honda corporate update - 2018 spring · 2019-12-19 · honda corporate update ... company’s basic...

Honda Corporate Update - 2018 Spring

2019 Acura RDX(Prototype)

Business Status

Other Topics

Automobile Business Operations

Motorcycle Business Operations

Business Strategy

Honda Corporate Update

2030 Vision

2

Financial Highlights

70

80

90

100

110

120

130

183 203 199 178 196

177 192 182 171 267

461 280

153

501 374

4.2%

6.4%

2.9%

5.5%

6.6%

5.0%

3.4%

6.0%5.4%

4.5%

-1%

1%

3%

5%

7%

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY2010 2011 2012 2013 2014 2015 2016 2017 2018 2019(P)

PP & Others Finance Motorcycle Automobile O/P Margin

・Earthquake・Thai flood・Earthquake・Thai flood

2012

USD/JPY

￥105 forFY19

840

670

IFRSUS GAAP

Profit Structure Profile over Past Decade and FY19 Forecast

・Airbag Inflator Issue

・Airbag Inflator Issue

Yen (billion)

700

503

* Forecast as of April 27, 2018 3

*

231

569

363

544

833823

FY18Results

FY19Forecast Change FY18

ResultsFY19

Forecast Change FY18Results

FY19Forecast Change

Japan 167 190 + 23 696 690 -6 300 300 -North

America 313 325 + 12 1,902 2,015 + 113 3,012 3,055 + 43Europe 234 235 + 1 183 185 + 2 1,022 1,030 + 8

Asia 17,720 18,545 + 825 2,166 2,220 + 54 1,512 1,495 - 17Other

Region 1,120 1,250 + 130 252 265 + 13 416 410 - 6Total 19,554 20,545 + 991 5,199 5,375 + 176 6,262 6,290 + 28

19,554 20,5455,199 5,375 6,262 6,290

+ 991( + 5.1 % )

+ 28( + 0.4 % )

+ 176( + 3.4 % )

4

AutomobilesMotorcycles Power Products

Unit(Thousand)

FY19Forecast

FY18Results

FY19Forecast

FY18Results

FY19Forecast

FY18Results

Forecast: Honda Group Unit Sales

FY18Results

FY19Forecast Change FY18

ResultsFY19

Forecast Change FY18Results

FY19Forecast Change

Japan 167 190 + 23 627 620 - 7 300 300 -North

America 313 325 + 12 1,902 2,015 + 113 3,012 3,055 + 43Europe 234 235 + 1 183 185 + 2 1,022 1,030 + 8

Asia 11,120 11,560 + 440 725 750 + 25 1,512 1,495 - 17Other

Region 1,120 1,250 + 130 252 265 + 13 416 410 - 6Total 12,954 13,560 + 606 3,689 3,835 + 146 6,262 6,290 + 28

3,689 3,8356,262 6,290

+ 28( + 0.4 % )

+ 146( + 4.0 % )

12,954 13,560

+ 606( + 4.7 % )

Forecast: Consolidated Unit Sales

AutomobilesMotorcycles Power Products

Unit(Thousand)

FY19Forecast

FY18Results

FY19Forecast

FY18Results

FY19Forecast

FY18Results

5

Earnings per shareattributable to owners of the parent

590.79 322.42 - 268.37

FY18Results

FY19Forecast

Change

amount %

Sales revenue 15,361.1 15,600.0 + 238.8 + 1.6%

Operating profit 833.5 700.0 - 133.5 - 16.0%

Operating margin 5.4% 4.5% - 0.9ptShare of profit of investmentsaccounted for using the equity method

247.6 215.0 - 32.6 - 13.2%

Profit before incometaxes 1,114.9 920.0 - 194.9 - 17.5%

Profit for the yearattributable to owners of the parent 1,059.3 570.0 - 489.3 - 46.2%

US Dollar 111 105 Yen up by 6 yen

*2

Yen (billion)

*1

(Yen)

*1:Please refer to the footnote on page 48 *2 :Profit for the year attributable to owners of the parent, excluding the 346.1 bil. yen impactof revaluation of deferred tax assets and liabilities in the U.S. consolidated subsidiaries due to thetax reform, is 713.2 bil. yen, and earnings per share attributable to owners of the parent is 397.75 yen, respectively.Market average rates (Yen)

FY19 Financial Forecast (Consolidated)

6

Operating profit -133.5 ( - 16.0 % )

833.5

700.0+ 40.5 - 22.0+ 67.0 - 51.0

+ 53.7 665.5

Operating margin5.4%

Operating margin 4.5%

- 207.0

Operating margin4.5%

- 14.7

FY19 Forecast: Change in Operating Profit

Yen (billion)

Excluding currency effects, litigation settlementand restitution income

Operating profit + 34.5 ( + 5.2 % )

CurrencyEffects

Revenue,model mix,

etc.

CostReduction,

etc.

Increase inSG&A Increase in

R&D

*Litigation settlement and restitution income related to airbag inflator in FY18

Restitutionincome *

*LitigationSettlement

FY18Results

FY19Forecast 7

Change in the company’s shareholders’ return policy

8

【Purpose for the change】

Further improving the Company’s capital strategy

【Points of the change】

Goal: to maintain a shareholders’ return ratio of

approximately 30%

Goal: to realize a return ratio alone of approximately 30%

Acquisition of the Company’s own shares at a timing that it

deems optimal

With respect to the redistribution of profits to its shareholders, the Company’s basic policy is to determine such distributions after taking into account, among others, its retained earnings for future growth and consolidated earnings performance based on a long-term perspective.

Dividend per Share FY17 FY18 FY19(Expectation)

Increase/Decrease from

FY17

Increase/Decrease from

FY18

1st Quarter End 22 24 + 2 ( 27 ) ( + 3 )2nd Quarter End 22 24 + 2 ( 27 ) ( + 3 ) 3rd Quarter End 24 25 + 1 ( 27 ) ( + 2 ) 4th Quarter End 24 27 + 3 ( 27 ) ( - )

Fiscal Year 92 100 + 8 ( 108 ) ( + 8 )

（Yen）

【Acquisition of the Company’s Own Shares】

・Total number of shares to be acquired : Up to 18 million shares (shares of common stock)(1.0% of total number of issued shares (excluding treasury stock))

・Total amount of shares to be acquired : Up to 70 billion yen・Period of acquisition: Starting on May 7, 2018 and ending on December 31, 2018

・Method of acquisition: Market purchases on the Tokyo Stock Exchange

9

Shareholders’ Return

10

FY11Actual

FY12Actual

FY13Actual

FY14Actual

FY15Actual

FY16Actual

FY17Actual

FY18Actual

FY19(Expectation)

Dividend（Yen）

1st Quarter End 12 15 19 20 22 22 22 24 (27)

2ndQuarter End 12 15 19 20 22 22 22 24 (27)

3rd Quarter End 15 15 19 20 22 22 24 25 (27)

4th Quarter End 15 15 19 22 22 22 24 27 (27)

Fiscal Year 54 60 76 82 88 88 92 100 (108)

Dividend ratio* 18.3% 51.1% 37.3% 25.7% 32.2% 46.0% 26.9% 25.1% (33.4%)

Acquisition of the Company’s Own Shares 25.0 0 0 0 0 0 0 87.0 (70.0)

97.4 108.1137.0 147.8 158.6 158.6 165.8 179.0 190.6

25.0

87.0 70.0

122.4108.1

137.0147.8

158.6 158.6 165.8

18.3%

51.1%37.3%

25.7% 32.2%46.0%

26.9%

25.1%33.4%

0

100

200

300

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

260.6

**

266.0

** incl. impact of revaluation of DTA/DTL 16.9%

**

Recent Shareholders’ Return Summary Trend

（billion）

Acquisition of the Company’sOwn Shares

TotalDividend Dividend Ratio

（billionYen）

* US GAAP up to FY15 , IFRS from FY16

Business Status

Other Topics



Business Strategy


2030 Vision

11


12

Further enhance inter-regional coordination and collaboration andincrease the efficiency of our operations from a global perspective.

Inter-regional coordination and collaboration

Accord 10% Civic

16%

CR-V 14%

Vezel10%

Fit8%

Derivative models

Other

Global Models continue to be widely popular representingapprox. 70% of CY2017 global Honda unit sales

Global models: Accord, Civic, CR-V, Vezel/ HR-V and Fit/ Jazz

13

Accord- All-new Accord launched in October 2017 in N.A. to be followed by other markets

Civic- Underwent full model change in 2015 in N.A. and successfully launched in global market

- Shares commonized platform between sedan, coupe and hatchback

CR-V- All-new CR-V underwent full model change in 2016 in N.A.and global launch to be completed by 2018.

Vezel/ HR-V- Grew into strong model and became one of the global models since its launch in 2013

Accord

Civic

CR-V

Vezel/ HR-V

Fit/ Jazz

*Derivative models: City/Grace, Greiz and XR-V

Sharing of down-sized turbocharged engine at some trim levels

Focus onplatform and parts

commonality

Focus onplatform and parts

commonality

5.3milCY2017

Global models: Direction of Model Development

2013 2014 2015 2016 2017

Civic

CR-V

HR-V

Fit

Global Operation Reform• Concurrent development

in all six regions• Adoption of locally

optimized design

• Increase commonality of platform and parts (Civic, CR-V and Accord)

Further enhance electrification, autonomous driving and connectivity technologies.

Spearhead industry effort to realize a carbon-free and collision-free mobile society.

14

Accord

• Adopt Lead-Country Introduction Strategy(Clarification of which region is responsible for model development leadership and increase model development efficiency.)

• Introduction of modular strategies

• Introduce advanced platforms to accommodate electrification of powertrains

November

April

March

April

August

Civic Sedan CY2015 CY2016 CY2017 CY2018 CY2019

NorthAmerica

ASIA

China

Brazil

Europe

Japan

Global Model Introductions

September

CR-V (PE) CY2015 CY2016 CY2017 CY2018 CY2019

NorthAmerica

ASIA

Brazil

China

Europe

Japan

April

June

July

In 2018

November

In 2018

Civic Sedan

CR-V

15

16

Regional Models

Introduction of regional models has also been expanding in each region.

China: Brand differentiationbetween two Joint Ventures

North America: Light Truck models

Japan: Mini-vehiclesAsia: Meet demand in each country with affordable models

Crider UR-V

Avancier XR-V

Odyssey

Pilot

Ridgeline

BR-VMobilio

Brio Amaze

N-Box

N-One N-WGN

N-Box +

GAC Dongfeng

China

Europe

Capacity increase to 5.7 milEstablish stable production structure leveraging regional capacity + mutual parts/model sharing

North America

South AmericaAsia

Japan

1.06 mil<Export>

Global Models& Electrified models 1.92 mil

200,000

Primarily Civic 5D production

150,000

1.13 mil

<Export> Acura, L/T models,

Accord & CR-V

930,000

<Export> • Strengthen mutual parts/model

sharing within Asia• Export to Africa

<Export> Leverage local cost benefit for

next markets (Africa)

Middle East and Africa

Jazz

Electrified models

CR-V

Accord & L/T models

Acura

10-20%for Other regions

80-90% for Local markets

Total Capacity

approx. 5.4 mil units(Since April 2017)

City

■ Utilization Image

Civic 5D

1,000

CR-V , HR-V(plan)

Civic

Flexible Global Production Infrastructure

(Units)

Clarity Series

17

Civic 5D

Mutually Complementary System for our Global Operations

Advance our six-region global operation structure through inter-regional cooperation and coordination

• Flexible production system complementary production allocation between regions • Supply Civic hatchback from the UK to North America and Japan• WR-V was developed mainly for South America but is now also sold in Asia.

18

1,066 1,066 1,066 816

1,923 1,923 1,9231,923

200 200 200 200

1,080 930 930 930

1,080+50

1,080+50

1,200+50 1,200

+50

151 151 151 151

Mar '16 Apr '17 Plan '19 Plan '22as of

Japan

NorthAmerica

Europe

Asia

China

Other

-1505,550 5,400

(Export only)

Global Production Capacity

(Export only)

5,270

Thailand -150

FY2017

Unit(thousand)

19

China Dongfeng

+120

Plan

5,520+120 -250

Japan Saitama

-250

BrazilSumare

-120Itirapina

+120

Plan

To be launched

Automobile New Model Introductions (main models only)

* Please note that “To be launched” models reflect the current plan and is subject to change.Also, photos are from currently available sources and are not actual specification models.

UR-V: China

Mar Apr May Jun Jul Aug Sep

WR-V: Brazil, India

Odyssey: N.A.N-Box: Japan

Clarity PHEV: U.S.,Japan (2018)

Accord: N.A.

Clarity BEV: U.S.

20

Oct

Already Launched in 2017

Nov Dec

Insight: U.S.

RDX: U.S., China

Automobile Operations by Regions

11,588 12,777

14,491 15,600

16,522 17,479 17,550 17,230

0

5,000

10,000

15,000

20,000

CY10 11 12 13 14 15 16 17

Passenger CarsLight Trucks

1,259 1,147

1,423 1,525 1,541 1,587 1,638 1,641

0

500

1,000

1,500

2,000

CY10 11 12 13 14 15 16 17

AcuraHonda Passenger CarsHonda Light Trucks

4,601 4,753 5,211

5,692 5,297

4,937 5,077 5,195

0

2,500

5,000

7,500

FY11 12 13 14 15 16 17 18

Registered vehiclesMini vehicles

608 601

717

848 788

704 711 725

0

250

500

750

1,000

FY'11 12 13 14 15 16 17 18

Registered vehiclesMini vehicles

21

<Industry>

<Honda>

United StatesJapan<Industry>

<Honda>

Unit(thousands)

Source: Autodata

Source: Honda

Source: JAMA

Source: Honda

Increase production capacity of light truck models to meet industry demand

Improve capacity utilization through exporting global models

CR-V

RDX

■ Production Allocation

Indiana

OhioEast

LibertyPlant

20172016

CR-V

MDX

Pilot

Shift

Civic

MDX

GlobalSource CivicExport to N.A.

Alabama

Pilot

Global Source

Civic

Ridgeline Odyssey

Odyssey

Ridgeline

Alabama

ProductionPlant

■ As of the end of 2017

Indiana

CR-V

Civic

MexicoEl Salto

CR-V

HR-V

Shift

Ohio(East Liberty)

RDX

CR-V

MDX

Model Allocation: North America

22

Split

Indiana

RDX

■ Production Allocation

Indiana

OhioEast

LibertyPlant

20192018

CR-V

Civic

ProductionPlant

CR-VCivic

CR-V

MDX

Model Allocation: North America

MDX

AccordOhio

MarysvillePlant

CR-V

CR-V

Insight Brand-New

Insight

Accord

OhioEast

Liberty Marysville

CR-V

RDX

TLX / ILX

CanadaOntario

Civic

CR-V

TLX

23

652 622 599

757 793

1,010

1,256

1,458

0

500

1,000

1,500

CY10 11 12 13 14 15 16 17

Acura SUVMPV Sedan

※2008-2014 Wholesale2015-2016 Retail


24

China

<Honda>

13,757 14,473 15,495 17,929

19,701 21,146

24,378 24,719

0

10,000

20,000

30,000

CY10 11 12 13 14 15 16 17

Minivan SUVMPV Sedan

Unit(thousands)

(excluding commercial vehicles)<Industry>

Source: Honda

Source: Honda

Further expand sister model strategy.

<Industry>

<Honda>

Asia

4,493 4,796

5,696 5,748 5,477 5,464 5,478 5,965

0

4,000

8,000

CY10 11 12 13 14 15 16 17

Malaysia ThailandIndonesia PhilippinesIndia

297 227

356

474 524

587 578 629

0

250

500

750

CY10 11 12 13 14 15 16 17

Malaysia ThailandIndonesia PhilippinesIndia

Source: Honda

Source: Honda

(Five main markets in Asia)* India: excluding commercial

vehicles and pickups

Introduce new models to meet specific market needs in each Asian market.

Sedan(4D/5D) SUV MPV

D

GAC

Dongfeng

C

GAC

Dongfeng

B

GAC

Dongfeng

By utilizing common platforms and strengthening local procurement and R&D functions, successive launch of cost competitive models being realized.

Accord

JadeCrider

Odyssey

Spirior

Gienia

Segment

Fit City Vezel

XR-V

CR-V (July 2017)

Elysion

Greiz

UR-V(Mar 2017)

Civic

Avancier

Regional Models: China

25

Two joint ventures offer different model types

consistent with their respective brand image


26

Brazil

<Honda>

3,329 3,426 3,634 3,580

3,333

2,481 1,989 2,176

0

2,500

5,000

CY10 11 12 13 14 15 16 17

126

93

135 139 138 153

123 131

0

100

200

CY10 11 12 13 14 15 16 17

Unit(thousands)

<Industry>

Source: Honda

Source: ANFAVEA

(Main market in Other Region)* excluding trucks

Improve Forex toughness by increasing local procurement and localization of development.

<Industry>

<Honda>

Europe (EU+EFTA)

13,743 13,542 12,452

12,240 12,913 14,095

15,132 15,632

0

5,000

10,000

15,000

20,000

CY10 11 12 13 14 15 16 17

187 150 141 140 133 132 138

120

0

100

200

300

400

CY10 11 12 13 14 15 16 17

(excluding commercial vehicles)

(EU and EFTA)

Source: ACEA / Honda

Source: ACEA / Honda

U.K. has been designated to serve asglobal supply base of the Civic Series.

Roadmap for Environmental Technologies

2010 2020 2030

DI engineCVT / DCT

Turbo engine

2000

(CO

2(g/

km)

0

Global expansion

Global expansion

Technologies to increase electrical

efficiency

Technologies to increase thermal

efficiency

ZEROemissions technology

27

2015

Clarity BEV (2017)

Clarity PHEV(2017)

Clarity Fuel Cell(2016)

Accord PHEV(2013)

FCX Clarity(2008)

FCX(2002)

Strive to electrify two-thirds of all vehicles we sell globally by 2030

CR-V HEV(2017)

BEV@China

CY2018

Clarity Plug-inHybrid＠Japan

CY2019

Urban EV＠Europe

CY2020

Urban EV＠Japan

NEW FCV

FCV

CR-V Hybrid＠Japan, Europe

InsightHybrid＠NA

ACCORDHybrid＠NA

CDXHybrid＠China

28

Honda’s Approach to Automobile Electrification

Leverage our strengths

Reinforce organization

・Optimize the technologies and experiences cultivated in HEV development for electrification expansion.

Electric motors・Established JV with Hitachi AMS for development, manufacture and sale of Honda’s state-of-the-art electric motors to combine our compact high-power technology with their mass-production expertise.

×

We expect that two-thirds of global automobile unit sales will be electrified by 2030.

Electrification = HEV + PHEV + BEV + FCV

We expect that two-thirds of global automobile unit sales will be electrified by 2030.

Electrification = HEV + PHEV + BEV + FCV

Cooperative control

Battery management

Key technologies we will focus on for Electrification

・Maximize cooperative control systems to fully extract and utilize the performance of the powertrain and related devices.

・Established “Electric Vehicle Development Division” which will oversee comprehensive vehicle development, including the powertrain and chassis, in order to further increase development speed.

・Maximize energy management performance and enhance heat management technologies to extend battery performance.

Roadmap for Environmental Technologies: Clarity Series

- Clarity Plug-in Hybrid earned a class-leading 47-mile EV driving range rating and340-mile extended range rating, launched in the U.S.(2017) and will be launched in Japan (2018).

- Clarity Electric, a spacious, comfortable and affordable sedan that suits their daily driving needs was launched in the U.S.(2017).

- Clarity Fuel Cell, only five-passenger FCV sedan in the industry, was launched in Japan in March 2016 and in the U.S. in December 2016, respectively.

“3-in-1” Clarity series provides unparalleled electric drive choice with premium midsize sedan capability and three advanced electrified powertrains

in a single vehicle platform to efficiently address cost and manufacturability

PHEV: Benefits of both Hybrids and BEVs

BEV:Affordable model for daily use

FCV: Ultimate zero-emissions vehicle

29

FY18 FY19 FY20 FY21

BEV GAC

Dongfeng

North America

Europe

Japan

PHEV North America

Japan

Regulation

ChinaSUV

SUV

Clarity（D-category）



30

Urban EV (B-category)

Urban EV

BEV/PHEV Model Introductions

Urban EV Concept

New ZEV(U.S.） NEV（China）

Clarity Plug-In HybridEverus EV Concept

Toward realization of a collision-free mobile society

Expanding adoption of Honda SENSINGJapan: Make Honda SENSEING standard equipment on all new models to be introducedNorth America/ China/ Europe/ Other regions: Expanding application to all-new models

* For Acura vehicles, called “Acura Watch”

31

- Strive to realize automated lane-changing function which enables the vehicle to drive in multiple lanes without any command from the driver on highways in 2020

- Strive to achieve the technological establishment of “level 4” automated driving for use in personal cars by around 2025

Automated Driving Roadmap

✔

✔

32

33

Honda’s approach to the new business environment

Waymo SenseTime

Softbank（Emotion Engine）

Kyoto University Boston University

（Information Security）

Softbank（5G Mobile Communication System）

Alibaba（Honda CONNECT）

ZipCar （U.S.）Reachstar （China）

Grab （Asia）

- Motorcycles

Hitachi AMS（EV Motor）

Neusoft（China EV）

General Motors（FC Stack）

R&D Center X Honda Xcelerator

- Global expansion

ElectrificationArtificial

Intelligence

Car Sharing

New Organizational Structure

AutonomousDriving

Connectivity

Business Status

Other Topics



Business Strategy


2030 Vision

34


Overview of Motorcycle Business

35

15,061 15,494 17,008 17,592 17,055 17,661

19,554 20,545

5,000

10,000

15,000

20,000

FY2012 2013 2014 2015 2016 2017 2018 2019(P)

143 110177 192 182 171

267

10.6%

8.2%

10.5% 10.4% 10.1% 9.9%

13.1%

0

100

200

300

FY2012 2013 2014 2015 2016 2017 2018

*Operating profit and margin, and Unit sales until FY13 are based on US GAAP while FY14 and after are based on IFRS

Honda M/C Business = High Profitability + Stability + Growth Potential

Yen (billion)

Unit (thousand) Honda Global Unit Sales

Operating Profit and Margin

Mega ModelsAnnual sales of each of these “Mega Models” has grown to approximately 3 million units. By leveraging the scale merit of this sales volume we will further enhance the efficiency of our parts procurement activities.

Overview of Motorcycle Business

FY2017

Light Motorcycle110/125cc

ACTIVA 110cc1.9 mil

2.4 milScooter 110cc

3.6mil

Cub 110/125cc2.3 mil

36

Indonesia

Malaysia

Thailand

VietnamIndia

PakistanChina

Japan

Bangladesh

Brazil

Argentine

PeruNigeria

Kenya

ItalyU.S.A

(ATV, S×S)Mexico

Philippines

28%

India19.2 mil

72%

Vietnam3.3 mil

75%

Indonesia5.9 mil

82%

Brazil0.8 mil

80%

Thailand1.8 mil

21%U.S.A (MC+ATV)

0.7 mil

44%

0.4 mil

16%Europe1.1 mil

Motorcycle productionat 35 plants in 21 countries

Motorcycle productionat 35 plants in 21 countries

Annual Production Capacity in India

5.8mil in 2016 6.4mil in 2017

*Market share excluding 50cc

Motorcycle Market Size and Honda Share (CY2017)

37

Thailand

Vietnam

Indonesia

India

Number of motorcycles units in operationPopulation

1,339

264

96

6940%

33%

25%

8%

Significant growth expected

Motorcycle Market Penetration in Asia (millions)

Source: Honda & IMF

0.2mil

Growth in Motorcycle Popularity

Next Markets Growing Markets Mature Markets

1,000

2,000

3,000

4,000

(USD)

India19.2 mil

Indonesia5.9mil

ThailandThailand

VietnamVietnam

Pakistan

Philippines

Bangladesh

Myanmar

GDP per capita 1.8mil

3.3mil

(CY2017)

Kenya

Nigeria

38Source: Honda & United NationsNote: penetration rate is as of 2017

18%

82%

In CY201133%

67%

In CY2017

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

CY2010 2011 2012 2013 2014 2015 2016 2017

Motorcycle Market Share Trend in India

■ Scooter Unit Sales of Honda / Competitors and Honda Share in Scooter Market

SC SC

MCMC

■ Fast Growing Segment Scooter / Motorcycle Sales Ratio (Industry)

0%

10%

20%

30%

40%

50%

60%

70%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

CY2010 2011 2012 2013 2014 2015 2016 2017

Competitors (Unit)

Honda (Unit)

Honda Share(%)

Honda

Honda is now No.2 in market share.

India

Company C

Company A

Company B

Company D

(Wholesale)

39

Hero Honda

1.6 1.6 1.6 1.6 1.6

1.2 1.2 1.2 1.2 1.2

1.2 1.8 1.8 1.8 2.4

1.21.2

CY2013 2014 2015 2016 2017

Expanded annual production capacity to 6.4 mil.

1st

2nd

3rd4.0mil

4.6mil

6.4mil

4.6mil

Capacity Expansion

4th

Manesar

Rajasthan

Karnataka

Gujarat

3rd

2nd

4th

1st

Product Line-up

110cc AT-ScooterActiva

110cc AT-ScooterDio

110cc MotorcycleDream Yuga

125cc MotorcycleCB Shine

India Motorcycle Operations

5.8mil

40

41

Electrification in Motorcycle and Mobile Battery

Introduce PCX ELECTRIC / PCX HYBRID in Japan (2018).

For future expansion of electric motorcycles/scooters: - Utilizing electric commuters, which feature a detachable mobile battery is

under consideration (in collaboration with the Japan Post Co., Ltd.)

- E-KIZUNA project with Saitama-city and Yamaha Motor Co., Ltd. is conducting an experiment involving electric motorcycles and replacement of batteries. EV motorcycle sharing scheme also under consideration.

Removable mobile battery pack and recharging station

PCX Electric Honda Mobile Power Pack

Honda Mobile Power Pack Exchanger Concept

Business Status

Other Topics



Business Strategy


2030 Vision

42


43

2030 Vision

44

2030 Vision

- Focus on three areas: Mobility, Robotics and Energy- Strive to further expand the joy of people by offering products and services- Strive to become No.1 in the areas of the environment and safety

Business Status

Other Topics



Business Strategy


2030 Vision

45


HondaJet

Advanced Technologies- United States (Dec. 2015)- Mexico (Mar. 2016)- Europe (May. 2016)

Certification Received

Sales Units- Delivered 67 units by the end of Dec. 2017- HondaJet was the most-delivered Jet in its category for 2017.- Expanded sales to China, Hong Kong and Macau with

appointment of Honsan General Aviation as HondaJet China.- Signed a Memorandum of Understanding for multiple HondaJets

to upgrade the Wijet fleet, a provider of air taxi services.- Extended sales to India with appointment of Arrow Aircraft

as HondaJet India.

46

- Over-The-Wing Engine Mount (OTWEM) ConfigurationWave drag reduction, maximized fuselage space

- Natural Laminar Flow (NLF) TechnologyAerodynamic drag reduction

- Composite FuselageLight-weight structure

- Advanced CockpitMinimized pilot workload, intuitive operation

The HondaJet is the world’s most advanced light jet. The aircraft is the fastest, highest-flying, most fuel-efficient, and has the most comfortable cabin in its class.

- Canada (Jun. 2017)- Brazil (Aug. 2017)

Internal OutsideDirectors Total

Directors(excluding Audit and SupervisoryCommittee Members)

7 2 9

Directors(serving as Audit and SupervisoryCommittee Members)

2 3 5

Total 9 5 14

The Company with Audit and Supervisory Committee

- For faster decision making, transfer of authority to Executive Council from Board of Directors to resolve most matters

- Board of Directors will focus more on discussions of mid to long term business strategies, as well as strengthening of oversight function

✔

47

External Evaluation on Honda’s Stakeholder Engagement

48

In October 2017, CDP released the results of a survey onclimate change initiatives and reduction of GHG emissions for5,000 major companies worldwide.

Honda received an A- rating, a score at the leadership level,in recognition of activities deemed to be best practices inenvironmental management in the CDP Japan 500 ClimateChange Report 2017, one of those categories.

CDP is an international NPO that provides a global systemfor measuring, disclosing, managing and sharing importantenvironmental information from companies and cities. Companyinitiatives in environmental challenges are evaluated in the fourstages of information disclosure, awareness, management andleadership.

Securing an A- on the CDP Japan 500 Climate Change Report 2017

Honda was selected for the second year running with a BronzeClass rating in the Automobiles sector of the Sustainability Award2017 issued by Switzerland-based RobecoSAM. RobecoSAMevaluates sustainability of approximately 2,500 companiesworldwide in terms of economic, environmental and socialcriteria. Companies deemed to be particularly outstanding ineach sector are rated in categories of Gold Class, Silver Classand Bronze Class each year.

Selected for the Second Straight Year with a BronzeClass Rating in the RobecoSAM Sustainability Index

Honda was selected for the first time as a component of the Dow Jones Sustainability World Index (“DJSI World”). The Dow Jones Sustainability Indices (“DJSI”) serve as one of the key benchmarks for socially responsible investing*.The DJSI are the investment indices developed and offered

cooperatively by the U.S.-based S&P Dow Jones Indices and Switzerland-based RobecoSAM who evaluate sustainability of the world's leading companies in terms of economic, environmental and social criteria and select companies that demonstrate overall excellence for the indices.

Selected for the Dow Jones SustainabilityWorld Index

Honda was selected for the third consecutive year as amember of the Dow Jones Sustainability Asia/Pacific Index.The DJSI are the investment indices developed and offered

cooperatively by the U.S.-based S&P Dow Jones Indices and Switzerland-based RobecoSAM who evaluate sustainability of the world's leading companies in terms of economic, environmental and social criteria and select companies that demonstrate overall excellence for the indices.

Selected for the Dow Jones SustainabilityAsia/Pacific Index

Business Status

Other Topics



Business Strategy


2030 Vision

49


50

616.5

1,059.3

840.7 833.5+ 21.9 - 84.0- 53.7 + 14.7

+ 94.1

Operating Profit

FY17 FY18 FY17 FY18

- 7.1

**

FY17 FY18

Outline of FY18 Results Summary (Consolidated)

Results Summary・Operating profit was 833.5 billion yen, a 7.1 billion yen decrease compared to the same period last year. Excluding FOREX effects, the reverse impact of the pension accounting treatment last fiscal year, the multi-district class action litigation settlement and receipt of restitution, the positive impact from revenue and model mix, cost reduction efforts and other factors resulted in a real-term profit increase of 94.1 billion yen.・Profit for the year attributable to owners of the parent increased to 1,059.3 billion yen, a 71.8% increase compared to last fiscal year, due primarily to an increase in share of profit of investments accounted for using the equity method as well as a 346.1 billion yen positive impact resulting from a revaluation of deferred tax assets and liabilities of subsidiaries following a reduction in the U.S. federal corporate tax rate.

12-month results FY17 and FY18Profit for the year attributable to

owners of the parent

Yen (billion)

CurrencyEffects Litigation

Settlement

Impact ofPension

AccountingTreatment

RestitutionIncome

real-termprofit

increase

*Litigation settlement and restitution income related to airbag inflator

51

FY17 FY18 Change FY17 FY18 Change FY17 FY18 Change

Japan 156 167 + 11 668 696 + 28 301 300 - 1North

America 294 313 + 19 1,970 1,902 - 68 2,977 3,012 + 35Europe 217 234 + 17 184 183 - 1 1,035 1,022 - 13

Asia 15,937 17,720 + 1,783 1,964 2,166 + 202 1,430 1,512 + 82Other

Regions 1,057 1,120 + 63 242 252 + 10 378 416 + 38Total 17,661 19,554 + 1,893 5,028 5,199 + 171 6,121 6,262 + 141

17,66119,554

5,028 5,199 6,121 6,262

FY18

+ 1,893( + 10.7 % )

+ 171( + 3.4 % )

+ 141( + 2.3 % )

FY17 FY18FY17 FY18FY17

Honda Group Unit Sales <FY18 Twelve Months>Unit

(Thousand)Motorcycles Automobiles Power

Products

Financial SummarySales revenue increased by 9.7% primarily due to sales increases in all business operations and positive FOREX effects.

Operating profit decreased by 0.9% due primarily to an increase in SG&A expenses, the multi-district class action litigation settlement and the impact of the pension accounting treatment last fiscal year, despite the positive impact from revenue and model mix and cost reduction efforts.

Financial Results 12 MonthsFY17 FY18 Change

Sales revenue 13,999.2 15,361.1 + 9.7%

Operating profit 840.7 833.5 - 0.9%

Operating margin 6.0% 5.4% - 0.6ptShare of profit of investmentsaccounted for using the equity method 164.7 247.6 + 50.3%

Profit before income taxes 1,006.9 1,114.9 + 10.7%Profit for the yearattributable to owners of the parent 616.5 1,059.3 + 71.8%

Earnings per share attributable to owners of the parent 342.10 590.79 + 248.69

US Dollar 108 111 Yen down by3 yen

*1*1

52

FY18 Financial Results (consolidated)

Yen (billion)

(Yen)

Market average rates (Yen)For *1, please refer to footnotes on page 48

Share of profit of investments accounted for

using the equity method

Sales Revenue Operating Profit Profit before Income Taxes

Profit for the yearattributable to owners

of the parent

FY17 FY18Yen(billion)

1,006.91,114.9

164.7

247.615,361.1

840.7 833.5

616.5

1,059.313,999.2

Honda GroupUnit Sales

4Q Results (3 Months)

FY17 FY18 Change

Motorcycles 4,248 4,747 +11.7%

Automobiles 1,285 1,296 + 0.9%

Power Products 2,218 2,477 + 11.7%

ConsolidatedUnit Sales

4Q Results (3 Months)

FY17 FY18 Change

Motorcycles 2,689 3,167 + 17.8%

Automobiles 960 950 - 1.0%

Power Products 2,218 2,477 + 11.7%

0

1,000

2,000

3,000

4,000

5,000

6,000

0

200

400

600

800

1,000

1,200

1,400

0

500

1,000

1,500

2,000

2,500

3,000

0

1,000

2,000

3,000

4,000

0

200

400

600

800

1,000

4,2484,747

1,2851,296

2,2182,477

2,6893,167

960 950

0

500

1,000

1,500

2,000

2,500

3,000

2,2182,477

Honda Group Unit Sales・Increase in motorcycle unit sales due mainly to sales growth in India, Pakistan and Thailand・Increase in automobile unit sales due mainly to sales growth in China and North Americadespite a decrease in Indonesia

FY18 4th Quarter Unit Sales

53

(thousand)

(thousand)

Motorcycles Automobiles Power Products

Motorcycles Automobiles Power Products

Unit (thousand)Consolidated Unit Sales

Honda Group Unit Sales FY17 FY18

Unit (thousand)

Financial Results4Q Results (3 Months)

FY17 FY18 Change

Sales revenue 3,763.4 3,914.7 + 4.0%

Operating profit 138.1 126.8 - 8.2%

Operating margin 3.7% 3.2% - 0.5ptShare of profit of investmentsaccounted for using the equity method

48.5 57.9 + 19.2%

Profit before income taxes 186.9 190.4 + 1.8%Profit for the periodattributable to owners of the parent 95.9 107.7 + 12.3%

Earnings per shareattributable to owners of the parent 53.24 60.59 + 7.35

US Dollar 114 108 Yen up by 6 yen

0

100

200

300

1Q 2Q 3Q 4Q

FY17FY18 7.7%

7.0%

5.9% 3.7%7.3%

4.1%

7.2%

3.2%0%

2%

4%

6%

8%

10%

1Q 2Q 3Q 4Q

FY17FY18266.8

228.0207.6

138.1

54

269.2

152.9

Financial SummarySales revenue increased by 4% primarily due to sales increases in all business operations.

Operating profit decreased by 8.2% due primarily to an increase in SG&A expenses and negative FOREX effects despite the positive impact from cost reduction efforts and other factors.

Profit for the period attributable to owners of the parent increased by 1.8% due mainly to an increase in share of profit of investments accounted for using the equity method.

284.5

FY18 4th Quarter Financial Results (Consolidated)

Yen (billion)

*1 (Yen)

Market average rates (Yen) *1: Please refer to the footnote on page 48

Operating Profit Yen (billion)Operating Margin

(excl. pension impact 4.4%)

(excl. litigation settlement 5.5%)126.8

4,352 4,538 4,523 4,248 4,699 5,238 4,870 4,747

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Japan 29 33 49 45 42 42 42 41North

America 78 71 68 77 80 83 69 81Europe 72 48 31 66 81 53 39 61

Asia 3,885 4,125 4,115 3,812 4,219 4,804 4,437 4,260Other

Regions 288 261 260 248 277 256 283 304Total 4,352 4,538 4,523 4,248 4,699 5,238 4,870 4,747

+ 499( + 11.7 % )

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

55

＜Asia＞・Increased sales in India, Pakistan and Thailand

Grazia(India)

Motorcycles - Honda Group Unit Sales(Motorcycles, All-Terrain Vehicles, Side-by-Side etc.)

Unit (Thousand)

Japan 146 156 170 196 157 167 174 198North

America 510 479 510 471 481 452 491 478Europe 45 45 43 51 42 43 42 56

Asia 453 482 527 502 523 570 578 495Other

Regions 59 56 62 65 64 60 59 69Total 1,213 1,218 1,312 1,285 1,267 1,292 1,344 1,296

1,213 1,218 1,312 1,285 1,267 1,292 1,344 1,296

0

500

1,000

1,500

56

+ 11( + 0.9 % )

Pilot(U.S.)

＜North America＞・Increased sales of Pilot＜Asia＞・Increased sales of Avancier and UR-V in China・Decreased sales of HR-V in Indonesia

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

Unit (Thousand)

Automobiles - Honda Group Unit Sales

Japan 59 87 54 101 59 79 64 98North

America 769 522 521 1,165 596 545 524 1,347Europe 225 165 190 455 240 166 191 425

Asia 360 376 311 383 362 379 300 471Other

Regions 75 90 99 114 74 89 117 136Total 1,488 1,240 1,175 2,218 1,331 1,258 1,196 2,477

1,488 1,240 1,175

2,218 1,331 1,258 1,196

2,477

0

500

1,000

1,500

2,000

2,500

57

+ 259( + 11.7 % )

＜North America＞・Increased sales of OEM engines＜Asia＞・ Increased sales of OEM engines in China and ThailandGCV160

(Engine)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

Unit (Thousand)

Power Products - Honda Group Unit Sales

186.9 + 4.6+ 4.8 - 17.9 + 14.7

+ 5.3

+ 27.0

190.4- 44.5

OperatingProfit

126.8

－－

Operating Profit - 11.2 ( - 8.2 % )

Profit before Income Taxes + 3.4 ( + 1.8 % )

+ 9.3


58

Change in Profit before Income Taxes <FY18 4th Qtr>

Yen (billion)

Excluding currency effectsand restitution income

- 8.0

OperatingProfit

138.1

Revenue,model mix,

etc.

CostReduction,

etc. Increasein

SG&A

Decreasein

R&D CurrencyEffects

Impact ofPension

AccountingTreatmentIn FY17

LitigationSettlement

Restitution Income

Share of profit of

investmentsaccountedfor using

the equity method

Finance income

and Finance

costs

- Currency Effects- Interest rate swap

/currency swap- Others

+ 4.6

+ 2.7- 2.0 <Increase Factors>

- Cost reduction efforts, etc.<Decrease Factors>- Raw material price increase, etc.

<Decrease Factors>- Increase in warranty, etc.

- JPY / USD- USD / Others(BRL, CAD, MXN)

- JPY / Asian Currencies(INR, THB, VND, CNY, IDR)

- Others

- 12.0+ 5.0

- 1.5

- 9.4FY17 4Q FY18 4Q

**

Profit before Income Taxes + 107.9 ( + 10.7 % )

1,006.91,114.9+ 129.9

+ 70.0 - 78.5- 27.3 + 21.9 + 82.8 + 32.2

Operating Profit - 7.1 ( - 0.9 % )

- 84.0- 53.7 + 14.7

59

Change in Profit before Income Taxes <FY18 Twelve Months>

Excluding currency effects,pension impact,

litigation settlement andrestitution income + 94.1

Yen (billion)

OperatingProfit

840.7

OperatingProfit

833.5- JPY / USD- USD / Others(BRL, CAD, MXN)

- JPY / Asian Currencies(INR, THB, VND, CNY, IDR)

- Others

+ 23.0+ 13.0

+ 24.0

- 38.1

<Increase Factors>- Cost reduction efforts, etc.<Decrease Factors>- Raw material price increase, etc.

FY17 FY18

Revenue,model mix,

etc.

CostReduction,

etc.

Increasein

SG&AIncrease

inR&D

CurrencyEffects Impact of

PensionAccountingTreatmentIn FY17

LitigationSettlement

Share of profit of

investmentsaccountedfor using

the equity method

Finance income

and finance

costs

Restitution Income

- Currency Effects- Interest rate swap

/currency swap- Others

+ 7.5

+ 19.6+ 5.1

**


( + 43.7 % )

31.159.5

41.8 38.1

78.8 68.5 64.8 54.8

7.2%

14.5%

10.0% 8.4%

15.5%13.4% 13.0%

10.5%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

0


(Consolidated Unit Sales)

4,352(2,831)

4,538(3,042)

4,523(2,675)

4,248(2,689)

4,699(3,245)

5,238(3,446)

4,870(3,096)

4,747(3,167)

Sales Revenue 432.4 409.3 420.6 453.7 508.5 510.1 499.1 520.9( + 14.8 % )

FY17 FY181Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

60

等

Motorcycle Business Sales Revenue/Operating Profit (Margin)

Unit (thousand)Yen (billion)

+ 67.1 (Currency effect - 8.1)Yen

(billion)Operating Profit

Operating Margin

＜Increase Factors＞・Positive impact from sales volume

and model mix, etc.

(excl. pension impact ：12.9%)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

184.5131.8 129.8

54.9140.3

39.2

167.4

26.7

7.3% 5.5%5.0%

2.0%5.3% 1.5% 5.8%

0.9%

-20%

-10%

0%

10%

0

61



1,213(908)

1,218(890)

1,312(925)

1,285(960)

1,267(900)

1,292(907)

1,344(932)

1,296(950)

Sales Revenue 2,536.1 2,377.4 2,596.4 2,746.7 2,624.5 2,693.0 2,901.4 2,826.1

( - 51.3 % )

FY17 FY181Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

( + 2.9 % )+ 79.4 (Currency effect - 59.5)

＜Decrease Factors＞・Increase in SG&A expenses

incl. warranty, etc.

Automobile Business Sales Revenue/Operating Profit (Margin)


Yen (billion)

Operating Profit

Operating Margin

(excl. pension impact ：2.4%)

(excl. litigationsettlement ：3.4%)

0.5

-1.0

-6.3

-2.7 0.1

- 2.0 1.5

-3.00.7%

-1.4%

-7.9%

-2.4%

0.2%

-2.3%

1.7%

-2.8%

-10%

-5%

0%

5%

10%

-10

Operating profitfromaircraft and aircraft engines

- 8.8 - 10.6 - 12.3 - 12.0 - 8.5 - 13.6 - 8.0 - 11.5

*

62



1,488(1,488)

1,240(1,240)

1,175(1,175)

2,218(2,218)

1,331(1,331)

1,258(1,258)

1,196(1,196)

2,477(2,477)

Sales Revenue 80.9 73.5 80.3 114.8 83.1 87.8 93.4 106.7

FY17 FY181Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

( - 7.1 % )

Power Product & Other Businesses Sales Revenue/Operating Profit (Margin)


Yen (billion)Operating Profit

Operating Margin

(excl. pension impact ：- 4.4%)

*Honda Group Unit Sales and Consolidated Unit Sales include only power product units- 8.1 (Currency effect - 0)

＜Decrease Factors＞・Negative impact from sales volume

and model mix, etc.

(For reference)

50.537.7 42.3 47.7 49.8 47.2 50.7 48.2

10.8%8.5% 9.3% 9.2% 9.2% 8.8% 9.6% 9.1%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

63

Total Assets of Finance

Subsidiaries8,538.3 8,440.3 9,643.3 9,437.0 9,494.4 9,688.7 9,867.1 9,409.2

Sales Revenue 467.9 446.3 455.7 521.1 539.6 539.5 527.1 530.8

FY17 FY181Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

( + 1.9 % )+ 9.7 (Currency effect - 22.2)

( + 1.1 % )

Financial Services BusinessTotal Assets/Sales Revenue/Operating Profit (Margin)

Yen (billion)

Operating Profit

Operating Margin

<Increase Factors>Increase in operating lease revenues, etc.

Yen (billion)

Motorcycle Business

Automobile Business

Power Product and Other Businesses

Financial Services Business

FY17Twelve Months

FY18Twelve Months

FY17Twelve Months

FY18Twelve Months

FY17Twelve Months

FY18Twelve Months

FY17Twelve Months

FY18Twelve Months


(Consolidated Unit Sales

17,661 19,554 5,028 5,199 6,121 6,262 －－(11,237) (12,954) (3,683) (3,689) (6,121) (6,262) (－) (－)

Sales Revenue 1,716.1 2,038.7 10,256.6 11,045.2 349.6 371.1 1,891.2 2,137.2

-100

0

100

200

300

400

500

600

+ 56.4 % + 9.9 %

( 4.9 % )

( - 2.8 % ) ( 9.4 % )( - 0.9 % ) ( 9.2 % )

( 3.4 % )( 13.1 % )

- 25.4 %

64

( 9.9 % )

FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

170.7267.0

501.1373.8

- 9.6 - 3.3 178.4 196.0

Sales Revenue/Operating Profit (Margin) by Business Segment <FY18 Twelve Months >

Yen (billion)Unit (thousand)

Operating Profit : Yen (billion) Operating Margin : (%)

-41.8

105.5

15.4

67.7

2.0

-32.2

71.4 4.0

83.3 9.3

-50

0

50

100

150

Japan North America Europe Asia Other

RegionsFY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18

4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q

Sales Revenue 1,076.9 1,239.3 2,134.0 2,148.6 257.3 277.3 946.3 1,038.0 199.8 218.8

FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY184Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q

+ 23.0 %- 32.3 % - 73.5 % + 361.5 %

Sales Revenue/Operating Profit by Geographical Segment <FY18 4th Qtr>

65

Japan North America Europe Asia Other

RegionsFY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Twelve Months

Sales Revenue 4,113.4 4,480.6 8,098.0 8,584.6 789.3 917.2 3,456.0 4,221.0 733.4 837.5

FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18Twelve Months

TwelveMonths

Twelve Months

TwelveMonths

Twelve Months

TwelveMonths

Twelve Months

TwelveMonths

Twelve Months

TwelveMonths

0

50

100

150

200

250

300

350

400

450

- 16.9 % - 30.2 % + 21.5 % + 51.1 %

66

+ 30.8 %

104.5 86.9

398.7

278.4

12.1 15.8

331.4402.6

29.0 43.8

Sales Revenue/Operating Profit (Margin) by Geographical Segment <FY18 Twelve months>

Yen (billion)

incl. pension impact

84.0（profit）

incl. litigation settlement 53.7（loss）

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY17 FY18

27.239.8 49.1 48.5 52.9

82.2

54.5 57.9

0

20

40

60

80

100

From Asia 39.3 36.2 40.8 43.8 46.3 57.9 47.0 55.8

+ 9.3( + 19.2 % )

67

Share of Profit of InvestmentsAccounted for Using the Equity Method

Yen (billion)

Yen (billion)

68

+ 1,149.4 - 589.3- 369.0

- 43.32,002.5 2,150.1

Net Change + 147.6Free cash flow+ 560.1

Net Cash1,678.1

Net Cash1,524.8

+ 1,079.3 - 511.4- 231.2

- 1.11,666.8

2,002.5

Net Cash1,524.8Net Cash

1,171.5

Net Change + 335.6

Capital expendituresIntangible assetsOther

Dividends paidOthers

- 493.7

- 139.9

+ 122.2

- 162.2- 69.0

Free cash flow+ 567.9

Cash Flows of Non-financial Services Businesses

FY17 Twelve Months

FY18 Twelve Months

Cash flows fromoperating activities

Cash flows from investing activities Cash flows from

financing activitiesEffect of exchange

rate changes

Cash & Cash equivalentsat end of period

Profit before income taxes + 828.9Share of profit of investment accounted for using the equity method - 164.7Depreciation* + 671.4Other - 256.2Cash & Cash equivalents

at beginning of FY17

Yen (billion)

Cash flows fromoperating activities

Cash flows from investing activities

Cash flows from financing activities

Effect of exchange rate changes

Cash & Cash equivalentsat end of period

Cash & Cash equivalentsat beginning of FY18

Profit before income taxes + 898.4Share of profit of investment accounted for using the equity method - 247.6Depreciation* + 709.3Other - 210.6

Capital expendituresIntangible assetsOther

- 415.3

- 154.8

- 19.0

Dividends paidOthers

- 174.2- 194.8

* Depreciation, amortization and impairment losses excluding equipment on operating leases

FY18 Forecast: Capital Expenditures, Depreciation and R&D

0%

2%

4%

6%

8%

0

200

400

600

800

FY12 13 14 15 16 17 18 19P0%

2%

4%

6%

8%

0

200

400

600

800

FY12 13 14 15 16 17 18 19P0%

2%

4%

6%

8%

0

200

400

600

800

FY12 13 14 15 16 17 18 19P

Capital Expenditures Depreciation

Amounts % against Sales

US GAAP IFRS US GAAP IFRS US GAAP IFRS

R&D Expenditures

FY18Results

FY19Forecast

Change

Capitalexpenditures * 433.8 480.0 + 46.2

Depreciation andamortization * 467.3 455.0 - 12.3

Research and developmentexpenditures **

730.7 790.0 + 59.2

* Capital expenditures as well as Depreciation in results and forecast aforementioned exclude investment in operating leases, finance leases andintangible 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 Statements of Income.

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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 statements 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 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 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 inincreases/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.

Unit sales:Motorcycle BusinessHonda Group Unit Sales is the total unit sales of completed products, including motorcycles, ATVs, and Side-by-Side 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.Automobile BusinessHonda 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.Power Product BusinessesHonda 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 since no affiliate and joint venture accounted for using the equity method was involved in the sale of Honda power products. 70

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