

8 Financial Results & FY13 Financial Forecasts Fumihiko Ike Senior Managing Officer and Director Chief Financial Officer - Consolidated Financial Results - FY13 Financial Forecasts - Dividend Kohei Takeuchi Operating Officer, General Manager of Accounting Division - Consolidated Financial Results Net Sales and Other Operating Revenue Change in Income before Income Taxes Business Segment Information Geographical Information Change in Equity in Income of Affiliates Consolidated Capital Expenditures - FY13 Financial Forecasts 8

9 Net Sales and Other Operating Revenue 4th Quarter (Three months) ( %) Net Sales by Business Segment Excluding currency translation effects; ( %) Motorcycle Business , ( %) Motorcycle Business ( %) (-.7 %) ( %) Automobile Business Financial Services Business Power Product & Other Businesses Currency Effects 2,45. Automobile Business Financial Services Business Power Product & Other Businesses Total Market average rates 1, ,213. 1, ,45. US Dollar Euro Twelve Months ( %) Excluding currency translation effects; ( %) Net Sales by Business Segment Twelve months 8, ( %) ( %) Motorcycle Business Automobile Business ( %) ( - 1.7%) Financial Services Business Power Product & Other Businesses Currency Effects 7,948. Motorcycle Business Automobile Business Financial Services Business Power Product & Other Businesses Total 1, , , , ,948. Market average rates Twelve Months Twelve Months US Dollar Euro

10 Change in Income before Income Taxes < 4th Quarter> Income before Income taxes Operating Income Decrease in SG&A Increase in R&D Other Income & Expenses Cost Reduction, etc. Currency Effects Unrealized gains and losses related to derivative instruments (Exhibit 2) Revenue, model mix, etc. <Increase Factors> - Decreased fixed cost per unit due to increased production - Cost reduction effort, etc. <Decrease Factors> - Increased raw material cost, etc. Others - Currency effect due to difference between average rates and transaction rates: Others Operating Income 46.2 <Increase Factors> -Increase in unit sales and model mix in automobile business, - Decreased sales incentives, etc. Operating Income *Please refer to Exhibit 1 regarding currency effects 1

11 Change in Income before Income Taxes < Twelve Months > Income before Income taxes Operating Income <Increase Factors> - Decreased quality-related expenses, etc. Other Income & Expenses Revenue, model mix, etc Cost Reduction, etc Decrease in SG&A Increase in R&D <Increase Factors> - Cost reduction effort, etc. <Decrease Factors> - Increased fixed cost per unit due to decreased production - Increased raw material cost, etc. Currency Effects Unrealized gains and losses related to derivative instruments (Exhibit 2) Others Operating Income Twelve Months <Increase Factors> -Decreased sales incentives, etc. <Decrease Factors> -Decrease in unit sales and model mix in automobile business, etc. - Currency effect due to difference between average rates and transaction rates: Others *Please refer to Exhibit 1 regarding currency effects Operating Income Twelve Months 11

12 Motorcycle Unit Sales (Motorcycles + All-Terrain Vehicles, etc.) Unit (thousand) Change from Major increase / decrease factors Unit (thousand) 2, 18, 16, 14, 12, 1, Japan North America Europe Asia Other Regions Total , , Increased sales of PCX and GIORNO - Positive impact of the introduction of Dio11 and NC7X - Positive impact of the introduction of CBR25R - Increased cruiser model sales such as Shadow - Increased sales of scooter models such as Ruckus and PCX, and CBR1RR - Positive impact of the introduction of New7cc lineup and VISION - Decreased sales of SH series scooters due to economic slowdown in Southern European countries - Increased sales of Activa and Shine in India - Positive impact of the introduction of VISION and increased sales of Air Blade and Wave series in Vietnam - Positive impact of the introduction of Click 125i and increased sales of Wave11-i in Thailand - Increased sales of CG15FAN, BIZ125 and CBR3R in Brazil - Increased sales of Wave and CG15 in Argentina ( % ) Unit sales of Honda-brand motorcycle products that are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its subsidiaries + 1,114 ( + 9.7% ) Approx. 18,735 Approx. 7,29 11,445 1,69 VISION (Vietnam) Approx. 15,499 Approx. 2,94 12,559 2,31 8, 6, 4, 2, Approx. 4,667 Approx. 4,645 Approx. 4,679 Approx. 4,744 Approx. 1,78 Approx. 1,95 Approx. 1,75 Approx. 1,81 Approx. 4,26 Approx. 3,826 Approx. 3,381 Approx. 75 Approx. 75 2, , , , Q 2, , Q 2, , Approx. 63 2, , , ,567 2Q , ,45 3Q Approx. 4,266 Approx. 81 3, , Other Regions Asia Europe North America Japan 9, , * Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts to Honda s affiliates accounted for under the equity method. 12

13 Motorcycle Business Net Sales/Operating Income (Margin) Net Sales Q 3Q Q 3Q , ,348.8 Operating Margin ( + 1.5% ) Currency Effect (Revenue from sales to external customers) ( + 4.7% ) Currency Effect (Revenue from sales to external customers) 15 Operating Income <Increase Factors> -Increased sales volume and model mix, etc <Decrease Factors> -Adverse impact of one-time gain related to licensing agreements in the last year -Increased SG&A expenses, -Negative currency effect, etc (+ 2.9%) 14% 1 9.8% 9.6% 9.6% 13.6% 13.6% 1.9% 8.5% ( %) 9.2% 1.8% % % 1% 8% Includes revenue related to dissolution of a joint venture with Hero Honda % 4% 2% 2Q 3Q 2Q 3Q % 13

14 Automobile Unit Sales Unit (thousand) Change from Major increase / decrease factors Unit (thousand) 4, 3,5 Japan North America Europe Asia Other Regions Positive impact of the introduction of FIT SHUTTLE / HYBRID, N-BOX, and FREED HYBRID - Decreased sales of FIT / FIT HYBRID, LIFE, ZEST, etc. - Increased sales of CIVIC, ACCORD and ODYSSEY - Positive impact of the introduction of fully remodeled CR-V - Decreased sales of FIT - Decreased sales of CIVIC and CR-V in Southern Europe caused by weak consumer confidence - Decreased sales of JAZZ and ACCORD in the U.K. and Germany - Decreased sales of CITY, CIVIC, JAZZ, CR-V, due to supply constraints caused by Thai flood - Increased sales of parts for production of CR-V, etc. in China - Increased sales of BRIO in India and FREED in Indonesia - Decreased sales of CITY, CIVIC and FIT in Brazil and Argentina, and decreased sales of CIVIC, CR-V, etc. in Australia due mainly to the decreased supply caused by the flood in Thailand CR-V (North America) 3, ( - 1.7% ) 3,137 3, Total ,8 22 2, , ( % ) ,5 1,458 1,323 1, Q Q Q Q Other Regions Asia Europe North America Japan * Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts to Honda s affiliates accounted for under the equity method. ** Certain sales of automobiles that are financed with residual value type auto loans by our domestic finance subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles. As a result, they are not included in total sales of our automobile segment or in our measure of unit sales. 14

15 Automobile Business Net Sales/Operating Income (Margin) Net Sales 1, Q 3Q 1, , , , Q 3Q 1, , , ,82.3 5, Operating Margin Operating Income ( % ) Currency Effect ( % ) <Increase Factors> -Increased sales volume and model mix, -Decreased SG&A expenses etc <Decrease Factors> -Increased R&D expenses, -Negative currency effect, etc (Revenue from sales to external customers) Currency Effect (Revenue from sales to external customers) 15% 12% 2 8.2% 9% % % % % 6% 3% % Q 3Q -2.4% % -1.2% -6.5% 2Q 3Q -1.3% % -6% -9% 15

16 Power Products Unit Sales Unit (thousand) Japan 89 Change from -15 Major increase / decrease factors - Decreased sales of GX16 / 39 general-purpose engines used in OEM generators and pumps for export due to appreciated of the Japanese yen HRR216 (North America) Unit (thousand) 6, 5, North America Europe Asia Other Regions Increased demand for lawn & garden products such as HRR216 / HRX217 lawnmowers and pressure washers brought on by unseasonably warm winter in the U.S. - Increased sales of generators and lawnmowers due to increased demand for leisure and garden products in Canada - Decreased sales of general-purpose engines used in OEM lawn & garden products, particularly in Italy, and general-purpose engines used in OEM generators caused by the weak economy in Europe - Increased sales of GX16 and GX25 / 35 general-purpose engines due to replacement demand after the flood in Thailand - Increased sales of GK2 engines and generators in India due to pull-forward demand before upcoming tax rise - Increased sales of WB2X / 3X pumps and general-purpose engines made in Thailand for the Middle East and South America due to the commencement of production and delivery of backorders created by the flood in Thailand 5, (+ 5.6%) 5, , Total 2, ,325 1,472 3, (+ 15.1% ) 1,174 1,121 2, 1, 1, , Q 1, Q 1, , , Q 115 1, Q 2, Other Regions Asia Europe North America Japan 2, , * Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts to Honda s affiliates accounted for under the equity method. 16

17 Power Product & Other Businesses Net Sales/Operating Income (Margin) Net Sales Q Q Q 3Q Operating Margin Operating Income ( - 9.% ) ( - 5.9% ) <Increase Factors> -Increased sales volume and model mix, etc <Decrease Factors> -Increased SG&A expenses, etc Currency Effect (Revenue from sales to external customers) Currency Effect (Revenue from sales to external customers) 3% 25% 2% 15% 5 1% % % % % % -.2% -3.2% -2.7% -1.8% -1.4% 5% % -5% -1% -15% -2% -25% -15 2Q 3Q 2Q 3Q -3% 17

18 Financial Services Business Total Assets/Net Sales/Operating Income (Margin) Total Assets of Finance Subsidiaries Net Sales 5, Q 3Q 5,48.3 5, , , Q 3Q 5, , , Operating Margin Operating Income 35.8% 32.9% 32.% 28.8% 38.7% (- 4.5%) Currency Effect (- 8.2%) <Decrease Factors> -Increased allowance for losses on credit, -Negative currency impact, etc 33.2% 29.5% (Revenue from sales to external customers) ( - 9.2% ) Currency Effect (Revenue from sales to external customers) (- 8.7%) % 32.5% 32.3% 5% 4% 3% 1 8 2% % 2 2Q 3Q 2Q 3Q % 18

19 Japan Net Sales/Operating Income (Margin) Net Sales Q 3Q Q 3Q ,69. 3, ,362.9 ( % ) ( - 6.9%) 1 Operating Income Operating Margin (%) <Increase Factors> -Increase in sales volume and model mix, -Decreased SG&A expenses, etc <Decrease Factors> -Increased R&D expenses, etc ( 1.8 % ) ( 1.2 % ) ( % ) ( % ) Q 3Q 2Q 3Q 19

20 North America Net Sales/Operating Income (Margin) Net Sales 1, Q 3Q 1,21.6 1, Q 3Q ,2.3 4, ,714.7 ( % ) ( - 1.4%) Operating Income Operating Margin (%) 35 3 <Increase Factors> -Increase in sales volume and model mix, etc <Decrease Factors> -Increased SG&A expenses -Negative currency effects, etc ( 7.3 % ) 3.9 ( %) 25 2 ( % ) ( 6. % ) Q Q ( 2.5 % ) ( 6.8 % ) Q 3Q 2

21 Europe Net Sales/Operating Income (Margin) Net Sales Q 3Q Q 3Q ( - 16.% ) ( %) Operating Income Operating Margin (%) <Increase Factors> -Increase in sales volume and model mix, etc ( 1.1 % ) ( -.9 % ) ( % ) ( % ) Q 3Q 2Q 3Q 21

22 Asia Net Sales/Operating Income (Margin) Net Sales Q 3Q Q 3Q , ,49.4 Operating Income Operating Margin (%) ( % ) ( - 19.%) 15 <Increase Factors> -Decreased SG&A expenses, <Decrease Factors> -Decrease in sales volume and model mix -Negative currency effects, etc etc ( 8.2 % ) 15.6 ( - 49.% ) 1 ( % ) ( 5.2 % ) ( 6.8 % ) ( 4.2 % ) 2Q 3Q Q 3Q 22

23 Other Regions Net Sales/Operating Income (Margin) Net Sales Q 3Q Q 3Q ( % ) ( - 9.1%) Operating Income 7 Operating Margin (%) ( 7.1 % ) 69.5 ( % ) 6 5 <Decrease Factors> -Decrease in sales volume and model mix -Negative currency effects, etc ( 6.4 % ) ( % ) Q Q ( 5. % ) ( 2.6 % ) 5.6 2Q 3Q 23

24 Change in Equity in income of affiliates Total Asia ( % ) ( % ) Q 3Q 2Q 3Q 24

25 Operating Income of Affiliates in Asia and Honda s Equity in Income from Asia Operating Income Net Income Q 3Q Q 3Q Operating Income of Affiliates and Honda s Equity in Income Operating Income Equity in Income ( % ) ( % ) Q Affiliates accounted for under the equity method in Asia Motorcycle Business: 3Q China Sundiro Honda Motorcycle Co., Ltd.* Wuyang-Honda Motors (Guangzhou) Co., Ltd.* Indonesia P.T. Astra Honda Motor * Pakistan Atlas Honda Ltd. Thailand A.P. Honda Co., Ltd Q 3Q Automobile Business : China As of the end of March 31, 212 Guangqi Honda Automobile Co., Ltd.* Dongfeng Honda Engine Co., Ltd.* Dongfeng Honda Automobile Co., Ltd.* Others 34, Total 42 companies 87.9 Fiscal term of companies marked * differs from that of Honda Motor Co., Ltd. 25

26 Consolidated Capital Expenditures < Twelve Months> ( % ) Excluding currency translation effects ( % ) Motorcycle Business Automobile Business Financial Services Business Power product & Other Businesses Currency Translation Effects 46.5 Twelve Months Market average rates US$ 1= JPY 86 Euro 1= JPY 113 Motorcycle Business Automobile Business Financial Services Business Power Product & Other Businesses Total (billions) Capital expenditures in results aforementioned exclude investment in operating leases and intangible assets Total Twelve Months Market average rates US$ 1= JPY 79 ( up by 7 yen) Euro 1= JPY 19 ( up by 4 yen) (billions) Motorcycle Business 62. Automobile Business Financial Services.3 Business Power Product & Other Businesses

27 212 年度以降の売上台数に係る Change in the Disclosure of Unit Sales Information from Fiscal Year Ending March 31, 213 Honda Group Unit Sales and Consolidated Unit Sales 27

28 "Honda Group Unit Sales" The total of unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method (Sum of 1 and 2) 1Finished products Automobiles Motorcycles Power products Honda + Consolidated Subsidiaries 2Finished products Automobiles Motorcycles 3Production parts Equity method Affiliates China automobile: Guangqi Honda Dongfeng Honda China motorcycle: Sundiro Honda Wuyang-Honda 2 Finished products Automobiles External Customers Automobiles + Motorcycles Asia motorcycle: Astra Honda A.P. Honda Atlas Honda Motorcycles *The photos are for the purpose of illustration only. 28

29 "Consolidated Unit Sales" The total of unit sales of completed products of Honda and its consolidated subsidiaries, not including parts for local production at Honda s affiliates accounted for under the equity method (Excluding 3 from the current "Unit Sales ) 1Finished products Automobiles Motorcycles Power Products Honda + Consolidated Subsidiaries 2Finished products Automobiles Motorcycles 3Production parts Equity method Affiliates China automobile: Guangqi Honda Dongfeng Honda China motorcycle: Sundiro Honda Wuyang-Honda Finished products Automoboles External Customers Automobiles + Motorcycles Asia motorcycle: Astra Honda A.P. Honda Atlas Honda Motorcycles *The photos are for the purpose of illustration only. 29

30 Honda Group Unit Sales Motorcycles Automobiles Power Products Unit (thousand) 2, + 1,539 ( % ) + 1,192 ( % ) 4,3 8, ( % ) 16,6 4, 31 6,3 15, 15,61 2,31 2,8 3, 3, ,31 6, 5, ,67 Other Regions Asia 1, , 12,412 13,82 2, 158 1,74 4, 1,121 1,15 Europe 1,323 5, 1, 2, 2,314 2,52 North America (Reference) FY13 Forecasts 588 (Reference) 71 FY13 Forecasts 392 (Reference) 355 FY13 Forecasts Japan 3

31 Consolidated Unit Sales Motorcycles Automobiles Power Products Unit (thousand) 12, + 1,25 ( % ) 4, + 1,58 ( % ) 8, ( % ) 9,9 3,5 3, , 6,3 9, 8,65 2,31 2,8 3, 2,5 2, , 5, 5, , ,67 Other Regions Asia 6, 2, 158 4, 6,1 7,12 1,5 1,323 1,74 3, 1,121 1,15 Europe 3, 1, 2, 2,314 2,52 North America (Reference) FY13 Forecasts 5 58 (Reference) 7 FY13 Forecasts 1, 392 (Reference) 355 FY13 Forecasts Japan 31

32 FY13 Financial Forecasts (Consolidated) Results FY13 Forecasts amount Change % Net sales & other operating revenue 7,948. 1,3. + 2, % Operating income % Income before income taxes % Equity in income of affiliates % Net income attributable to Honda Motor Co., Ltd % EPS attributable to Honda Motor Co., Ltd. () Note : Shares which are based on calculation of EPS approx. 1,82,3, shares (weighted average number of shares outstanding ) approx. 1,82,299,559 shares (weighted average number of shares outstanding ) Average Rates () US Dollar 79 8 down by 1 yen Euro up by 3 yen 32

33 Forecast: Change in Income before Income Taxes Income before Income taxes ( % ) Operating Income ( % ) * * Other Income & Expenses Cost Reduction, etc. Increase in SG&A Increase in R&D * ± Currency Effect Unrealized gains and losses related to derivative instruments Others Revenue, model mix, etc. * The impact of the change in depreciation method which is anticipated to cause a decrease in depreciation expense by approximately JPY 4. billion in total, is included. Operating Income Operating Income 62. FY13 Forecasts 33

34 Forecast: Capital Expenditures, Depreciation, R&D Expenses Results FY13 Forecasts Change Capital Expenditures * Depreciation and amortization * ** -8.7 R&D expenses * ** Depreciation and amortization in results and the forecast aforementioned exclude depreciation of investment in operating leases and amortization of intangible assets Honda uses the straight-line method for calculating the forecasts for the depreciation of property, plant and equipment for the year ending March 31,

35 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 foreign exchange rates between the Japanese yen and the U.S. dollar, the Euro and other major currencies, as well as other factors detailed from time to time. Accounting standards: Our consolidated financial standards are prepared in conformity with U.S. generally accepted accounting principles. Notice on the Factors for Increases and Decreases in Income: With respect to the discussion above of the change in operating income, 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) Foreign currency effects consist of translation adjustments, which come from the translation of the currency of foreign subsidiaries financial statements into Japanese, and foreign currency adjustments, which result from foreign-currency-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. (2) With respect to cost reduction and effects of raw material cost fluctuations, 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, Asia and other regions. (3) With respect to changes in net sales and model mix, 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 net sales 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. 35

36 -Currency Effects- (effects associated with sales transactions and translation effects) (Exhibit 1) Average Rates () Change JPY / USD up by 2 yen JPY / Euro JPY / Others Transactions between other currencies up by 9 yen Difference of average rates (Impact on Operating income) * *1:Impact of YOY difference of FOREX to be used for booking revenue of foreign currency transactions Difference between transaction *2 rates and average rates (Impact on Other income & expenses) *2:Impact of YOY difference between average FOREX and hedge rates during the period Currency effect associated with sales transaction Currency effect from *3 translation of foreign financial statements (impact on operating income) -8.6 *3:Effect due to the difference of the rate used for translating Honda s overseas subsidiaries financial statements denominated in foreign currencies into Japanese yen with the corresponding period of the fiscal year -4.4 Total

37 - Unrealized Gains and Losses Related to Derivative Instruments - (Exhibit 2) Change Change Foreign currency Forward Interest rate swap Currency swap Others Total

38 38