HONDA MOTOR CO., LTD. AND SUBSIDIARIES Condensed ...

HONDA MOTOR CO., LTD. AND SUBSIDIARIES Condensed Consolidated Interim Financial Statements

June 30, 2019

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Results

Overview of Operating Performance

Honda's consolidated sales revenue for the three months ended June 30, 2019 decreased by 0.7%, to ?3,996.2 billion from the same period last year, due mainly to decreased sales revenue in Automobile business, Motorcycle business, Life creation and other businesses operations as well as negative foreign currency effects, which was partially offset by increased sales revenue in Financial services business operations. Operating profit decreased by 15.7%, to ?252.4 billion from the same period last year, due mainly to increased selling, general and administrative expenses, a decrease in profit attributable to decreased sales revenue and model mix as well as negative foreign currency effects, which was partially offset by continuing cost reduction. Profit before income taxes decreased by 19.1%, to 289.8 billion from the same period last year. Profit for the period attributable to owners of the parent decreased by 29.5%, to ?172.3 billion from the same period last year.

Business Segments Motorcycle Business For the three months ended June 30, 2018 and 2019

Motorcycle Business Japan North America Europe Asia Other Regions

Honda Group Unit Sales*

Three months Three months

ended

ended

Jun. 30, 2018 Jun. 30, 2019 Change

5,352

4,921 (431)

49

51

2

72

74

2

80

84

4

4,840

4,378 (462)

311

334

23

Units (thousands)

Consolidated Unit Sales*

Three months Three months

ended

ended

%

Jun. 30, 2018 Jun. 30, 2019 Change

(8.1)

3,615

3,264 (351)

4.1

49

51

2

2.8

72

74

2

5.0

80

84

4

(9.5)

3,103

2,721 (382)

7.4

311

334

23

%

(9.7) 4.1 2.8 5.0 (12.3) 7.4

* Honda Group Unit Sales is the total unit sales of completed motorcycle, ATV and side-by-side 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.

Sales revenue from external customers decreased by 3.9%, to ?533.0 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 24.2%, to ?69.8 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix as well as increased selling, general and administrative expenses, which was partially offset by continuing cost reduction.

Automobile Business For the three months ended June 30, 2018 and 2019

Automobile Business Japan North America Europe Asia Other Regions

Honda Group Unit Sales*

Three months Three months

ended

ended

Jun. 30, 2018 Jun. 30, 2019 Change

1,305

1,321

16

162

181

19

518

495 (23)

42

34

(8)

520

554

34

63

57

(6)

Units (thousands)

Consolidated Unit Sales*

Three months Three months

ended

ended

%

Jun. 30, 2018 Jun. 30, 2019 Change

1.2

952

905 (47)

11.7

145

161

16

(4.4)

518

495 (23)

(19.0)

42

34

(8)

6.5

184

158 (26)

(9.5)

63

57

(6)

%

(4.9) 11.0 (4.4) (19.0) (14.1) (9.5)

* Honda 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.

Sales revenue from external customers decreased by 3.7%, to ?2,694.4 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 20.6%, to ?120.3 billion from the same period last year, due mainly to increased selling, general and administrative expenses as well as a decrease in profit attributable to decreased sale volume and model mix, which was partially offset by continuing cost reduction.

Financial Services Business

Sales revenue from external customers increased by 16.7%, to ?688.4 billion from the same period last year, due mainly to an increase in revenues on disposition of lease vehicles and operating lease revenues. Operating profit increased by 15.0%, to ?65.7 billion from the same period last year, due mainly to an increase in profit attributable to increased sales revenue.

Life Creation and Other Businesses For the three months ended June 30, 2018 and 2019

Life Creation Business Japan North America Europe Asia Other Regions

Units (thousands)

Honda Group Unit Sales / Consolidated Unit Sales*

Three months Three months

ended

ended

Jun. 30, 2018

Jun. 30, 2019

Change

%

1,341

1,280

(61)

(4.5)

72

74

2

2.8

575

605

30

5.2

229

198

(31) (13.5)

395

347

(48) (12.2)

70

56

(14) (20.0)

* Honda 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 Life creation 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 were involved in the sale of Honda power products.

Sales revenue from external customers decreased by 2.0%, to ?80.3 billion from the same period last year, due mainly to decreased consolidated unit sales in Life creation business. Operating loss was ?3.5 billion, an increase of ?1.9 billion from the same period last year, due mainly a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses. In addition, operating loss of aircraft and aircraft engines included in the Life creation and other businesses was ?9.1 billion, an improvement of ?0.8 billion from the same period last year.

Cash Flows Consolidated cash and cash equivalents on June 30, 2019 decreased by ?102.9 billion from March 31, 2019, to ?2,391.1 billion. The reasons for

the increases or decreases for each cash flow activity, when compared with the same period last year, are as follows:

Net cash provided by operating activities amounted to ?195.5 billion of cash inflows. Cash inflows from operating activities decreased by ?18.8 billion from the same period last year, due mainly to increased payments for parts and raw materials, which was partially offset by decreased payment of income taxes.

Net cash used in investing activities amounted to ?168.1 billion of cash outflows. Cash outflows from investing activities decreased by ?75.8 billion from the same period last year, due mainly to decreased payments for acquisitions of other financial assets, which was partially offset by a decrease in proceeds from sales and redemptions of other financial assets.

Net cash used in financing activities amounted to ?83.8 billion of cash outflows. Cash outflows from financing activities increased by ?23.4 billion from the same period last year, due mainly to an increase in repayments of financing liabilities, which was partially offset by an increase in proceeds from financing liabilities.

Research and Development The changes in research and development activities by Honda and its subsidiaries for the three months ended June 30, 2019 are as follows:

Honda and the motorcycle development division of Honda R&D Co., Ltd. were integrated with an aim to transition from the current structure where sales, development, manufacturing and procurement divisions operate independently to a new structure where each process of planning and concept making, development, launch and mass-production of a new product are coordinated closely.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES Condensed Consolidated Statements of Financial Position

March 31, 2019 and June 30, 2019

Current assets: Cash and cash equivalents Trade receivables Receivables from financial services Other financial assets Inventories Other current assets

Total current assets

Non-current assets: Investments accounted for using the equity method Receivables from financial services Other financial assets Equipment on operating leases Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets

Total non-current assets

Total assets

Assets

Liabilities and Equity

Current liabilities: Trade payables Financing liabilities Accrued expenses Other financial liabilities Income taxes payable Provisions Other current liabilities Total current liabilities

Non-current liabilities: Financing liabilities Other financial liabilities Retirement benefit liabilities Provisions Deferred tax liabilities Other non-current liabilities Total non-current liabilities

Total liabilities Equity:

Common stock Capital surplus Treasury stock Retained earnings Other components of equity

Equity attributable to owners of the parent Non-controlling interests Total equity Total liabilities and equity

Note

Yen (millions)

March 31,

June 30,

2019

2019

unaudited

unaudited

? 2,494,121 793,245

1,951,633 163,274

1,586,787 358,234

7,347,294

? 2,391,188 771,359

1,892,869 151,895

1,559,036 350,061

7,116,408

713,039

736,942

3,453,617 3,385,135

417,149

432,848

5 4,448,849 4,408,620

6 2,981,840 3,132,937

744,368

754,026

150,318

149,801

162,648

189,985

13,071,828 13,190,294

?20,419,122 ?20,306,702

Note

Yen (millions)

March 31,

June 30,

2019

2019

unaudited

unaudited

? 1,184,882 ? 1,054,752

3,188,782 3,001,424

476,300

442,990

132,910

188,300

49,726

57,503

7

348,763

311,324

599,761

572,437

5,981,124 5,628,730

4,142,338 4,171,839

63,689

301,018

398,803

407,055

7

220,745

231,858

727,411

732,074

319,222

322,469

5,872,208 6,166,313

11,853,332 11,795,043

86,067 171,460 (177,827) 7,973,637 214,383

8,267,720 298,070

8,565,790

?20,419,122

86,067 171,538 (177,751) 8,096,826

70,360

8,247,040 264,619

8,511,659

?20,306,702

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended June 30, 2018 and 2019

Sales revenue

Operating costs and expenses: Cost of sales Selling, general and administrative Research and development

Total operating costs and expenses Operating profit Share of profit of investments accounted for using the equity method

Finance income and finance costs: Interest income Interest expense Other, net

Total finance income and finance costs Profit before income taxes

Income tax expense Profit for the period

Profit for the period attributable to: Owners of the parent Non-controlling interests

Yen (millions)

June 30,

June 30,

Note

2018

2019

unaudited

unaudited

8 ? 4,024,133 ? 3,996,253

(3,162,696) (371,656) (190,398)

(3,724,750) 299,383 54,302

(3,166,483) (407,449) (169,852)

(3,743,784) 252,469 44,230

11,913 (2,963) (4,353) 4,597 358,282

14,195 (3,595) (17,488) (6,888) 289,811

(91,560) (100,219) ? 266,722 ? 189,592

244,330 22,392

172,302 17,290

Earnings per share attributable to owners of the parent Basic and diluted

Yen

June 30,

June 30,

2018

2019

11 ? 137.75 ? 97.92

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2018 and 2019

Profit for the period

Yen (millions)

June 30,

June 30,

Note

2018

2019

unaudited

unaudited

? 266,722 ? 189,592

Other comprehensive income, net of tax: Items that will not be reclassified to profit or loss Remeasurements of defined benefit plans Net changes in revaluation of financial assets measured at fair value through other comprehensive income Share of other comprehensive income of investments accounted for using the equity method Items that may be reclassified subsequently to profit or loss Net changes in revaluation of financial assets measured at fair value through other comprehensive income Exchange differences on translating foreign operations Share of other comprehensive income of investments accounted for using the equity method

Total other comprehensive income, net of tax

Comprehensive income for the period

Comprehensive income for the period attributable to: Owners of the parent Non-controlling interests

-- 124 (1,284)

-- (6,348)

(825)

(1)

110

71,534 (129,218)

(13,841)

(14,259)

56,532 (150,540)

? 323,254 ? 39,052

302,588 20,666

28,277 10,775

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES Condensed Consolidated Statements of Changes in Equity

For the three months ended June 30, 2018 and 2019

Balance as of April 1, 2018 (unaudited) Effect of changes in accounting policy

Adjusted balance as of April 1, 2018

Comprehensive income for the period Profit for the period Other comprehensive income, net of tax

Total comprehensive income for the period Reclassification to retained earnings Transactions with owners and other

Dividends paid Purchases of treasury stock

Total transactions with owners and other

Balance as of June 30, 2018 (unaudited)

Note

Common stock

? 86,067

86,067

Yen (millions)

Equity attributable to owners of the parent

Capital Treasury surplus stock

Retained earnings

Other components

of equity

?171,118 ?(113,271) ?7,611,332 ? 178,292

(46,833)

(208)

171,118 (113,271) 7,564,499

178,084

Total ?7,933,538

(47,041) 7,886,497

Non-controlling interests

?

300,557

6

300,563

Total equity ?8,234,095

(47,035)

8,187,060

244,330

244,330 80

58,258

58,258 (80)

244,330 58,258

302,588 --

22,392 (1,726)

20,666

266,722 56,532

323,254 --

12

(48,013)

(48,013)

(43,441)

(43,441)

(43,441) (48,013)

(91,454)

? 86,067 ?171,118 ?(156,712) ?7,760,896 ? 236,262 ?8,097,631 ?

(51,861)

(51,861) 269,368

(99,874) (43,441) (143,315) ?8,366,999

Balance as of April 1, 2019 (unaudited)

Comprehensive income for the period Profit for the period Other comprehensive income, net of tax

Total comprehensive income for the period Reclassification to retained earnings Transactions with owners and other

Dividends paid Purchases of treasury stock Disposal of treasury stock Share-based payment transactions

Total transactions with owners and other

Other changes

Balance as of June 30, 2019 (unaudited)

Note

Common stock

? 86,067

Yen (millions) Equity attributable to owners of the parent

Other Capital Treasury Retained components surplus stock earnings of equity ?171,460 ?(177,827) ?7,973,637 ? 214,383

Total ?8,267,720

Non-controlling

interests

?

298,070

Total equity ?8,565,790

172,302

172,302 (2)

(144,025)

(144,025) 2

172,302 (144,025)

28,277 --

17,290 (6,515)

10,775

189,592 (150,540)

39,052 --

12

(49,287)

(3)

79

78

78

76

(49,287)

176

? 86,067 ?171,538 ?(177,751) ?8,096,826 ?

70,360

(49,287) (3) 79 78

(49,133)

176

?8,247,040 ?

(44,226)

(44,226) 264,619

(93,513) (3) 79 78

(93,359)

176

?8,511,659

See accompanying notes to condensed consolidated interim financial statements.

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