According to Automotive News, due to the rather arcane laws of accounting, these new costs will actually be applied to the fiscal year that ended on March 31, rather than the current one. Honda's revised earnings will be announced in late June. The company previously reported an operating profit of 651.7 billion yen ($5.3 billion), which was down 13 percent from the previous year. There has been no change to planned dividends for investors.
In the US, Honda and Acura have a total of about 6.28 million vehicles in need of a replacement airbag inflator, and the automaker says about two million of those are already repaired. In addition to the Takata campaign, the company has faced other financial setbacks during this calendar year. For example, in early January, it received a $70 million fine from the National Highway Traffic Safety Administration for failing to report 1,729 cases of injuries or deaths over 11 years.
As part of a strategy to improve quality globally, Honda cut back its global sales forecasts for the coming year, and it also decided not to make any volume predictions through 2017.
From: Honda Motor Co., Ltd.
1-1, Minami-Aoyama 2-chome, Minato-ku, 107-8556 Tokyo
President and Representative Director
Notice of Events after the Reporting Period Regarding Product Warranty Expenses
Honda Motor Co., Ltd. (the "Company") and its consolidated subsidiaries have been conducting market-based measures in relation to airbag inflators, such as product recalls and a Safety Improvement Campaign. Due to factors arising since May 2015 such as an expansion of the scope of these market-based measures based on an agreement between our supplier and the U.S. National Highway Traffic Safety Administration, a change has arisen in the estimate relating to product warranty expenses. The amount of product warranty expenses now expected to be incurred is 44,800 million yen.
Because these expenses arose subsequent to the date of the accounting audit firm's audit report (May 8, 2015) for the audit required under the Company Law, the event does not constitute an "adjusting event after the reporting period" that would require adjustment of the consolidated or unconsolidated financial accounts, so the event will not be reflected in the consolidated and unconsolidated financial accounts for the fiscal year ended March 31, 2015.
Regarding the consolidated financial statements (based on IFRS) for the fiscal year ended March 31, 2015 to be included in the annual securities report required under the Financial Instruments and Financial Exchange Law (to be submitted to the Financial Services Agency of Japan) and Form 20-F (to be submitted to the U.S. Securities and Exchange Commission) that are scheduled to be submitted in late June 2015, because the event occurred before the date on which the financial statements were authorized for issue, the event will be reflected as an adjusting event in such consolidated financial statements.
Further, regarding the summary of consolidated financial results for the fiscal year ended March 31, 2015 (based on U.S. GAAP) announced on April 28, 2015, the event will be reflected as an adjusting event, and the adjusted summary consolidated financial results will be announced in late June 2015, on the same day as the submission of the annual securities report.
Please note that there will be no change to the planned year-end cash dividends (22 yen per share) for the fiscal year ended March 31, 2015. Also, there will be no change resulting from the above mentioned event to the consolidated financial forecasts (based on IFRS) or the unconsolidated financial forecasts for the fiscal year ending March 31, 2016, or the expected total cash dividends (88 yen per share) for the fiscal year ending March 31, 2016, which were announced on April 28, 2015.