HMC Harmonic Inc

Honda Motor Co., Ltd. Reports Consolidated Financial Results For the Fiscal Fourth Quarter and the Fiscal Year Ended March 31, 2005 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, 2005. Fourth Quarter Results Honda's consolidated net income for the fiscal fourth quarter ended March 31, 2005 totaled JPY 94.0 billion (USD 876 million), an increase of 26.9% from the corresponding period in 2004. Basic net income per Common Share for the quarter amounted to JPY 101.43 (USD 0.94), compared to JPY 78.47, an increase of 29.3% from the corresponding period in 2004. Two of Honda's American Depositary Shares represent one Common Share. Consolidated net sales and other operating revenue (herein referred to as "revenue") for the quarter amounted to JPY 2,349.5 billion (USD 21,879 million), an increase of 9.5% over the corresponding period in 2004. Revenue included a negative effect of currency translation, caused by translation 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 corresponding period in 2004, revenue for the quarter would have increased by approximately 10.8%. Consolidated operating income for the fiscal fourth quarter totaled JPY 140.3 billion (USD 1,307 million), an increase of 24.3% compared to the corresponding period in 2004. This increase in operating income was primarily due to increased profit from higher revenue, continuing cost reduction effects and decrease in selling, general and administrative (SG&A) expenses, which offset the negative impact of, for example, depreciation of the U.S. dollar and an increase in research and development (R&D) expenses. Consolidated income before income taxes for the quarter totaled JPY 129.1 billion (USD 1,203 million), an increase of 21.3% from the corresponding period in 2004. Business Segment With respect to Honda's sales in the fiscal fourth quarter by business category, motorcycle unit sales increased by 3.7% from the corresponding period in 2004 to 2,716 thousand units. Of them, unit sales in Japan decreased 9.7% to 93 thousand units, and overseas unit sales increased 4.2% to 2,623 thousand units, due mainly to increased unit sales of parts for local production at affiliates in Indonesia, and favorable sales in Thailand and the Philippines, as well as strong sales in Other regions, such as Brazil. Revenue from sales to unaffiliated customers increased 10.5%, to JPY 325.7 billion (USD 3,033 million), due mainly to increased unit sales in Asia and Latin America, offsetting the negative currency translation effects. Operating income decreased by 2.0% to JPY 26.9 billion (USD 251 million), due mainly to the depreciation of the U.S. dollar and an increase in SG&A expenses, which offset the positive impact of increased profit from higher revenue. Honda's unit sales of automobiles increased by 8.3% from the corresponding period in 2004 to 859 thousand units, due to increased overseas unit sales. In Japan, unit sales of automobiles decreased 7.1% to 195 thousand units and overseas unit sales increased 13.9% to 664 thousand units. Strong sales in the U.S. as a result of attractive models, such as the Acura RL and the Odyssey, and increased unit sales of parts for local production in China were the major contributing factors for this increase in overseas unit sales. Revenue from sales to unaffiliated customers increased 10.4%, to JPY 1,870.0 billion (USD 17,413 million) during the quarter, due to increased unit sales and improved model mix in North America, offsetting the negative currency translation effects and decreased sales incentive. Operating income increased 57.9% to JPY 90.5 billion (USD 844 million) due mainly to increased profit from higher revenue, ongoing cost reduction effects and decrease in quality-related expenses, which offset the negative impact of depreciation of the U.S. dollar. Revenue from sales to unaffiliated customers in financial services increased 12.2% to JPY 64.6 billion (USD 602 million), due to the growth of the automobile business in North America. Operating income decreased 23.2% to JPY 18.1 billion (USD 169 million), due primarily to increased funding costs. Unit sales of power products in Japan totaled 117 thousand units, a decrease by 4.9%. Overseas unit sales was 1,667 thousand units and total unit sales of power products were 1,784 thousand units, which was almost same level as corresponding period in 2004. Revenue from sales to unaffiliated customers in power product and other businesses decreased by 9.2% to JPY 89.1 billion (USD 830 million), due mainly to changes in the model mix in power product business. Operating income increased 5.5% to JPY 4.6 billion (USD 43 million), due mainly to improved profit in other businesses, offsetting the negative currency effects. Geographic Segment With respect to Honda's sales for the fourth quarter by geographic segment, in Japan, revenue for exports and domestic sales was JPY 1,093.3 billion (USD 10,181 million), up by 1.1% compared to the corresponding period in 2004, due primarily to increased unit sales for exports in the motorcycle and automobile businesses, although domestic automobile sales decreased. Operating income in Japan was JPY 50.6 billion (USD 471 million), down by 43.3%, due primarily to the negative impact of depreciation of the U.S. dollar, and increases in SG&A and R&D expenses, which offset the positive impact of increased profit coming from higher revenue and ongoing cost reduction effects. In North America, revenue increased by 14.6% from the previous year to JPY 1,284.2 billion (USD 11,959 million), due mainly to increased unit sales in motorcycle and automobile businesses, offsetting the negative impact of the currency translation effects. Operating income in North America increased by JPY 62.9 billion, an increase of 587.0% to JPY 73.6 billion (USD 686 million) from the corresponding period of the previous year, due primarily to the positive impact of increased profit from higher sales and decrease in quality-related expenses, offsetting the negative currency effect of depreciation of the U.S. dollar. In Europe, revenue for the quarter decreased by 1.9% to JPY 284.6 billion (USD 2,651 million) compared to the corresponding period of the previous year, due primarily to decreased unit sales for exports in the automobile business, offsetting the positive impact of increased unit sales for the domestic market in automobile and power product businesses. Operating income in Europe increased by 71.3% to JPY 11.6 billion (USD 108 million), due mainly to positive currency effects caused by the appreciation of the Euro and ongoing cost reduction effects. In Asia, revenue increased by 17.0% to JPY 239.5 billion (USD 2,231 million) from the corresponding period of the previous year, due mainly to increases in unit sales in the motorcycle, automobile and power product businesses. Operating income decreased by 26.8% to JPY 7.0 billion (USD 65 million) from the corresponding period of the previous year, due mainly to temporary factors, such as start-up expenses for the export plant in China, offsetting the positive impact of increased profit from higher revenue. In Other regions, unit sales increased in motorcycle and automobile businesses, and revenue for the fourth quarter increased by 42.3% to JPY 132.6 billion (USD 1,235 million) compared to the corresponding period of the previous year. An increased unit sale in Latin America was a major contributing factor to an increase in revenue. Operating income increased by 5.6% from the corresponding period of the previous year to JPY 4.6 billion (USD 43 million), due mainly to increased profit from higher revenue. Fiscal Year Results Honda's consolidated net income for the year ended March 31, 2005 totaled JPY 486.1 billion (USD 4,527 million), an increase of 4.7% from the previous year. Basic net income per Common Share for the year amounted to JPY 520.68 (USD 4.85), compared to JPY 486.91 for the previous year. Consolidated net sales and other operating revenue for the year amounted to JPY 8,650.1 billion (USD 80,549 million), an increase of 6.0% from the previous year. Revenue included a negative effect of currency translation caused by translation 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 previous year, revenue for the year would have increased by approximately 8.8%. Unit sales in all of Honda's business categories, motorcycle, automobile and power product businesses increased during the year, and consolidated operating income for the year totaled JPY 630.9 billion (USD 5,875 million), an increase of 5.1% compared to the previous year. This increase in operating income was primarily due to the positive impact of increased profit from higher revenue and ongoing cost reduction effects, which offset negative currency effects of depreciation of the U.S. dollar, and increases in SG&A and R&D expenses. Consolidated income before income taxes for the year totaled JPY 656.8 billion (USD 6,116 million), an increase of 2.3% compared to the previous year. Business Segment With respect to Honda's sales for the year by business category, motorcycle unit sales increased 13.9% to 10,482 thousand units. Of them, unit sales in Japan decreased 6.2% to 378 thousand units, while overseas unit sales increased 14.8% to 10,104 thousand, due mainly to strong sales in Asia, such as Indonesia and India. Revenue from sales to unaffiliated customers increased 10.2% to JPY 1,097.7 billion (USD 10,222 million), due primarily to increased unit sales in Asia, offsetting negative currency translation effects. Operating income increased 63.4% to JPY 69.3 billion (USD 646 million), due mainly to increased profit from higher revenue and ongoing cost reduction effects, which offset the negative currency effects of depreciation of the U.S. dollar. Unit sales related to automobiles for the year increased by 8.7% to 3,242 thousands units. In Japan, unit sales of automobiles was 712 thousand units, almost the same level as the previous year, and overseas unit sales increased 11.6% to 2,530 thousand units, due mainly to increased unit sales of parts for local production in China, and increased sales in Europe and North America. Revenue from sales to unaffiliated customers increased 5.6% to JPY 6,963.6 billion (USD 64,844 million), due mainly to increased unit sales in Asia and Europe, and improved model mixes in domestic automobile business, offsetting the negative currency translation effects. Operating income increased 3.1% to JPY 452.3 billion (USD 4,213 million), due mainly to the positive impact of increased profit from higher revenue and cost reduction effects, offsetting the negative impact of depreciation of the U.S. dollar and increased sales incentive expenses. Revenue from sales to unaffiliated customers in financial services increased 5.4% to JPY 255.7 billion (USD 2,381 million), due to an increased finance-subsidiaries receivables from growth of businesses. Operating income decreased 17.1% to JPY 89.9 billion (USD 837 million), due mainly to increased funding costs. Unit sales of power products totaled 5,300 thousand units, an increase of 5.0% compared to the previous year. Of them, unit sales in Japan totaled 432 thousand units, decreased by 9.4%, and overseas unit sales increased 6.5% to 4,868 thousand units, mainly as a result of increased unit sales in North America and Asia. Revenue from sales to unaffiliated customers increased by 0.4% to JPY 332.9 billion (USD 3,101 million), due mainly to increased unit sales in power product business in North America and Asia. Operating income increased 85.9% to JPY 19.3 billion (USD 180 million), due to increased profit from higher revenue in power product business and an increased profit in other businesses, offsetting the negative currency effect of depreciation of the U.S. dollar. Geographic Segment With respect to Honda's sales for the year by geographic segment, in Japan, revenue was JPY 4,138.9 billion (USD 38,541 million), up by 5.3% from the previous year, due mainly to increased export sales in motorcycle and automobile businesses. Operating income in Japan was JPY 184.8 billion (USD 1,722 million), down by 3.9% from the previous year, due primarily to the negative currency impact caused by depreciation of the U.S. dollar, and increases in SG&A and R&D expenses, which offset the positive impact of increased profit from higher revenue and cost reduction effects. In North America, revenue increased by 0.7% from the previous year to JPY 4,705.5 billion (USD 43,817 million), due mainly to increased unit sales in the automobile and power product businesses, which offset the negative currency translation effects. Operating income in North America increased by 3.5% to JPY 321.1 billion (USD 2,991 million) from the previous year, due primarily to increased profit coming from higher revenue and an decrease in quality-related expenses, which offset the negative currency impact of depreciation of the U.S. dollar and increased sales incentive expenses. In Europe, revenue for the year increased by 10.0% to JPY 1,043.0 billion (USD 9,713 million) compared to the previous year, due mainly to increased unit sales in the motorcycle, automobile and power product businesses, and the positive impact of currency translation effects. Operating income in Europe increased by 59.6% to JPY 41.2 billion (USD 384 million), due mainly to the positive currency impact caused by appreciation of the Euro, increased profit from higher revenue and cost reduction effects. In Asia, revenue increased by 22.2% to JPY 860.5 billion (USD 8,013 million) from the previous year, due primarily to increased unit sales in all business segments, namely motorcycle, automobile and power product businesses, offsetting the negative currency translation effect. Operating income also increased by 35.9% to JPY 60.6 billion (USD 565 million) from the previous year, due to increased profit from higher revenue, which offset the negative impact of an increase in SG&A. Revenue from Other regions for the year increased by 33.8% to JPY 465.9 billion (USD 4,339 million) compared to the previous year, due primarily to increased unit sales in the motorcycle, automobile and power product businesses in Latin America, offsetting the negative currency translation effect. Operating income increased by 39.5% to JPY 33.1 billion (USD 309 million) from the previous year, due mainly to increased profit coming from higher revenue. Forecasts for the fiscal year ending March 31, 2006 The global economy, driven primarily by the U.S. and Asian economies, is expected to grow steadily, but the pace of growth is anticipated to slowdown. Also, the global management environment still lacks transparency because of global political and economic uncertainty, fluctuations in oil prices, and currency movements. In Japan, the economic recovery has become more moderate, and weak consumer spending is anticipated to continue. As a result, competition in the Japanese market is expected to intensify. Under such circumstances, in regard to the forecasts of the financial results for the fiscal year ending March 31, 2006, Honda projects consolidated results to be as shown below: First half ending September 30, 2005 Yen (billions) Changes from FY 2005 Net sales and other operating revenue 4,560 +9.4% Operating income 295 -11.4% Income before income taxes 280 -17.6% Net income 205 -15.1% Fiscal year ending March 31, 2006 Yen (billions) Changes from FY 2005 Net sales and other operating revenue 9,300 +7.5% Operating income 650 +3.0% Income before income taxes 615 -6.4% Net income 450 -7.4% 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, 2005 will be JPY 105 and JPY 135, respectively, and for the full year ending March 31, 2006, JPY 105 and JPY 135, respectively. Dividend per Share of Common Stock for the fiscal year ending March 31, 2006 For the year ending March 31, 2006, the Company plans to increase the interim cash dividend by 9 yen to JPY 37 per share. It also projects that the year-end cash dividend will be JPY 37 per share. As a result, total cash dividends for the year ending March 31, 2006 are expected to be JPY 74 per share, an increase of 9 yen per share from that for the year ended March 31, 2005. This announcement contains forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934. Honda's actual results could materially differ from those contained in these forward-looking statements as a result of numerous factors outside of Honda's control. Such factors include general economic conditions in Honda's principal markets, and foreign exchange rates between the Japanese yen and other major currencies, as well as other factors detailed from time to time in Honda's reports filed with the U.S. Securities and Exchange Commission. DATASOURCE: Honda Motor Co., Ltd. CONTACT: Tetsuo Oshima, +1-212-355-9191, x.16 for Honda Motor Co., Ltd.

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