ended December 31, 2010
－Upward revision to forecast of fiscal consolidated operating income and net income－
Honda Motor Co., Ltd. announced its consolidated financial results for the fiscal third quarter and the fiscal nine months ended December 31, 2010.
Consolidated Financial Summary
Despite the unfavorable currency effects due to the appreciation of the Japanese yen and a decrease in automobile sales in Japan, consolidated operating income for the fiscal third quarter (October 1, 2010 through December 31, 2010) was 125.6 billion yen primarily due to the recovery of automobile sales in North America and the expansion of motorcycle business in Asia.
Consolidated operating profit for the fiscal nine months (April 1, 2010 through December 31, 2010) considerably increased compared to the same period last year, primarily due to increased profit in automobile business in Japan, North America and Asia as well as motorcycle business in Asia, offsetting the unfavorable currency effects due to the Japanese yen appreciation. Equity in income of affiliates, including profit from joint ventures in China, also substantially increased compared to the same period last year.
Honda made an upward revision to the forecast for consolidated operating income for FY11 (fiscal year ending March 31, 2011) from the previous 500 billion yen to 620 billion yen. This upward revision was based on the forecast for an increase in profit due to the expansion of motorcycle business in Asia and South America, improved model mix in North America, continuing cost reduction efforts, and increased profit from financial services business. The forecast for net income*1 was also revised upward from the previous 500 billion yen to 530 billion yen due to the forecasted increase in equity in income of affiliates mainly in Asia in addition to an increase in operating income.
|
|
|
3rd quarter ended Dec. 31, 2009 |
3rd quarter ended Dec. 31, 2010 |
Difference |
Fiscal nine months ended Dec. 31, 2009 |
Fiscal nine months ended Dec. 31, 2010 |
Difference |
|
Unit Sales (million units) |
Motorcycles*2 |
2.378 |
2.895 |
+ 0.517 |
7.037 |
8.511 |
+1.474 |
|
Automobiles*3 |
0.914 |
0.855 |
– 0.059 |
2.518 |
2.652 |
+0.134 |
|
|
Power products*4 |
0.998 |
1.157 |
+ 0.159 |
3.113 |
3.763 |
+0.650 |
|
|
Financial Results (billion yen) |
Net sales and other operating revenue |
2,240.7 |
2,110.4 |
-130.3 |
6,299.6 |
6,723.7 |
+424.1 |
|
Operating income |
176.9 |
125.6 |
-51.3 |
267.6 |
523.5 |
+255.8 |
|
|
Income before income taxes |
171.0 |
131.5 |
-39.4 |
242.6 |
553.9 |
+311.3 |
|
|
Equity in income of affiliates |
32.8 |
43.4 |
+10.6 |
69.3 |
114.7 |
+45.3 |
|
|
Net income*1 |
134.6 |
81.1 |
-53.5 |
196.2 |
489.5 |
+293.3 |
|
|
Honda’s Average Rates (Yen) |
USD = |
89 |
83 |
Yen up by 6 yen |
93 |
87 |
Yen up by 6 yen |
|
EUR = |
133 |
112 |
Yen up by 21 yen |
133 |
114 |
Yen up by 19 yen |
|
|
|
FY10 results |
FY11 forecasts announced on Oct. 29, 2010 |
FY11 forecasts revised on Jan. 31, 2011 |
Difference from FY10 |
Difference from forecasts announced on Oct. 29, 2010 |
|
Unit Sales (million units) |
Motorcycles*2 |
9.639 |
11.490 |
11.535 |
+1.896 |
+0.045 |
|
Automobiles*3 |
3.392 |
3.615 |
3.580 |
+0.188 |
-0.035 |
|
|
Power products*4 |
4.744 |
5.565 |
5.610 |
+0.866 |
+0.045 |
|
|
Financial Results/ Forecasts (billion yen) |
Net sales and other operating revenue |
8,579.1 |
9,000.0 |
8,900.0 |
+320.8 |
-100.0 |
|
Operating income |
363.7 |
500.0 |
620.0 |
+256.2 |
+120.0 |
|
|
Income before income taxes |
336.1 |
535.0 |
665.0 |
+328.8 |
+130.0 |
|
|
Equity in income of affiliates |
93.2 |
117.0 |
130.0 |
+36.7 |
+13.0 |
|
|
Net income*1 |
268.4 |
500.0 |
530.0 |
+261.6 |
+30.0 |
|
|
Honda’s Average Rates (Yen) |
USD = |
93 |
84 |
85 |
Yen up by 8 yen |
Yen down by 1 yen |
|
EUR = |
130 |
113 |
112 |
Yen up by 18 yen |
Yen up by 1 yen |
*1 Net income attributable to Honda Motor Co., Ltd. based on U.S. generally accepted accounting principles.
*2 Unit sales of approximately 1.75 million units for the current fiscal 3rd quarter, approximately 5.48 million units for the current fiscal nine months and approximately 7.22 million units for the forecast of the fiscal year ending March 31, 2011 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 from Honda and its consolidated subsidiaries, are not included in the total sales of the motorcycle segment or in the measure of unit sales, in conformity with U.S. generally accepted accounting principles.
*3 Certain sales of automobiles that are financed with residual value type auto loans by Honda’s 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 the total sales of the automobile segment or in the measure of unit sales.
*4 Unit sales of power products include all trilateral trade transactions from the fiscal year ended March 31, 2010. This change was made and reported by retrospective application in the three months ended March 31, 2010. Honda adjusted unit sales of power products for the three months and the fiscal nine months ended December 31, 2009 to conform to the presentation used for the fiscal year ended March 31, 2010.
Out-of-period adjustments
The overstatements of trade accounts and notes receivable, inventories, net sales and other operating revenue, and cost of sales in the previously issued consolidated financial statements, in relation to "inventory management trading"*5 activities in which a domestic subsidiary of the Company was involved were found. The Company recorded the related cumulative loss amounted to approximately 14.1 billion yen, which incurred in prior fiscal years, as selling, general and administrative expenses in the Company’s consolidated statements of income for the nine months ended December 31, 2010, not by retrospectively adjusting the prior year financial statements. As a result, operating income for the nine months ended December 31, 2010 decreased by approximately 14.1 billion yen. The Company also adjusted net sales amounted to approximately 9.8 billion yen and related operating expenses overstated in the Company’s consolidated statements of income for the six months ended September 30, 2010, in the Company’s consolidated statements of income for the three months ended December 31, 2010. As a result, operating income for the three months ended December 31, 2010 decreased by approximately 14.4 billion yen, including the above cumulative loss incurred in prior fiscal years. Honda believes that these out-of-period adjustments are immaterial to the Company’s consolidated financial statements or results of operations as of and for the three months and nine months ended December 31, 2010 as well as prior periods.
*5 "Inventory management trading" means transactions in which a domestic subsidiary of the Company temporarily purchases seafood products from seafood companies with the promise that they will buy back such products after a certain period, in order to bridge the gap between the purchasing period (the fishing season) and the sales period for seafood products.
