Honda Motor Company, Ltd. (HMC)

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Honda Motor Co., Ltd. (HMC)

F3Q13 Earnings Call

January 31, 2013 12:00 am ET

Presentation

Unidentified Company Representative

Welcome to the Honda Financial Results Audio Presentation. On January 31, 2013, Honda Motor Company announced its financial results for the fiscal third quarter, which ended on December 31, 2012. Through this audio presentation, we would like to review the financial results and highlight the major factors, which influenced Honda’s business operations during the period.

The presentation material which will serve as the basis for today’s program is available on Honda’s Investor Relations website at http://world.honda.com/investors/. For those of you, who have not yet downloaded the material; please do so now, as we will start immediately following a forward-looking statement.

This audio presentation 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 which is currently available.

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. The various factors for increases and decreases in income have been classified in accordance with a method that Honda considers reasonable.

Before explaining the results, we would like to briefly review the global business environment during the past quarter. The automobile industry in the U.S. continued strong growth through the quarter, and was boosted by demand for replacement vehicles, following the destruction caused by Hurricane Sandy in late October. Sales slowed in Japan following the end of the Eco Car incentives program.

While the sales slow down in Europe continued into the fourth quarter though performance was slightly better than the previous quarter. Sales in Asia were mixed with the strong rebound in the ASEAN Region led by a recovery in Thailand, while sales in China continue to rise, but out of much more moderate phase. In the Motorcycle segment, sales rose in Asia led by increasing demand for scooters in India that were at a more moderate pace than the previous quarter.

Due to the introduction of stricter consumer credit regulations related to down payment requirements, sales volume contracted in Indonesia for the second consecutive quarter. Demand was down in Brazil due to limited credit availability and sales in Vietnam were relatively flat compared to the previous year. We would now like to review the financial summary for the third quarter, which ended on January 31, 2012.

Please refer to Slide 4. Honda realized a major recovery in automobile production and sales, predominately in North America and Asia. Motorcycle sales also rose in Asia, but there was a decline in sales in the other regions category primarily in Brazil. For power product operations, sales rose in North America, Asia and other regions.

With respect to group unit sales, strong growth in the motorcycle markets in India and Thailand resulted in a total of 3,815,000 units, an increase of 5.7% compared to the same period last year, despite a slowdown in Indonesia and Vietnam within Asia, and a decline in Brazil within other regions.

Regarding the Automobile segment results were mixed with strong growth in North America, Asia and other regions. The group sales total of 986,000 units represents an increase of 25.9% compared to the third quarter of last year. Power product operations recorded strong unit sales in North America, Asia and other region's markets, resulting, in a rise to 1,195,000 units up 17% from the same period the previous year.

Financial highlights for the third quarter. Revenue totaled JPY2,425.7 billion, a rise of 24.9%. Operating income amounted to JPY131.9 billion an increase of JPY87.6 billion or a rise of 197.8% compared to the same period last year. This was mainly due to a strong recovery following the Thai flooding last year increased revenue from automobile operations, led primarily by new model introductions in North America as well as increases realized as a result of currency fluctuations.

Income before taxes totaled JPY89.7 billion. Equity and income of affiliates totaled JPY21.4 billion, a decrease of 6.5% from the same period last year. Net income attributable to Honda Motor totaled JPY77.4 billion an increase of 62.5% compared to the same period last year.

EPS was JPY42.97, a JPY16.52 increase from the same period last year. With respect to ForEx during the period, the Japanese Yen depreciated against both the U.S. dollar and the Euro. The average Yen exchange rate was JPY81 to the U.S. dollar of JPY4 difference from the same period last year. The Euro average was JPY106 per Euro a JPY1 difference compared to the same period last year.

Operating income analysis. Next, we would like to provide you with more details related to our fiscal results. Please turn to Slide 9. Due predominately to a sharp increase in automobile sales, as well as slight gains in motorcycle and power product revenue in addition to a positive impact from currency fluctuation our total revenue reached JPY2,425.7 billion. In the chart adjacent to the graph, details of the fiscal quarter by business segment are highlighted.

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