Form 6-K
Table of Contents

No.1-7628

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF AUGUST 2018

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒    Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


Table of Contents

Contents

Exhibit 1:

On July 31, 2018, Honda Motor Co., Ltd. (the “Company”) announced its consolidated financial results for the fiscal first quarter ended June 30, 2018.


Table of Contents

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(HONDA MOTOR CO., LTD.)

/s/ Eiji Fujimura

Eiji Fujimura
General Manager
Finance Division
Honda Motor Co., Ltd.

Date: August 3, 2018


Table of Contents

July 31, 2018

HONDA MOTOR CO., LTD. REPORTS

CONSOLIDATED FINANCIAL RESULTS

FOR THE FISCAL FIRST QUARTER

ENDED JUNE 30, 2018

Tokyo, July 31, 2018 — Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal first quarter ended June 30, 2018.

First Quarter Results

Honda’s consolidated profit for the period attributable to owners of the parent for the fiscal first quarter ended June 30, 2018 totaled JPY 244.3 billion, an increase of 17.8% from the same period last year. Earnings per share attributable to owners of the parent for the quarter amounted to JPY 137.75, an increase of JPY 22.71 from the corresponding period last year. One Honda American Depository Share represents one common share.

Consolidated sales revenue for the quarter amounted to JPY 4,024.1 billion, an increase of 8.4% from the same period last year, due primarily to increased revenue in all business operations.

Consolidated operating profit for the quarter amounted to JPY 299.3 billion, an increase of 11.2% from the same period last year, due primarily to an increase in sale volume and model mix and decreased SG&A expenses.

Share of profit of investments accounted for using the equity method for the quarter amounted to JPY 54.3 billion, an increase of 2.6% from the corresponding period last year.

Consolidated profit before income taxes for the quarter totaled JPY 358.2 billion, an increase of 6.9% from the same period last year.

 

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Table of Contents

Consolidated Statements of Financial Position for the Fiscal First Quarter Ended June 30, 2018

Total assets increased by JPY 302.6 billion, to JPY 19,651.8 billion from March 31, 2018, mainly due to an increase in receivables from financial services and foreign currency translation effects, despite a decrease in cash and cash equivalents. Total liabilities increased by JPY 169.7 billion, to JPY 11,284.8 billion from March 31, 2018, mainly due to an increase in finance liabilities and foreign currency translation effects, despite a decrease in trade payable. Total equity increased by JPY 132.9 billion, to JPY 8,366.9 billion from March 31, 2018 due mainly to increased retained earnings attributable to increased profit for the period, despite a decrease attributable to acquisition of the Company’s own shares.

Consolidated Statements of Cash Flows for the Fiscal First Quarter Ended June 30, 2018

Consolidated cash and cash equivalents on June 30, 2018 decreased by JPY 89.3 billion from March 31, 2018, to JPY 2,167.1 billion.

The reasons for the increases or decreases for each cash flow activity, when compared with the same period of the previous fiscal year, are as follows:

Cash flows from operating activities

Net cash provided by operating activities amounted to JPY 214.4 billion for the fiscal first quarter ended June 30, 2018. Cash inflows from operating activities increased by JPY 37.8 billion compared with the same period of the previous fiscal year due mainly to an increase in cash received from customers, despite increased payments for parts and raw materials.

Cash flows from investing activities

Net cash used in investing activities amounted to JPY 243.9 billion. Cash outflows from investing activities increased by JPY 65.1 billion compared with the same period of the previous fiscal year, due mainly to an increase in payments for acquisitions of other financial assets.

Cash flows from financing activities

Net cash used in financing activities amounted to JPY 60.3 billion. Cash outflows from financing activities decreased by JPY 28.1 billion compared with the same period of the previous fiscal year, due mainly to an increase in proceeds from financing liabilities, despite purchases of treasury stock.

 

—2—


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Forecasts for the Fiscal Year Ending March 31, 2019

In regard to the forecasts of the financial results for the fiscal year ending March 31, 2019, Honda projects consolidated results to be as shown below:

Fiscal year ending March 31, 2019

 

     Yen (billions)      Changes from FY 2018  

Sales revenue

     15,450.0        + 0.6

Operating profit

     710.0        - 14.8

Profit before income taxes

     930.0        - 16.6

Profit for the year

     685.0        - 39.3

Profit for the year attributable to owners of the parent

     615.0        - 41.9
     Yen         

Earnings per share attributable to owners of the parent

     

Basic and diluted

     348.56     

Note: The forecasts are based on the assumption that the average exchange rates for the Japanese yen to the U.S. dollar will be JPY 107 for the full year ending March 31, 2019.

The reasons for the increases or decreases in the forecasts of the operating profit, and profit before income taxes for the fiscal year ending March 31, 2019 from the previous year are as follows.

 

     Yen (billions)  

Revenue, model mix, etc.

     + 9.5  

Cost reduction, the effect of raw material cost fluctuations, etc.

     + 88.0  

SG&A expenses

     - 33.0  

R&D expenses

     - 22.0  

Currency effect

     - 205.0  

Settlement of multidistrict class action litigation*

     + 53.7  

Restitution income*

     - 14.7  
  

 

 

 

Operating profit compared with fiscal year ended March 31, 2018

     - 123.5  
  

 

 

 

Share of profit of investments accounted for using the equity method

     - 32.6  

Finance income and finance costs

     - 28.7  
  

 

 

 

Profit before income taxes compared with fiscal year ended March 31, 2018

     - 184.9  
  

 

 

 

* Litigation settlement and restitution income related to airbag inflator included in SG&A expenses in fiscal year 2018

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 the actual results of the Company could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in the principal markets of the Company, its consolidated subsidiaries and its affiliates accounted for by the equity-method, and fluctuation of foreign exchange rates, as well as other factors detailed from time to time. The various factors for increases and decreases in profit have been classified in accordance with a method that Honda considers reasonable.

 

—3—


Table of Contents

Dividend per Share of Common Stock

Fiscal first quarter dividend is JPY 27 per share of common stock. The total expected annual dividend per share of common stock for the fiscal year ending March 31, 2019, is JPY 108 per share.

 

—4—


Table of Contents

[1] Condensed Consolidated Statements of Financial Position

 

     Yen (millions)  
     Mar. 31, 2018     Jun. 30, 2018  

Assets

    

Current assets:

    

Cash and cash equivalents

     2,256,488       2,167,105  

Trade receivables

     800,463       737,184  

Receivables from financial services

     1,840,699       1,881,179  

Other financial assets

     213,177       258,643  

Inventories

     1,523,455       1,521,811  

Other current assets

     291,006       350,579  
  

 

 

   

 

 

 

Total current assets

     6,925,288       6,916,501  
  

 

 

   

 

 

 

Non-current assets:

    

Investments accounted for using the equity method

     679,517       714,085  

Receivables from financial services

     3,117,364       3,262,905  

Other financial assets

     436,555       439,004  

Equipment on operating leases

     4,088,133       4,262,870  

Property, plant and equipment

     3,062,433       3,038,773  

Intangible assets

     741,514       730,301  

Deferred tax assets

     129,338       120,901  

Other non-current assets

     169,022       166,464  
  

 

 

   

 

 

 

Total non-current assets

     12,423,876       12,735,303  
  

 

 

   

 

 

 

Total assets

     19,349,164       19,651,804  
  

 

 

   

 

 

 

Liabilities and Equity

    

Current liabilities:

    

Trade payables

     1,224,627       1,097,867  

Financing liabilities

     2,917,261       3,000,321  

Accrued expenses

     404,719       426,923  

Other financial liabilities

     115,405       162,241  

Income taxes payable

     53,595       62,973  

Provisions

     305,994       281,498  

Other current liabilities

     602,498       580,034  
  

 

 

   

 

 

 

Total current liabilities

     5,624,099       5,611,857  
  

 

 

   

 

 

 

Non-current liabilities:

    

Financing liabilities

     3,881,749       4,013,858  

Other financial liabilities

     60,005       58,231  

Retirement benefit liabilities

     404,401       420,749  

Provisions

     220,625       208,525  

Deferred tax liabilities

     629,722       665,594  

Other non-current liabilities

     294,468       305,991  
  

 

 

   

 

 

 

Total non-current liabilities

     5,490,970       5,672,948  
  

 

 

   

 

 

 

Total liabilities

     11,115,069       11,284,805  
  

 

 

   

 

 

 

Equity:

    

Common stock

     86,067       86,067  

Capital surplus

     171,118       171,118  

Treasury stock

     (113,271     (156,712

Retained earnings

     7,611,332       7,760,896  

Other components of equity

     178,292       236,262  
  

 

 

   

 

 

 

Equity attributable to owners of the parent

     7,933,538       8,097,631  

Non-controlling interests

     300,557       269,368  
  

 

 

   

 

 

 

Total equity

     8,234,095       8,366,999  
  

 

 

   

 

 

 

Total liabilities and equity

     19,349,164       19,651,804  
  

 

 

   

 

 

 

 

—5—


Table of Contents

[2] Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Income

For the three months ended June 30, 2017 and 2018

 

                               
     Yen (millions)  
     Three months ended
Jun. 30, 2017
    Three months ended
Jun. 30, 2018
 

Sales revenue

     3,713,096       4,024,133  

Operating costs and expenses:

    

Cost of sales

     (2,874,789     (3,162,696

Selling, general and administrative

     (394,823     (371,656

Research and development

     (174,273     (190,398
  

 

 

   

 

 

 

Total operating costs and expenses

     (3,443,885     (3,724,750
  

 

 

   

 

 

 

Operating profit

     269,211       299,383  
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     52,948       54,302  

Finance income and finance costs:

    

Interest income

     8,997       11,913  

Interest expense

     (2,854     (2,963

Other, net

     6,723       (4,353
  

 

 

   

 

 

 

Total finance income and finance costs

     12,866       4,597  
  

 

 

   

 

 

 

Profit before income taxes

     335,025       358,282  

Income tax expense

     (109,517     (91,560
  

 

 

   

 

 

 

Profit for the period

     225,508       266,722  
  

 

 

   

 

 

 

Profit for the period attributable to:

    

Owners of the parent

     207,335       244,330  

Non-controlling interests

     18,173       22,392  
     Yen  

Earnings per share attributable to owners of the parent

    

Basic and diluted

     115.04       137.75  

 

—6—


Table of Contents

Condensed Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2017 and 2018

 

                               
     Yen (millions)  
     Three months ended
Jun. 30, 2017
    Three months ended
Jun. 30, 2018
 

Profit for the period

         225,508           266,722  

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

     5,817       124  

Share of other comprehensive income of investments accounted for using the equity method

     (1,182     (1,284

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

     —         (1

Exchange differences on translating foreign operations

     6,492       71,534  

Share of other comprehensive income of investments accounted for using the equity method

     3,349       (13,841
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     14,476       56,532  
  

 

 

   

 

 

 

Comprehensive income for the period

     239,984       323,254  
  

 

 

   

 

 

 

Comprehensive income for the period attributable to:

    

Owners of the parent

     219,855       302,588  

Non-controlling interests

     20,129       20,666  

 

—7—


Table of Contents

[3] Condensed Consolidated Statements of Changes in Equity

As of and for the three months ended June 30, 2017

 

    Yen (millions)  
    Equity attributable to owners of the parent     Non-
controlling
interests
    Total
equity
 
    Common
stock
    Capital
surplus
    Treasury
stock
    Retained
earnings
    Other
components
of equity
    Total  

Balance as of April 1, 2017

    86,067       171,118       (26,189     6,712,894       351,406       7,295,296       274,330       7,569,626  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

               

Profit for the period

          207,335         207,335       18,173       225,508  

Other comprehensive income, net of tax

            12,520       12,520       1,956       14,476  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

          207,335       12,520       219,855       20,129       239,984  

Reclassification to retained earnings

          412       (412     —           —    

Transactions with owners and other

               

Dividends paid

          (43,254       (43,254     (35,919     (79,173

Purchases of treasury stock

        (3         (3       (3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        (3     (43,254       (43,257     (35,919     (79,176
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2017

    86,067       171,118       (26,192     6,877,387       363,514       7,471,894       258,540       7,730,434  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
As of and for the three months ended June 30, 2018

 

    Yen (millions)  
    Equity attributable to owners of the parent     Non-
controlling
interests
    Total
equity
 
    Common
stock
    Capital
surplus
    Treasury
stock
    Retained
earnings
    Other
components
of equity
    Total  

Balance as of April 1, 2018

    86,067       171,118       (113,271     7,611,332       178,292       7,933,538       300,557       8,234,095  

Effect of changes in accounting policy

          (46,833     (208     (47,041     6       (47,035
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance as of April 1, 2018

    86,067       171,118       (113,271     7,564,499       178,084       7,886,497       300,563       8,187,060  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

               

Profit for the period

          244,330         244,330       22,392       266,722  

Other comprehensive income, net of tax

            58,258       58,258       (1,726     56,532  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

          244,330       58,258       302,588       20,666       323,254  

Reclassification to retained earnings

          80       (80     —           —    

Transactions with owners and other

               

Dividends paid

          (48,013       (48,013     (51,861     (99,874

Purchases of treasury stock

        (43,441         (43,441       (43,441
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        (43,441     (48,013       (91,454     (51,861     (143,315
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2018

    86,067       171,118       (156,712     7,760,896       236,262       8,097,631       269,368       8,366,999  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

—8—


Table of Contents

[4] Consolidated Statements of Cash Flows

 

     Yen (millions)  
     Three months
ended
Jun. 30, 2017
    Three months
ended
Jun. 30, 2018
 

Cash flows from operating activities:

    

Profit before income taxes

     335,025       358,282  

Depreciation, amortization and impairment losses excluding equipment on operating leases

     177,979       186,819  

Share of profit of investments accounted for using the equity method

     (52,948     (54,302

Finance income and finance costs, net

     14,519       (39,201

Interest income and interest costs from financial services, net

     (30,983     (29,870

Changes in assets and liabilities

    

Trade receivables

     43,116       25,256  

Inventories

     (75,532     12,510  

Trade payables

     (48,379     (55,189

Accrued expenses

     (55,386     (42,209

Provisions and retirement benefit liabilities

     (26,299     (26,241

Receivables from financial services

     (5,461     (48,179

Equipment on operating leases

     (51,744     (48,399

Other assets and liabilities

     (71,802     (21,513

Other, net

     4,225       158  

Dividends received

     20,726       23,344  

Interest received

     57,816       65,751  

Interest paid

     (22,018     (25,757

Income taxes paid, net of refunds

     (36,217     (66,818
  

 

 

   

 

 

 

Net cash provided by operating activities

     176,637       214,442  

Cash flows from investing activities:

    

Payments for additions to property, plant and equipment

     (124,693     (144,899

Payments for additions to and internally developed intangible assets

     (35,828     (37,608

Proceeds from sales of property, plant and equipment and intangible assets

     4,529       7,022  

Payments for acquisitions of investments accounted for using the equity method

     (2,450     (2,401

Payments for acquisitions of other financial assets

     (52,603     (150,294

Proceeds from sales and redemptions of other financial assets

     31,536       84,214  

Other, net

     719       —    
  

 

 

   

 

 

 

Net cash used in investing activities

     (178,790     (243,966

Cash flows from financing activities:

    

Proceeds from short-term financing liabilities

     1,878,152       1,882,899  

Repayments of short-term financing liabilities

     (1,766,270     (1,824,528

Proceeds from long-term financing liabilities

     212,833       267,458  

Repayments of long-term financing liabilities

     (335,354     (253,164

Dividends paid to owners of the parent

     (43,254     (48,013

Dividends paid to non-controlling interests

     (23,748     (29,227

Purchases and sales of treasury stock, net

     (3     (43,441

Other, net

     (10,904     (12,340
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (88,548     (60,356

Effect of exchange rate changes on cash and cash equivalents

     4,143       497  
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (86,558     (89,383

Cash and cash equivalents at beginning of year

     2,105,976       2,256,488  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

     2,019,418       2,167,105  
  

 

 

   

 

 

 

 

—9—


Table of Contents

[5] Assumptions for Going Concern

None

[6] Notes to Consolidated Financial Statements

[A] Changes in accounting policies

(a) IFRS 9 “Financial Instruments”

Honda was an early adopter of IFRS 9 “Financial Instruments” issued in November 2009, amended in October 2010 and November 2013 (“IFRS9 (2013)”) prior to the year ended March 31, 2018 and has adopted the final version of IFRS 9 issued in July 2014 (“IFRS 9 (2014)”) with a date of initial application of April 1, 2018. The adoption of IFRS 9 (2014) resulted in changes in accounting policies primarily for classification and impairment. IFRS 9 (2014) has an exemption allowing comparative information for prior periods not to be restated with respect to classification and measurement (including impairment) changes. Therefore, the comparative information has not been restated and continues to be reported under IFRS 9 (2013). Instead, the cumulative effect of adopting IFRS 9 (2014) was recognized in the opening balance of equity as of the date of initial application on April 1, 2018. The following are primary changes and corresponding impacts of adopting IFRS 9 (2014).

Classification of financial assets

Debt securities other than those classified into financial assets measured at amortized cost were classified into financial assets measured at fair value through profit or loss under IFRS 9 (2013). IFRS 9 (2014) newly established a classification in which financial assets are measured at fair value through other comprehensive income. Under IFRS 9 (2014), a financial asset shall be measured at fair value through other comprehensive income if both of the following conditions are met: 1) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and 2) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Honda has evaluated the business models within which financial assets are held and contractual terms of financial assets. As a result, Honda has reclassified debt securities such as government bonds and municipal bonds held by certain subsidiaries from the financial assets measured at fair value through profit or loss to financial assets measured at fair value through other comprehensive income as of April 1, 2018.

The impact of this reclassification is as follows:

 

     Yen (millions)  
     Carrying amounts
as of March 31, 2018
under IFRS 9
(2013)
     Reclassification     Carrying amounts
as of April 1, 2018
under IFRS 9
(2014)
 

Other financial assets:

       

Financial assets measured at fair value through profit or loss:

       

Debt securities

     69,829        (14,376     55,453  

Financial assets measured at fair value through other comprehensive income:

       

Debt securities

     —          14,376       14,376  

 

—10—


Table of Contents

Impairment of financial assets

IFRS 9 (2014) replaced the incurred loss model under IAS 39 with the expected credit loss (ECL) model. The ECL model requires the allowance for credit losses to be measured at amounts equal to either lifetime ECL for those financial assets which have experienced a significant increase in credit risk (SICR) since initial recognition or 12-month ECL for financial assets which have not experienced a SICR. Lifetime ECL represents ECL that results from all possible default events over the expected life of a financial asset. 12-month ECL is the portion of lifetime ECL that results from default events that are possible within 12 months after the reporting date. ECL is a probability-weighted estimate of the difference between the contractual cash flows and the cash flows that the entity expects to receive, discounted at the original effective interest rates.

When determining whether credit risk has increased significantly, Honda assesses financial assets either individually based primarily on delinquencies or collectively for groups of financial assets with shared risk characteristics such as the period of initial recognition, collateral type, original term and credit score considering relative changes in expected default rates since initial recognition.

The application of the ECL model resulted in an increase in the allowance for credit losses of JPY 4,599 million as of April 1, 2018, which is on receivables from financial services.

 

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Table of Contents

(b) IFRS 15 “Revenue from Contracts with Customers”

Honda has adopted IFRS 15 ”Revenue from Contracts with Customers” with a date of initial application of April 1, 2018 by recognizing the cumulative effect of initially applying this standard as an adjustment to the opening balance of equity at the date of initial application. Therefore, the comparative information has not been restated and continues to be reported under the previous accounting policy.

Honda’s contracts with customers include promises to transfer goods or services without charges such as free inspections. Such promised goods or services are generally considered performance obligations and related sales revenue is deferred under IFRS15, if it is deemed material, while such sales was recognized at contract inception under the previous accounting policy.

Further, under IFRS 15, dealer incentives are considered variable consideration when determining the transaction price and sales revenue is recognized only to the extent that it is highly probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved, which results in higher deductions from sales revenue recognized when products are sold to dealers.

The impacts of adopting IFRS 15 on Honda’s condensed consolidated financial statements as of and for the three months ended June 30, 2018 are as follows:

(Condensed Consolidated Statements of Financial Position)

As of June 30, 2018

 

                                               
     Yen (millions)  
     Balances without
adoption of IFRS 15
     Adjustments     As reported  

Assets

       

Current assets:

       

Cash and cash equivalents

     2,167,105        —         2,167,105  

Trade receivables

     739,075        (1,891     737,184  

Receivables from financial services

     1,881,179        —         1,881,179  

Other financial assets

     258,643        —         258,643  

Inventories

     1,521,811        —         1,521,811  

Other current assets

     349,773        806       350,579  
  

 

 

    

 

 

   

 

 

 

Total current assets

     6,917,586        (1,085     6,916,501  
  

 

 

    

 

 

   

 

 

 

Non-current assets:

       

Investments accounted for using the equity method

     714,076        9       714,085  

Receivables from financial services

     3,262,905        —         3,262,905  

Other financial assets

     439,004        —         439,004  

Equipment on operating leases

     4,262,870        —         4,262,870  

Property, plant and equipment

     3,038,773        —         3,038,773  

Intangible assets

     730,301        —         730,301  

Deferred tax assets

     120,646        255       120,901  

Other non-current assets

     165,658        806       166,464  
  

 

 

    

 

 

   

 

 

 

Total non-current assets

     12,734,233           1,070       12,735,303  
  

 

 

    

 

 

   

 

 

 

Total assets

     19,651,819        (15     19,651,804  
  

 

 

    

 

 

   

 

 

 

 

—12—


Table of Contents
                                               
     Yen (millions)  
     Balances without
adoption of IFRS 15
    Adjustments     As reported  

Liabilities and Equity

      

Current liabilities:

      

Trade payables

     1,097,867       —         1,097,867  

Financing liabilities

     3,000,321       —         3,000,321  

Accrued expenses

     395,295       31,628       426,923  

Other financial liabilities

     162,241       —         162,241  

Income taxes payable

     62,973       —         62,973  

Provisions

     285,040       (3,542     281,498  

Other current liabilities

     565,831       14,203       580,034  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     5,569,568       42,289       5,611,857  
  

 

 

   

 

 

   

 

 

 

Non-current liabilities:

      

Financing liabilities

     4,013,858       —         4,013,858  

Other financial liabilities

     58,231       —         58,231  

Retirement benefit liabilities

     420,749       —         420,749  

Provisions

     209,522       (997     208,525  

Deferred tax liabilities

     676,068       (10,474     665,594  

Other non-current liabilities

     304,110       1,881       305,991  
  

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     5,682,538       (9,590     5,672,948  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     11,252,106       32,699       11,284,805  
  

 

 

   

 

 

   

 

 

 

Equity:

      

Common stock

     86,067       —         86,067  

Capital surplus

     171,118       —         171,118  

Treasury stock

     (156,712     —         (156,712

Retained earnings

     7,792,650       (31,754     7,760,896  

Other components of equity

     237,606       (1,344     236,262  
  

 

 

   

 

 

   

 

 

 

Equity attributable to owners of the parent

     8,130,729       (33,098     8,097,631  

Non-controlling interests

     268,984       384       269,368  
  

 

 

   

 

 

   

 

 

 

Total equity

     8,399,713       (32,714     8,366,999  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

     19,651,819       (15     19,651,804  
  

 

 

   

 

 

   

 

 

 

 

—13—


Table of Contents

(Condensed Consolidated Statements of Income)

For the three months ended June 30, 2018

 

                                               
     Yen (millions)  
     Balances without
adoption of IFRS 15
    Adjustments     As reported  

Sales revenue

     4,005,681       18,452         4,024,133  

Operating costs and expenses:

      

Cost of sales

     (3,163,464     768       (3,162,696

Selling, general and administrative

     (372,114     458       (371,656

Research and development

     (190,398     —         (190,398
  

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     (3,725,976     1,226       (3,724,750
  

 

 

   

 

 

   

 

 

 

Operating profit

     279,705       19,678       299,383  
  

 

 

   

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     54,302       (0     54,302  

Finance income and finance costs:

      

Interest income

     11,913       —         11,913  

Interest expense

     (2,963     —         (2,963

Other, net

     (4,353     —         (4,353
  

 

 

   

 

 

   

 

 

 

Total finance income and finance costs

     4,597       —         4,597  
  

 

 

   

 

 

   

 

 

 

Profit before income taxes

     338,604       19,678       358,282  

Income tax expense

     (86,745     (4,815     (91,560
  

 

 

   

 

 

   

 

 

 

Profit for the period

     251,859       14,863       266,722  
  

 

 

   

 

 

   

 

 

 

Profit for the period attributable to:

      

Owners of the parent

     229,442       14,888       244,330  

Non-controlling interests

     22,417       (25     22,392  

 

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Table of Contents

[B] Segment Information

Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Power Product and other businesses, which are based on Honda’s organizational structure and characteristics of products and services. Operating segments are defined as the components of Honda for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for these reportable segments are consistent with the accounting policies used in the Company’s condensed consolidated financial statements.

Principal products and services, and functions of each segment are as follows:

 

Segment

 

Principal products and services

 

Functions

Motorcycle Business

  Motorcycles, all-terrain vehicles (ATVs), side-by-sides (S×S) and relevant parts  

Research and development Manufacturing

Sales and related services

Automobile Business

  Automobiles and relevant parts  

Research and development Manufacturing

Sales and related services

Financial Services Business

  Financial services   Retail loan and lease related to Honda products Others

Power Product and Other Businesses

  Power Products and relevant parts, and others   Research and development Manufacturing Sales and related services Others

1. Segment information based on products and services

As of and for the three months ended June 30, 2017

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

     508,540        2,589,935        536,957        77,664       3,713,096        —         3,713,096  

Intersegment

     —          34,635        2,732        5,449       42,816        (42,816     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     508,540        2,624,570        539,689        83,113       3,755,912        (42,816     3,713,096  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     78,842        140,344        49,864        161       269,211        —         269,211  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

     1,440,194        7,781,275        9,494,404        318,045       19,033,918        10,393       19,044,311  

Depreciation and amortization

     18,210        155,103        182,232        3,733       359,278        —         359,278  

Capital expenditures

     9,914        102,638        465,785        1,688       580,025        —         580,025  

 

As of and for the three months ended June 30, 2018

 

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

     554,907        2,797,336        589,895        81,995       4,024,133        —         4,024,133  

Intersegment

     —          47,855        3,290        5,847       56,992        (56,992     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     554,907        2,845,191        593,185        87,842       4,081,125        (56,992     4,024,133  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     92,130        151,681        57,179        (1,607     299,383        —         299,383  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

     1,501,577        7,930,533        9,783,246        306,719       19,522,075        129,729       19,651,804  

Depreciation and amortization

     17,703        164,631        190,329        3,410       376,073        —         376,073  

Capital expenditures

     9,750        122,615        504,192        2,442       638,999        —         638,999  

Explanatory notes:

 

1.

Intersegment sales revenues are generally made at values that approximate arm’s-length prices.

 

2.

Unallocated corporate assets, included in reconciling items, amounted to JPY 394,601 million as of June 30, 2017 and JPY 417,739 million as of June 30, 2018 respectively, which consist primarily of cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

 

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Table of Contents

In addition to the disclosure required by IFRS, Honda provides the following supplemental information for the financial statements users:

2. Supplemental geographical information based on the location of the Company and its subsidiaries

As of and for the three months ended June 30, 2017

 

     Yen (millions)  
     Japan      North
America
     Europe      Asia      Other
Regions
     Total     Reconciling
Items
    Consolidated  

Sales revenue:

                     

External customers

     507,944        2,008,877        166,748        827,096        202,431        3,713,096        —         3,713,096  

Inter-geographic areas

     517,080        121,248        46,519        154,606        1,431        840,884       (840,884     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

     1,025,024        2,130,125        213,267        981,702        203,862        4,553,980       (840,884     3,713,096  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     21,536        101,589        6,653        97,833        14,730        242,341       26,870       269,211  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Assets

     4,202,768        10,838,441        663,091        2,794,158        643,550        19,142,008       (97,697     19,044,311  

Non-current assets other than financial instruments and deferred tax assets

     2,475,066        4,797,297        109,051        703,479        174,345        8,259,238       —         8,259,238  
As of and for the three months ended June 30, 2018

 

     Yen (millions)  
     Japan      North
America
     Europe      Asia      Other
Regions
     Total     Reconciling
Items
    Consolidated  

Sales revenue:

                     

External customers

     554,143        2,177,299        172,979        918,723        200,989        4,024,133       —         4,024,133  

Inter-geographic areas

     586,072        136,051        64,262        176,989        2,346        965,720       (965,720     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

     1,140,215        2,313,350        237,241        1,095,712        203,335        4,989,853       (965,720     4,024,133  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     14,712        110,360        7,035        122,514        22,635        277,256       22,127       299,383  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Assets

     4,373,497        11,140,457        666,118        2,981,065        610,157        19,771,294       (119,490     19,651,804  

Non-current assets other than financial instruments and deferred tax assets

     2,581,488        4,707,715        97,930        666,829        144,446        8,198,408       —         8,198,408  

Explanatory notes:

 

1.

Major countries or regions in each geographic area:

 

North America

   United States, Canada, Mexico

Europe

   United Kingdom, Germany, Belgium, Turkey, Italy

Asia

   Thailand, Indonesia, China, India, Vietnam

Other Regions

   Brazil, Australia

 

2.

Sales revenues between geographic areas are generally made at values that approximate arm’s-length prices.

 

3.

Unallocated corporate assets, included in reconciling items, amounted to JPY 394,601 million as of June 30, 2017 and JPY 417,739 million as of June 30, 2018 respectively, which consist primarily of cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

 

—16—


Table of Contents

[C] Other

1. Loss related to airbag inflators

Honda has been conducting market-based measures in relation to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to the product recalls arise, however, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

In the United States and Canada, various class action lawsuits and civil lawsuits related to the above mentioned market-based measures have been filed against Honda. The plaintiffs have claimed for properly functioning airbag inflators, compensation of economic losses including incurred costs and the decline in the value of vehicles, as well as punitive damages. Most of the class action lawsuits in the United States were transferred to the United States District Court for the Southern District of Florida and consolidated into a multidistrict class action litigation.

For the three months ended September 30, 2017, Honda has reached a settlement with the plaintiffs of the multidistrict class action litigation in the United States. As of the date of this report, this settlement is subject to final court approval. For the three months ended September 30, 2017, Honda recognized the settlement of JPY 53,739 million as selling, general and administrative expenses, which includes funds contributed to enhance airbag inflator recall activities.

For the class action lawsuits and civil lawsuits other that the above, Honda did not recognize a provision for loss contingencies because the conditions for a provision have not been met as of the date of this report. Therefore, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report because there are some uncertainties, such as the period when these lawsuits will be concluded.

 

—17—