Honda released their earnings report for FY07 and the 4th quarter today, and while FY07 operating income increased by 11.9%, the results in the 4th quarter of FY07 were off 32.5% from the year-earlier period. Factors blamed for the decline include the current subprime loan situation, higher than normal North American vehicle incentives, currency issues, and increased raw material costs.

Furthermore, Honda is forecasting an overall decline of 31.8% for FY08, despite a slight increase (1.1%) in forecast sales. This bulk of this decline is attributed to currency effects of an expected further devaluation of the dollar vs. the yen.

See the Consolidated Financial Summary here

See the full presentation here

Press release follows:

Consolidated Financial Summary for the Fiscal Year Ended March 31, 2008 & Forecasts for the Fiscal Year Ending March 31, 2009 -- Achieved all-time record for consolidated revenue, operating income, income before income taxes, equity in income of affiliates, net income, and basic net income per common share, with increased income in all business areas -- TOKYO, Japan, April 25, 2008 - Honda Motor Co., Ltd. announced that in the fiscal year ended March 31, 2008, it achieved an all-time record for consolidated net sales and other operating revenue (herein referred to as "revenue") for the eighth consecutive fiscal year which amounted to JPY 12,002.8 billion (+8.3%) due to increased sales revenue in all business areas. Consolidated operating income, which amounted to JPY 953.1 billion (+11.9%), also increased to achieve an all-time record for the first time in two years, due to increased profit from higher revenues, cost reduction efforts, and the positive effect of currency exchange rates. This result was achieved despite an increase in incentives in North America, the impact of increased raw material costs, and increases in selling, general and administrative (SG&A) expenses and research and development (R&D) expenses. Honda also achieved all-time record results for income before income taxes which totalled JPY 895.8 billion (+13.0%) , equity in income of affiliates which totalled JPY 118.9 billion (+15.0%), and net income which totalled JPY 600.0 billion (+1.3%). Honda plans for a year-end cash dividend of JPY 22 per share. Combined with the fiscal first quarter dividend of JPY 20, the fiscal second quarter dividend of JPY 22 and the fiscal third quarter dividend of JPY 22, the total cash dividend to be paid for the entire fiscal year is expected to be JPY 86 per share, which is an increase of JPY 19 compared to the previous fiscal year. Details of consolidated unit sales: (The total includes fully finished products made by Honda and its subsidiaries as well as unit sales of fully finished products and parts produced locally by affiliates accounted for under the equity method.) Motorcycles: 9.32 million units (-10.1%); Though sales increased in some regions such as South America, consolidated unit sales decreased due mainly to decreased sales in North America, Europe and Asia. (Unit sales of approximately 4.58 million units of Honda-brand motorcycle products are not included in the total listed above, in conformity with U.S. generally accepted accounting principles, because they are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its consolidated subsidiaries.) Automobiles: 3.925 million units (+7.5%); the increase was due to increased sales in markets outside of Japan, especially in North America, Europe and Asia. Power Products: 6.057 million units (-5.7%); the decrease was due mainly to decreased sales in North America. Consolidated revenue increased in all business areas and totalled JPY 12,002.8 billion (+8.3%), an all-time record for the eighth consecutive year. Consolidated operating income increased for the first time in two years and totalled JPY 953.1billion (+11.9%), setting an all-time record. This result was due to increased profit from higher revenues, cost reduction efforts, and the positive currency effects, which offset an increase in incentives in North America, the impact of increasing raw material costs, and increases in SG&A expenses and R&D expenses. Income before income taxes increased for the first time in two years and totalled JPY895.8 billion (+13.0%), setting an all-time record. Equity in income of affiliates totalled JPY 118.9 billion (+15.0%), achieving an eighth consecutive all-time record due mainly to the increased income of affiliates in Asia. Consolidated net income increased for the first time in two years and totalled JPY 600.0 billion (+1.3%), setting an all-time record, despite an increase in corporate income tax. Results for the fourth quarter (January - March 2008) Consolidated revenue for the fiscal fourth quarter totalled JPY 3,055.5 billion (-1.0%). Consolidated operating income for the period was JPY 168.8 billion (-32.5%), consolidated income before income taxes was JPY 146.8 billion (-38.6%), equity in income of affiliates was JPY 24.3 billion (+22.1%). Consolidated net income totalled JPY25.4 billion (-85.6%) due partly to an increase in corporate income tax. Forecasts for the Fiscal Year Ending March 31, 2009 Honda is planning for unit sales totals of 10.62 million motorcycles (+13.9%), 4.14 million automobiles (+5.5%), and 6.155 million power products (+1.6%). (Unit sales of approximately 4.72 million units of Honda-brand motorcycle products are not included in this total, in conformity with U.S. generally accepted accounting principles, because they are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its consolidated subsidiaries.) Honda will conduct its business operations based on the goals described in the following chart with assumption of the average currency exchange rate of JPY 100 = U.S. dollar 1 and JPY 155 = Euro 1 for the entire year. Yen (billions) For the year ending March 31, 2009, Honda plans for a quarterly cash dividend of JPY 22 per share. As a result, total cash dividends for the year ending March 31, 2009 are expected to increase JPY 2 to JPY 88.

Last edited by JeffX on April 25, 2008 21:53