• Apr 28, 2011



Honda has announced earnings of $545 million for its fiscal fourth quarter, down 38 percent versus last year and less than half of analysts' $1.15 billion expectation. Honda's profit drop comes as the automaker brought in $27 billion in sales, down 2.9 percent from last year's fourth quarter.

Honda's results were weighed down by the March 11 earthquake and tsunami that derailed most March production in Japan. The automaker's Japan sales dropped 22 percent on the quarter, but a 7.9 percent sales increase in North America helped make up for most of the losses in its home country. Overall sales were down 1.6 percent to 860,000 units.

The earthquake reportedly cost Honda $560 million for the quarter, but the long-term effects could be far greater. The Japanese automaker doesn't expect production to return to normal until the end of the year, which could have devastating consequences for sales and profits. Frighteningly, Automotive News reports that Yuuki Sakurai, president of Fukoku Capital Management, says that even as production comes back sales may not, adding "May sales, June sales may be close to zero as the companies won't have much to sell."

The fourth quarter may have fallen short of expectations, but for the year Honda more than doubled its profits to $6.57 billion. Check out Honda's official press release after the jump.

[Sources: Honda, Automotive News – sub. req. | Image: Zach Bowman/AOL]



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Honda Motor Co., Ltd. Reports Consolidated Financial Results For the Fiscal Fourth Quarter and The Fiscal Year Ended March 31, 2011

TOKYO, April 28, 2011 /PRNewswire/ -- Honda Motor Co., Ltd. (NYSE: HMC) today announced its consolidated financial results for the fiscal fourth quarter and the fiscal year ended March 31, 2011.

Fourth Quarter Results

Honda's consolidated net income attributable to Honda Motor Co., Ltd. for the fiscal fourth quarter ended March 31, 2011 totaled JPY 44.5 billion (USD 536 million), a decrease of 38.3% from the same period last year. Basic net income attributable to Honda Motor Co., Ltd. per common share for the quarter amounted to JPY 24.72 (USD 0.30), a decrease of JPY 15.06 from JPY 39.78 for the corresponding period last year. One Honda American Depository Share represents one common share.

Consolidated net sales and other operating revenue (herein referred to as "revenue") for the quarter amounted to JPY 2,213.0 billion (USD 26,616 million), a decrease of 2.9.

Consolidated operating income for the quarter amounted to JPY 46.2 billion (USD 556 million), a decrease of 51.9% from the same period last year, due primarily to increased SG&A expenses, unfavorable foreign currency effects, and impact of the Great East Japan Earthquake occurred on March 11, 2011 (the "Earthquake") despite continuing cost reduction efforts, decreased R&D expenses, increased sales volume and model mix and operating income related to licensing agreements.

Consolidated income before income taxes and equity in income of affiliates for the quarter totaled JPY 76.6 billion (USD 921 million), a decrease of 18.1% from the same period last year, despite non-operating income related to dissolution of the joint venture.

Equity in income of affiliates amounted to JPY 25.0 billion (USD 301 million) for the quarter, an increase of 4.7 % from the corresponding period last year.

-- United States dollar amounts have been translated from yen solely for the convenience of the reader at the rate of JPY 83.15=U.S.$1, the mean of the telegraphic transfer selling exchange rate and the telegraphic transfer buying exchange rate prevailing on the Tokyo foreign exchange market on March 31, 2011.

-- Impact of the Great East Japan Earthquake occurred on March 11, 2011 on the Company's consolidated financial position or results of operations;

On March 11, 2011, Japan experienced a large earthquake commonly referred to as the Great East Japan Earthquake, which caused damage to certain of property, plant and equipment and inventory, and temporary suspension of production of the Company's plants and research and development activities of the Company and its domestic consolidated subsidiaries.

As a result, the Company and its domestic consolidated subsidiaries recognized JPY 45,720 million of losses, of which JPY 17,450 million is included in cost of sales and JPY 28,270 million is included in selling, general and administrative in the accompanying consolidated statement of income for the year ended March 31, 2011. The losses mainly consist of unallocated fixed production overhead of JPY 15,062 million which is included in cost of sales, and loss on damaged property, plant and equipment of JPY 15,647 million which is included in selling, general and administrative.

The Company and its domestic consolidated subsidiaries did not recognize the costs of future restoration activities expected to be incurred in the next fiscal year in the current year consolidated financial statements.

-- Dissolution of the joint venture and licensing agreements;

On March 22, 2011, Honda sold all of its investments in Hero Honda Motors Ltd. (HHML) with book value of JPY 34,275 million, which represented 26.0% of HHML's total outstanding shares, to its joint venture partner at JPY 71,073 million for the dissolution of the joint venture. In addition, Honda and HHML have signed a new licensing agreement which enables HHML to continue producing, selling and servicing its current products. Consideration for the licensing agreement was JPY 45,000 million, and becomes due through 2014.

Total consideration received less interest portion, including the fair value attributable to the termination of certain obligations under the joint venture agreement, is allocated to each element using the relative selling price method in accordance with FASB ASC 605 "Revenue Recognition". As a result, the Company recognized revenue of JPY 32,015 million related to the licensing agreement in Net sales and other operating revenue, and gain on sale of the investments of JPY 46,756 million in Other income (expense) – Other, net.

Transaction prices were determined through negotiation based on the estimate by management of Honda after considering economic rationality.

With respect to Honda's sales for the fiscal fourth quarter by business segment, motorcycle unit sales totaled 2,934 thousand units, an increase of 12.8, to JPY 353.1 billion (USD 4,247 million), from the same period last year, due mainly to increased unit sales and revenue related to licensing agreements, despite the unfavorable currency translation effects. Operating income totaled to JPY 48.1 billion (USD 579 million), an increase of 71.8% from the same period last year, due primarily to increased unit sales and model mix and operating income related to licensing agreements, despite increased SG&A expenses and unfavorable foreign currency effects.

*Of the net sales of Honda-brand motorcycle products that are manufactured and sold by overseas affiliates accounted for under the equity method, those with respect to which parts for manufacturing were not supplied from Honda or its subsidiaries are not included in net sales and other operating revenue, in conformity with U.S. generally accepted accounting principles. Accordingly, these unit sales are not included in the financial results. Sales of such products amounted to approximately 1,810 thousand units for the period.

Honda's automobile unit sales totaled 860 thousand units**, a decrease of 1.6, to JPY 1,645.3 billion (USD 19,788 million), from the same period last year, due mainly to unfavorable currency translation effects. Honda reported an operating loss of JPY 39.1 billion (USD 471 million), a deterioration of JPY 63.1 billion from the same period last year, due primarily to increased SG&A expenses, unfavorable foreign currency effects and the impact of the Earthquake, despite continuing cost reduction efforts and decreased R&D expenses.

**Certain sales of automobiles that are financed with residual value type auto loans by our domestic finance subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles. As a result, they are not included in total sales of our automobile segment or in our measure of unit sales.

Revenue from customers in the financial services business decreased 6.8 to JPY 39.6 billion (USD 476 million) from the same period last year due mainly to the unfavorable foreign currency effects, despite the decreased allowance for losses on credit and lease residual values.

Honda's power product unit sales totaled 1,746 thousand units, an increase of 7.1, to JPY 80.0 billion (USD 963 million), from the same period last year, due mainly to increased unit sales in power products, despite unfavorable currency translation effects. Honda reported an operating loss of JPY 2.3 billion (USD 28 million), an improvement of JPY 0.7 billion from the same period last year, primarily due to continuing cost reduction efforts and increased sales volume and model mix of power products, despite increased SG&A expenses.

Fiscal Year Results

Honda's consolidated net income attributable to Honda Motor Co., Ltd. for the fiscal year ended March 31, 2011 totaled JPY 534.0 billion (USD 6,423 million), an increase of 99.0% from the previous fiscal year. Basic net income attributable to Honda Motor Co., Ltd. per common share for the fiscal year amounted to JPY 295.67 (USD 3.56), an increase of JPY 147.76 from JPY 147.91 for the previous fiscal year.

Consolidated revenue for the period amounted to JPY 8,936.8 billion (USD 107,479 million), an increase of 4.2.

Consolidated operating income for the period totaled JPY 569.7 billion (USD 6,852 million), an increase of 56.6% from the previous fiscal year, due primarily to increased sales volume and model mix, decrease in fixed costs as volume of production increase and continuing cost reduction efforts, despite increased SG&A expenses and R&D expenses, the unfavorable foreign currency effects, and the impact of the Earthquake.

Consolidated income before income taxes and equity in income of affiliates for the period totaled JPY 630.5 billion (USD 7,583 million), an increase of 87.6% from the previous fiscal year due mainly to increased operating income and the non-operating income related to the dissolution of the joint venture.

Equity in income of affiliates amounted to JPY 139.7 billion (USD 1,681 million) for the period, an increase of 49.8% from the previous fiscal year.

Forecasts for the Fiscal Year Ending March 31, 2011

The Company is currently unable to reasonably calculate forecasts of the consolidated financial results for the fiscal six months ending September 30, 2011, or for the fiscal year ending March 31, 2012, due to the impact of the Great East Japan Earthquake that occurred on March 11, 2011.

Therefore, the Company will release the forecasts of the consolidated financial results for the fiscal six months ending September 30, 2011 and for the fiscal year ending March 31, 2012 as soon as they become available.

Profit Redistribution Policy and Dividend per Share of Common Stock for fiscal years 2011

The Company strives to carry out its operations worldwide from a global perspective and to increase its corporate value. With respect to the redistribution of profits to our shareholders, which we consider to be one of the most important management issues, the Company's basic policy for dividends is to make distributions after taking into account its long-term consolidated earnings performance.

The Company will also acquire its own shares at the optimal timing with the goal of improving efficiency of the Company's capital structure and implementing a flexible capital policy. The present goal is to maintain a shareholders return ratio (i.e. the ratio of the total of the dividend payment and the repurchase of the Company's own shares to net income attributable to Honda Motor Co., Ltd.) of approximately 30%. Retained earnings will be allocated toward financing R&D activities that are essential for the future growth of the Company and capital expenditures and investment programs that will expand its operations for the purpose of improving business results and strengthening the Company's financial condition.

The Company plans to distribute year-end cash dividends of JPY 15 per share for the year ended March 31, 2011. As a result, total cash dividends for the year ended March 31, 2011, together with the first quarter cash dividends of JPY 12, the second quarter cash dividends of JPY 12 and the third quarter cash dividends of JPY 15, are planned to be JPY 54 per share, an increase of JPY 16 per share from the annual dividends paid for the year ended March 31, 2010.

Also, please note that the year-end cash dividends for the year ended March 31, 2011 is a matter to be resolved at the general meeting of shareholders.

The dividend forecast for the fiscal year ending March 31, 2012 is not determined, as the Company is currently unable to reasonably calculate forecasts of the consolidated financial results for the fiscal year ending March 31, 2012, due to the impact of the Great East Japan Earthquake that occurred on March 11, 2011.

This announcement 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 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 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.


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    • 1 Second Ago
  • 44 Comments
      DCI Gene Shunt
      • 3 Years Ago
      So would this be a good time for me to try to buy a Fit or not? Serious here. I'm digging the cargo capacity & price.
        poopoohead100
        • 3 Years Ago
        @DCI Gene Shunt
        I would buy one soonish, before a new gen Fit comes out. If the new Civic is any indication (softer suspension, slower steering), it sounds like Honda is softening its cars and moving away from their driver's car reputation. So get one while they're still fun to drive. My older brother has one with a 5M, and it's great.
          • 3 Years Ago
          @poopoohead100
          [blocked]
          DCI Gene Shunt
          • 3 Years Ago
          @poopoohead100
          Dealer told me(havent verified yet) that once the Fits run out, no new inventory until Jan. 8 months to get a radioactive Fit? ehh
          poopoohead100
          • 3 Years Ago
          @poopoohead100
          Si competes in a different segment. People cross-shop Si with GTI, MS3, etc, but not with Corolla, Elantra, Cruze, Focus. If Honda softens the Civic, what non-performance trim compact car combines the same proven reliability and driver engagement?
      harlanx6
      • 3 Years Ago
      More is expected from Honda. Like Toyota, they have been complacent. It's time for the attack of the turbo diesels. The Asians are vulnerable. The Germans are coming. U S makers still don't get it.
        Ferris Macau
        • 3 Years Ago
        @harlanx6
        Honda is a sitting duck, Odyssey is good, nothing else. Their 'hybrids' FAILED miserably. If Hyundai/KIA come strong with a mini van and Optima gains traction Honda is done.
          • 3 Years Ago
          @Ferris Macau
          [blocked]
          NightFlight
          • 3 Years Ago
          @Ferris Macau
          The IMA system is a weak link, good thing there is V2.0 on the way.
        NightFlight
        • 3 Years Ago
        @harlanx6
        The Japanese, Honda and Toyota specifically are focusing on hybrid technologies. It seems that the GENERAL PUBLIC here in America (not us enthusiasts) are much more interested in hybrids than they are diesels. Being an enthusiast, I want the diesels though. We just have to accept that we are in the minority, especially since diesel has a higher cost than regular gasoline here in North America.
          Ferris Macau
          • 3 Years Ago
          @NightFlight
          yep, diesels are the way to go, but USA is all about image people drive Hybrids so they appear to be 'saving the world', behind closed doors they pollute and waste as much as everyone else
        Ferris Macau
        • 3 Years Ago
        @harlanx6
        Honda was caught off guard during the Toyota recalls, they could've gobbled up market share but they were either inefficient (insight) or heavy (everything else). It was like stealing candy from a baby as far as Ford and Hyundai was concerned.
          • 3 Years Ago
          @Ferris Macau
          [blocked]
      Tony
      • 3 Years Ago
      You don't say? But Honda has such a diverse and interesting product line... Where's that sarcasm font?
        • 3 Years Ago
        @Tony
        [blocked]
      • 3 Years Ago
      [blocked]
      Rick
      • 3 Years Ago
      I suck at economics, so as I understand it; they lost their ass and only made $545mil for the 4th quarter but had 6.5bil for the year. So for quarters 1-3 they averaged 2.25 bil? I don't see how 1 bad month (March) in a quarter would cut the quarter profits in half. That sounds to me like the numbers were on a down trend before the tsunami hit. I wonder if it's also related to better designs coming out from competitors.
        • 3 Years Ago
        @Rick
        [blocked]
      Glenn
      • 3 Years Ago
      So which is it, go back to the cars they used to build. Or RWD?
        Mel @ aWingThing.COm
        • 3 Years Ago
        @Glenn
        I think they could have an equal amount of both. I think Hyundai is proving that. They aren't selling the Gen Coupe to set sales numbers. They are selling it because it helps the brand image and reaches a certain client. Honda on the other hand seems intent on not trying to compete in any growing segment and is happy just releasing the sale old vehicles generation after generation. And with a portfolio that includes the Crosstour, TL, CRZ, and Insight, that isn't winning any new customers over. Both Honda and Acura are just ok with catering to their diehard loyalists. I love that they are leaving in droves and going to Kia and Hyundai that are actually shaking things up.
          NightFlight
          • 3 Years Ago
          @Mel @ aWingThing.COm
          I guess you missed that the Crosstour is actually selling well, sales of the CR-Z and TL are up. A refreshed Insight is on the way, with IMA V2.0. It helps when you read the actual figures instead of coming to your own conclusions based on what you think. Fact > Opinion
          drcmelr
          • 3 Years Ago
          @Mel @ aWingThing.COm
          I guess you missed the part that damn near every review, from damn near every web and print publication talks about how god awful it looks and is compared constantly to the Aztek. People buy Honda's because of loyalty and dependability, not the styling. That doesn't excuse them for the horrid styling.
      50 AKA Ferrari
      • 3 Years Ago
      If ever there was a time to post for the first time on this website. This is it: I owned an S2000 and my engine blew with no mods at 100k. That experience alone and how I was treated at the dealerships etc over the course of ownership turned me off by Honda. The dealership experience is just soooo bad and then their entire lineup is just not good/compelling. In order for Honda to sell well: 1. Clean up dealership experience: I feel like I'm being taken advantage of in sales and in service nobody cares. 2. Create a sports car that gets GOOD gas mileage, fun to drive, WITH torque. 3. Fix the styling of the cars. 4. Compete with your competitors...stop trying to ignore what Nissan, Toyota, Hyundai etc are doing but they are eating up your market share. 5. HIRE ME because I'll clean this mess up for you personally. I'll do it for $1 and um... a new NSX & s2000
        • 3 Years Ago
        @50 AKA Ferrari
        [blocked]
        NightFlight
        • 3 Years Ago
        @50 AKA Ferrari
        Just out of curiousity, what was the cause of the engine failure in your S2000? I know two people who track/autocross 100,000+ mile S2K nearly every single weekend and they've never had a mechanical issue to speak of. One of them has 130,000 miles and is almost a dedicated track vehicle.
      r67bennett
      • 3 Years Ago
      Another official proof that HYUNDAI has leapfrogged Honda .
        NightFlight
        • 3 Years Ago
        @r67bennett
        Hyundai is a much, MUCH larger company that Honda is. This wasn't surprising and you thinking it is "proof" is a bit silly especially seeing that the earthquake and nuclear diaster played a big part in this.
      chromal
      • 3 Years Ago
      They're dead to me because they don't make a manual hatchback civic that handles on asphalt and dirt well. So I still have my 6th gen as a 2nd car and a mazda3 as a 1st.
      tipdrip215
      • 3 Years Ago
      Looks like people are finally figuring out how OVERRATED Hondurrr is. My two cents on what it would take to bring some excitement back to the H in a square and A in a circle: 1. Three letters. RWD. There is no substitute when going for sportiness, no matter how much their brass believes otherwise. And I wish they would stop sugar coating the fact that the Pilot, MDX, and Ridgeline are just Odysseys made to look tougher. Same lame 3.5, wrong-wheel-drive, and chassis underpinnings. 2. V8s. If they don't want to turn Honda into a jack-of-all-trades lineup like Nissan and Toyota (i.e. body-on-frame trucks and SUV's, a full line of crossovers), or don't have the finances to do so, fine by me. But at least give Acura a RL which can compete directly with the LS and Infiniti M's of the world, which means V8 power and RWD or longitudinal AWD, not this front-bias SH-AWD hogwash. 3. If they ever want Acura to be taken seriously in the luxury market, then they need to quit being cheap and building guzzied up Accord chassis variants. Build some stuff based on its own chassis. 4. It seems that lately anything that hasn't been designed too conservatively (new Civic, Accord) by Honda and Acura has been butt ugly (Acura's universal beak front end, Crosstour/ZDX, Element, Insight Prius-wannabe, Pilot wanting to look tougher but isn't tougher.) 5. Killing off the last real exciting Honda, the S2000, and the return of excitement with the new S2000/NSX/V8s/RWD 6. CRZ looks good, but just hasn't brought the promised excitement other than being the first hybrid since the original insight to offer 3 pedals and a H pattern. I could go on, but Honda has proven they don't care what we the buyers think.
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