TOKYO, April 26 /PRNewswire-FirstCall/ -- Honda Motor Co., Ltd.
today announced its consolidated financial results for the fiscal
fourth quarter and the fiscal year ended March 31, 2006. Fourth
Quarter Results Honda's consolidated net income for the fiscal
fourth quarter ended March 31, 2006 totaled JPY 219.5 billion (USD
1,869 million), an increase of 133.4% from the same period in 2005.
Basic net income per Common Share for the quarter amounted to JPY
239.78 (USD 2.04), compared to JPY 101.43 for the same period in
2005. Two of Honda's American Depository Shares represent one
Common Share. Consolidated net sales and other operating revenue
(herein referred to as "revenue") for the quarter amounted to JPY
2,833.7 billion (USD 24,123 million), an increase of 20.6% over the
same period in 2005. Revenue was positively affected by currency
translations, which were translations of
foreign-currency-denominated revenue from Honda's overseas
subsidiaries into Japanese yen. Honda estimates that if the
exchange rate of yen had remained unchanged from the same period in
2005, revenue for the quarter would have increased by approximately
10.5%. Consolidated operating income for the fiscal fourth quarter
totaled JPY 340.8 billion (USD 2,901 million), an increase of
142.8% compared to the same period in 2005. This increase in
operating income was primarily due to the positive impact of
currency effects caused by the depreciation of the Japanese yen,
increased profit attributable to higher revenue and gain on return
of the substitutional portion of the Employees' Pension Funds to
the Japanese government (herein referred to as "return"), which
offset the negative impact of increased selling, general and
administrative (SG&A) expenses and research and development
(R&D) expenses. Consolidated income before income taxes for the
quarter totaled JPY 334.8 billion (USD 2,850 million), an increase
of 159.3% from the same period in 2005. Equity in income of
affiliates, which is mainly attributable to Asian affiliates
accounted for under the equity method, amounted to JPY 22.7 billion
(USD 194 million) for the quarter, an increase of 16.3% from the
same period in 2005. The gain on "return" of JPY 138.0 billion (USD
1,175 million) which was recorded in the fiscal fourth quarter
ended March 31, 2006, was included in the result of consolidated
operating income and consolidated income before income taxes.
Accordingly, the result of amount of the relevant income after tax
that was recorded by the "return" was included in the consolidated
net income for the fiscal fourth quarter ended March 31, 2006.
Business Segment With respect to Honda's sales in the fiscal fourth
quarter by business category, motorcycle unit sales totaled 2,413
thousand units, a decrease of 11.2% from the same period in 2005.
Motorcycle unit sales in Japan was 93 thousand units, approximately
the same level as the corresponding period in 2005. Overseas unit
sales was 2,320 thousand units, a decrease of 11.6% from the same
period in 2005, due mainly to a decrease in unit sales of parts for
local production at affiliates accounted for under the equity
method in Asia*. Revenue from sales to unaffiliated customers
increased 20.2%, to JPY 391.4 billion (USD 3,332 million), due
mainly to positive currency translation effects and the positive
impact of the change in model mix, offsetting the negative impact
of decreased unit sales. Operating income increased by 124.5% to
JPY 60.5 billion (USD 516 million), due mainly to the positive
currency effects caused by the depreciation of the Japanese yen,
increased profits attributable to higher revenue, an decrease in
unrealized profit in inventories and gain on "return," offsetting
negative impact of the increased SG&A expenses. * Of the net
sales of Honda-brand motorcycle products that are manufactured and
sold by overseas affiliates accounted for under the equity method,
those with respect to which parts for manufacturing were not
supplied from Honda or such affiliates are not included in net
sales and other operating revenue, in conformity with U.S.
generally accepted accounting principles. Accordingly, these unit
sales are not included in the financial results and forecasts. Such
products amounted 1,070 thousand units for the fiscal fourth
quarter. Honda's unit sales of automobiles was 901 thousand units,
increased by 4.9% from the same period in 2005. In Japan, unit
sales of automobiles decreased 2.6% to 190 thousand units. Overseas
unit sales increased 7.1% to 711 thousand units, due mainly to
continued strong sales in North America. Revenue from sales to
unaffiliated customers increased 20.3% to JPY 2,250.1 billion (USD
19,155 million) during the quarter, due to the positive currency
translation impact and increased unit sales, mainly in North
America. Operating income increased 168.3% to JPY 243.0 billion
(USD 2,069 million), due mainly to the positive impact of currency
effects caused by the depreciation of the Japanese yen, increased
profit attributable to higher revenue, change in sales price in
North America and gain on "return", which offset the negative
impact of the increased SG&A expenses such as increase in
logistic costs caused by higher oil prices and increased R&D
expenses. Revenue from sales to unaffiliated customers in financial
services business increased 28.1% to JPY 82.8 billion (USD 705
million), due mainly to positive currency translation effects and
the increased revenue due to the growth of the automobile business
in North America. Operating income increased 32.3% to JPY 23.9
billion (USD 204 million), due mainly to the positive impact of the
currency effects caused by the depreciation of the Japanese yen,
higher revenue due to an increased finance-subsidiaries receivable
from growth of business and the decreased SG&A due to the
reversal of the allowance for losses on lease residual values that
was attributable to the increase in used-car prices, which offset
negative impact of increased funding costs. Unit sales of power
products in Japan totaled 138 thousand units, an increase of 17.9%
and overseas unit sales was 1,981 thousand units, increased by
18.8%. Total unit sales of power products was 2,119 thousand units,
up by 18.8 % from the same period in 2005. Increased unit sales of
general-purpose engines in North America and Europe, and
general-purpose engines and cogeneration units in Japan, were the
major contributing factors to this increase. Revenue from sales to
unaffiliated customers in power products and other businesses
increased by 22.6% to JPY 109.3 billion (USD 930 million), due
mainly to an increase in unit sales of power products. Operating
income was JPY 13.2 billion (USD 112 million), an increase of
183.2% from the same period in 2005, due mainly to the positive
impact of the currency effects caused by the depreciation of the
Japanese yen, an increased profit attributable to higher revenue
and gain on "return", which offset increased SG&A expenses.
Geographical Segment With respect to Honda's sales for the fiscal
fourth quarter by geographical segment, in Japan, revenue for
exports and domestic sales was JPY 1,179.6 billion (USD 10,042
million), up by 7.9% compared to the same period in 2005, due
primarily to increased unit sales for exports in the automobile
business. Operating income in Japan was JPY 184.8 billion (USD
1,573 million), up by 265.1%, due primarily to the positive impact
of the currency effects caused by the depreciation of the Japanese
yen, increased profit attributable to higher revenue and gain on
"return" of JPY 138.0 billion (USD 1,175 million), which offset the
negative impact of the increase in SG&A expenses, such as an
increase in logistic costs caused by higher oil prices and R&D
expenses. In North America, revenue increased by 26.6% from the
same period in 2005 to JPY 1,625.3 billion (USD 13,836 million),
due mainly to the positive currency translation effects and
increased unit sales in all of Honda's business segments,
particularly the motorcycle, automobile, financial services and
power product businesses. Operating income increased by 43.8% to
JPY 105.8 billion (USD 901 million) from the same period in 2005,
due primarily to the positive impact of the currency effects caused
by the depreciation of the Japanese yen, increased profit
attributable to higher revenue and change in sales price in North
America, which offset the negative impact of the increased sales
incentives and the negative impact of increased funding. In Europe,
revenue for the quarter increased by 24.2% to JPY 353.5 billion
(USD 3,010 million) compared to the same period of the previous
year, due primarily to the positive currency translation effects
and increased unit sales in all of Honda's business segments.
Operating income in Europe decreased by 15.3% to JPY 9.8 billion
(USD 84 million), due mainly to the negative impact of the increase
in SG&A expenses, offsetting the positive impact of increased
profit attributable to higher revenue. In Asia, revenue increased
by 19.3% to JPY 285.8 billion (USD 2,433 million) from the same
period of the previous year, due primarily to the positive currency
translation effects and increased unit sales in all of Honda's
business segments. Operating income increased by 82.3% to JPY 12.7
billion (USD 109 million) from the same period of the previous
year, due mainly to the positive impact of currency effects caused
by the depreciation of the Japanese yen and increased profit
attributable to higher revenue. In Asia, in addition to
subsidiaries, many affiliates accounted for under the equity method
manufacture and sell Honda-brand products. Operating income does
not include income from these affiliates. Income from these
affiliates is recorded as equity in income of affiliates and
reflected in net income. In other regions, revenue for the fourth
quarter increased by 21.6% to JPY 161.3 billion (USD 1,373 million)
compared to the same period of the previous year, due mainly to the
positive currency translation effects and the increased revenue in
motorcycle business, mainly in South America. Operating income
increased by 153.8% from the same period of the previous year to
JPY 11.6 billion (USD 100 million), due mainly to the positive
impact of currency effects caused by the depreciation of the
Japanese yen and increased profit attributable to higher revenue,
offsetting the negative impact of the increase in SG&A
expenses. Fiscal Year Results Honda's consolidated net income for
the fiscal year ended March 31, 2006, totaled JPY 597.0 billion
(USD 5,082 million), an increase of 22.8% from the same period in
2005. Basic net income per Common Share for the fiscal year
amounted to JPY 648.67 (USD 5.52), compared to JPY 520.68 for the
same period in 2005. Two of Honda's American Depositary Shares
represent one Common Share. Consolidated revenue for the period
amounted to JPY 9,907.9 billion (USD 84,345 million), an increase
of 14.5% over the same period in 2005. Revenue was positively
affected by currency translations, which were translations of
foreign-currency-denominated revenue from Honda's overseas
subsidiaries into yen. Honda estimates that if the exchange rate of
yen had remained unchanged from that in the same period in 2005,
revenue for the fiscal year would have increased by approximately
9.3%. Consolidated operating income for the fiscal year totaled JPY
868.9 billion (USD 7,397 million), an increase of 37.7% over the
same period in 2005. This was primarily due to positive currency
effects caused by the depreciation of the Japanese yen, increased
profit attributable to higher revenue, continuing cost reduction
effects and gain on "return," which offset the negative impact of
increased SG&A and R&D expenses. Consolidated income before
income taxes for the fiscal year totaled JPY 814.6 billion (USD
6,935 million), an increase of 24.0% from the same period in 2005.
Equity in income of affiliates, which is mainly attributable to
Asian affiliates accounted for under the equity method for the
fiscal year amounted to JPY 99.6 billion (USD 848 million), which
was up 3.7%. The gain on "return" of JPY 138.0 billion (USD 1,175
million) which was recorded in the fiscal year ended March 31,
2006, was included in the result of consolidated operating income
and consolidated income before income taxes. Accordingly, the
result of amount of the relevant income after tax that was recorded
by the "return" was included in the consolidated net income for the
fiscal year ended March 31, 2006. Business Segment With respect to
Honda's sales in the fiscal year by business category, motorcycle
unit sales totaled 10,271 thousand units, down 2.0% from the same
period in 2005. Motorcycle unit sales in Japan decreased 2.6% to
368 thousand units, and overseas unit sales was 9,903 thousand
units, which was down 2.0% from the same period in 2005, mainly due
to a decrease in unit sales of parts for local production at
affiliates accounted for under the equity method in Asia*. Revenue
from sales to unaffiliated customers increased 11.7%, to JPY
1,225.8 billion (USD 10,435 million), due mainly to the positive
impact of the currency translation effects and the change in model
mix, offsetting negative impact of decreased unit sales. Operating
income increased by 64.4% to JPY 113.9 billion (USD 970 million),
due mainly to the positive impact of currency effects caused by the
depreciation of the Japanese yen, increased profit attributable to
higher revenue, continuing cost reduction effects and gain on
"return," offsetting the negative impact of the increase in
SG&A and R&D expenses. * Of the net sales of Honda-brand
motorcycle products that are manufactured and sold by overseas
affiliates accounted for under the equity method, those with
respect to which parts for manufacturing were not supplied from
Honda or such affiliates are not included in net sales and other
operating revenue, in conformity with U.S. generally accepted
accounting principles. Accordingly, these unit sales are not
included in the financial results and forecasts. Such products
amounted 2,600 thousand units for the fiscal year. Honda's unit
sales of automobiles increased by 4.6% from the same period in 2005
to 3,391 thousand units. In Japan, unit sales of automobiles
decreased 2.2% to 696 thousand units. Overseas unit sales increased
6.5% to 2,695 thousand units, due mainly to increased unit sales in
North America. Revenue from sales to unaffiliated customers
increased 14.9%, to JPY 8,004.6 billion (USD 68,142 million) during
the period, due to the positive currency translation effects and
increased unit sales mainly in North America and Europe. Operating
income increased by 38.9% to JPY 628.3 billion (USD 5,349 million),
due mainly to the positive impact of currency effects caused by the
depreciation of the Japanese yen, an increase in profit
attributable to higher revenue, continuing cost reduction effects
and gain on "return," which offset the negative impact of increase
in SG&A and R&D expenses. Revenue from sales to
unaffiliated customers in the financial services business increased
20.0% to JPY 306.8 billion (USD 2,612 million), due to the growth
of the automobile business in North America. Operating income
increased 0.8% to JPY 90.5 billion (USD 771 million), due primarily
to the positive impact of currency effects caused by the
depreciation of the Japanese yen, higher revenue due to an
increased finance-subsidiaries receivable from growth of business
and decreased SG&A expenses which offset increased funding
costs. Unit sales of power products in Japan totaled 487 thousand
units, an increase of 12.7%. Overseas unit sales were 5,389
thousand units, an increase of 10.7%, and total unit sales of power
products was 5,876 thousand units, up by 10.9 % from the same
period in 2005. Increased unit sales, mainly in North America and
Europe, was major contributing factor to this increase. Revenue
from sales to unaffiliated customers in power product and other
businesses increased by 11.3% to JPY 370.6 billion (USD 3,155
million), due mainly to increased unit sales. Operating income
increased 86.3% to JPY 35.9 billion (USD 306 million), due mainly
to positive currency effects caused by the depreciation of the
Japanese yen, the increased profit attributable to higher revenue
and gain on "return", which offset the negative impact of the
increase in SG&A expenses. Geographical Segment With respect to
Honda's sales for the year by geographical segment, in Japan,
revenue for exports and domestic sales was JPY 4,437.8 billion (USD
37,779 million), up by 7.2% compared to the same period in 2005,
due primarily to the increased revenue for exports in the
automobile business and increased revenue in the motorcycle, power
product and other businesses, which offset the negative impact of
decreased unit sales in domestic automobile business. Operating
income in Japan was JPY 370.9 billion (USD 3,158 million), up by
100.6%, due primarily to the positive impact of the currency
effects caused by the depreciation of the yen, increased profit
attributable to higher revenue and continuing cost reduction
effects and gain on "return" of JPY 138.0 billion (USD 1,175
million), which offset the negative impact of the increase in
SG&A and R&D expenses. In North America, revenue increased
by 19.4% from the same period of the previous year to JPY 5,616.3
billion (USD 47,811 million), due mainly to positive currency
translation impact and the increased revenue in all of Honda's
business segments. Operating income in North America increased by
10.2% to JPY 353.9 billion (USD 3,013 million), due primarily to
the positive impact of currency effects caused by the depreciation
of the Japanese yen and the increased profit attributable to higher
revenue, which offset the negative impact of the increase in
SG&A expenses. In Europe, revenue for the period increased by
14.0% to JPY 1,189.5 billion (USD 10,126 million) compared to the
same period of the previous year, due mainly to the positive
currency translation impact and the increased revenue in all of
Honda's business segments. Operating income in Europe decreased by
36.2% to JPY 26.3 billion (USD 224 million), due mainly to the
negative impact of the changes in model mix and increased SG&A
expenses, offsetting the positive impact of the currency effects
caused by the depreciation of the Japanese yen and the increased
profit attributable to higher revenue. In Asia, revenue increased
by 15.9% to JPY 997.3 billion (USD 8,491 million) from the same
period of the previous year, due mainly to positive currency
translation impact and the increased revenue in all of Honda's
business segments. Operating income increased by 7.1% to JPY 64.9
billion (USD 553 million) from the same period of the previous
year, due mainly to the positive impact of the currency effects
caused by the depreciation of the Japanese yen, increased profit
attributable to higher revenue and continuing cost reduction, which
offset the negative impact of the increase in SG&A expenses. In
Asia, in addition to subsidiaries, many affiliates accounted for
under the equity method manufacture and sell Honda-brand products.
Operating income does not include income from these affiliates.
Income from these affiliates is recorded as equity in income of
affiliates and reflected in net income. In other regions, revenue
for the year increased by 22.7% to JPY 571.6 billion (USD 4,867
million) compared to the same period of the previous year, due
mainly to positive impact of the currency translation effects and
the increased revenue in all of Honda's business segments mainly in
South America. Operating income increased by 72.2% from the same
period of the previous year to JPY 57.1 billion (USD 487 million),
due mainly to the positive currency effects caused by the
depreciation of the Japanese yen, the increased profit attributable
to higher revenue and continuing cost reduction effects, offsetting
the negative impact of the increase in SG&A expenses. Forecasts
for the Fiscal Year Ending March 31, 2007 As for the global
economy, the U.S. and Asian economies are expected to grow
steadily, and Japan and Europe are also expected to maintain their
moderate economic recovery. However, the global environment in
which surrounding Honda's management is working still lacks
transparency because of global political and economic uncertainty,
fluctuations in oil prices, and currency movements. As a result, we
expect to see continued severe situations. Under such
circumstances, in regard to the forecasts of the financial results
for the fiscal year ending March 31, 2007, Honda projects
consolidated results to be as shown below: FY2007 Forecasts for
Consolidated Results First half ending September 30, 2006 Yen
(billions) Changes from FY 2006 Net sales and other operating
revenue 5,250 +14.1% Operating income 375 +12.6% Income before
income taxes 365 +16.4% Net income 275 +12.5% Fiscal year ending
March 31, 2007 Yen (billions) Changes from FY 2006 Net sales and
other operating revenue 10,600 +7.0% Operating income 750 -13.7%
Income before income taxes 735 -9.8% Net income 550 -7.9% Basic net
income per common share 301.18 - Explanatory notes: At the board of
directors meeting held on April 26, 2006, the Company resolved a
matter of stock split. A 1:2 stock split will be made for
shareholders listed or recorded in the final register of
shareholders and register of beneficial shareholders as at June 30,
2006. As of July 1, 2006, one share of the Company's common stock
will be split into two. The above estimated basic net income per
common share was calculated based on the number of shares issued
after stock split. In case of using the number of shares issued as
of March 31, 2006, estimated basic net income per common share for
the fiscal year ending March 31, 2007 will be JPY 602.36. FY2007
Forecasts for Unconsolidated Results First half ending September
30, 2006 Yen (billions) Changes from FY 2006 Net sales 1,910 +5.9%
Operating profit 82 -32.3% Income before income taxes 143 -9.0% Net
income 114 -34.3% Fiscal year ending March 31, 2007 Yen (billions)
Changes from FY 2006 Net sales 3,940 +4.9% Operating profit 160
-33.3% Income before income taxes 280 -13.0% Net income 220 -27.1%
These forecasts are based on the assumption that the average
exchange rates for the yen to the U.S. dollar and the Euro for the
first half of the year ending September 30, 2006 will be JPY 113
and JPY 135 and for the full year ending March 31, 2007, JPY 112
and JPY 132. The exchange rates for the second half of the year
ending March 31, 2007 will be JPY 110 and JPY 130, respectively.
Dividend per Share of Common Stock for the fiscal year ending March
31, 2007 At the board of directors meeting held on April 26, 2006,
the Company resolved a matter of stock split. A 1:2 stock split
will be made for shareholders listed or recorded in the final
register of shareholders and register of beneficial shareholders as
at June 30, 2006. As of July 1, 2006, one share of the Company's
common stock will be split into two. After the stock split, for the
year ending March 31, 2007, the Company plans that the interim cash
dividend of JPY 30 per share. It also projects that the year-end
cash dividend will be JPY 30 per share. As a result, total cash
dividends for the year ending March 31, 2007 are expected to be JPY
60 per share. Had the stock split not been carried out, the
dividends would have been equal to JPY 60 per share for both
interim and year-end dividends, which would have been an increase
of JPY 20 per share for the interim dividend, as a result, an
increase of JPY 20 per share for the year, to JPY 120. More
information can be found at http://world.honda.com/investors/ This
announcement contains "forward-looking statements" as defined in
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such
statements are based on management's assumptions and beliefs taking
into account information currently available to it. Therefore,
please be advised that Honda's actual results could materially
differ from those described in these forward-looking statements as
a result of numerous factors, including general economic conditions
in Honda's principal markets and foreign exchange rates between the
Japanese yen and the U.S. dollar, the Euro and other major
currencies, as well as other factors detailed from time to time.
The various factors for increases and decreases in income have been
classified in accordance with a method that Honda considers
reasonable. DATASOURCE: Honda Motor Co., Ltd. CONTACT: Tetsuo
Oshima for Honda Motor Co., Ltd., +1-212-355-9191 x16 Web site:
http://world.honda.com/investors
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