Table of Contents

No.1-7628

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF FEBRUARY 2020

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

Form 20-F  ☒    Form 40-F  ☐    

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

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

 

 

 


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Contents

Exhibit 1:

On February 12, 2020, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal third quarter ended December 31, 2019 with Financial Services Agency in Japan.


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

 

HONDA GIKEN KOGYO KABUSHIKI KAISHA ( HONDA MOTOR CO., LTD. )

/s/ Masao Kawaguchi

Masao Kawaguchi

General Manager

Finance Division

Honda Motor Co., Ltd.

Date: February 19, 2020


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

December 31, 2019


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Results

Overview of Operating Performance

Honda’s consolidated sales revenue for the nine months ended December 31, 2019 decreased by 3.1%, to ¥11,472.9 billion from the same period last year, due mainly to decreased sales revenue in Automobile business operations as well as negative foreign currency translation effects, which was partially offset by increased sales revenue in Financial services business operations. Operating profit decreased by 6.5%, to ¥639.2 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales revenue and model mix as well as negative foreign currency effects, which was partially offset by continuing cost reduction as well as decreased selling, general and administrative expenses. Profit before income taxes decreased by 9.5%, to ¥786.1 billion from the same period last year. Profit for the period attributable to owners of the parent decreased by 22.1%, to ¥485.2 billion from the same period last year.

Business Segments

Motorcycle Business

For the nine months ended December 31, 2018 and 2019

 

     Units (thousands)  
     Honda Group Unit Sales*     Consolidated Unit Sales*  
   Nine months
ended
Dec. 31, 2018
     Nine months
ended
Dec. 31, 2019
                 Nine months
ended
Dec. 31, 2018
     Nine months
ended
Dec. 31, 2019
              
   Change     %      Change     %  

Motorcycle Business

     15,680        15,038        (642       (4.1     10,378        9,732        (646       (6.2

Japan

     157        154        (3     (1.9     157        154        (3     (1.9

North America

     216        221        5       2.3       216        221        5       2.3  

Europe

     181        186        5       2.8       181        186        5       2.8  

Asia

     14,187        13,453        (734     (5.2     8,885        8,147        (738     (8.3

Other Regions

     939        1,024        85       9.1       939        1,024        85       9.1  

 

*

Honda Group Unit Sales is the total unit sales of completed motorcycle, ATV and side-by-side products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

Sales revenue from external customers decreased by 1.6%, to ¥1,585.7 billion from the same period last year, due mainly to decreased consolidated unit sales as well as negative foreign currency translation effects. Operating profit decreased by 9.9%, to ¥222.1 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix as well as negative foreign currency effects, which was partially offset by continuing cost reduction.


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Automobile Business

For the nine months ended December 31, 2018 and 2019

 

     Units (thousands)  
     Honda Group Unit Sales*     Consolidated Unit Sales*  
   Nine months
ended
Dec. 31, 2018
     Nine months
ended
Dec. 31, 2019
                 Nine months
ended
Dec. 31, 2018
     Nine months
ended
Dec. 31, 2019
              
   Change     %      Change     %  

Automobile Business

       3,959          3,809        (150     (3.8       2,769        2,541        (228     (8.2

Japan

     515        489        (26     (5.0     464        431        (33     (7.1

North America

     1,444        1,402        (42     (2.9     1,444        1,402        (42     (2.9

Europe

     121        103        (18     (14.9     121        103        (18     (14.9

Asia

       1,698          1,655        (43     (2.5     559        445        (114     (20.4

Other Regions

     181        160        (21     (11.6     181        160        (21     (11.6

 

*

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

Sales revenue from external customers decreased by 6.5%, to ¥7,691.1 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 12.8%, to ¥229.0 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sale volume and model mix as well as negative foreign currency effects, which was partially offset by continuing cost reduction as well as decreased selling, general and administrative expenses.

Financial Services Business

Sales revenue from external customers increased by 12.4%, to ¥1,961.9 billion from the same period last year, due mainly to an increase in revenues on disposition of lease vehicles and operating lease revenues. Operating profit increased by 11.3%, to ¥196.7 billion from the same period last year, due mainly to an increase in profit attributable to increased sales revenue.

Life Creation and Other Businesses

For the nine months ended December 31, 2018 and 2019

 

     Units (thousands)  
     Honda Group Unit Sales /Consolidated Unit Sales*  
   Nine months
ended
Dec. 31, 2018
     Nine months
ended
Dec. 31, 2019
              
   Change     %  

Life Creation Business

       3,954          3,630        (324     (8.2

Japan

     246        218        (28     (11.4

North America

     1,781        1,661        (120     (6.7

Europe

     600        502        (98     (16.3

Asia

       1,080          1,038        (42     (3.9

Other Regions

     247        211        (36     (14.6

 

*

Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In Life creation business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales since no affiliate and joint venture accounted for using the equity method were involved in the sale of Honda power products.

Sales revenue from external customers decreased by 8.0%, to ¥234.1 billion from the same period last year, due mainly to decreased consolidated unit sales in Life creation business. Operating loss was ¥8.6 billion, an increase of ¥6.5 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix. In addition, operating loss of aircraft and aircraft engines included in the Life creation and other businesses was ¥28.4 billion, an improvement of ¥0.8 billion from the same period last year.


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Cash Flows

Consolidated cash and cash equivalents on December 31, 2019 decreased by ¥52.2 billion from March 31, 2019, to ¥2,441.8 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the same period last year, are as follows:

Net cash provided by operating activities amounted to ¥605.3 billion of cash inflows. Cash inflows from operating activities increased by ¥106.7 billion from the same period last year, due mainly to a decrease in receivables from financial services, despite increased payments for purchase of equipment on operating leases.

Net cash used in investing activities amounted to ¥435.9 billion of cash outflows. Cash outflows from investing activities decreased by ¥60.1 billion from the same period last year, due mainly to decreased payments for additions to property, plant and equipment.

Net cash used in financing activities amounted to ¥200.1 billion of cash outflows. Cash outflows from financing activities increased by ¥145.9 billion from the same period last year, due mainly to increased repayments of financing liabilities.

Research and Development

The changes in research and development activities by Honda and its subsidiaries for the nine months ended December 31, 2019 are as follows:

Honda and the motorcycle development division of Honda R&D Co., Ltd. were integrated with an aim to transition from the current structure where sales, development, manufacturing and procurement divisions operate independently to a new structure where each process of planning and concept making, development, launch and mass-production of a new product are coordinated closely.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position

March 31, 2019 and December 31, 2019

 

          Yen (millions)  
Assets    Note    March 31,
2019
    December 31,
2019
 
          unaudited     unaudited  

Current assets:

       

Cash and cash equivalents

      ¥   2,494,121     ¥ 2,441,824  

Trade receivables

        793,245       635,473  

Receivables from financial services

        1,951,633       1,887,688  

Other financial assets

        163,274       253,814  

Inventories

        1,586,787       1,566,420  

Other current assets

        358,234       365,040  
     

 

 

   

 

 

 

Total current assets

        7,347,294       7,150,259  
     

 

 

   

 

 

 

Non-current assets:

       

Investments accounted for using the equity method

        713,039       649,568  

Receivables from financial services

        3,453,617       3,438,065  

Other financial assets

        417,149       446,910  

Equipment on operating leases

   5      4,448,849       4,645,895  

Property, plant and equipment

   6      2,981,840       3,081,531  

Intangible assets

        744,368       751,187  

Deferred tax assets

        150,318       133,991  

Other non-current assets

        162,648       191,300  
     

 

 

   

 

 

 

Total non-current assets

        13,071,828       13,338,447  
     

 

 

   

 

 

 

Total assets

      ¥   20,419,122     ¥   20,488,706   
     

 

 

   

 

 

 
          Yen (millions)  
Liabilities and Equity    Note    March 31,
2019
    December 31,
2019
 
          unaudited     unaudited  

Current liabilities:

       

Trade payables

      ¥   1,184,882     ¥ 899,047  

Financing liabilities

        3,188,782       3,159,707  

Accrued expenses

        476,300       429,267  

Other financial liabilities

        132,910       155,086  

Income taxes payable

        49,726       52,046  

Provisions

   7      348,763       267,034  

Other current liabilities

        599,761       550,599  
     

 

 

   

 

 

 

Total current liabilities

        5,981,124       5,512,786  
     

 

 

   

 

 

 

Non-current liabilities:

       

Financing liabilities

        4,142,338       4,177,419  

Other financial liabilities

        63,689       304,096  

Retirement benefit liabilities

        398,803       420,436  

Provisions

   7      220,745       233,406  

Deferred tax liabilities

        727,411       764,279  

Other non-current liabilities

        319,222       332,028  
     

 

 

   

 

 

 

Total non-current liabilities

        5,872,208       6,231,664  
     

 

 

   

 

 

 

Total liabilities

        11,853,332       11,744,450  
     

 

 

   

 

 

 

Equity:

       

Common stock

        86,067       86,067  

Capital surplus

        171,460       171,790  

Treasury stock

        (177,827     (217,223

Retained earnings

        7,973,637       8,312,797  

Other components of equity

        214,383       107,802  
     

 

 

   

 

 

 

Equity attributable to owners of the parent

        8,267,720       8,461,233  

Non-controlling interests

        298,070       283,023  
     

 

 

   

 

 

 

Total equity

        8,565,790       8,744,256  
     

 

 

   

 

 

 

Total liabilities and equity

      ¥   20,419,122     ¥   20,488,706  
     

 

 

   

 

 

 

See accompanying notes to condensed consolidated interim financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the nine months ended December 31, 2018 and 2019

 

          Yen (millions)  
     Note    December 31,
2018
    December 31,
2019
 
          unaudited     unaudited  

Sales revenue

   8    ¥   11,839,500     ¥   11,472,949  

Operating costs and expenses:

       

Cost of sales

        (9,325,508     (9,090,126

Selling, general and administrative

        (1,254,501     (1,163,591

Research and development

        (575,486     (579,978
     

 

 

   

 

 

 

Total operating costs and expenses

        (11,155,495     (10,833,695
     

 

 

   

 

 

 

Operating profit

        684,005       639,254  
     

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

        169,631       149,731  

Finance income and finance costs:

                                                         

Interest income

        36,172               38,565  

Interest expense

        (10,065     (15,125

Other, net

        (11,492     (26,257
     

 

 

   

 

 

 

Total finance income and finance costs

        14,615       (2,817
     

 

 

   

 

 

 

Profit before income taxes

        868,251       786,168  

Income tax expense

        (187,436     (254,713
     

 

 

   

 

 

 

Profit for the period

      ¥ 680,815     ¥ 531,455  
     

 

 

   

 

 

 

Profit for the period attributable to:

       

Owners of the parent

        623,339       485,288  

Non-controlling interests

        57,476       46,167  
          Yen  
          December 31,
2018
    December 31,
2019
 

Earnings per share attributable to owners of the parent

       

Basic and diluted

   11    ¥ 353.10     ¥ 276.13  

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the nine months ended December 31, 2018 and 2019

 

          Yen (millions)  
     Note    December 31,
2018
    December 31,
2019
 
          unaudited     unaudited  

Profit for the period

      ¥      680,815     ¥ 531,455  

Other comprehensive income, net of tax:

       

Items that will not be reclassified to profit or loss

       

Remeasurements of defined benefit plans

        —         —    

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

        (25,697     3,337  

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

        (3,023     704  

Items that may be reclassified subsequently to profit or loss

       

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

        120       99  

Exchange differences on translating foreign operations

        29,817       (90,608

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

        (23,918     (23,331
     

 

 

   

 

 

 

Total other comprehensive income, net of tax

        (22,701     (109,799
     

 

 

   

 

 

 

Comprehensive income for the period

      ¥ 658,114     ¥      421,656  
     

 

 

   

 

 

 

Comprehensive income for the period attributable to:

       

Owners of the parent

        606,702       378,667  

Non-controlling interests

        51,412       42,989  

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended December 31, 2018 and 2019

 

          Yen (millions)  
     Note    December 31,
2018
    December 31,
2019
 
          unaudited     unaudited  

Sales revenue

   8    ¥   3,973,655     ¥   3,747,593  

Operating costs and expenses:

       

Cost of sales

        (3,158,104     (2,966,552

Selling, general and administrative

        (444,556     (379,648

Research and development

        (200,848     (234,744
     

 

 

   

 

 

 

Total operating costs and expenses

        (3,803,508     (3,580,944
     

 

 

   

 

 

 

Operating profit

        170,147       166,649  
     

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

        51,403       41,552  

Finance income and finance costs:

       

Interest income

        12,848       12,305  

Interest expense

        (4,108     (7,530

Other, net

        (3,363     (6,243
     

 

 

   

 

 

 

Total finance income and finance costs

        5,377       (1,468
     

 

 

   

 

 

 

Profit before income taxes

        226,927       206,733  

Income tax expense

        (42,059     (75,043
     

 

 

   

 

 

 

Profit for the period

      ¥ 184,868     ¥ 131,690  
     

 

 

   

 

 

 

Profit for the period attributable to:

       

Owners of the parent

        168,238       116,432  

Non-controlling interests

        16,630       15,258  
          Yen  
          December 31,
2018
    December 31,
2019
 

Earnings per share attributable to owners of the parent

       

Basic and diluted

   11    ¥ 95.61     ¥ 66.37  

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended December 31, 2018 and 2019

 

            Yen (millions)  
     Note      December 31,
2018
    December 31,
2019
 
            unaudited     unaudited  

Profit for the period

      ¥      184,868     ¥      131,690  

Other comprehensive income, net of tax:

       

Items that will not be reclassified to profit or loss

       

Remeasurements of defined benefit plans

        —         —    

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

        (26,131     8,030  

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

        (2,278     1,308  

Items that may be reclassified subsequently to profit or loss

       

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

        161       (65

Exchange differences on translating foreign operations

        (169,559     77,102  

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

        (6,168     8,240  
     

 

 

   

 

 

 

Total other comprehensive income, net of tax

        (203,975     94,615  
     

 

 

   

 

 

 

Comprehensive income for the period

      ¥ (19,107   ¥ 226,305  
     

 

 

   

 

 

 

Comprehensive income for the period attributable to:

       

Owners of the parent

        (28,313     205,575  

Non-controlling interests

        9,206       20,730  

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

For the nine months ended December 31, 2018 and 2019

 

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

Balance as of April 1, 2018 (unaudited)

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

Effect of changes in accounting policy

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

Effect of hyperinflation

            (9,454     14,896       5,442         5,442  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance as of April 1, 2018

      86,067       171,118       (113,271     7,555,045       192,980       7,891,939       300,563       8,192,502  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                 

Profit for the period

            623,339         623,339       57,476       680,815  

Other comprehensive income, net of tax

              (16,637     (16,637     (6,064     (22,701
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

            623,339       (16,637     606,702       51,412       658,114  

Reclassification to retained earnings

            (1,906     1,906       —           —    

Transactions with owners and other

                 

Dividends paid

    12             (144,983       (144,983     (65,039     (210,022

Purchases of treasury stock

          (64,556         (64,556       (64,556

Disposal of treasury stock

          1           1         1  

Share-based payment transactions

        225             225         225  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        225       (64,555     (144,983       (209,313     (65,039     (274,352
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

            (2,788       (2,788     (2,713     (5,501
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2018 (unaudited)

    ¥ 86,067     ¥ 171,343     ¥ (177,826   ¥ 8,028,707     ¥ 178,249     ¥ 8,286,540     ¥ 284,223     ¥ 8,570,763  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

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

Balance as of April 1, 2019 (unaudited)

    ¥ 86,067     ¥ 171,460     ¥ (177,827   ¥ 7,973,637     ¥ 214,383     ¥ 8,267,720     ¥ 298,070     ¥ 8,565,790  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                 

Profit for the period

            485,288         485,288       46,167       531,455  

Other comprehensive income, net of tax

              (106,621     (106,621     (3,178     (109,799
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

            485,288       (106,621     378,667       42,989       421,656  

Reclassification to retained earnings

            (40     40       —           —    

Transactions with owners and other

                 

Dividends paid

    12              (147,863       (147,863     (54,987     (202,850

Purchases of treasury stock

          (39,475         (39,475       (39,475

Disposal of treasury stock

          79           79         79  

Share-based payment transactions

        330             330         330  

Equity transactions and others

                  (3,049     (3,049
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        330       (39,396     (147,863       (186,929     (58,036     (244,965
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

            1,775         1,775         1,775  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2019 (unaudited)

    ¥ 86,067     ¥ 171,790     ¥ (217,223   ¥ 8,312,797     ¥ 107,802     ¥ 8,461,233     ¥ 283,023     ¥ 8,744,256  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the nine months ended December 31, 2018 and 2019

 

            Yen (millions)  
     Note      December 31,
2018
    December 31,
2019
 
            unaudited     unaudited  

Cash flows from operating activities:

       

Profit before income taxes

      ¥ 868,251     ¥ 786,168  

Depreciation, amortization and impairment losses excluding equipment on operating leases

        518,386       529,727  

Share of profit of investments accounted for using the equity method

        (169,631     (149,731

Finance income and finance costs, net

        (68,087     (36,878

Interest income and interest costs from financial services, net

        (92,655     (98,250

Changes in assets and liabilities

       

Trade receivables

        105,991       144,006  

Inventories

        (105,008     (14,088

Trade payables

        (85,229     (208,556

Accrued expenses

        (34,658     (56,143

Provisions and retirement benefit liabilities

        (22,445     (34,155

Receivables from financial services

        (165,210     30,472  

Equipment on operating leases

        (141,291     (248,773

Other assets and liabilities

        (101,717     (104,211

Other, net

        108       3,782  

Dividends received

        98,624       104,657  

Interest received

        201,325       218,353  

Interest paid

        (105,418     (113,631

Income taxes paid, net of refunds

        (202,677     (147,350
     

 

 

   

 

 

 

Net cash provided by operating activities

        498,659       605,399  

Cash flows from investing activities:

       

Payments for additions to property, plant and equipment

        (316,581     (250,995

Payments for additions to and internally developed intangible assets

        (136,115     (159,851

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

        16,381       10,307  

Payments for acquisitions of subsidiaries, net of cash and cash equivalents acquired

        —         (3,047

Payments for acquisitions of investments accounted for using the equity method

        (2,401     (4,802

Payments for acquisitions of other financial assets

        (449,654     (240,295

Proceeds from sales and redemptions of other financial assets

        389,553       214,102  

Other, net

        2,649       (1,404
     

 

 

   

 

 

 

Net cash used in investing activities

        (496,168     (435,985

Cash flows from financing activities:

       

Proceeds from short-term financing liabilities

        6,085,890       6,226,745  

Repayments of short-term financing liabilities

        (5,865,684     (6,348,745

Proceeds from long-term financing liabilities

        1,290,354       1,398,797  

Repayments of long-term financing liabilities

        (1,256,400     (1,182,699

Dividends paid to owners of the parent

        (144,983     (147,863

Dividends paid to non-controlling interests

        (61,786     (47,043

Purchases and sales of treasury stock, net

        (64,555     (39,396

Repayments of lease liabilities

        (37,061     (55,689

Other, net

        —         (4,237
     

 

 

   

 

 

 

Net cash used in financing activities

        (54,225     (200,130

Effect of exchange rate changes on cash and cash equivalents

        (10,681     (21,581
     

 

 

   

 

 

 

Net change in cash and cash equivalents

        (62,415     (52,297

Cash and cash equivalents at beginning of year

        2,256,488       2,494,121  
     

 

 

   

 

 

 

Cash and cash equivalents at end of period

      ¥ 2,194,073     ¥ 2,441,824  
     

 

 

   

 

 

 

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

 

1

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(1) Reporting Entity

Honda Motor Co., Ltd. (the “Company”) is a public company domiciled in Japan. The Company and its subsidiaries (collectively “Honda”) develop, manufacture and distribute motorcycles, automobiles, power products and others throughout the world, and also provide financial services to customers and dealers for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, Italy, France, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina and Brazil.

(2) Basis of Preparation

 (a) Compliance with Interim Financial Reporting Standards

The condensed consolidated interim financial statements of the Company have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended March 31, 2019, since the condensed consolidated interim financial statements do not include all the information required in the annual consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

 (b) Functional Currency and Presentation Currency

The condensed consolidated interim financial statements are presented in Japanese yen, which is the functional currency of the Company. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen, except when otherwise indicated.

 (c) Use of Estimates and Judgments

The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. These estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The condensed consolidated interim financial statements are prepared based on the same judgments and estimations as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2019.


Table of Contents

 

2

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(3) Summary of Significant Accounting Policies

The condensed consolidated interim financial statements are prepared based on the same accounting policies as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2019, except for the changes below.

 IFRS 16 “Leases”

Honda has adopted IFRS 16 “Leases” with a date of initial application of April 1, 2019. Honda used the modified retrospective approach, under which the cumulative effect of initial application was recognized as an adjustment to the opening balance of equity at the date of initial application. Therefore, the comparative information has not been restated and continues to be reported under the previous accounting policy.

Previously, Honda determined at contract inception whether an arrangement was or contained a lease under IAS 17 “Leases” and IFRIC 4 “Determining whether an Arrangement contains a Lease”. Honda assesses whether a contract is or contains a lease under IFRS 16 on or after April 1, 2019. Honda applied the practical expedient to grandfather the assessment of which a contract was or contained a lease when applying IFRS 16. Therefore, Honda applied IFRS 16 to all contracts entered into prior to April 1, 2019 and identified as leases under IAS 17 and IFRIC 4.

IFRS 16 introduced a single on-balance lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. In addition, expenses related to leases change from straight-line operating lease expenses to depreciation charge for right-of-use assets and interest expense on lease liabilities. At transition, Honda recognized the lease liabilities for leases previously classified as an operating lease under IAS 17, and measured these liabilities at the present value of the remaining lease payments, discounted using Honda’s incremental borrowing rate as of April 1, 2019. The weighted average rate applied was 1.19%. The right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the statement of financial position immediately before the date of initial application. In addition, Honda applied the following practical expedients when applying IFRS 16.

 

   

Applied a single discount rate to a portfolio of leases with reasonably similar characteristics;

 

   

Adjusted the right-of-use assets by the amount of any provision for onerous leases under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” recognized immediately before the date of initial application as an alternative to performing an impairment review; and

 

   

Excluded initial direct costs from the measurement of the right-of-use assets at the date of initial application.

In the condensed consolidated statements of financial position, lease liabilities are included in other financial liabilities and right-of-use assets are included in property, plant and equipment.

Honda recognized additional lease liabilities of ¥272,232 million and total assets, mainly right-of-use assets were recognized approximately in the same amounts in the condensed consolidated statements of financial position as of April 1, 2019.

The difference between the future minimum lease payments under non-cancelable operating leases as of March 31, 2019 disclosed in the consolidated financial statements immediately before the date of initial application, and the lease liabilities recognized as of April 1, 2019, is as follows:

 

     Yen (millions)  

Future minimum lease payments under non-cancelable operating leases as of March 31, 2019

     115,634  

Discounted using the incremental borrowing rate as of April 1, 2019

     108,147  
  

 

 

 

Add: Finance lease obligations

     62,308  

Add: Cancelable operating leases

     11,612  

Add: Extension options reasonably certain to be exercised

     152,473  
  

 

 

 

Lease liabilities recognized as of April 1, 2019

     334,540  
  

 

 

 


Table of Contents

 

3

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(4) Segment Information

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

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

 

Segment

  

Principal products and services

  

Functions

Motorcycle Business

   Motorcycles, all-terrain vehicles (ATVs), side-by-sides (SxS) and relevant parts    Research and development
Manufacturing
Sales and related services

Automobile Business

   Automobiles and relevant parts    Research and development
Manufacturing
Sales and related services

Financial Services Business

   Financial services    Retail loan and lease related to
Honda products
Others

Life Creation and Other Businesses*

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

 

Explanatory note:

*

Power product business has been renamed Life creation business from April 1, 2019. Honda expands the concept of our Power product business and continues pursuing it under a new concept of “Life Creation Business”. This renaming of the business represents our intention to evolve our business as a function to create new value for “mobility” and “daily lives”, which includes our existing Power product business as well as new businesses for the future, including energy business.

   (a) Segment Information

Segment information as of and for the nine months ended December 31, 2018 and 2019 is as follows:

As of and for the nine months ended December 31, 2018

 

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

Sales revenue:

                  

External customers

   ¥ 1,610,740      ¥ 8,228,119      ¥ 1,746,285      ¥ 254,356     ¥ 11,839,500      ¥ —       ¥ 11,839,500  

Intersegment

     —          146,792        11,202        19,840       177,834        (177,834     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

        1,610,740           8,374,911           1,757,487           274,196          12,017,334        (177,834     11,839,500  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 246,711      ¥ 262,734      ¥ 176,746      ¥ (2,186   ¥ 684,005      ¥ —       ¥ 684,005  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,437,358      ¥ 7,749,612      ¥ 9,944,099      ¥ 327,153     ¥ 19,458,222      ¥    392,979     ¥    19,851,201  

Depreciation and amortization

     49,304        455,477        583,184        10,871       1,098,836        —         1,098,836  

Capital expenditures

     46,708        363,963        1,468,846        9,540       1,889,057        —         1,889,057  


Table of Contents

 

4

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

As of and for the nine months ended December 31, 2019

 

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

Sales revenue:

                  

External customers

   ¥ 1,585,770      ¥ 7,691,119      ¥ 1,961,952      ¥ 234,108     ¥ 11,472,949      ¥ —       ¥ 11,472,949  

Intersegment

     —          164,786        10,626        19,317       194,729        (194,729     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

        1,585,770           7,855,905           1,972,578         253,425          11,667,678        (194,729     11,472,949  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 222,182      ¥ 229,000      ¥ 196,761      ¥ (8,689   ¥ 639,254      ¥ —       ¥ 639,254  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,519,250      ¥ 7,837,663      ¥ 10,373,083      ¥ 362,483     ¥ 20,092,479      ¥    396,227     ¥    20,488,706  

Depreciation and amortization

     50,147        417,950        615,663        10,777       1,094,537        —         1,094,537  

Capital expenditures

     52,849        328,282        1,730,700        10,574       2,122,405        —         2,122,405  

Segment information for the three months ended December 31, 2018 and 2019 is as follows:

 

For the three months ended December 31, 2018

 

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

Sales revenue:

                  

External customers

   ¥ 516,514      ¥ 2,806,148      ¥ 560,305      ¥ 90,688     ¥ 3,973,655      ¥ —       ¥ 3,973,655  

Intersegment

     —          53,408        3,716        8,704       65,828        (65,828     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     516,514        2,859,556        564,021        99,392       4,039,483        (65,828     3,973,655  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 69,537      ¥ 41,228      ¥ 60,374      ¥ (992   ¥ 170,147      ¥ —       ¥ 170,147  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
For the three months ended December 31, 2019

 

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

Sales revenue:

                  

External customers

   ¥ 530,227      ¥ 2,523,149      ¥ 616,318      ¥ 77,899     ¥ 3,747,593      ¥ —       ¥ 3,747,593  

Intersegment

     —          51,736        3,470        8,471       63,677        (63,677     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     530,227        2,574,885        619,788        86,370       3,811,270        (63,677     3,747,593  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 74,527      ¥ 33,707      ¥ 64,599      ¥ (6,184   ¥ 166,649      ¥ —       ¥ 166,649  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

Explanatory notes:

 

1.

Segment profit (loss) of each segment is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs. Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

 

2.

Segment assets of each segment are defined as total assets including investments accounted for using the equity method, derivatives, 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 revenues are generally made at values that approximate arm’s-length prices.

 

4.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of December 31, 2018 and 2019 amounted to ¥654,744 million and ¥650,927 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.


Table of Contents

 

5

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

   (b) Supplemental Geographical Information

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

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

As of and for the nine months ended December 31, 2018

 

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

Sales revenue:

                      

External customers

   ¥ 1,750,679      ¥ 6,319,470      ¥ 462,264      ¥ 2,738,003      ¥ 569,084      ¥ 11,839,500      ¥ —       ¥ 11,839,500  

Inter-geographic areas

     1,891,295        375,358        204,574        537,150        5,418        3,013,795        (3,013,795     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     3,641,974        6,694,828        666,838        3,275,153        574,502        14,853,295        (3,013,795     11,839,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating profit (loss)

   ¥ 85,496      ¥ 213,839      ¥ 8,582      ¥ 343,271      ¥ 32,745      ¥ 683,933      ¥ 72     ¥ 684,005  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Assets

   ¥ 4,510,933      ¥ 11,104,584      ¥ 664,122      ¥ 2,891,842      ¥ 610,717      ¥ 19,782,198      ¥ 69,003     ¥ 19,851,201  

Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets

   ¥ 2,617,310      ¥ 4,694,949      ¥ 90,489      ¥ 665,401      ¥ 145,342      ¥ 8,213,491      ¥ —       ¥ 8,213,491  
As of and for the nine months ended December 31, 2019

 

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

Sales revenue:

                      

External customers

   ¥ 1,714,572      ¥ 6,259,055      ¥ 426,596      ¥ 2,532,782      ¥ 539,944      ¥ 11,472,949      ¥ —       ¥ 11,472,949  

Inter-geographic areas

     1,623,743        285,634        156,462        500,784        5,239        2,571,862        (2,571,862     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     3,338,315        6,544,689        583,058        3,033,566        545,183        14,044,811        (2,571,862     11,472,949  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating profit (loss)

   ¥ 38,066      ¥ 280,736      ¥ 11,004      ¥ 274,911      ¥ 35,555      ¥ 640,272      ¥ (1,018   ¥ 639,254  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Assets

   ¥ 4,812,390      ¥ 11,366,463      ¥ 652,222      ¥ 2,966,416      ¥ 625,857      ¥ 20,423,348      ¥ 65,358     ¥ 20,488,706  

Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets

   ¥ 2,936,823      ¥ 4,816,100      ¥ 59,005      ¥ 687,869      ¥ 133,830      ¥ 8,633,627      ¥ —       ¥ 8,633,627  
For the three months ended December 31, 2018

 

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

Sales revenue:

                      

External customers

   ¥ 620,730      ¥ 2,126,699      ¥ 143,432      ¥ 889,906      ¥ 192,888      ¥ 3,973,655      ¥ —       ¥ 3,973,655  

Inter-geographic areas

     675,383        123,560        75,375        175,886        1,816        1,052,020        (1,052,020     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     1,296,113        2,250,259        218,807        1,065,792        194,704        5,025,675        (1,052,020     3,973,655  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating profit (loss)

   ¥ 43,382      ¥ 49,996      ¥ 1,311      ¥ 93,162      ¥ 2,120      ¥ 189,971      ¥ (19,824   ¥ 170,147  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


Table of Contents

 

6

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

For the three months ended December 31, 2019

 

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

Sales revenue:

                   

External customers

   ¥    502,173     ¥ 2,074,816      ¥ 135,220     ¥ 855,119      ¥ 180,265      ¥ 3,747,593     ¥ —       ¥ 3,747,593  

Inter-geographic areas

     542,748       88,038        55,104       161,475        1,589        848,954          (848,954     —    
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

     1,044,921         2,162,854        190,324        1,016,594        181,854          4,596,547        (848,954       3,747,593  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit (loss)

   ¥ (43,134   ¥ 101,755      ¥ 1,201     ¥ 88,633      ¥ 27,130      ¥ 175,585     ¥ (8,936   ¥ 166,649  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

  

 

Explanatory notes:

 

1.

Major countries or regions in each geographic area:

 

North America    United States, Canada, Mexico
Europe    United Kingdom, Germany, Belgium, Italy, France
Asia    Thailand, Indonesia, China, India, Vietnam
Other Regions    Brazil, Australia

 

2.

Operating profit (loss) of each geographical region is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs.

 

3.

Assets of each geographical region are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets.

 

4.

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

 

5.

Reconciling items include elimination of inter-geographic transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of December 31, 2018 and 2019 amounted to ¥654,744 million and ¥650,927 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

(5) Equipment on Operating Leases

The additions to equipment on operating leases for the nine months ended December 31, 2018 and 2019 are ¥1,466,827 million and ¥1,728,200 million, respectively.

The sales or disposals of equipment on operating leases for the nine months ended December 31, 2018 and 2019 are ¥735,138 million and ¥854,013 million, respectively.

(6) Property, Plant and Equipment

The additions to property, plant and equipment for the nine months ended December 31, 2018 and 2019 are ¥316,498 million and ¥278,168 million, respectively.

The sales or disposals of property, plant and equipment for the nine months ended December 31, 2018 and 2019 are ¥32,243 million and ¥27,970 million, respectively.


Table of Contents

 

7

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(7) Provisions

The components of and changes in provisions for the nine months ended December 31, 2019 are as follows:

 

     Yen (millions)  
     Product
warranties*
    Other     Total  

Balance as of April 1, 2019

   ¥ 458,482     ¥ 111,026     ¥ 569,508  
  

 

 

   

 

 

   

 

 

 

Provision

   ¥ 134,227     ¥ 30,282     ¥ 164,509  

Write-offs

     (196,052     (18,639     (214,691

Reversal

     (10,729     (1,104     (11,833

Exchange differences on translating foreign operations

     (5,395     (1,658     (7,053
  

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2019

   ¥ 380,533     ¥ 119,907     ¥ 500,440  
  

 

 

   

 

 

   

 

 

 

Current liabilities and non-current liabilities of provisions as of March 31, 2019 and December 31, 2019 are as follows:

 

     Yen (millions)  
     As of March 31,
2019
     As of December 31,
2019
 

Current liabilities

   ¥              348,763      ¥ 267,034  

Non-current liabilities

     220,745        233,406  
  

 

 

    

 

 

 

Total

   ¥ 569,508      ¥ 500,440  
  

 

 

    

 

 

 

 

Explanatory notes:

 

*

Honda recognizes provisions for product warranties to cover future product warranty expenses. Honda recognizes costs for general warranties on products Honda sells and for specific warranty programs, including product recalls. Honda recognizes general estimated warranty costs at the time products are sold to customers. Honda also recognizes specific estimated warranty program costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. These provisions are estimated based on historical warranty claim experience with consideration given to the expected level of future warranty costs as well as current information on repair costs. Provision for product warranties are utilized for expenditures based on the demand from customers and dealers.


Table of Contents

 

8

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(8) Sales Revenue

As stated in Note 4, Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Life creation and other businesses.

The sales revenue disaggregated by geographical markets based on the location of the customer and the reconciliation of the disaggregated revenue with the four reportable segments for the nine months ended December 31, 2018 and 2019 are as follows:

For the nine months ended December 31, 2018

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
     Total  

Revenue arising from Contracts with Customers

                                                                                                                                           

Japan

   ¥ 60,864      ¥ 1,147,678      ¥ 65,160      ¥ 69,094      ¥ 1,342,796  

North America

     138,977        4,578,382        742,391        97,340        5,557,090  

Europe

     115,353        305,019        —          39,015        459,387  

Asia

     1,070,666        1,804,174        31        34,519        2,909,390  

Other Regions

     224,274        382,815        —          14,312        621,401  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 1,610,134      ¥ 8,218,068      ¥ 807,582      ¥ 254,280      ¥ 10,890,064  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     606        10,051        938,703        76        949,436  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 1,610,740      ¥ 8,228,119      ¥ 1,746,285      ¥ 254,356      ¥ 11,839,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Explanatory notes:

 

*   Revenue arising from the other sources primarily includes lease revenues recognized under IAS 17 and interest recognized under IFRS 9.

 

For the nine months ended December 31, 2019

 

    

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
     Total  

Revenue arising from Contracts with Customers

              

Japan

   ¥ 57,997      ¥ 1,087,118      ¥ 92,262      ¥ 60,831      ¥ 1,298,208  

North America

     147,413        4,348,702        862,848        96,105        5,455,068  

Europe

     111,561        276,983        —          33,956        422,500  

Asia

     1,034,494        1,646,400        11        31,654        2,712,559  

Other Regions

     233,052        329,760        —          11,216        574,028  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 1,584,517      ¥ 7,688,963      ¥ 955,121      ¥ 233,762      ¥ 10,462,363  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     1,253        2,156        1,006,831        346        1,010,586  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 1,585,770      ¥ 7,691,119      ¥ 1,961,952      ¥ 234,108      ¥ 11,472,949  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Explanatory notes:

 

*

Revenue arising from the other sources primarily includes lease revenues recognized under IFRS 16 and interest recognized under IFRS 9.


Table of Contents

 

9

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

 For the three months ended December 31, 2018

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
     Total  

Revenue arising from Contracts with Customers

                                                                                                                                           

Japan

   ¥ 20,489      ¥ 401,580      ¥ 21,226      ¥ 28,825      ¥ 472,120  

North America

     41,242        1,572,603        214,558        34,406        1,862,809  

Europe

     25,946        104,466        —          11,446        141,858  

Asia

     350,974        595,769        —          10,215        956,958  

Other Regions

     77,258        128,933        —          5,720        211,911  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 515,909      ¥ 2,803,351      ¥ 235,784      ¥ 90,612      ¥ 3,645,656  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     605        2,797        324,521        76        327,999  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥    516,514      ¥ 2,806,148      ¥    560,305      ¥   90,688      ¥   3,973,655  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Explanatory notes:

 

*   Revenue arising from the other sources primarily includes lease revenues recognized under IAS 17 and interest recognized under IFRS 9.

 

For the three months ended December 31, 2019

 

 

    

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
     Total  

Revenue arising from Contracts with Customers

              

Japan

   ¥ 16,659      ¥ 284,519      ¥ 33,001      ¥ 21,394      ¥ 355,573  

North America

     48,655        1,479,388        243,960        31,054        1,803,057  

Europe

     30,790        93,825        —          9,847        134,462  

Asia

     355,430        556,876        2        11,390        923,698  

Other Regions

     78,689        107,602        —          4,153        190,444  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 530,223      ¥ 2,522,210      ¥   276,963      ¥ 77,838      ¥ 3,407,234  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     4        939        339,355        61        340,359  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 530,227      ¥ 2,523,149      ¥ 616,318      ¥ 77,899      ¥ 3,747,593  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Explanatory notes:

 

*

Revenue arising from the other sources primarily includes lease revenues recognized under IFRS 16 and interest recognized under IFRS 9.


Table of Contents

 

10

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(9) Fair Value

 (a) Definition of Fair Value Hierarchy

Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:

 

Level 1    Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date
Level 2    Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly
Level 3    Unobservable inputs for the assets or liabilities

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety. Honda recognizes the transfers between the levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

 (b) Method of Fair Value Measurement

The fair values of assets and liabilities are determined based on relevant market information and through the use of an appropriate valuation method.

The measurement methods and assumptions used in the measurement of assets and liabilities are as follows:

 (Cash and cash equivalents, trade receivables and trade payables)

The fair values approximate their carrying amounts due to their short-term maturities.

 (Receivables from financial services)

The fair value of receivables from financial services is measured primarily by discounting future cash flows using the current interest rates applicable for these receivables of similar remaining maturities. Fair value measurement for receivables from financial services is classified as Level 3.

 (Debt securities)

Debt securities consist mainly of mutual funds, corporate bonds, local bonds and auction rate securities.

The fair value of mutual funds with an active market is measured by using quoted market prices. Fair value measurement for mutual funds with an active market is classified as Level 1.

The fair values of corporate bonds and local bonds are measured based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurements for corporate bonds and local bonds are classified as Level 2.


Table of Contents

 

11

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

The subsidiary’s auction rate securities are A to AAA rated and are insured by qualified guarantee agencies, and reinsured by the Secretary of Education and the United States government, and guaranteed at approximately 95% by the United States government. To measure fair value of auction rate securities, Honda uses a third-party-developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction. Fair value measurement for auction rate securities is classified as Level 3.

 (Equity securities)

The fair value of equity securities with an active market is measured by using quoted market prices. Fair value measurement for equity securities with an active market is classified as Level 1.

The fair value of equity securities with no active market is measured mainly by using the comparable company valuation method and other appropriate valuation methods. Fair value measurement for equity securities with no active market is classified as Level 3. In addition, in the case that cost represents the best estimate of fair value, fair value for the equity securities with no active market is measured at cost.

Price book-value ratio (PBR) of a comparable company are used as a significant unobservable input in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as PBR of a comparable company rise (decline). Such fair value measurements are conducted in accordance with the group accounting policy approved by the appropriate person of authority and based upon valuation methods determined by personnel in accounting divisions of Honda.

 (Derivatives)

Derivatives consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements and interest rate swap agreements.

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are measured by using market observable inputs such as spot exchange rates, discount rates and implied volatility. The fair values of currency swap agreements and interest rate swap agreements are measured by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. Fair value measurements for these derivatives are classified as Level 2.

The credit risk of the counterparties is considered in the valuation of derivatives.

 (Financing liabilities)

The fair value of financing liabilities is measured by discounting future cash flows using interest rates currently available for liabilities of similar terms and remaining maturities. Fair value measurement of financing liabilities is mainly classified as Level 2.


Table of Contents

 

12

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(c) Assets and Liabilities Measured at Fair Value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2019 consist of the following:

 

     Yen (millions)  

As of March 31, 2019

   Level 1      Level 2      Level 3      Total  

Other financial assets:

           

Financial assets measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 12,233      ¥ —        ¥ 12,233  

Interest rate instruments

     —          34,164     

 

—  

 

     34,164  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          46,397        —          46,397  
  

 

 

    

 

 

    

 

 

    

 

 

 

Debt securities

     21,090        31,551        5,439        58,080  

Financial assets measured at fair value through other comprehensive income:

           

Debt securities

     —          10,495        —          10,495  

Equity securities

  

 

108,879

 

     —       

 

98,156

 

     207,035  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 129,969      ¥ 88,443      ¥ 103,595      ¥ 322,007  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other financial liabilities:

           

Financial liabilities measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 35,449      ¥ —        ¥ 35,449  

Interest rate instruments

     —          34,042        —          34,042  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          69,491        —          69,491  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ —        ¥ 69,491      ¥ —        ¥ 69,491  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2019.

 

     Yen (millions)  

As of December 31, 2019

   Level 1      Level 2      Level 3      Total  

Other financial assets:

           

Financial assets measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 13,105      ¥ —        ¥ 13,105  

Interest rate instruments

     —          32,894        —          32,894  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          45,999        —          45,999  
  

 

 

    

 

 

    

 

 

    

 

 

 

Debt securities

     22,197        34,960        5,223        62,380  

Financial assets measured at fair value through other comprehensive income:

           

Debt securities

     —          8,969        —          8,969  

Equity securities

     114,702        —          102,200        216,902  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 136,899      ¥ 89,928      ¥ 107,423      ¥ 334,250  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other financial liabilities:

           

Financial liabilities measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 23,711      ¥ —        ¥ 23,711  

Interest rate instruments

     —          37,289        —          37,289  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          61,000        —          61,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ —        ¥ 61,000      ¥ —        ¥ 61,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between Level 1 and Level 2 for the nine months ended December 31, 2019.


Table of Contents

 

13

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

There were no significant effects of the measurements on profit or loss or other comprehensive income in Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended December 31, 2019.

(d) Financial Assets and Financial Liabilities measured at amortized cost

The carrying amounts and fair values of financial assets and financial liabilities measured at amortized cost as of March 31, 2019 and December 31, 2019 are as follows:

 

     Yen (millions)  
     As of March 31,
2019
     As of December 31,
2019
 
     Carrying
amount
     Fair value      Carrying
amount
     Fair value  

Receivables from financial services

   ¥ 5,405,250      ¥ 5,417,297      ¥ 5,325,753      ¥ 5,362,234  

Debt securities

     54,964        54,952        72,118        72,116  

Financing liabilities

     7,331,120        7,355,632        7,337,126        7,390,321  

The table does not include financial assets and financial liabilities measured at amortized cost whose fair values approximate their carrying amounts.


Table of Contents

 

14

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(10) Contingent Liabilities

Claims and Lawsuits

Honda is subject to potential liability under various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position or results of operations.

Loss related to airbag inflators

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

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


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(11) Earnings Per Share

Earnings per share attributable to owners of the parent for the nine months ended December 31, 2018 and 2019 are calculated based on the following information. There were no dilutive potential common shares outstanding for the nine months ended December 31, 2018 and 2019.

 

     2018      2019  

Profit for the period attributable to owners of the parent (millions of yen)

   ¥ 623,339      ¥ 485,288  

Weighted average number of common shares outstanding, basic (shares)

     1,765,309,719        1,757,434,612  

Basic earnings per share attributable to owners of the parent (yen)

   ¥ 353.10      ¥ 276.13  

Earnings per share attributable to owners of the parent for the three months ended December 31, 2018 and 2019 are calculated based on the following information. There were no dilutive potential common shares outstanding for the three months ended December 31, 2018 and 2019.

 

     2018      2019  

Profit for the period attributable to owners of the parent (millions of yen)

   ¥ 168,238      ¥ 116,432  

Weighted average number of common shares outstanding, basic (shares)

     1,759,562,385        1,754,227,903  

Basic earnings per share attributable to owners of the parent (yen)

   ¥ 95.61      ¥ 66.37  

(12) Dividend

(a) Dividend payout

For the nine months ended December 31, 2018

 

Resolution

   The Board of Directors Meeting on April 27, 2018

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   48,013

Dividend per share (yen)

   27.00

Record date

   March 31, 2018

Effective date

   May 30, 2018

Resolution

   The Board of Directors Meeting on July 31, 2018

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   47,682

Dividend per share (yen)

   27.00

Record date

   June 30, 2018

Effective date

   August 28, 2018

Resolution

   The Board of Directors Meeting on October 30, 2018

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   49,287

Dividend per share (yen)

   28.00

Record date

   September 30, 2018

Effective date

   November 28, 2018


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

For the nine months ended December 31, 2019

 

Resolution

   The Board of Directors Meeting on May 8, 2019

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   49,287

Dividend per share (yen)

   28.00

Record date

   March 31, 2019

Effective date

   June 3, 2019

Resolution

   The Board of Directors Meeting on August 2, 2019

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   49,287

Dividend per share (yen)

   28.00

Record date

   June 30, 2019

Effective date

   August 30, 2019

Resolution

   The Board of Directors Meeting on November 8, 2019

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   49,287

Dividend per share (yen)

   28.00

Record date

   September 30, 2019

Effective date

   November 29, 2019

(b) Dividends payable of which record date was in the nine months ended December 31, 2019, effective after the period

 

Resolution

   The Board of Directors Meeting on February 7, 2020

Type of shares

   Common shares

Resource for dividend

   Retained earnings

Total amount of dividends (millions of yen)

   48,932

Dividend per share (yen)

   28.00

Record date

   December 31, 2019

Effective date

   March 4, 2020

(13) Approval of Release of Condensed Consolidated Interim Financial Statements

The release of the condensed consolidated interim financial statements was approved by Takahiro Hachigo, President and Representative Director, Chief Executive Officer and Kohei Takeuchi, Senior Managing Director and Chief Financial Officer on February 12, 2020.