2011
Corporate Profile
Honda Motor Co., Ltd., operates under the basic principles of Respect for the Individual and
The Three Joysexpressed as The Joy of Buying, The Joy of Selling and The Joy of
Creating. Respect for the Individual reflects our desire to respect the unique character and
ability of each individual person, trusting each other as equal partners in order to do our best in
every situation. Based on this, The Three Joys express our belief and desire that each person
working in or coming into contact with our Company, directly or through our products, should
share a sense of joy through that experience.
In line with these basic principles, since its establishment in 1948, Honda has remained
on the leading edge by creating new value and providing products of the highest quality at a
reasonable price, for worldwide customer satisfaction. In addition, the Company has conducted
its activities with a commitment to protecting the environment and enhancing safety in a
mobile society.
The Company has grown to become the worlds largest motorcycle manufacturer and
one of the leading automakers. With a global network of 383* subsidiaries and 91* affiliates
accounted for under the equity method, Honda develops, manufactures and markets a wide
variety of products to earn the Company an outstanding reputation from customers worldwide.
*As of March 31, 2011
Contents
Financial Highlights
To Our Shareholders
14
Review of Operations
Motorcycle Business
30
32
Automobile Business
Financial Services
Business
Risk Factors
CSR Report
Available on the Internet at the following URL:
http://world.honda.com/CSR/
37
Corporate Governance
Environmental Report
Available at the following URL:
http://world.honda.com/environment/report/
38
Philanthropy
Available on the Internet at the following URL:
http://world.honda.com/community/
On the cover:
41
Financial Section
76
Investor Information
1,200
120
800
80
400
40
Summary of
Operating Results
by Business
07
08
09
10
11
Yen (billions)
Yen (billions)
160
1,600
Motorcycle Business
Yen (billions)
Yen (billions)
Yen (billions)
1,600
1,200
Yen (billions)
400
Yen (billions)
07
08
160 10
09
11
1,200
120
160
10,000
1,000
800
80
120
7,500
750
400
40
500
14.4%
Percentage
of Net5,000
Sales
80
by Business
800
Automobile Business
40
2,500
07
07
08
250
08
09
76.0%
09
10
11
190
11
10
9,178
9,178
Japan
1,690
202
185
North Europe
America
Asia
Other
Regions
120
Yen (billions)
80
40
Yen (billions)
810,000
09
10
11
7,500
750
200
100
2,500
250
-100
Yen (billions)
07
08
1,000 10
09
11
Yen (billions)
80
300
60
200
40
100
20
0
Yen (billions)
-100
07
08
80
09
08
09
20
10
09
11
10
10
11
600
2010
40
2,500
750
North Europe
America
Asia
500
Other
Regions
1,008
250
582
07
08
09
11
10
266
198
1,458
2011
2,500
300
1,000
1,690
5,000
Japan
450
150
North Europe
America
185
202
750
Yen (billions)
Asia
Asia
500
Other
Regions
150
08
100
09
80
266
60
198
300
10
Japan
100
250
-100
11
2,085
North Europe
America
Asia
40
Other
20
Regions
1,325
0
1,174
07
08
-20
11
09
388 10
537
50
1,458
07
08
09
11
10
2,085 Japan
North Europe
America
Yen (billions)
-20
Yen (billions)
200
80
266
60
198
300
150
200
40
Japan
100
North Europe
America
Asia
Other
20
Regions
Yen (billions)
Yen (billions)
537
200
600
388
150
450
Japan
300
North Europe
America
Asia
Other
100
Regions
Germany
150
Canada
50
U.K.
Dreams inspire
us to create innovative
products that enhance
mobility
and benefit society.
-100
-20
0
100
0
07
08
09
10
11
07
08
09
10Thailand
11 Japan
To meet the 50particular needs of customers in different regions around the world, we
150
Yen (billions)
07
08
2,085
1,325
Germany
100
537
200
600
388
important
environmental and safety
issues.
50
Canada
10
11
Japan
300
North Europe
America
Asia
50
07
08
09
10
11
2
Germany
Canada
2011
Brazil
0
2009
U.K.
2010
Other
100
Regions
150
0
2009
150
450
U.S.A.
Thailand Japan
2010
2011
U.S.A.
Brazil
base our11 sales networks, research and development centers and manufacturing facilities in
200 10
09
150
1,174
each
region. Furthermore, as a socially
responsible
corporate citizen,
U.K. we strive to address
Yen (billions)
Yen (billions)
09
Other
Regions
1,325
1,174
Yen
582(billions)
400
Asia
450
300
Other
Regions
Yen (billions)
200
200
North Europe
America
07
Yen
582(billions)
400
1,008
11
5,000
Japan
Yen (billions)
190
7,500
2009
20
10
202
Japan
Yen (billions)
Yen (billions)
-20
40
600
09
80
9,178
-20
60
Yen (billions)
11
10,000
11
07
(Thousands)
250
10
08
185
500
400
09
40
07
190
7,500
1,008
750
Yen (billions)
60
1,000
1,690
1,458
80
400
Yen (billions)
10,000
120
Yen (billions)
800
300
Years ended March
31
160
1,200
Net Sales
/
Yen (billions)
1,000
Operating
Income 400
(Loss)
Yen (billions)
Yen (billions)
Yen (billions)
1,600
40
400
200
40
100
07
08
09
20
-100
-20
07
08
09
11
10
10
2,500
11
250
582
07
08
09
11
10
266
198
1,458
9,178
Japan
North Europe
America
Asia
1,008
Yen (billions)
Yen (billions)
Power
10,000 Product and
Other190
Businesses
202
185
7,500
Yen (billions)
5,000
Japan
450
2,500
300
150
07
08
100
09
50
09
500
Other
Regions
3.3%
100
250
-100
11
10
Japan
2,085
North Europe
America
Asia
08
2,085 Japan
Yen (billions)
80
266
60
198
200
40
100
North Europe
America
Germany
537
Asia
Other
20
Regions
-20
09
11
10
Asia
Japan
Thailand Japan
U.S.A.
North Europe
America
1,325
1,174
Yen (billions)
North Europe
America
Asia
600
388
North Europe
America
Asia
2011
388
Canada
50
U.K.
07
08
09
U.S.A.
10Thailand
11 Japan
Japan
North Europe
America
Brazil
Canada
U.K.
U.S.A.
Thailand Japan
2009
150
450
2010
1,17
Other
100
Regions
Germany
Germany
Yen (billions)
537
200
2,085
2009
Locations
2,085
Other
Regions
150
Japan
300
-100
2010
2011
Brazil
Germany
U.K.
Other
100
Regions
Thailand Japan
50
150
0
07
08
09
10
11
2009
Germany
2010
2011
2009
Canada
2010
U.K.
U.S.A.
Thailand Japan
Brazil
2009
2010
198
Canada
U.K.
Yen (billions)
537
200
450
150
Japan
300
1,325
1,325
600
388
08
Other
Region
582
-20
North Europe
America
Yen (billions)
07
40
Other
20
Regions
11
1,174
Yen
582(billions)
400
Japan
Asia
1,458
6.3%
09
388 10
1,008
300
North Europe
America
80
266
60
0
1,174
07
Japan
Yen (billions)
198
Financial
Services Business
300
11
10
Asia
Other
Regions
537
North Europe
America
Japan
388
202
Brazil
1,458
08
Yen
582(billions)
400
200
200
North Europe
America
150
07
750
Yen (billions)
600
1,000
1,690
1,325
185
190
1,174
2011
Financial Highlights
Financial Data
Years ended March 31
Yen
U.S. dollars
2009
2010
2011
10,011,241
8,579,174
8,936,867
$107,479
Operating income
189,643
363,775
569,775
6,852
161,734
336,198
630,548
7,583
99,034
93,282
139,756
1,681
137,005
268,400
534,088
6,423
139,724
61,696
92,170
1,108
2011
563,197
463,354
487,591
5,864
11,818,917
11,629,115
11,570,874
139,157
4,007,288
4,328,640
4,449,975
53,517
Capital expenditures
(excluding purchase of operating lease assets)
633,913
348,981
326,620
3,928
Depreciation
(excluding property on operating leases)
441,868
401,743
351,496
4,227
75.50
147.91
295.67
3.56
77
34
51
0.61
2,208.35
2,385.45
2,469.05
29.69
Note: U
nited States dollar amounts have been translated from yen solely for the convenience of the reader at the rate of 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. No representation is made that yen amounts could have
been, or could be, converted into U.S. dollars at that rate or any other rate on this or any other date or at all.
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
8,000
8,000
8,000
8,000
8,000
8,000
4,000
4,000
4,000
4,000
4,000
4,000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
0708
08
0809
09
0910
10
1011
11
11
07
07
07
08
08
08
09
09
0910
10
1011
11
11
Operating
Operating
Operating
Income
Income
Income
(left
(left
(left
scale)
scale)
scale)
Income
Income
Income
(left
(left
(left
scale)
scale)
scale)
Operating
Operating
Operating
Margin
Margin
Margin
(right
(right
(right
scale)
scale)
scale)
Operating
Operating
Operating
Margin
Margin
Margin
(right
(right
(right
scale)
scale)
scale)
Yen
Yen
Yen
(billions)
(billions)
(billions)
150
150
150
150
150
150
(Thousands)
(Thousands)
(Thousands)
(Thousands)
(Thousands)
(Thousands)
12,000
12,000
12,000
12,000
12,000
12,000
100
100
100
100
100
100
8,000
8,000
8,000
8,000
8,000
8,000
505050
505050
4,000
4,000
4,000
4,000
4,000
4,000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
0708
08
0809
09
0910
10
1011
11
11
000
07
070
0 0 0 07
07
07
070
10,000
10,000
10,000
10,000
10,000
10,000
(%)
(%)
(%)
Yen
Yen
Yen
(billions)
(billions)
(billions)
(Yen)
(Yen)
(Yen)
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
(%)
(%)
(%)
600
600
600
20.0
20.0
20.0
600
600
600
20.0
20.0
20.0
450
450
450
15.0
15.0
15.0
450
450
450
15.0
15.0
15.0
300
300
300
10.0
10.0
10.0
300
300
300
10.0
10.0
10.0
150
150
150
5.0
5.0
5.0
150
150
150
5.0
5.0
5.0
000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
000
Yen
Yen
Yen
(billions)
(billions)
(billions)
12,000
12,000
12,000
12,000
12,000
12,000
(Yen)
(Yen)
(Yen)
3,000
3,000
3,000
3,000
3,000
3,000
Yen
Yen
Yen
(billions)
(billions)
(billions)
600
600
600
600
600
600
Yen
Yen
Yen
(billions)
(billions)
(billions)
2,000
2,000
2,000
2,000
2,000
2,000
8,000
8,000
8,000
8,000
8,000
8,000
2,000
2,000
2,000
2,000
2,000
2,000
400
400
400
400
400
400
1,500
1,500
1,500
1,500
1,500
1,500
4,000
4,000
4,000
4,000
4,000
4,000
1,000
1,000
1,000
1,000
1,000
1,000
200
200
200
200
200
200
1,000
1,000
1,000
1,000
1,000
1,000
07
07
07
08
08
0809
09
09
10
1011
11
11
Net
Net
Net
Income
Income
Income
Attributable
Attributable
Attributable
to
to
to 10
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
(left
(left
(left
scale)
scale)
Net
Net
Net
Income
Income
Income
Attributable
Attributable
Attributable
to
to
toscale)
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
(left
(left
(left
scale)
scale)
scale)
ROE
ROE
ROE
(right
(right
(right
scale)
scale)
scale)
ROE
ROE
ROE
(right
(right
(right
scale)
scale)
scale)
(%)
(%)
(%)
(%)
(%)
(%)
1,000
1,000
1,000
10.0
10.0
10.0
1,000
1,000
1,000
10.0
10.0
10.0
7.5
7.5
7.5
750
750
750
7.5
7.5
7.5
750
750
750
5.0
5.0
5.0
500
500
500
5.0
5.0
5.0
500
500
500
2.5
2.5
2.5
250
250
250
2.5
2.5
2.5
250
250
250
000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
000
12,000
12,000
12,000
12,000
12,000
12,000
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
07
08
08
08
09
09
0910
10
1011
11
11
Total
Total
Total
Assets
Assets
Assets
(left
(left
(left
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders
Shareholders
Shareholders
Assets
Assets
Assets
(left
(left
(left
scale)
scale)
scale)
Equity
Equity
Equity
(left
(left
(left
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders
Shareholders
Shareholders
Equity
Equity
Equity
(left
(left
(left
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders
Shareholders
Shareholders
Equity
Equity
Equity
per
per
Common
per
Common
Common
Share
Share
Share
(right
(right
(right
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders
Shareholders
Shareholders
Equity
Equity
Equity
per
per
Common
per
Common
Common
Share
Share
Share
(right
(right
(right
scale)
scale)
scale)
000
000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
0708
08
0809
09
0910
10
1011
11
11
Capital
Capital
Capital
Expenditures
Expenditures
Expenditures
Depreciation
Depreciation
Depreciation
Capital
Capital
Capital
Expenditures
Expenditures
Expenditures
Depreciation
Depreciation
Depreciation
500
500
500
500
500
500
000
0 0 007
07
0708
0
07
07
0708
0
10
09
11
1011
1011 11
1
11
11
10
09
11
1011
1011 11
1
11
11
Operating Data
Motorcycles
2011 Change
2010
Automobiles
2011 Change
2010
Japan
190
190
0.0 %
North America
189
185
(2.1)
1,297
Europe
199
202
1.5
249
Asia
7,628
9,178
20.3
950
1,008
Other Regions
1,433
1,690
17.9
250
266
Total
9,639
11,445
3,392
3,512
Net Sales
Breakdown
Yen (millions)
Japan
Motorcycle Business
Automobile Business
2011 Change
2010
70,461 70,244
1,383,855
1,310,734
(7.0)
3,013,432
3,252,852
2010
388
1,458 12.4
1,818
2,085
14.7
198 (20.5)
1,066
1,174
10.1
6.1
1,069
1,325
23.9
6.4
469
537
14.5
4,744
5,509
(9.9)%
3.5 %
24,635
26,349
7.9
553,169
503,960
(5.3)%
20.5%
16.1%
2011 Change
2010
2011 Change
322
582
2011 Change
2010
(0.3)%
96,664
646
18.7 %
Power Products
2010
2011 Change
98,367
96,515
(8.9)
65,890
67,917
3.1
1.7
7.0 %
(1.9)%
North America
103,956
Europe
124,665
103,890 (16.7)
575,326
441,696 (23.2)
10,428
9,263 (11.2)
54,366
55,264
Asia
461,067
577,669 25.3
1,041,258
1,221,704 17.3
4,318
3,728 (13.7)
36,754
49,369 34.3
Other Regions
380,143
439,727 15.7
540,977
567,112
13,802
18,596 34.7
22,305
23,614
6,554,848
6,794,098
1,140,292 1,288,194Yen13.0
%
(billions)
Total
4.8
606,352
561,896
Yen (billions)
3.6 %
12,000
Unit Sales
4,000
7.5
(Thousands)
(Thousands)
(Thousands)
8,000
8,000
8,000
8,000
4,000
4,000
4,000
4,000
250
3,000
3,000
3,000
3,000
(Thousands)
(Thousands)
(Thousands)
07
08
09
10
4,000
4,000
4,000
2,000
2,000
2,000
2,000
12,000
12,000
12,000
4,000
4,000
4,000
4,000
8,000
8,000
8,000
10,000
10,000
10,000
Yen
Yen
Yen
(billions)
(billions)
(billions)
1,500
1,500
1,500
1,500
2,000
2,000
2,000
4,000
4,000
4,0000 0 0 0
1,000
1,000
1,000
2,000
2,000
2,000
07
07
0708
08
0809
09
0910
10
1011
11
11
(%)
20.0
450
300(billions)
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
0
Yen
Yen
Yen
(billions)
(billions)
(billions)
7,500
7,500
7,500
7,500
07
10,000
10,000
10,000
600600600600
5.0
10,000
10,000
10,000
08
09
7,500
7,500
7,500
500500500500
1,000
1,000
1,000
2,500
2,500
2,500
2,500
5,000
5,000
5,000
07
07
0708
08
0809
09
0910
10
1011
11
11
(Yen)
12,000
3,000
07
Yen
Yen
Yen
(billions)
(billions)
(billions) 0
11 400400400
400
600
600
600
10
200
400
400
400200200200
Yen (billions)
600
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
(billions)
4,000
500500500500
1,000
200
10,000
10,000
10,000
0
400400400400
Yen
Yen
Yen
(billions)
(billions)
(billions)
07
08
09
10
500
500
500
300
300300300
Total Assets (left
scale)
11
07
Japan
07
07
0708
08
0809
09
0910
10
1011
11
11
000
North America
07
07
0708
08
0809
09
0910
10
1011
11
11
Europe
000
Asia
300
300
300
100100100100
Other Regions
07
07
0708
08
0809
09
0910
10
1011
11
11
08
Capital Expenditures
Depreciation
200
200
200
0 0 0 0
0 0 0 0
0 0 0 0
200
200
2000 0 0 0
0708
07
09
0809
08
10
0910
09
11
1011
10
11
11 07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11 07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11 07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
500
500
500 07 0708
2,500
2,500
2,500
100
100
100
000
08
10,000
10,000
10,000
10,000
Power Product and2,000
Other Businesses400
10.0
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
(billions)
1,000
1,000
1,000
1,000
1,500
1,500
1,500
000
Yen (billions)
10,000
10,000
10,000
10,000
8,000
Financial
Services Business
10,000
10,000
10,000
10,000
10,000
10,000
10,000 150
11
07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
15.0
10,000
10,000
10,000
10,000
Automobile
Business
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
(billions)
2,000
2,000
2,000
2,000
10
50
6,000
6,000
6,000
2,000
2,000
2,000
2,000
07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
Yen (billions)
Net Sales
09
100
600
10,000
10,000
10,000
10,000
Motorcycle
Business
08
8,000
8,000
8,000
4,000
4,000
4,000
4,000
Operating Income (left scale)
Yen (billions)
150
2.5
6,000
6,000
6,000
6,000
07
2,000
2,000
2,0000 0 0 0
000
07
07
0708
08
0809
09
0910
10
1011
11
11
8,000
8,000
8,000
8,000
Power Products
(Thousands)
(Thousands)
(Thousands)
5.4 %
5.0
(Thousands)
(Thousands)
(Thousands)
(Thousands)
11
3,000
3,000
3,000
1,000
1,000
1,000
1,000
0 0 0 0
07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
4,000
4,000
4,000
000
500
Automobiles
Motorcycles
292,679
(%)
750
(Thousands)
(Thousands)
(Thousands)
(Thousands)
12,000
12,000
12,000
12,000
277,682
10.0
8,000
(Thousands)
(Thousands)
(Thousands)
(Thousands)
(7.3)%
1,000
5.9
000
07
07
0708
08
0809
09
0910
10
1011
11
11
5
To Our Shareholders
Turning to the economic environment during the fiscal year, in the United States, personal
consumption and private capital investment increased gradually, and the economy was
on a moderate recovery trend; however, credit contraction and high rates of unemployment persisted. In Europe, economic conditions, in general, improved along with
increases in consumer spending and other developments, but unemployment remained
high, and there was concern regarding the financial system. In Asia, the economies of
China and India expanded, and the remaining countries in the region generally reported
recoveries. In Japan, the economy moved into a lull, and, although private capital investment showed some improvement, tough operating conditions continued as trends in
consumer spending were weak in some areas and unemployment remained high. It
is forecast that the Great East Japan Earthquake will have a depressing impact on the
economy for the near term.
Under these business conditions, Hondas consolidated net sales and other operating
revenue for the fiscal year ended March 31, 2011 expanded over the previous fiscal year,
despite unfavorable currency translation effects, as a result of increases in the sales of
motorcycles, automobiles and other Honda products. Such adverse factors as higher
selling, general and administrative expenses, increased R&D expenditures, foreign currency movements and the effects of the earthquake had some negative impact. However,
operating income and net income attributable to Honda Motor Co., Ltd. grew, reflecting
such positive factors as the increase in net sales, changes in the mix of sales, the benefit
of higher production volume on costs and overall cost-cutting activities.
Motorcycle Business
Total unit sales of motorcycles increased from the previous fiscal year because of higher sales
in Asia and other regions, including South America.
In particular, sales in Thailand of Hondas new Wave 110i and the Scoopy i as well as sales in
India of the new CB Twister and the Activa acted as driving forces in bringing a major gain
in sales. On the other hand, in North America, where demand did not fully recover, despite
a moderate recovery mainly in the sales of utility all-terrain vehicles (ATVs), recovery in the
sales of sports ATVs used mainly for recreation and motorcycles for recreation was lagging.
Sales in other areas, including South America, picked up after mid-year because of
the increased availability of credit and improvement in income. Sales of the CG150FAN,
NXR150, CG125 and other models were strong, mainly in the Brazilian market.
Automobile Business
Unit sales increased from the previous fiscal year, despite declines in Japan and Europe, as a
result of growth in unit sales in North America and Asia.
in demand in the latter half of the fiscal year following the termination of government subsidies. New models were introduced to boost sales, including the Fit Hybrid, but because
of the impact of shrinking demand, the adverse effects of the Great East Japan Earthquake
and other factors, unit sales decreased.
In Europe, in spite of the launch of the CR-Z as a new market entrant and other mea-
sures, sales in the region were generally stagnant because of the termination of sales support
policies in certain countries in the region, weakness in consumer spending trends and moreintense competition.
On the other hand, in North America, along with the moderate recovery in the United
States, sales of the new model Odyssey and light trucks expanded.
In Asia, demand in China was on a growth trend, and sales of the CR-V, in particular,
showed major expansion. Sales also grew in Thailand, Indonesia and elsewhere, amid favorable economic trends.
In North America, Europe, Japan and other regions, including South America, along with
the increase in demand for construction equipment accompanying the economic recovery,
unit sales of general-purpose engines, mainly on an OEM basis, increased. In Asia, unit sales
grew along with market expansion, agricultural subsidies provided by certain governments
in the region, the effects of weather conditions and other factors.
With this awareness, we have positioned the next 10 years as a time for Honda
to reform in the direction of delivering good products to our customers, with speed,
affordability and low CO2 emissions, and right now we are taking aggressive action to
do just that. Delivering good products means that Honda must create attractive products that customers think are necessary based on our original technology, knowledge
and ingenuity. We must do this with speed without keeping our customers waiting,
and we must deliver them at affordable prices that will make customers think, Im glad
I bought a Honda. I believe this is what we want to achieve, and, as a personal mobility manufacturer, we must make more-aggressive efforts than ever before to make
major reductions in CO2 emissions.
Motorcycles
Good Products at Affordable Prices
Among motorcycles, there are commuter types that play an essential role in providing
people with basic transportation, and there are fun types that people ride for the joy and
pleasure of riding. The market for commuter types in the emerging countries is expanding
along with economic growth. With this trend as a driving force, Honda sold approximately
17,952,000 motorcycles last year, the largest number in our history. The principal markets
for motorcycles are China, India, Indonesia and other countries that have large populations, and further growth in sales is expected in these countries. In addition, the nations in
the African region, especially Nigeria, are new and expanding markets, and we believe they
will provide support for Hondas growth.
more and more affordable prices will be important. In recent years, Honda has taken initiatives to procure parts globally. We have standardized the basic architecture for models in
the region to enable us to enjoy economies of scale in parts procurement. We have also
promoted improvement activities among local parts manufacturers to set price standards
globally as we have also worked to realize synergies.
For example, in Brazil, which is an important emerging country, the market share of
Honda products is about 80%, but, by far, the most-important factor in Hondas position
in that market is our entry-level models. These are Cub-style 100cc bikes that are light,
quick and offer an easy ride, which is exactly the kind of performance that a commuter
bike should provide. As we have evolved these bikes as Honda motorcycles, we have created supply systems that enable us to offer them at affordable prices.
Also, by making these bikes available at affordable prices, Honda is able to provide
Hondas large bikes come in the VFR series and the CB series. The VFR series aims to of-
fer bikes that use the latest technology to make riding an interesting and fun experience.
On the other hand, the CB series bikes are in the tradition of styling and value that Honda
has created over the years in Japan and the United States. Having two series of bikes, one
targeting traditional needs and the other focusing on a new wave, is an advantage for a
top motorcycle manufacturer. Our next goal will be to make
Honda motorcycles even more unique in terms of design
and performance.
10
Automobiles
Internal Combustion Engine Evolution and the Spread of Hybrids
The current trend in the world automobile market toward more-compact cars with better
fuel economy has been accelerated by the growing awareness of environmental issues
and the instability of oil prices.
As a company providing personal mobility, Honda has moved forward with R&D on
a full range of environmental technologies and taken initiatives to reduce the burden on
the natural environment. Among the various alternatives, and this is especially true for
hybrids, we believe that environmental technology will be more valuable if it can appeal
to a wider range of customers. That is why we proceeded with the development of our
lightweight, compact IMA hybrid system, and, following this, have succeeded in offering
vehicles equipped with this system at affordable prices. This hybrid system is now available
on the Insight and CR-Z models, and in October 2011, Honda launched a Fit Hybrid model,
and will continue to work to expand the market penetration of these vehicles.
We believe that hybrid technology will become a mainstay product as one means to re-
duce the burden on the environment. But, we think that people do not just want a hybrid
vehicle, but also a vehicle with competitiveness and performance. In other words, these cars
must be more than just hybrids. They also must have good fuel economy, offer a pleasant
driving experience, and be available at affordable prices. That is why Honda is working to
improve fuel economy by improving both the gasoline engine and battery technology. Also,
with a target date in 2012, Honda will introduce a new lineup of gasoline engines and
transmissions and is working toward the development of medium-sized and larger plugin hybrid car models that can be recharged using household power outlets.
Electric Vehicle (EV) that will apply technology it has created for a fuel cell electric vehicle
(FCEV). Work is also under way on developing a compact diesel engine for the European
market. The results that Honda has achieved by focusing our corporate resources on advanced technology will be applied to creating new products in the years ahead.
In the mini-vehicle segment, in Japan total new cars sold in 2010 amounted
to about 1.73 million units, while the number of registrated vehicles sold
was about 3.23 million units. Thus, in terms of units, mini-vehicles
accounted for more than 30% of new car sales. Because of issues
related to the rising cost of gasoline, customer demand for
smaller cars is expected to rise, and an important issue will
be how to increase competitiveness in mini-vehicles in the
domestic market.
11
To respond effectively to this trend, Honda is already upgrading our mini-vehicle en-
gines, transmissions and platforms. Therefore, an all-new mini-vehicle equipped with technology unique to Honda is expected to be launched in the near future.
The BRIO was launched in 2011 in Thailand as an eco-car with good fuel economy as
well as exported to other ASEAN member nations. Plans also call for launching the BRIO
as an entry-level car in India. To compete successfully in the rapidly expanding market for
compact cars in emerging markets, the key factor is affordability. Honda will draw on
the know-how we have accumulated in Asian countries as a motorcycle manufacturer to
enhance our competitiveness in automobiles.
Also, in India, along with previously available electric power generators, Honda has be-
gun to manufacture our first inverter power generators in that country, which can be used
with high-precision equipment, such as medical devices, and require advanced technology
to produce. In China, Honda has also become the first Japanese company to manufacture
small tillers in that country. Through these and other activities, Honda is responding to
demand in emerging markets by drawing on our technology and know-how to meet customers expectations and develop new markets.
In addition, as part of our power products business, Honda is working aggressively to develop and market new energy-creation products, such as solar
power panels and small cogeneration units for household use.
For Honda, the next 10 years will be crucial in determining whether we can
successfully survive the major changes taking place in business conditions:
namely, the increased awareness on a global scale of issues related to the
natural environment and structural change in the world economy. Honda must focus especially on further developing our advanced environmental
technologies, strengthening our business position in emerging markets and
bolstering our competitiveness in the small car business as we aim to make
new leaps forward by enhancing the core characteristics that make Honda
unique.
12
For fiscal 2011, Honda set a year-end cash dividend of 15 per share, bringing total
cash dividends for the fiscal year to 54 per share. This dividend comprised 12 per share
for the first quarter, 12 per share for the second quarter, 15 per share for the third quarter and the previously mentioned year-end dividend of 15 per share.
For the fiscal year ending March 31, 2012, we are scheduled to pay quarterly dividends of
15 per share, or 60 per share for the full year, which will be 6 per share higher than in fiscal
2011. We will continue to do our utmost to meet the expectations of our shareholders.
Honda is a company where each and every member of management and the organiza-
tion works to realize the dream of providing joy to Honda customers by setting challenging
objectives, aiming for progress and growth as we look toward a better future at all times
and working to open up the frontiers of the future. What we are aiming for today is to
become a company that society wants to exist. In the future, as in the past, Honda will
take up the challenges of advanced creativity inherent in the features and qualities that
are associated with the Honda brand by continuing to draw on The Power of Dreams,
respond to the expectations of society, bring joy to our customers, inspire them and give
them satisfaction.
We look forward to the continued understanding and support of our shareholders and
Takanobu Ito
President & Chief Executive Officer
13
4,000
6,000
10,000
3,000
4,000
300
7,500
200
2,000
2,000
1,000
0
Review of Operations
Thousands
Japan
North America
8,000
Europe
Asia
4,000
Other Regions
Total
07
08
09
North America
10
11
Europe
Asia
09
10
2,500
0
11
10
11
190
189
185
(2.1)
199
202
1.5
7,628
9,178
20.3
1,433
11
1,690
17.9
4,000
150
1,000
07
08
07
07
08
08
09
09
09
Non-current
10
10
10
% change
190
6,000
300
1,500
0
0
2011
2010
8,000
450
2,000
2,000
0
500
Yen (billions)
Yen (millions)
2,000
3,000
Japan
1,500
2,000
North America
Europe
1,000
1,000
Asia
07
08
09
10
11
07
08
09
10
11
Other Regions
North America
Europe
Asia
11,445
9,639
11
07
08
09
07
08
09
07
08
09
08
09
6,000
Yen (billions)
500
4,500
0.0 % 400
3,000
300
1,500
200
0
100
18.7 %
11
Current
2011
2010
300
5,000
150
2,500
07
07
08
08
09
09
Non-current
% change
4,500
70,244
(0.3)%
103,956
96,664
(7.0)
124,665
103,890
(16.7)
461,067
577,669
25.3
380,143
10
11
10 11
439,727
15.7
70,461
1,140,292
Other Regions
09
6,000
Total
Thousands
08
Yen (billions)
450
7,500
0
0
07
Yen (billions)
Yen (billions)
Yen (billions)
600
10,000
4,000
Japan
08
Yen (billions)
Other Regions
Net Thousands
Sales
07
09
Yen (billions)
12,000
500
0
08
600
Thousands
Thousands
Japan
07
Unit Sales
5,000
100
1,288,194
3,000
1,500
0
07
13.0 %
Current
Yen (billions)
8,000
Yen (billions)
500
Percentage
of Net Sales by Business
10,000
6,000
400
300
12,000
7,500
4,000
2,000
200
5,000
2,000
2,500
0
0
07
08
09
10
11
07
08
09
10
11
14.4%
1,500
8,000
100
1,000
0
4,000
07
08
09
10
11
500
07
Yen (billions)
Yen (billions)
600
Yen (billions)
6,000
08
09
10
11
500
450
4,500
400
300
4,000
3,000
10,000
3,000
1,500
7,500
300
150
200
0
100
0
07
08
09
10
11
07
08
09
10
11
CBR250R (Japan)
2,000
0
0
Non-current
Current
08
09
10
07
08
09
11
2,500
07
08
09
10
11
Yen (billions)
4,500
8,000
500
3,000
6,000
400
300
4,000
09
5,000
07
6,000
14
08
1,000
er Regions
07
Motorcycle Business
Hondas unit sales of motorcycles and all-terrain vehicles (ATVs) totaled 11,445 thousand units, an
increase of 18.7% compared with the previous fiscal year, due mainly to an increase in unit sales in
Asia and Other Regions, including South America.
Revenue from external customers increased 147.9 billion, or 13.0%, to 1,288.1 billion
from the previous fiscal year, due mainly to increased unit sales and revenue related to licensing
agreements. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal
year to the current fiscal year, net sales for the year would have increased by approximately 171.3
billion, or 15.0%, compared to the increase as reported of 147.9 billion, which includes the unfavorable foreign currency translation effects.
Operating income increased 79.7 billion, or 135.6%, to 138.5 billion from the previous
fiscal year, due mainly to an increase in income attributable to the increased net sales and income
related to licensing agreements.
15
Japan
Total industry demand for motorcycles in Japan in fiscal
2011 was approximately 420 thousand units*, approximately 3% higher than in the previous fiscal year. Although
the percentage of younger people in the total population
units, and about the same level as in the previous fiscal year, as
sales of the scooters PCX and Giorno expanded.
North America
Total demand for motorcycles and all-terrain vehicles (ATVs)
in the United States during calendar 2010 declined approximately 17% from the previous year, to about 700 thousand*
units. Although there were signs of recovery, mainly in sales
of utility ATVs, this did not lead to a full-scale recovery in
demand.
16
Europe
Total demand for motorcycles in Europe* during calendar
2010 declined about 13%, to approximately 920 thousand
units. This major drop in demand was due to a number of
factors, including a reactionary decline following the end of
subsidies for motorcycle purchases in Italy and the impact of
an increase in the value-added tax (VAT) in Spain.
PCX (Europe)
17
CB Twister (India)
Asia
Demand for motorcycles continued to expand in Asia,
despite price increases, including the price of gasoline, tighter credit and other factors in certain countries. In calendar
2010, total demand for motorcycles*1 rose about 10%, to
approximately 43.8 million units.
18
subsidiary in Vietnam, announced it would expand the capacity of its second plant to meet the favorable increase in
demand. By the latter half of calendar 2011, this expansion
in facilities is scheduled to bring total annual capacity to
approximately 2.0 million units.
December 16, 2010 to sell to its joint venture partners all the
shares held by Honda in Hero Honda Motors Limited, an affiliate of Honda accounted for under the equity method, for
the dissolution of the joint venture. Accordingly, Honda executed the share transfer agreement and new license agree-
Other Regions
In Brazil, the principal market within Other Regions, total
CG150FAN (Brazil)
East, Africa, Oceania and other areas), unit sales rose 17.9%
over the previous fiscal year, to 1.69 million units. This was
the result of increased sales of mainstay models, including
the CG150FAN and NXR150 motorcycles in Brazil.
* S ource: ABRACICLO (the Brazilian association of motorcycle, moped and bicycle
manufacturers)
19
4,000
6,000
2,000
12,000
10,000
300
7,500
3,000
4,000
1,500
8,000
200
2,000
2,000
1,000
4,000
1,000
0
500
Review of Operations
0
07
08
09
10
11
Thousands
4,000
Japan
Yen (billions)
2,000
3,000
North America
Europe
1,500
2,000
Asia
1,000
1,000
Other Regions
07
08
North America
07
08
09
09
10
Europe
10
Total
11
11
Asia
Yen (millions)
10,000
6,000
Japan
7,500
4,000
North America
Europe
5,000
2,000
Asia
Japan
08
08
09
10
09
09
2,500
0
11
10
10
11
11
07
08
07
07
08
08
09
582
1,297
1,458
249
198
950
1,008
6.1
11
250
266
6.4
10
09
09
10
10
Non-current
% change
646
4,000
150
5,000
0
0
2011
2010
6,000
300
7,500
2,000
0
2,500
07
08
09
10
11
07
08
09
10
11
North America
Europe
Other Regions
Total
Asia
Other Regions
Yen (billions)
600
Yen (billions)
08
09
07
08
09
07
08
09
3,392
11
11
3,512
07
08
09
08
09
6,000
Yen (billions)
500
4,500
(9.9)% 400
12.4
(20.5)
3,000
300
1,500
200
0
100
3.5 %
Current
Yen (billions)
6,000
2010
2011
1,383,855
1,310,734
3,013,432
3,252,852
575,326
441,696
1,041,258
1,221,704
17.3
10
11
540,977
10 11
567,112
4.8
6,554,848
6,794,098
450
400
300
300
12,000
200
150
100
8,000
0
0
07
Yen (billions)
600
Thousands
Yen (billions)
8,000
450
10,000
Yen (billions)
Yen (billions)
600
500
8,000
Yen (billions)
07
07
Other Regions
Net Thousands
Sales
2,500
0
08
Yen (billions)
Thousands
Japan
07
0
0
Unit Sales
500
0
5,000
100
07
07
08
08
09
09
4,000
Non-current
0
Yen (billions)07
08
09
Current
10
11
% change
4,500
(5.3)%
7.9
(23.2)
3,000
2,000
1,500
1,500
0
1,000
3.6 %
07
500
0
07
08
09
07
08
09
07
08
09
6,000
Percentage
of Net Sales by Business
500
450
4,500
400
300
3,000
4,000
1,500
3,000
7,500
10,000
300
150
200
0
100
0
07
08
09
10
11
07
08
09
10
11
Non-current
er Regions
Current
76.0%
0
2,000
07
08
09
10
11
1,000
0
5,000
2,500
07
08
09
10
11
Yen (billions)
6,000
4,500
3,000
8,000
500
400
6,000
300
1,500
4,000
200
07
08
09
10
11
2,000
0
20
100
07
08
09
10
11
600
6,000
450
4,500
Automobile Business
Hondas unit sales of automobiles totaled 3,512 thousand units, an increase of 3.5% compared with
the previous fiscal year, due mainly to an increase in unit sales in North America and Asia, which was
partially offset by decreases in unit sales in Japan and Europe.
Revenue from external customers increased 239.2 billion, or 3.6%, to 6,794.0 billion from
the previous fiscal year, due mainly to increased unit sales, which was partially offset by the unfavorable foreign currency translation effects. Honda estimates that by applying Japanese yen exchange
rates of the previous fiscal year to the current fiscal year, net sales for the year would have increased
by approximately 545.7 billion, or 8.3%, compared to the increase as reported of 239.2 billion,
which includes unfavorable foreign currency translation effects. Revenue including intersegment
sales increased 247.4 billion, or 3.8%, to 6,802.3 billion from the previous fiscal year.
Operating income increased 137.7 billion, or 108.7%, to 264.5 billion from the previous
fiscal year, due mainly to an increase in income attributable to the increased net sales and continuing cost reductions, which were partially offset by increased selling, general and administrative
expenses and R&D expenses, unfavorable foreign currency effects and the impact of the Great East
Japan Earthquake (the Earthquake), which occurred on March 11, 2011.
21
Japan
Total industry automobile sales in Japan*1 for fiscal 2011
decreased about 6%, to approximately 4.6 million units. In
the first half of the fiscal year, automobile sales held firm
because of the positive effects of government policies that
provided tax breaks and subsidies for purchasing eco-cars
and other factors. However, these subsidies came to an end
in the latter half of the fiscal year, resulting in a reactionary
decline in sales.
tic market decreased following the termination of the ecoFit Hybrid (Japan)
22
Europe
During calendar 2010, total demand in Europe*1 decreased
CR-Z (Europe)
North America
23
Asia
In Asia, total demand continued to increase due to robust
economic growth and the positive effects of new car model
launches. Unit sales in China rose about 32% over the previous
year to approximately 18.06 million units.*1 In Asia, excluding
China, units sales climbed 27%, to about 7.48 million units.*2
in demand in Chinas automobile market, Guangqi Honda Automobile Co., Ltd., an affiliate accounted for under the equity
method, is scheduled to increase its annual production capacity
from the current 360 thousand to 480 thousand units by the
latter half of calendar 2011. In addition, Dongfeng Honda Automobile Co., Ltd., an affiliate accounted for under the equity
method, started construction of a second plant in response to
continued expansion in demand in Chinas automobile market.
Within the latter half of calendar 2012, Dongfeng Hondas
Li Nian S1 (China)
24
City (Thailand)
Other Regions
Total industry demand for automobiles in Brazil, one of the principal markets among the Other Regions, increased about 11%,
to approximately 3.33 million*1 units in calendar 2010. This
was the result of rising consumer confidence due to surges in
employment and income as well as an improvement in the purchasing environment for new automobiles due to lower interest
rates and increased availability of credit in Brazil. In Australia,
total demand for automobiles expanded about 11% over the
previous year, to approximately 1.04 million units, supported by
continued favorable economic conditions.*2
25
4,000
6,000
10,000
4,000
Yen (billions)
2,000
3,000
3,000
4,000
7,500
1,500
2,000
2,000
2,000
5,000
1,000
1,000
1,000
0
2,500
500
0
0
0
Review of Operations
0
Unit Sales
07
08
09
10
11
07
08
09
10
11
Thousands
8,000
Yen (billions)
Japan
10,000
6,000
North America
Asia
5,000
2,000
Japan
Other Regions
08
North America
07
08
09
09
10
10
Total
11
Europe
11
Asia
Other Regions
Yen (millions)
500
450
Japan
400
300
North America
300
Europe
150
200
er Regions
Japan
07
07
08
08
08
09
10
11
07
08
09
10
11
North America
Non-current
Europe
Current
150
12,000
200
2,000
0
100
8,000
0
0
2,500
0
11
10
10
11
11
Asia
07
08
07
07
09
08
08
09
09
Non-current
08
09
300
3,000
4,000
Total
1,000
Other Regions
2011
2010
3.3%
1,500
07
08
09
10
07
07
08
08
09
09
Non-current
07
08
09
1,174
10.1
1,069
1,325
23.9
11
469
537
14.5
0
100
1,500
07
08
09
16.1
0
%1,000
07
08
09
5,509
4,744
11
11
3,000
300
1,500
2,000
200
Current
10
500
0
Yen (billions)
11
2011
% change
98,367
96,515
65,890
67,917
3.1
54,366
55,264
1.7
36,754
49,369
34.3
23,614
5.9
277,682
292,679
Current
11
08
09
4,500
(1.9)%
1022,305
11
10 11
10
07
6,000
3,000
10,000
1,500
7,500
0
5,000
07
08
09
5.4 %2,500
0
07
08
09
07
08
09
07
08
09
400
300
200
100
07
08
09
10
11
6,000
BF60
450
4,500
300
3,000
150
1,500
20.5 % 400
500
600
500
4,500
1,066
10
10
10
% change
6,000
Yen (billions)
14.7
09
4,000
08
2,085
6,000
ENEPO EU9iGB
Pianta FV200
07
1,818
2,000
11
09
388
8,000
3,000
08
322
2010
0
0
2,000
07
Yen (billions)
450
4,500
Other Regions
4,500
26
10
6,000
400
300
Yen (billions)
09
09
150
1,500
3,000
Asia
07
09
600
Thousands
Yen (billions)
8,000
450
500
Percentage
of Net Sales by Business
6,000
08
Yen0(billions)
Yen (billions)07
600
6,000
600
Yen (billions)
07
4,000
Yen (billions)
Net Sales
0
100
200
5,000
100
300
4,000
Europe
7,500
4,000
07
300
7,500
Yen (billions)
Thousands
2,500
0
10,000
07
08
09
10
11
Japan
Other Regions
United States and in the Middle East and Africa as well as an in-
nomic recovery.
blowers and other types of machinery. In May 2010, Honda newly launched the ENEPO EU9iGB, a gas-powered electric power
North America
new thin-film solar cells will go on sale that are even more com-
Europe
electric power.
Aviation Business
Asia
Next, the aircraft will undergo flight, structural and other tests
in the first half of 2012, and the first HondaJets are slated to be
to increased sales.
4,000
8,000
Yen (billions)
3,000
10,000
6,000
10,000
6,000
500
200
300
5,000
2,000
7,500
4,000
2,000
12,000
200
2,5000
1,000
5,000
2,000
Review
of Operations
0
2,500
0
0
Net Sales
08
09
10
11
100
2,000
07
08
09
0
1,500
11
07 08 09 10 11
07 08 09 10 11
Japan
North America
Asia
Other Regions
Total
07 08 09 10 11
07 08 09 10 11
North America
07
08
Europe
09
10
11
Asia
Other Regions
0
0
2,000
Finance
600 Receivables and Property on Operating Leases
6,000
Yen (billions)
450
6,000
Yen (millions)
09
Property on
Total
150
3,000
07
08
09
10
26,349
553,169
503,960
(8.9)
10,428
9,263
(11.2)
(13.7)
07 08 09 606,352
10 11
07 08 09 10 11
561,896
Non-current
07
08
09
1,500
6,000
07
08
3,461,493
3,479,981
1,308,147
1,357,632
4,769,640
4,837,613
11
09
3,000
1,500
10,000
0
7,500
34.7
07
08
09
(7.3)%5,000
2011
10
08
2,500
2010
09
07
7.0 %
11
10
4,500
Current
09
3,000
Operating
8,000Leases
% change
24,635
3,728
09
4,500
0
4,000
11
2011
18,596
08
Finance Receivables
300
4,500
10 11
2010
4,318
0
Yen (billions)
Current
08
1013,802
11
07
1,000
08
1,000
6,000
400
300
4,500
300
150
3,000
4,000
200
1000
1,500
3,000
07
500
Yen (billions)
600
Yen 0
(billions)
Yen (billions)07
500
450
6,000
Yen (millions)
300
2,000
150
200
0
1,500
10
Yen (billions)
Europe
4,000
07
400
4,000
300
Japan
er Regions
100
8,000
0
0
07 08 09 10 11
07 08 09 10 11
Thousands
Yen (billions)
8,000
600
Yen (billions)
6,000
500
450
0
0
100
300
7,500
400
4,000
07
08
09
07
08
09
07
08
09
% change
0.5%
3.8
500
1.4%
400
300
200
07
08
Finance
Receivables
r Regions
09
10
2,000
11
Property on
Operating Leases
100
07
08
09
10
11
6.3%
600
6,000
450
4,500
300
3,000
150
1,500
28
07
08
09
10
11
other countries.
starting in the fiscal year ended March 31, 2007, some of the
ating leases and direct financing leases will have a material net
ing the Japanese yen exchange rates of the previous fiscal year
to the current fiscal year, revenue for the year would have de-
in the fair value of retained interests since the year ended March
31, 2011.
to lease residual values. Selling, general and administrative expenses decreased 25.0 billion, or 24.5%, to 77.3 billion from
the previous fiscal year, due mainly to a decrease in provisions
for credit losses.
29
Honda aims to achieve global growth by further encouraging and strengthening innovation and
creativity and creating quality products that please the customers and exceed their expectations.
1.
In connection with its efforts to develop the most effective safety and environmental
technologies, Honda will continue to be innovative in advanced technology and products.
Honda aims to create and introduce new value-added products to quickly respond to specific
needs in various markets around the world. Honda will also continue its efforts to conduct
research on experimental technologies for the future.
2.
Production Efficiency
Honda will establish and enhance efficient and flexible production systems at its global
production bases and supply high quality products, with the aim of meeting the needs of its
customers in each region.
3.
Sales Efficiency
Honda will remain proactive in its efforts to expand product lines through the innovative use
of IT and will show its continued commitment to different customers throughout the world by
upgrading its sales and service structure.
4.
Product Quality
In response to increasing customer demand, Honda will upgrade its quality control by enhancing
the functions of and coordination among the development, purchasing, production, sales and
service departments.
5.
Safety Technologies
Honda is working to develop safety technologies that enhance accident prediction and
prevention, technologies to help reduce the risk of injuries to passengers and pedestrians from
car accidents, and technologies that enhance compatibility between large and small vehicles,
as well as expand its lineup of products incorporating such technologies. Honda will reinforce
and continue to advance its contribution to traffic safety in motorized societies in Japan and
abroad. Honda also intends to remain active in a variety of traffic safety programs, including
advanced driving and motorcycling training programs provided by local dealerships.
6.
The Environment
Honda will step up its efforts to create better, cleaner and more fuel-efficient engine technologies
and to further improve recyclables throughout its product lines. Honda will also work to advance fuel cell technology and steadily promote its new solar cell business. In addition, Honda
will further its efforts to minimize its environmental impact. To this end, Honda sets global
targets to reduce the environmental burden as measured by the Life Cycle Assessment*, in all
areas of business, spanning production, logistics and sales.
* Life Cycle Assessment:
A comprehensive system for quantifying the impact Hondas products have on the environment at the different stages in
their life cycles, from material procurement and energy consumption to waste disposal.
30
Therefore, in order to improve the competitiveness of its products, Honda will endeavor to
enhance its R&D, production and sales capabilities. Furthermore, Honda will continue to enhance
its social reputation in the community through Companywide activities. Honda recognizes that
further enhancing the following specific areas is essential to its success:
7.
Continuing to
Enhance Hondas
Social Reputation
and Communication
with the Community
To achieve these targets, Honda will make all possible efforts in pursuit of its vision for the
Company as it moves towards 2020: To provide good products in a timely fashion, at affordable prices, and with low CO2 emissions.
8.
The Company temporarily suspended production at its sites located in Japan due to the effects
of the Great East Japan Earthquake that occurred on March 11, 2011, which included a shortage of parts supplies. In addition, some of Hondas business sites, such as Hondas R&D subsidiaries located in Tochigi Prefecture, were heavily damaged. By April 11, 2011, the Company had
resumed production activities at all of its production sites; however, production of completed
automobiles at plants within Japan and production of components and parts for Hondas
overseas sites had been operating at approximately half the normal rate. Production in Japan
had been nearly normalized in late June. Production at Hondas automobile plants overseas has
been reduced as well and is expected to be nearly normalized around August to September.
In such circumstances, Honda will endeavor to normalize the supply chain continuously and
aims to return to normal production as soon as possible. Honda will work on sales pickup by
the recovery of production and bring about a recovery of its operations as soon as possible.
Taking into account this experience, Honda will strive to minimize risks that have surfaced due
to the earthquake disaster, including risks related to supply chain disruption.
which is a subsidiary of the Company, and based on the investigation report and suggestion
for preventive countermeasures that was submitted to the Companys Board of Directors by
the investigation committee established with external experts, the Company will build a system
to make appropriate business judgments in accordance with the applicable laws and regulations and will further enhance corporate governance, increasing compliance awareness and
strengthening the risk management systems, including through the reexamination of personnel management systems.
Through these Companywide activities, Honda will strive to be a company that its shareholders,
investors, customers and society want to exist.
31
Risk Factors
Risks Relating to the Great East Japan Earthquake and its Aftermath
The Great East Japan Earthquake occurred on March 11, 2011 and the Fukushimas nuclear
power plant disaster have caused and will continue to cause significant damage to the Japanese economy. After March 11, 2011, Honda temporarily suspended or reduced production at
Hondas automobile plants in and outside of Japan. However, the production in Japan has in
general returned to normal levels since late June, and production outside of Japan is expected
to be generally normalized from around August to September. In addition, although Hondas
business sites, such as Hondas R&D subsidiaries located in Tochigi Prefecture, were heavily damaged, currently we expect them to be restored. Although prospects for restoration of business
activities have become clear, as mentioned above, Hondas production activities may be affected
depending on the status of the future supply of certain parts for which supply is currently
restricted, and on the status of infrastructure, such as the supply of electricity and logistics
services. Furthermore, sales in domestic and international markets may decline. Depending on
the magnitude of these effects, Hondas results of operations may be adversely affected.
Honda may be
adversely affected
by market
conditions
Honda conducts its operations in Japan and throughout the world, including North America,
Europe and Asia. A sustained loss of consumer confidence in these markets, which may be
caused by continued economic slowdown, recession, changes in consumer preferences, rising
fuel prices, financial crisis or other factors could trigger a decline in demand for automobiles,
motorcycles and power products that may adversely affect Hondas results of operations.
2.
Prices for
automobiles,
motorcycles and
power products can
be volatile
Prices for automobiles, motorcycles and power products in certain markets may experience
sharp changes over short periods of time. This volatility is caused by many factors, including
fierce competition, which is increasing, short-term fluctuations in demand from instability in
underlying economic conditions, changes in tariffs, import regulations and other taxes, shortages of certain materials and components, high material prices and sales incentives by Honda
or other manufacturers or dealers. There can be no assurance that such price volatility will
not continue or intensify or that price volatility will not occur in markets that to date have not
experienced such volatility.
Overcapacity within the industry has increased and will likely continue to increase if the
1.
32
Hondas operations
are subject
to currency
fluctuations
Honda has manufacturing operations throughout the world, including Japan, and exports
products and components to various countries.
Honda purchases materials and components and sells its products and components in
foreign currencies. Therefore, currency fluctuations may affect Hondas pricing of products sold
and materials purchased. Accordingly, currency fluctuations have an effect on Hondas results
of operations and financial condition, as well as Hondas competitiveness, which will over time
affect its results.
Since Honda exports many products and components, particularly from Japan, and gener-
ates a substantial portion of its revenues in currencies other than the Japanese yen, Hondas
results of operations would be adversely affected by an appreciation of the Japanese yen
against other currencies, in particular the U.S. dollar.
2.
Hondas hedging
of currency and
interest rate risk
exposes Honda to
other risks
Although it is impossible to hedge against all currency or interest rate risk, Honda uses derivative
financial instruments in order to reduce the substantial effects of currency fluctuations and interest rate exposure on our cash flow and financial condition. These instruments include foreign
currency forward contracts, currency swap agreements and currency option contracts, as well
as interest rate swap agreements. Honda has entered into, and expects to continue to enter
into, such hedging arrangements. As with all hedging instruments, there are risks associated
with the use of such instruments. While limiting to some degree our risk fluctuations in currency
exchange and interest rates by utilizing such hedging instruments, Honda potentially forgoes
benefits that might result from other fluctuations in currency exchange and interest rates. Honda is also exposed to the risk that its counterparties to hedging contracts will default on their
obligations. Honda manages exposure to counterparty credit risk by limiting the counterparties
to major international banks and financial institutions meeting established credit guidelines.
However, any default by such counterparties might have an adverse effect on Honda.
1.
2.
The automobile,
motorcycle and power
product industries are
subject to extensive
environmental and other
governmental regulations,
including with respect to
global climate changes
Regulations regarding vehicle emission levels, fuel economy, noise and safety and noxious
Honda is reliant on
the protection and
preservation of its
intellectual property
Honda owns or otherwise has rights in a number of patents and trademarks relating to the
substances, as well as levels of pollutants from production plants, are extensive within the automobile, motorcycle and power product industries. These regulations are subject to change,
and are often made more restrictive, particularly in recent years, due to an increasing concern
with respect to possible global climate changes. The costs to comply with these regulations can
be significant to Hondas operations.
products it manufactures, which have been obtained over a period of years. These patents
and trademarks have been of value in the growth of Hondas business and may continue to be
of value in the future. Honda does not regard any of its businesses as being dependent upon
any single patent or related group of patents. However, an inability to protect this intellectual
property generally, or the illegal infringement of some or a large group of Hondas intellectual
property rights, would have an adverse effect on Hondas operations.
3.
Honda is
subject to legal
proceedings
Honda is and could be subject to suits, investigations and proceedings under relevant laws
and regulations of various jurisdictions. A negative outcome in any of the legal proceedings
pending against Honda could adversely affect Hondas business, financial condition or results
of operations.
33
1.
Hondas financial
services business
conducts business
under highly
competitive conditions
in an industry with
inherent risks
Hondas financial services business offers various financing plans to its customers designed to
increase the opportunity for sales of its products and to generate financing income. However,
customers can also obtain financing for the lease or purchase of Hondas products through a
variety of other sources that compete with our financing services, including commercial banks
and finance and leasing companies. The financial services offered by us also involve credit risk
as well as risks relating to lease residual values, cost of capital and access to funding. Competition for customers and/or these risks may affect Hondas results of operations in the future.
2.
Honda relies on
various suppliers
for the provision of
certain raw materials
and components
Honda purchases raw materials, and certain components and parts, from numerous external
suppliers, and relies on some key suppliers for some items and the raw materials it uses in the
manufacture of its products. Hondas ability to continue to obtain these supplies in an efficient
and cost-effective manner is subject to a number of factors, some of which are not within
Hondas control. These factors include the ability of its suppliers to provide a continued source
of supply and Hondas ability to compete with other users in obtaining the supplies. Loss of a
key supplier in particular may affect our production and increase our costs.
3.
Honda conducts
its operations in
various regions
of the world
Honda conducts its businesses worldwide, and in several countries, Honda conducts businesses
through joint ventures with local entities, in part due to the legal and other requirements of
those countries. These businesses are subject to various regulations, including the legal and
other requirements of each country. If these regulations or the business conditions or policies of
these local entities change, it may have an adverse affect on Hondas business, financial condition or results of operations.
4.
Honda conducts its businesses worldwide, and its operations may variously be subject to wars,
use of force by foreign countries, terrorism, multinational conflicts, political uncertainty, natural
disasters, epidemics, labor strikes and other events beyond our control which may delay or
disrupt Hondas local operations in the affected regions, including the purchase of raw materials
and parts, the manufacture, sales and distribution of products and the provision of services.
Delays or disruptions in one region may in turn affect our global operations. If such delay or
disruption occurs and continues for a long period of time, Hondas business, financial condition
or results of operations may be adversely affected.
5.
Honda may be
adversely affected
by inadvertent
disclosure of
confidential
information
Although Honda maintains internal controls through established procedures to keep confidential information including personal information of its customers and relating parties, such
information may be inadvertently disclosed. If this occurs, Honda may be subject to, and may be
adversely affected by, claims for damages from the customers or parties affected. Also, inadvertent disclosure of confidential business or technical information to third parties may result in a
loss of Hondas competitiveness.
34
6.
Risks relating to
pension costs and
other postretirement
benefits
Honda has pension plans and provides other post-retirement benefits. The amounts of pension
benefits, lump-sum payments and other post-retirement benefits are primarily based on the
combination of years of service and compensation. The funding policy is to make periodic contributions as required by applicable regulations. Benefit obligations and pension costs are based
on assumptions of many factors, including the discount rate, the rate of salary increase and the
expected long-term rate of return on plan assets. Differences in actual expenses and costs or
changes in assumptions could affect Hondas pension costs and benefit obligations, including
Hondas cash requirements to fund such obligations, which could materially affect our financial
condition and results of operations.
7.
The rights of shareholders under Japanese law to take various actions, including exercising
voting rights inherent in their shares, receiving dividends and distributions, bringing derivative
actions, examining a companys accounting books and records, and exercising appraisal rights,
are available only to holders of record. Because the depositary, through its custodian agents,
is the record holder of the Shares underlying the ADSs, only the depositary can exercise those
rights in connection with the deposited Shares. The depositary will make efforts to exercise
votes regarding the Shares underlying the ADSs as instructed by the holders and will pay to the
holders the dividends and distributions collected from the Company. However, in the capacity as
an ADS holder, such holder will not be able to bring a derivative action, examine our accounting
books or records or exercise appraisal rights through the depositary.
8.
Rights of shareholders
under Japanese law may
be more limited than
under the laws of other
jurisdictions
9.
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium
between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily
upward and downward price fluctuation limits for each stock, based on the previous days
closing price. Although transactions may continue at the upward or downward limit price if the
limit price is reached on a particular trading day, no transactions may take place outside these
limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit
may not be able to sell his or her shares at such price on a particular trading day, or at all.
35
10.
The Company is a limited liability, joint stock corporation incorporated under the laws of Japan.
Most of its directors, executive officers and corporate auditors reside in Japan. All or substantially
all of the Companys assets and the assets of these persons are located in Japan and elsewhere
outside the United States. It may not be possible, therefore, for U.S. investors to effect service of
process within the United States upon the Company or these persons or to enforce against the
Company or these persons judgments obtained in U.S. Courts predicated upon the civil liability
provisions of the Federal securities laws of the United States. There is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of judgment of U.S. courts, of
liabilities predicated solely upon the federal securities laws of the United States.
11.
The Companys
shareholders of record
on a record date may not
receive the dividend they
anticipate
The customary dividend payout practice and relevant regulatory regime of publicly listed
companies in Japan may differ from that followed in foreign markets. The Companys dividend
payout practice is no exception. While the Company may announce forecasts of year-end and
quarterly dividends prior to the record date, these forecasts are not legally binding. The actual payment of year-end dividends requires a resolution of the Companys shareholders. If the
shareholders adopt such a resolution, the year-end dividend payment is made to shareholders as
of the applicable record date, which is currently specified as March 31 by the Companys Articles
of Incorporation. However, such a resolution of the shareholders is usually made at an ordinary
general meeting of shareholders held in June. The payment of quarterly dividends requires
a resolution of the Companys board of directors. If the board adopts such a resolution, the
dividend payment is made to shareholders as of the applicable record dates, which are currently
specified as June 30, September 30 and December 31 by the Articles of Incorporation. However,
the board usually does not adopt a resolution with respect to a quarterly dividend until after the
respective record dates.
Shareholders of record as of an applicable record date may sell shares after the record date in
anticipation of receiving a certain dividend payment based on the previously announced forecasts. However, since these forecasts are not legally binding and resolutions to pay dividends are
usually not adopted until after the record date, our shareholders of record on record dates for
year-end and quarterly dividends may not receive the dividend they anticipate.
Additional risks not currently known to Honda or that Honda now deems immaterial may also
harm Honda and affect your investment.
36
Corporate Governance
Companies listed on the New York Stock Exchange (the NYSE)
Currently, Honda does not adopt stock option compensation plans. If Honda were
to adopt such a plan, Honda must obtain shareholder approval for stock options
only if the stock options are issued with specifically favorable conditions or price
concerning the issuance and exercise of the stock options.
37
Front row:
Back row:
38
Chairman and
Representative Director
President,
Chief Executive Officer and
Representative Director
Koichi Kondo
Takanobu Ito
Akio Hamada
Senior Managing
Officer and Director
Senior
Managing Officer
Senior Managing
Officer and Director
Senior Managing
Officer and Director
Fumihiko Ike
Tetsuo Iwamura
Tatsuhiro Oyama
Tomohiko Kawanabe
Directors
Koichi Kondo
Compliance Officer
President,
Chief Executive Officer and
Representative Director
Takanobu Ito
Akio Hamada
Tatsuhiro Oyama
Fumihiko Ike
Tomohiko Kawanabe
Yoshiharu Yamamoto
President, Chief Executive Officer and Director of Honda R&D Co., Ltd.
Director
Kensaku Hogen
Director
Nobuo Kuroyanagi
Takeo Fukui
Takuji Yamada
Masahiro Yoshida
Note: Mr. Kensaku Hogen and Mr. Nobuo Kuroyanagi satisfy the required conditions for the outside director provided for in Article 2, Paragraph 1, Item 15 of the Company Law.
Corporate Auditors
Toru Onda
Hideki Okada
Corporate Auditor
Fumihiko Saito
Corporate Auditor
Hirotake Abe
Corporate Auditor
Tomochika Iwashita
Note: C
orporate Auditors Mr. Fumihiko Saito, Mr. Hirotake Abe and Mr. Tomochika Iwashita are outside corporate auditors as provided for in Article 2, Paragraph 1, Item 16 of the
Company Law.
39
Executive Officers
President, Chief Executive Officer
Takanobu Ito
Akio Hamada
Tetsuo Iwamura
Tatsuhiro Oyama
Fumihiko Ike
Tomohiko Kawanabe
Managing Officer
Takashi Yamamoto
Managing Officer
Masaya Yamashita
Managing Officer
Hidenobu Iwata
Managing Officer
Manabu Nishimae
Chief Operating Officer for Regional Operations (Europe, the Middle & Near East and Africa)
President and Director of Honda Motor Europe Ltd.
Managing Officer
Koichi Fukuo
Managing Officer
Hiroshi Kobayashi
Managing Officer
Sho Minekawa
Managing Officer
Yoshiharu Yamamoto
President, Chief Executive Officer and Director of Honda R&D Co., Ltd.
Managing Officer
Toshihiko Nonaka
Operating Officer
Takuji Yamada
Operating Officer
Masahiro Takedagawa
Operating Officer
Yoshiyuki Matsumoto
Operating Officer
Ko Katayama
Operating Officer
Masahiro Yoshida
Operating Officer
Seiji Kuraishi
Operating Officer
Takashi Nagai
Operating Officer
Katsushi Watanabe
Operating Officer
Toshiaki Mikoshiba
Operating Officer
Yoshi Yamane
Operating Officer
Takashi Sekiguchi
Operating Officer
Takahiro Hachigo
Operating Officer
Hiroshi Sasamoto
President, Chief Executive Officer and Director of Honda Engineering Co., Ltd.
Operating Officer
Hiroyuki Yamada
Operating Officer
Chitoshi Yokota
Operating Officer
Michimasa Fujino
Operating Officer
Soichiro Takizawa
Operating Officer
Yuji Shiga
Responsible for CIS countries, the Middle & Near East and Africa for Regional Operations
Operating Officer
Kohei Takeuchi
There is no family relationship between any director or executive officer and any other director or executive officer.
40
Financial Section
42 Financial Review
58 Consolidated Balance Sheets
60 Consolidated Statements of Income
61 Consolidated Statements of Changes in Equity
63 Consolidated Statements of Cash Flows
64 Segment Information
69 Basis of Translating Financial Statements
70 Consolidated Balance Sheets Divided into Non-Financial Services Businesses and Finance Subsidiaries
71 Consolidated Statements of Cash Flows Divided into Non-Financial Services Businesses and Finance Subsidiaries
72 Financial Summary
74 Selected Quarterly Financial Data
41
Financial Review
Operating and Financial Review
(hereafter, net sales) for the fiscal year ended March 31, 2011,
year ended March 31, 2010, due mainly to increased net sales in
current fiscal year, net sales for the year would have increased by
translation effects.
consolidated subsidiaries.
Yen (billions)
12,000
10,000
8,000
6,000
4,000
2,000
follows;
2007
2008
2009
2010
2011
8,367.0 billion from the previous fiscal year. Cost of sales increased
82.1 billion, or 1.3%, to 6,496.8 billion from the previous fiscal
sales and the effect of raw material fluctuations, which was partially
billion from the previous fiscal year. The effective tax rate decreased
10.9 percentage points, to 32.8% from the previous fiscal year. The
affiliates.
the products.
Operating Income
Net Income
Automobile Business
3.6%, to 6,794.0 billion from the previous fiscal year, due mainly to
increased unit sales, which was partially offset by the negative foreign
currency translation effects. Honda estimates that by applying
Japanese yen exchange rates of the previous fiscal year to the current
fiscal year, net sales for the year would have increased by approximately
(Yen)
800
400
600
300
400
200
200
100
2007
2008
2009
2010
2011
Business Segments
Motorcycle Business
the previous fiscal year to the current fiscal year, net sales for the
5.4%, to 292.6 billion from the previous fiscal year, due mainly to
previous fiscal year to the current fiscal year, net sales for the year
323.8 billion from the previous fiscal year. Cost of sales decreased
licensing agreements.
currency effects.
operating leases and direct financing leases will have a material net
or 1.4%, to 4,837.6 billion from the previous fiscal year, due mainly
Geographical Information
Japan
billion, or 9.2%, to 3,611.2 billion from the previous fiscal year, due
rates of the previous fiscal year to the current fiscal year, revenue for
increased net sales and model mix, continuing cost reductions and
to 387.1 billion from the previous fiscal year. Cost of sales decreased
Earthquake.
11.6 billion, or 3.6%, to 309.8 billion from the previous fiscal year,
44
North America
billion, or 24.5%, to 77.3 billion from the previous fiscal year, due
billion from the previous fiscal year, due mainly to negative foreign
billion, or 27.3%, to 300.9 billion from the previous fiscal year, due
and model mix, and a decrease in fixed costs per unit as a result of
in the fiscal year ended March 31, 2007, some of the leases which
effects.
Europe
Motorcycle Business
improvement of 0.6 billion from the previous fiscal year, due mainly
Asia
engine, which is outfitted with the worlds first roller rocker arm and
Other Regions
982.0 billion from the previous fiscal year, due mainly to an increase
23.7 billion, or 51.8%, to 69.5 billion from the previous fiscal year,
sales and model mix, positive foreign currency effects, which was
but also to suit the tastes of a broad range of other customers. Also,
expenses.
bike which is the first Cub style equipped with the PGM-FI
electronically controlled fuel injection system that is more compact
than those equipped in previous models. WAVE 110i has a more-
a full model change. The new MegaPro offers a new design and
Also, it is equipped with a new type engine that aims for improved
technologies.
Ltd. in Japan; Honda R&D Americas, Inc. in the United States; and
Automobile Business
United States. All of these entities work in close association with our
Total consolidated R&D expenses for the fiscal year ended March
environment issues.
Among major achievements in Japan during fiscal 2011, we
launched the Freed Spike, which features ease of driving and a
spacious interior in a compact body. In addition, we made minor
45
transmission. The LEGEND is also now the first car in the world
launched the Fit Hybrid (sold in Europe as the Jazz Hybrid), a new
which are more compact than models already on the market and
type in the Fit series, which has its hybrid battery installed underneath
the baggage compartment and thus retains the interior comfort and
Inc., our U.S. subsidiary in the jet aircraft business, reported that the
been designed for obtaining approval from the U.S. Federal Aviation
Concept. This new electric vehicle (EV) concept model offers driving
Fundamental Research
the features of having the motor on the same axle as the gearbox.
of the future.
delivers high efficiency and high fuel performance, together with two
Japan and more than 24,600 patents abroad. Honda also had
applications pending for more than 14,800 patents in Japan and for
600
(%)
6
400
200
Yen (billions)
2008
2009
2010
2011
2007
Capital Expenditures
R&D facilities.
2010
2011
Increase (Decrease)
Yen (millions)
Motorcycle Business
Automobile Business
Financial Services Business
Financial Services Business (Excluding Property on Operating Leases)
Power Product and Other Businesses
38,332
267,257
544,425
398
23,748
37,084
260,149
798,584
164
13,963
(1,248)
(7,108)
254,159
(234)
(9,785)
Total
873,762
1,109,780
236,018
329,735
311,360
(18,375)
37,084 million in the fiscal year ended March 31, 2011. Funds were
Yen (millions)
Motorcycle Business
Automobile Business
Financial Services Business
Power Product and Other Businesses
65,300
350,000
300
14,400
Total
430,000
Note: The estimated amount of capital expenditures for the Financial Services Business in
the above table does not include property on operating leases.
Intangible assets are not included in the table above.
March 2011.
In the financial services business segment, capital expenditures
excluding property on operating leases amounted to 164 million in
the fiscal year ended March 31, 2011, while capital expenditures for
700
600
500
year ended March 31, 2011, totaling 13,963 million, were deployed
400
300
200
100
2007
2008
Capital Expenditures
2009
2010
2011
Depreciation
47
458.8 billion, compared with the previous fiscal year, due mainly to
balance sheet.
Liquidity
The 1,279.0 billion in cash and cash equivalents at the end of the
dealers.
sales, and Honda believes it has sufficient liquidity for its business
operations.
2011.
Cash Flows
Consolidated cash and cash equivalents for the year ended March
31, 2011 increased by 159.1 billion from March 31, 2010, to
1,279.0 billion. The reasons for the increases or decreases for each
cash flow activity are as follows:
Net cash provided by operating activities amounted to 1,070.8
billion of cash inflows. Cash inflows from operating activities
decreased by 473.3 billion compared with the previous fiscal year,
due mainly to increased payments for parts and raw materials
primarily due to an increase in automobile production, which was
partially offset by an increase in cash received from customers,
primarily due to increased unit sales in the automobile business.
Net cash used in investing activities amounted to 731.3 billion of
Long-term
unsecured
debt securities
P-1
A-1
a-1+
A1
A+
AA
48
Guarantee
2011, no amount was accrued for any estimated losses under the
Yen (millions)
Total
1-3 years
3-5 years
After 5 years
Long-term debt
Operating leases
Purchase commitments*1
Interest payments*2
Contributions to defined benefit pension plans*3
3,005,695
102,783
28,466
218,226
92,815
962,455
19,100
28,466
92,907
92,815
1,369,943
24,370
97,696
555,551
15,115
25,112
117,746
44,198
2,511
Total
3,447,985
1,195,743
1,492,009
595,778
164,445
*1 Honda had commitments for purchases of property, plant and equipment at March 31, 2011.
*2 To estimate the schedule of interest payments, the Company utilized the balances and average interest rates of borrowings and debts and derivative instruments as of March 31, 2011.
*3 Since contributions beyond the next fiscal year are not currently determinable, contributions to defined benefit pension plans reflect only contributions expected for the next fiscal year.
Trend Information
The Great East Japan Earthquake occurred on March 11, 2011 and
the nuclear power plant disaster has caused and will continue to
at its sites located in Japan due to the effects of this disaster, which
includes a shortage of parts supplies and damage on property, plant
and equipment.
49
which the use of different estimates that could have reasonably been
used in the current period would have had a material impact on the
increase
these costs and expenses resulting from the disaster are included in
assumptions.
accounting policies.
incurred. The effect of this disaster on Hondas sales activities for the
the
uncertainty
inherent
in
such
estimates
and
(Product Warranty)
As of the date of the filing of Hondas Form 20-F (as of June 23,
estimated average repair cost per unit for warranty claims. Our
long period.
inherently uncertain.
satellite offices within the plants and other offices as it would take
some time to restore its buildings and facilities, and resumed R&D
Actual claims incurred in the future may differ from the original
estimates, which may result in material revisions to the warranty
expense accruals.
50
The changes in provisions for those product warranties and net sales and other operating revenue for each of the years in the three-year
period ended March 31, 2011 are as follows:
Yen (millions)
2009
293,760
(123,509)
79,576
2,233
(18,081)
233,979
233,979
(86,886)
79,520
(3,571)
2,996
226,038
226,038
(82,080)
84,920
(3,550)
(11,385)
213,943
10,011,241
8,579,174
8,936,867
2011
2010
(Credit Losses)
by the dealership.
regularly review the adequacy of the allowance for credit losses and
estimates.
rate analysis and delinquency roll rate analysis. When performing the
collateral type, credit grades and original terms. Loss rates are
2011, the provision for fiscal 2011 and the allowance balance at the
projected for these pools based on historical rates and adjusted for
billion and 2.8 billion, respectively. Note that this sensitivity analysis
2011.
51
Yen (billions)
Retail
Wholesale
Total
31.4
49.1
(57.3)
14.7
(1.4)
(2.2)
2.5
3.2
(6.0)
2.1
(0.1)
0.7
1.9
(0.5)
0.0
(0.2)
34.8
54.4
(63.9)
16.9
(1.4)
(2.7)
34.3
1.8
1.8
38.0
3,138.8
3,431.6
1.24%
1.09%
699.3
878.3
0.44%
0.27%
377.6
383.4
0.15%
0.50%
4,215.7
4,693.4
1.00%
0.90%
For the year ended March 31, 2010
Yen (billions)
Retail
Wholesale
Total
34.3
30.0
(43.7)
13.9
(0.6)
1.8
1.9
(3.2)
1.1
0.1
1.8
0.3
(0.6)
0.0
(0.0)
38.0
32.3
(47.6)
15.1
(0.5)
33.9
1.7
1.6
37.3
3,246.4
3,180.0
0.94%
1.05%
449.4
497.8
0.42%
0.40%
331.7
325.5
0.18%
0.49%
4,027.6
4,004.5
0.81%
0.93%
For the year ended March 31, 2011
Yen (billions)
Retail
Wholesale
Total
33.9
1.7
1.6
37.3
0.8
34.8
10.3
(27.6)
11.1
(3.0)
1.7
0.7
(1.5)
0.5
(0.0)
1.6
0.3
(0.5)
0.0
(0.0)
0.8
38.2
11.3
(29.7)
11.7
(3.2)
25.5
1.4
1.4
28.4
3,368.0
3,346.5
0.49%
0.76%
362.1
374.9
0.26%
0.40%
301.6
309.5
0.15%
0.47%
4,031.7
4,031.0
0.45%
0.71%
The following table provides information related to losses on operating leases due to customer defaults:
52
Yen (billions)
2009
2010
2011
2.0
8.7
1.9
3.3
1.6
0.8
leases.
losses are due mainly to the improvement in the overall credit quality
If future auction values for all Honda and Acura vehicles in our
buy the leased vehicle for the contractual residual value of the vehicle
at the end of the lease term. Likewise, dealers have the option to
our finance subsidiaries. The likelihood that the leased vehicle will be
remaining lease terms. Similarly, if future return rates for our existing
contractual residual value and the actual market value of the vehicle
at the end of the lease term. We are exposed to risk of loss on the
percentage point from our present estimates, the total impact would
sale of the vehicles are less than the contractual residual values at
the end of the lease term. For direct financing leases, our finance
total impact would be slight. Note that this sensitivity analysis may
Used vehicle prices continued to improve during fiscal year 2011 due
of the lease term, and the expected loss severity, or the expected
31, 2011 was 3.0% for Japanese plans. Our assumed discount rate
and rate of salary increase as of March 31, 2011 were 5.5~6.0% and
many factors, including the discount rate, the rate of salary increase
operations.
Actual results may differ from our assumptions, and the difference
of March 31, 2011 were 2.0% and 2.2%, respectively, and our
assumed expected long-term rate of return for the year ended March
Japanese Plans
Assumptions
Yen (billions)
Percentage point change (%)
Funded status
Equity
Pension expense
Discount rate
+0.5/0.5
84.8/+95.5
+34.3/45.3
3.1/+4.0
+0.5/0.5
3.8/+3.8
Funded status
Equity
Pension expense
Discount rate
+0.5/0.5
39.9/+45.7
+16.9/19.9
4.1/+4.1
+0.5/0.5
1.8/+1.8
Foreign Plans
Assumptions
Yen (billions)
*1 Note that this sensitivity analysis may be asymmetric, and is specific to the base conditions at March 31, 2011.
*2 Funded status for fiscal 2011 is affected by March 31, 2011 assumptions.
Pension expense for fiscal 2011 is affected by March 31, 2010 assumptions.
(Income Taxes)
developments.
tax benefits and potential tax benefits are not representative of actual
tax positions that meet the more likely than not recognition threshold
resolution.
54
and in interest rates. Honda does not hold any derivative financial
2011
2010
Yen (millions)
Contract
amounts
Fair value
Average
contractual
rate (Yen)
Yen (millions)
Contract
amounts
Fair value
257,822
32,188
24
29,931
20,761
3,207
3,537
231,657
(6,076)
456
57
(108)
(829)
102
34
(1,134)
90.80
126.70
88.58
139.69
various
90.02
various
various
285,212
34,183
19
13,857
58,330
8,175
3,046
223,587
(1,229)
(1,701)
(1)
(253)
(3,660)
41
65
(1,212)
Total
579,127
(7,498)
626,409
(7,950)
27,865
55,731
3,123
6,246
78
(829)
(50)
(26)
various
various
various
various
14,746
29,491
144
(108)
Total
92,965
(827)
44,237
36
Average
contractual
rate (Yen)
82.77
111.63
83.44
131.40
various
82.73
various
various
various
various
term debt with both fixed and floating rates. Our finance receivables
are primarily fixed rate. Interest rate swap agreements are mainly
31, 2010 and 2011. For finance receivables and long-term debt,
these tables present principal cash flows, fair value and related
weighted average interest rates. For interest rate swaps and currency
and interest rate swaps, the table presents notional amounts, fair
value and weighted average interest rates. Variable interest rates are
determined using formulas such as LIBOR+ and an index.
55
Finance SubsidiariesReceivables
2010
2011
Yen (millions)
Yen (millions)
Total
Fair
value
Total
29,401
7,349
412,709
2-3
year
3-4
year
4-5
year
Thereafter
Average
interest
rate
Fair
value
1,063
1,744
* 4.39%
*
* 2.83%
* 362,136
2,807
449,459
Other finance
subsidiariesreceivables:
JP
US$
Other
131,071 108,332
68,801
51,125
3,578,219 3,611,409 3,669,656 1,369,752 901,315 668,921 441,010 219,625 69,033 3,701,218
Total*3
1-2
year
* 31,329
14,512
8,591
4,819
2,344
*
*
330,807 116,559 99,741 63,982 48,781
TotalOther finance
subsidiariesreceivables:
Within
1 year
27,555
27,555
4,055,233 4,031,792
*1 Under U.S. generally accepted accounting principles, disclosure of fair values of direct financing leases is not required.
*2 The retained interest in securitizations is accounted for as trading securities and is reported at fair value.
*3 The finance subsidiariesreceivables include finance subsidiariesreceivables included in trade accounts and notes receivables and other assets in the consolidated balance sheets.
2010
2011
Yen (millions)
Yen (millions)
Total
56
Within
1 year
323,852 320,000
70,000
120,000
40,000
30,000
60,000
322,270 1.01%
320,000
Total
1-2
year
2-3
year
3-4
year
4-5
year
Thereafter
Fair
value
Average
interest
rate
Fair
value
Total
151,998
153,250
102,226
33,909
25,306
6,502
6,001
27,507
3,001
102,896 1.35%
114,676
114,599
80,619
16,504
58,614
3,501
2,000
80,770 0.49%
391,272
420,970
451,891
28,967
41,381 141,526
45,521
82,764 111,732
477,827 4.38%
211,685
311,222
213,695
316,596
297,285 146,160
453,802 239,339
8,276
5,361
42,872
299,014 0.98%
458,794 1.94%
1,534,478 1,582,083
1,299,872 427,576
84,818
89,963
148,699
10,014
60,403
2010
Yen (millions)
Notional
principal
currency
Receive/
Pay
JP
US$
CA$
GBP
EUR
Float/Fix
Float/Fix
Fix/Float
Float/Float
Float/Fix
Fix/Float
Float/Fix
Float/Fix
Yen (millions)
Expected maturity date
Contract
amounts
Fair
value
Contract
amount
770
(24) 420
2,476,108 (47,762) 2,357,658
525,362 24,473
519,895
12,473
525,099 (10,905)
458,092
233,677 10,036
179,904
45,075
(528)
32,134
6,029
Total
Fair
value
Average
receive
rate
Average
pay
rate
88,971
83,150 112,253
47,966
5,277
(14)
(20,292)
16,611
16
(4,218)
5,373
(136)
(17)
1.34%
0.37%
4.40%
0.74%
1.30%
5.29%
1.78%
0.88%
3.16%
1.84%
1.75%
0.60%
2.87%
2.68%
1.95%
2.24%
(2,677)
Average
receive
rate
Average
pay
rate
1.35%
0.76%
5.03%
1.29%
0.73%
1.09%
1.74%
2.81%
Within
1 year
1-2
year
2-3
year
3-4
year
4-5
year
Thereafter
180
240
305,929 594,618 940,725 427,415
29,103 61,336 183,762 50,291
12,473
71,298 97,491 141,507 94,553
51,401 51,401 77,102
21,422 10,712
2,681
2,118
1,230
2010
Yen (millions)
Yen (millions)
Receiving Paying
side
side
currency currency
Receive/
Pay
JP
US$
Other
Other
Fix/Float
124,721 29,735 82,078 23,820 17,563 5,087
5,537
Float/Float 137,850 17,403 105,671 58,564 42,348 2,877
Fix/Float
405,289 12,613 313,576
88,093 100,068 125,415
Float/Float
51,104 (3,953) 47,774 27,962
19,812
27,734
1,882
2,337
21,523
25,179
6,444
(3,064)
29,616
2,337
50,082
Total
Contract
amounts
Fair
value
Contract
amount
Within
1 year
1-2
year
2-3
year
3-4
year
4-5
year
Thereafter
Fair
value
any plaintiff for general and special damages and court costs will be
balance sheets. At March 31, 2010 and 2011, the estimated fair
billion, respectively.
Legal Proceedings
57
Assets
Yen
(millions)
U.S. dollars
(millions)
2010
2011
2011
1,119,902
1,279,024
$ 15,382
883,476
787,691
9,473
1,100,158
1,131,068
13,603
Inventories
935,629
899,813
10,822
176,604
202,291
2,433
397,955
390,160
4,692
4,613,724
4,690,047
56,405
2,361,335
2,348,913
28,249
457,834
440,026
5,292
184,847
199,906
2,404
642,681
639,932
7,696
1,651,672
1,645,517
19,790
343,525
287,885
3,462
1,308,147
1,357,632
16,328
489,769
483,654
5,817
Buildings
1,509,821
1,473,067
17,716
3,257,455
3,166,353
38,079
143,862
202,186
2,432
5,400,907
5,325,260
64,044
3,314,244
3,385,904
40,720
2,086,663
1,939,356
23,324
616,565
594,994
7,155
11,629,115
11,570,874
$139,157
Current assets:
Cash and cash equivalents
Trade accounts and notes receivable, net of allowance
for doubtful accounts of 8,555 million in 2010 and
7,904 million ($95 million) in 2011
Finance subsidiariesreceivables, net
Construction in progress
Other assets
Total assets, net of allowance for doubtful accounts of
9,319 million in 2010 and 23,275 million in 2011
58
Yen
(millions)
U.S. dollars
(millions)
2010
2011
2011
1,066,344
1,094,740
$ 13,166
722,296
962,455
11,575
24,704
25,216
303
Accounts
802,464
691,520
8,317
Accrued expenses
542,521
525,540
6,320
23,947
31,960
384
236,854
236,761
2,848
3,419,130
3,568,192
42,913
2,313,035
2,043,240
24,573
Other liabilities
1,440,520
1,376,530
16,554
Total liabilities
7,172,685
6,987,962
84,040
86,067
86,067
1,035
Capital surplus
172,529
172,529
2,075
Legal reserves
45,463
46,330
557
Retained earnings
5,304,473
5,666,539
68,148
(1,208,162)
(1,495,380)
(17,984)
(71,730)
(26,110)
(314)
4,328,640
4,449,975
53,517
127,790
132,937
1,600
4,456,430
4,582,912
55,117
11,629,115
11,570,874
$139,157
Current liabilities:
Short-term debt
Current portion of long-term debt
Trade payables:
Notes
Equity:
Honda Motor Co., Ltd. shareholders equity:
Common stock, authorized 7,086,000,000 shares in 2010 and 2011;
issued 1,834,828,430 shares in 2010 and 1,811,428,430 shares in 2011
Noncontrolling interests
Total equity
59
Yen
(millions)
Net sales and other operating revenue
2009
2010
U.S. dollars
(millions)
2011
2011
10,011,241
8,579,174
8,936,867
$107,479
Cost of sales
7,419,582
6,414,721
6,496,841
78,134
1,838,819
1,337,324
1,382,660
16,629
563,197
463,354
487,591
5,864
9,821,598
8,215,399
8,367,092
100,627
189,643
363,775
569,775
6,852
Interest income
41,235
18,232
23,577
284
Interest expense
(22,543)
(12,552)
(8,474)
(102)
Other, net
(46,601)
(33,257)
45,670
549
(27,909)
(27,577)
60,773
731
161,734
336,198
630,548
7,583
Current
68,062
90,263
76,647
922
Deferred
41,773
56,606
130,180
1,565
109,835
146,869
206,827
2,487
51,899
189,329
423,721
5,096
99,034
93,282
139,756
1,681
150,933
282,611
563,477
6,777
13,928
14,211
29,389
354
137,005
268,400
534,088
$ 6,423
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to Honda Motor Co., Ltd.
Yen
Basic net income attributable to
Honda Motor Co., Ltd. per common share
60
2009
75.50
2010
147.91
U.S. dollars
2011
2011
295.67
$ 3.56
Yen (millions)
Accumulated
other
comprehensive
income (loss),
Treasury
net
stock
Total
Honda Motor
Co., Ltd.
shareholders Noncontrolling
equity
interests
Total equity
Dividends paid to
Honda Motor Co., Ltd. shareholders
(139,724)
(139,724)
(139,724)
Dividends paid to
noncontrolling interests (10,841)
(10,841)
Capital transactions and others
(172)
(172)
Comprehensive income (loss):
Net income
137,005
137,005
13,928
150,933
Other comprehensive
income (loss), net of tax
Adjustments from foreign
currency translation
(477,316)
(477,316) (19,865) (497,181)
Unrealized gains (losses) on
available-for-sale securities, net
(25,063)
(25,063)
(60)
(25,123)
Unrealized gains (losses) on
derivative instruments, net
(460)
(460)
(460)
Pension and other postretirement
benefits adjustments
(37,791)
(37,791)
(1,740)
(39,531)
Total comprehensive income (loss)
(403,625)
(7,737) (411,362)
Purchase of treasury stock
(62)
(62)
(62)
Reissuance of treasury stock
(57)
277
220
220
Retirement of treasury stock
Dividends paid to
Honda Motor Co., Ltd. shareholders
(61,696)
(61,696)
(61,696)
Dividends paid to
noncontrolling interests (16,278)
(16,278)
Capital transactions and others
127
127
Comprehensive income (loss):
Net income
268,400
268,400
14,211
282,611
Other comprehensive
income (loss), net of tax
Adjustments from foreign
currency translation
91,097
91,097
5,750
96,847
Unrealized gains (losses) on
available-for-sale securities, net
23,107
23,107
111
23,218
Unrealized gains (losses) on
derivative instruments, net
(324)
(324)
(324)
Pension and other postretirement
benefits adjustments
786
786
813
1,599
Total comprehensive income (loss)
383,066
20,885
403,951
Purchase of treasury stock
(20)
(20)
(20)
Reissuance of treasury stock
2
2
2
Retirement of treasury stock
61
Yen (millions)
Accumulated
other
comprehensive
income (loss),
Treasury
net
stock
Total
Honda Motor
Co., Ltd.
shareholders Noncontrolling
equity
interests
Total equity
Dividends paid to
Honda Motor Co., Ltd. shareholders
(92,170)
(92,170)
(92,170)
Dividends paid to
noncontrolling interests
(16,232)
(16,232)
Capital transactions and others
(946)
(946)
Comprehensive income (loss):
Net income
534,088
534,088
29,389
563,477
Other comprehensive
income (loss), net of tax
Adjustments from foreign
currency translation
(290,745)
(290,745)
(6,796) (297,541)
Unrealized gains (losses) on
available-for-sale securities, net
575
575
(27)
548
Unrealized gains (losses) on
derivative instruments, net
168
168
168
Pension and other postretirement
benefits adjustments
2,784
2,784
(241)
2,543
Total comprehensive income (loss)
246,870
22,325
269,195
Purchase of treasury stock
(34,800)
(34,800)
(34,800)
Reissuance of treasury stock
3
3
3
Retirement of treasury stock
(80,417) 80,417
Common
Capital
Legal
Retained
stock
surplus
reserves
earnings
Accumulated
other
comprehensive
income (loss),
Treasury
net
stock
Total
Honda Motor
Co., Ltd.
shareholders Noncontrolling
equity
interests
Total equity
$53,597
17
53,614
(1,108)
(195)
(11)
6,776
(3,579)
7
2
30
3,236
(419)
0
$55,117
Yen
(millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation excluding property on operating leases
Depreciation of property on operating leases
Deferred income taxes
Equity in income of affiliates
Dividends from affiliates
Gain on sales of investments in affiliates
Provision for credit and lease residual losses on finance subsidiariesreceivables
Impairment loss on investments in securities
Damaged and impairment loss on long-lived assets and goodwill excluding
property on operating leases
Impairment loss on property on operating leases
Loss (gain) on derivative instruments, net
Decrease (increase) in assets:
Trade accounts and notes receivable
Inventories
Other current assets
Other assets
Increase (decrease) in liabilities:
Trade accounts and notes payable
Accrued expenses
Income taxes payable
Other current liabilities
Other liabilities
Other, net
2009
150,933
2010
U.S. dollars
(millions)
2011
2011
282,611 563,477
$ 6,777
441,868
195,776
41,773
(99,034)
65,140
77,016
26,001
401,743
227,931
56,606
(93,282)
140,901
40,062
603
351,496
212,143
130,180
(139,756)
98,182
(46,756)
13,305
2,133
4,227
2,551
1,566
(1,681)
1,181
(562)
160
26
21,597
18,528
(15,506)
548
3,312
(37,753)
16,833
835
(7,788)
202
10
(94)
(30,025)
(262,782)
(82,838)
8,640
(6,910)
352,994
103,071
24,150
38,700
(33,676)
266
(40,729)
465
(405)
3
(490)
(133,662)
(102,711)
(12,861)
10,630
74,872
(9,714)
151,345
(20,457)
(14,524)
5,662
(30,146)
(44,255)
(55,331)
39,103
9,461
32,209
(83,115)
(30,335)
(665)
470
114
387
(1,000)
(364)
383,641
1,544,212
1,070,837
12,878
(19,419)
(11,412)
14,078
13,995
(5,871)
(262)
4,945
2,739
(21,181)
(179,951)
6,283
154,977
71,073
(392,062)
(318,543)
24,472
24,725
(1,448,146) (2,208,480)
1,595,235 2,109,904
(55,168)
(544,027)
(798,420)
245,110
408,265
(137)
168
(3)
33
(2,164)
1,864
855
(3,831)
297
(26,561)
25,375
(9,602)
4,910
(4,879)
1,921
(31,936)
26,896
(17,348)
32,667
(635,190)
18,843
(2,303,930)
2,023,031
324,672
(668,128)
100,017
(1,133,364)
(595,751)
(731,390)
(8,796)
270,795
1,299,984
(889,483)
(139,724)
(10,841)
131
(649,641)
1,132,222
(963,833)
(61,696)
(16,278)
(18)
113,669
799,520
(870,406)
(92,170)
(16,232)
(34,797)
1,367
9,615
(10,469)
(1,108)
(195)
(418)
530,862
(559,244)
(100,416)
(1,208)
(141,672)
40,316
(79,909)
(960)
(360,533)
429,533
159,122
1,914
690,369
1,119,902
13,468
1,119,902 1,279,024
$15,382
1,050,902
690,369
63
Segment Information
policies used for these reportable segments are consistent with the
statements.
Functions
Manufacturing
Sales and related services
Automobile business
other businesses
Manufacturing
Sales and related services
Others
Segment Information
As of and for the year ended March 31, 2009
Yen (millions)
Financial
Motorcycle
Automobile
Services
Business
Business
Business
64
Power
Product
and Other
Businesses
Segment
Total
Reconciling
Items
7,674,404
7,649,861
596,525
515,854
368,905
384,389
10,051,345
9,861,702
(40,104)
(40,104)
Other
Adjustments
Consolidated
10,011,241
10,011,241
9,821,598
99,913
24,543
80,671
(15,484)
189,643
189,643
26,105
1,047,112
107,431
51,200
90,401
71,709
5,219,408
379,068
373,295
523,593
5,735,716
199,324
671,127
1,220
275,607
16,247
13,825
16,920
99,034
12,277,843
502,746
637,644
1,302,041
(458,926)
99,034
11,818,917
502,746
637,644
1,302,041
413
18,874
18,528
2,310
40,125
40,125
77,016
77,016
77,016
Yen (millions)
Financial
Motorcycle
Automobile
Services
Business
Business
Business
606,352 277,682
12,459
26,936
Segment
Total
Reconciling
Items
8,579,174
39,395
(39,395)
Other
Adjustments
Consolidated
8,579,174
6,554,848
6,428,090
618,811
423,910
304,618
321,339
8,618,569
8,254,794
(39,395)
(39,395)
8,579,174
8,215,399
58,837
126,758
194,901
(16,721)
363,775
363,775
23,131
1,025,665
103,032
48,683
38,332
69,082
5,044,247
334,875
337,787
284,586
5,541,788
230,453
546,342
1,069
281,966
16,821
12,751
23,748
93,282
11,893,666
454,728
629,674
893,008
(264,551)
93,282
11,629,115
454,728
629,674
893,008
548
3,312
3,860
3,860
Power
Product
and Other
Businesses
40,062
40,062
40,062
Yen (millions)
Financial
Motorcycle
Automobile
Services
Business
Business
Business
Power
Product
and Other
Businesses
561,896 292,679
11,562
25,600
Segment
Total
Reconciling
Items
Other
Adjustments
8,936,867
45,380
(45,380)
8,936,867
Total
1,288,194
Cost of sales, SG&A and R&D expenses 1,149,600
6,802,316
6,537,766
573,458
387,179
318,279
323,804
138,594
264,550
186,279
(5,525)
583,898
40,471
933,671
76,280
40,324
37,084
100,018
4,883,029
341,955
296,364
273,502
5,572,152
213,805
800,491
(733)
290,730
16,756
13,146
13,963
139,756
11,679,582
434,991
563,639
1,125,040
(108,708)
139,756
11,570,874
434,991
563,639
1,125,040
59
16,774
835
17,668
17,668
13,305
13,305
13,305
8,982,247
8,398,349
Consolidated
(45,380)
(45,380) 14,123
8,936,867
8,367,092
(14,123)
569,775
65
Financial
Motorcycle
Automobile
Services
Business
Business
Business
Power
Product
and Other
Businesses
Segment
Total
Reconciling
Items
Other
Adjustments
Consolidated
$15,492
$81,709
99
$ 6,758
139
$3,520
308
$107,479
546
$
(546)
$107,479
Total
Cost of sales, SG&A and R&D expenses
15,492
13,826
81,807
78,626
6,896
4,656
3,830
3,894
108,025
101,002
(546)
(546)
170
107,479
100,627
1,667
3,182
2,240
(67)
7,022
(170)
6,852
487
11,229
917
485
446
1,203
58,726
4,113
3,564
3,289
67,013
2,571
9,627
(9)
3,496
201
159
168
1,681
140,464
5,231
6,779
13,530
(1,307)
1,681
139,157
5,231
6,779
13,530
202
10
212
212
$160
$160
$160
Explanatory notes:
1. Segment income (loss) of each segment is measured in a consistent manner with consolidated operating income, which is income before
income taxes and equity in income of affiliates before other income (expenses), except Other Adjustments, which is out-of-period adjustments.
Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable. The amount of
out-of-period adjustments are not reported to or used by the chief operating decision maker in deciding how to allocate resources and in
assessing the Companys operating performance. Therefore, the adjustments are not included in the Power product and other businesses
but as Other Adjustments for the year ended March 31, 2011.
2. Assets of each segment are defined as total assets, including derivative financial instruments, investments in affiliates, and deferred tax
assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments
are allocated based on the most reasonable measures applicable except for the corporate assets described below.
3. Intersegment sales and revenues are generally made at values that approximate arms-length prices.
4. Unallocated corporate assets, included in reconciling items, amounted to 257,291 million as of March 31, 2009, 338,135 million as of
March 31, 2010, and 453,116 million as of March 31, 2011, which consist primarily of cash and cash equivalents and available-for-sale
securities and held-to-maturity securities held by the Company. Reconciling items also include elimination of intersegment transactions.
5. Depreciation and amortization of the Financial Services Business include 195,776 million for the year ended March 31, 2009, 227,931
million for the year ended March 31, 2010 and 212,143 million for the year ended March 31, 2011, respectively, of depreciation of property
on operating leases.
6. Capital expenditures of the Financial Services Business includes 668,128 million for the year ended March 31, 2009, 544,027 million for the
year ended March 31, 2010 and 798,420 million for the year ended March 31, 2011, respectively, related to purchases of operating lease
assets.
7. For the year ended March 31, 2011, substantially all of the 45,720 million of the costs and expenses resulting from the Great East Japan
Earthquake are included in Cost of sales, SG&A and R&D expenses of the Automobile business.
External Sales and Other Operating Revenue by Product or Service Groups
U.S. dollars
(millions)
2009
2010
2011
2011
1,323,259
88,252
7,674,404
582,261
224,648
118,417
1,079,165
61,127
6,554,848
606,352
188,014
89,668
1,225,098
63,096
6,794,098
561,896
202,838
89,841
$ 14,734
759
81,709
6,758
2,439
1,080
Total
10,011,241
8,579,174
8,936,867
$107,479
66
Yen
(millions)
Geographical Information
As of and for the year ended March 31, 2009
Yen (millions)
Japan
United States
Other Countries
Total
1,871,962
1,140,316
3,990,729
1,835,163
4,148,550
566,445
10,011,241
3,541,924
Japan
United States
Other Countries
1,864,513
1,113,386
3,294,758
1,767,879
3,419,903
603,881
Japan
United States
Other Countries
1,834,003
1,053,168
3,504,765
1,766,814
3,598,099
571,591
Japan
United States
Yen (millions)
Total
8,579,174
3,485,146
Yen (millions)
Total
8,936,867
3,391,573
$22,057
12,666
$42,150
21,249
Other Countries
Total
$43,272
6,874
$107,479
40,789
The above information is based on the location of the Company and its subsidiaries.
67
Yen (millions)
Japan
North
America
Europe
Asia
Other
Regions
Total
Reconciling
Items
244,440
87,362
273,140
66,256
Other
Adjustments
Consolidated
10,011,241
2,961,823
(2,961,823)
Total
4,162,587
4,779,124 1,278,902
1,608,231
1,144,220 12,973,064
(2,961,823)
10,011,241
4,324,203
4,699,422 1,268,701
1,504,628
1,009,158 12,806,112
(2,984,514)
9,821,598
189,643
Assets
Long-lived assets
11,818,917
3,541,924
Yen (millions)
Japan
North
America
Europe
Asia
1,864,513 3,752,417
769,857 1,320,047
Other
Regions
Total
Reconciling
Items
872,340 8,579,174
24,151
Other
Adjustments
Consolidated
8,579,174
1,441,264
155,799
55,615
198,533
1,875,362
(1,875,362)
Total
3,305,777
3,908,216
825,472
1,518,580
896,491 10,454,536
(1,875,362)
8,579,174
3,334,912
3,671,837
836,344
1,405,574
850,683 10,099,350
(1,883,951)
8,215,399
363,775
(29,135) 236,379
(10,872) 113,006
Assets
Long-lived assets
2,947,764 6,319,896
1,113,386 1,861,596
591,423 1,050,727
107,262 240,704
11,629,115
3,485,146
Yen (millions)
Japan
68
North
America
Europe
Asia
1,834,003 3,941,505
618,426 1,594,058
1,777,204
206,392
80,872
247,109
3,611,207
4,147,897
699,298
1,841,167
3,545,089
3,846,975
709,501
1,690,530
Other
Regions
Total
Reconciling
Items
Other
Adjustments
Consolidated
2,344,785
(2,344,785)
982,083 11,281,652
(2,344,785)
8,936,867
912,534 10,704,629
(2,351,660)
14,123
8,367,092
66,118 300,922
(10,203) 150,637
Assets
Long-lived assets
2,875,630 6,209,145
1,053,168 1,852,542
564,678 1,049,113
106,633 231,867
Japan
$22,057
Total
North
America
Europe
Asia
$47,402
$7,437
$19,171
Other
Regions
Total
$11,412
$107,479
Reconciling
Other
Items
Adjustments
Consolidated
$107,479
21,373
2,482
973
2,972
399
28,199
(28,199)
43,430
49,884
8,410
22,143
11,811
135,678
(28,199)
107,479
42,635
46,265
8,533
20,331
10,974
128,738
(28,282)
171
100,627
$795
$ 3,619
$ (123)
$ 1,812
$837
$ 6,940
$ 83
$(171)
$ 6,852
Assets
Long-lived assets
$34,584
12,666
$74,674
22,280
$6,791
1,282
$12,617
2,789
$ 7,921
1,772
$136,587
40,789
$ 2,570
$139,157
40,789
Explanatory notes:
1. Major countries or regions in each geographic area:
North America
Other Regions
Brazil, Australia
2. Operating income (loss) of each geographical region is measured in a consistent manner with consolidated operating income, which is
income before income taxes and equity in income of affiliates before other income (expenses), except Other Adjustments, which is out-ofperiod adjustments. The adjustments are not included in Japan but as Other Adjustments for the year ended March 31, 2011.
3. Assets of each geographical region are defined as total assets, including derivative financial instruments, investments in affiliates, and
deferred tax assets.
4. Sales and revenues between geographic areas are generally made at values that approximate arms-length prices.
5. Unallocated corporate assets, included in reconciling items, amounted to 257,291 million as of March 31, 2009, 338,135 million as of
March 31, 2010, and 453,116 million as of March 31, 2011, which consist primarily of cash and cash equivalents, available-for-sale
securities, and held-to-maturity securities held by the Company. Reconciling items also include elimination of transactions between
geographic areas.
6. Cost of sales, SG&A and R&D expenses of Japan includes 45,720 million for the year ended March 31, 2011 related to loss of the Great
East Japan Earthquake.
Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of and for the year
ended March 31, 2011 have been translated into United States dollars at the rate of 83.15 = U.S.$1, the approximate exchange rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2011. Those U.S. dollar amounts presented in the consolidated financial
statements and related notes are included solely for the reader. This translation should not be construed as a representation that all the
amounts shown could be converted into U.S. dollars.
69
Yen (millions)
2010
2011
Assets
Non-financial services businesses
3,535,061
3,587,110
1,100,695
1,252,362
525,768
459,120
Inventories
935,629
899,813
972,969
975,815
880,721
866,809
2,068,119
1,924,014
Current assets:
Cash and cash equivalents
446,218
388,474
6,930,119
6,766,407
Finance Subsidiaries
19,207
26,662
1,112,984
1,136,791
2,362,813
2,356,090
1,308,147
1,352,863
Other assets
Total assets
Reconciling items
Total assets
738,637
699,746
5,541,788
5,572,152
(842,792)
(767,685)
11,629,115
11,570,874
1,736,752
1,678,655
211,325
212,428
24,795
45,301
Trade payables
833,326
727,607
Accrued expenses
457,146
463,624
210,160
229,695
174,197
142,108
Other liabilities
1,024,017
880,778
Total liabilities
2,934,966
2,701,541
1,385,032
1,369,485
703,434
928,944
Accrued expenses
125,788
98,604
2,155,243
1,909,549
488,970
536,161
4,858,467
4,842,743
Finance Subsidiaries
Short-term debt
(620,748)
(556,322)
Total liabilities
7,172,685
6,987,962
4,328,640
4,449,975
Reconciling items
Noncontrolling interests
Total equity
Total liabilities and equity
70
127,790
132,937
4,456,430
4,582,912
11,629,115
11,570,874
Yen (millions)
Years ended March 31, 2010 and 2011
2011
2010
Non-financial
services
Finance
Reconciling
businesses
subsidiaries
items
Consolidated
176,370 106,241
Non-financial
services
Finance
businesses
subsidiaries
Reconciling
items
Consolidated
282,611 456,181
107,296
563,477
399,221
20,622
(93,282)
140,901
230,453
35,984
629,674
56,606
(93,282)
140,901
349,834
28,691
(139,756)
98,182
213,805
101,489
563,639
130,180
(139,756)
98,182
(46,756)
(46,756)
603
603
2,133
2,133
548
3,312
3,860
16,833
835
17,668
(6,683)
(31,070)
(37,753)
670
(8,458)
(7,788)
(67,982)
352,994
63,763
(2,691)
(6,910)
352,994
26,837
(33,676)
12,413
(550)
38,700
(33,676)
153,440
22,892
28,393
(2,095)
12,278
151,345
63,563
(50,618)
(73,797)
13,342
(4,713)
620
(55,331)
(59,835)
1,099,644
437,076
7,492
1,544,212
634,758
440,722
(4,643)
1,070,837
106,565
(5,878) (121,852)
(21,165)
(41,730)
4,951
16,865
(19,914)
(389,747)
(2,315)
(392,062)
71,073
(316,472)
(2,071)
71,073
(318,543)
24,132
340
24,472
24,089
636
24,725
87,571
(544,027)
4,350
91,921
(544,027)
(90,859)
(798,420)
(7,717)
(98,576)
(798,420)
245,110
245,110
408,265
408,265
(219,199) (117,502)
(595,751)
(263,040)
(477,498)
9,148
(731,390)
(458,642)
(304,264) 113,265
(649,641)
115,120 1,023,804
(6,702) 1,132,222
(25,285)
(941,995)
3,447
(963,833)
(61,696)
(61,696)
11,270
18,174
(27,539)
(92,170)
107,495
786,399
(848,511)
(5,096)
(5,053)
5,644
113,669
799,520
(870,406)
(92,170)
(259,050)
(16,278)
(18)
(446,799)
(16,278)
(18)
(16,232)
(34,797)
(16,232)
(34,797)
(222,455) 110,010
(559,244)
(141,294)
45,383
(4,505)
(100,416)
38,786
1,530
40,316
(78,757)
(1,152)
(79,909)
432,581
(3,048)
429,533
151,667
7,455
159,122
668,114
22,255
690,369
1,100,695
19,207
1,119,902
19,207
1,119,902 1,252,362
26,662
1,279,024
1,100,695
Notes:
1. Non-financial
services businesses lend to finance subsidiaries. These cash flows are included in the decrease (increase) in investments and advances, increase (decrease) in short-term
debt, proceeds from long-term debt, and repayment of long-term debt. The amount of the loans to finance subsidiaries is a 121,852 million decrease for the fiscal year ended March
31, 2010, and a 16,865 million increase for the fiscal year ended March 31, 2011, respectively.
2. D
ecrease (increase) in trade accounts and notes receivable for finance subsidiaries is due to the reclassification of finance subsidiariesreceivables which relate to sales of inventory in
the unaudited consolidated statements of cash flows presented above.
71
Financial Summary
Honda Motor Co., Ltd. and Subsidiaries
Years ended or at March 31
Sales, income, and dividends
Net sales and other operating revenue
Operating income
Income before income taxes and
equity in income of affiliates
Income taxes
Equity in income of affiliates
Net income attributable to noncontrolling interests
Net income attributable to Honda Motor Co., Ltd.
As percentage of sales
Cash dividends paid during the period
Research and development
Interest expense
2001
6,463,830
401,438
2002
7,362,438
661,202
388,419
178,439
25,704
(3,443)
232,241
3.6%
22,412
352,829
21,400
2003
7,971,499
724,527
555,854
231,150
42,515
(4,512)
362,707
4.9%
24,360
395,176
16,769
2004
8,162,600
600,144
619,413
245,065
61,972
(9,658)
426,662
5.4%
30,176
436,863
12,207
653,680
252,740
75,151
(11,753)
464,338
5.7%
33,541
448,967
10,194
119.17
119.17
11.5
1,144.43
186.11
186.11
12.5
1,320.77
219.71
219.71
15.5
1,367.34
243.45
243.45
17.5
1,527.45
Sales progress
Sales amounts:*
Japan
Overseas
Total
1,740,340
27%
4,723,490
73%
6,463,830
100%
1,868,746
25%
5,493,692
75%
7,362,438
100%
1,748,706
22%
6,222,793
78%
7,971,499
100%
1,628,493
20%
6,534,107
80%
8,162,600
100%
Unit sales:
Motorcycles
Automobiles
Power Products
Number of employees
Exchange rate (yen amounts per U.S. dollar)
Rates for the period-end
Average rates for the period
*The geographic breakdown of sales amounts is based on the location of customers.
72
5,118
2,580
3,884
6,095
2,666
3,926
8,080
2,888
4,584
9,206
2,983
5,047
114,300
120,600
126,900
131,600
124
111
133
125
120
122
106
113
2005
8,650,105
630,920
2006
9,907,996
868,905
668,364
266,665
96,057
(11,559)
486,197
5.6%
47,797
467,754
11,655
2007
2008
11,087,140
851,879
829,904
317,189
99,605
(15,287)
597,033
6.0%
71,061
510,385
11,902
12,002,834
953,109
792,868
283,846
103,417
(20,117)
592,322
5.3%
140,482
551,847
12,912
2009
2010
10,011,241
189,643
8,579,174
363,775
161,734
109,835
99,034
(13,928)
137,005
1.4%
139,724
563,197
22,543
895,841
387,436
118,942
(27,308)
600,039
5.0%
152,590
587,959
16,623
336,198
146,869
93,282
(14,211)
268,400
3.1%
61,696
463,354
12,552
Yen
(millions)
U.S. dollars
(millions)
2011
2011
8,936,867
569,775
$107,479
6,852
630,548
206,827
139,756
(29,389)
534,088
6.0%
92,170
487,591
8,474
7,583
2,487
1,681
(354)
6,423
1,108
5,864
102
10,631,400
1,879,000
4,125,750
12,036,500
1,905,743
4,488,825
12,615,543
1,836,652
4,550,479
11,818,917
1,932,637
4,007,288
11,629,115
2,313,035
4,328,640
11,570,874
2,043,240
4,449,975
$139,157
24,573
53,517
373,980
457,841
225,752
262,225
627,066
366,795
361,747
9,741
654,030
839,261
417,393
101,032
633,913
668,128
441,868
195,776
348,981
544,027
401,743
227,931
326,620
798,420
351,496
212,143
3,928
9,602
4,227
2,551
9,368,236
1,559,500
3,289,294
260.34
260.34
25.5
1,778.24
1,699,205
20%
6,950,900
80%
8,650,105
100%
324.33
324.33
38.5
2,259.26
1,694,044
17%
8,213,952
83%
9,907,996
100%
324.62
324.62
77
2,463.69
1,681,190
15%
9,405,950
85%
11,087,140
100%
330.54
330.54
84
2,507.79
1,585,777
13%
10,417,057
87%
12,002,834
100%
75.50
75.50
77
2,208.35
1,446,541
14%
8,564,700
86%
10,011,241
100%
147.91
147.91
34
2,385.45
Yen
U.S. dollars
295.67
295.67
51
2,469.05
$ 3.56
3.56
0.61
29.69
Yen
(millions)
U.S. dollars
(millions)
1,577,318
1,503,842
18%
17%
7,001,856
7,433,025
82%
83%
8,579,174
8,936,867
100%
100%
$ 18,086
89,393
$107,479
Thousands
10,482
3,242
5,300
10,271
3,391
5,876
10,369
3,652
6,421
9,320
3,925
6,057
10,114
3,517
5,187
9,639
3,392
4,744
11,445
3,512
5,509
137,827
144,785
167,231
178,960
181,876
176,815
179,060
93
93
83
86
107
108
117
113
118
117
100
114
98
101
73
II
III
IV
74
II
III
IV
256,149
166,204
131,580
76,615
272,487
135,929
81,118
44,554
150.27
75.24
45.01
24.72
3,405
2,570
3,065
2,470
3,315
2,713
3,745
2,820
$36.16
28.33
$35.89
28.43
$39.69
33.82
$44.54
36.51
Investor Information
75
Investor Information
Honda Motor Co., Ltd.
Company Information
Established
Lines of Business
Fiscal Year-end
March 31
Independent Registered
Public Accounting Firm
Web Site
Corporate Web Site
http://www.honda.co.jp
IR Web Sites
Japanese: http://www.honda.co.jp/investors/
English: http://world.honda.com/investors/
Stock Information
76
IR Offices
Securities Code
7267
Japan
7,086,000,000 shares
1,811,428,430 shares
Number of Shareholders
202,129
U.S.A.
June
June 30
September 30
December 31
March 31
Contact Address:
Contact Address:
Note: With respect to taxation and other matters relating to the acquisition, holding,
and disposition of the Companys common stock or ADRs by non-residents of
Japan, please also refer to Item 10E. Taxation of Form 20-F included in the
Investor Relations section on our web site.
Major Shareholders
Number of shares held
(thousands)
Individual or Organization
Percentage of total
shares outstanding (%)
136,341
77,869
74,903
66,214
56,361
51,199
36,686
35,039
34,766
34,700
7.5
4.3
4.1
3.7
3.1
2.8
2.0
1.9
1.9
1.9
9.7%
%
Individuals 9.7
Individuals
0.0%
%
Government and
and municipal
municipal corporations
corporations 0.0
Government
43.3%
%
Financial institutions
institutions 43.3
Financial
Domestic companies
companies and
and others
others 9.9
9.9%
%
Domestic
Securities companies
companies 1.6
1.6%
%
Securities
Hondas Stock Price and Trading Volume on the Tokyo Stock Exchange
Yen
Yen
5,000
5,000
4,000
4,000
3,000
3,000
Stock (millions)
(millions)
Stock
Share prices
prices prior
prior to
to stock
stock split
split have
have been
been
Share
adjusted to
to their
their effective
effective
adjusted
post-adjustment values.
values.
post-adjustment
Volume
Volume
High
High
Low
Low
2,000
2,000
300
300
200
200
1,000
1,000
100
100
00
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
00
(CY)
(CY)
Note: The Company executed a two-for-one stock split for the Companys common stock effective July 1, 2006. The prices of shares on the Tokyo Stock Exchange prior to the
split have been adjusted retroactively for consistency. Consequently, the prices shown here are not the actual prices of shares on the Tokyo Stock Exchange.
77
Printed in Japan