6-K 1 d84563d6k.htm FORM 6-K Form 6-K
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No.1-7628

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF AUGUST 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 August 6, 2020, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal first quarter ended June 30, 2020 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: August 25, 2020


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

June 30, 2020


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Results

Overview of Operating Performance

The spread of coronavirus disease 2019 (COVID-19) has caused the global economic slowdown and also has affected Honda’s consolidated financial results for the three months ended June 30, 2020.

Resulting from travel restriction measures by government, Honda’s production bases in Japan and overseas were also affected by suspended or reduced production mainly due to restrictions on employees’ commute to the workplaces and delays in the supply of parts within the supply chain. Some dealers in Japan and overseas were obliged to suspend business, shorten business hours, or reduce services such as inspections and repairs.

Honda’s consolidated sales revenue for the three months ended June 30, 2020 decreased by 46.9%, to ¥2,123.7 billion from the same period last year, due mainly to decreased sales revenue in all business operations. Operating loss was ¥113.6 billion, a decrease of ¥366.1 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales revenue and model mix, which was partially offset by decreased selling, general and administrative expenses. Loss before income taxes was ¥73.4 billion, a decrease of ¥363.2 billion from the same period last year. Loss for the period attributable to owners of the parent was ¥80.8 billion, a decrease of ¥253.1 billion from the same period last year.

Business Segments

Motorcycle Business

For the three months ended June 30, 2019 and 2020

 

     Units (thousands)  
     Honda Group Unit Sales*     Consolidated Unit Sales*  
   Three months
ended
Jun. 30, 2019
     Three months
ended
Jun. 30, 2020
                 Three months
ended
Jun. 30, 2019
     Three months
ended
Jun. 30, 2020
              
   Change     %      Change     %  

Motorcycle Business

     4,921        1,855        (3,066       (62.3     3,264        1,221        (2,043     (62.6

Japan

     51        50        (1     (2.0     51        50        (1     (2.0

North America

     74        61        (13     (17.6     74        61        (13     (17.6

Europe

     84        61        (23     (27.4     84        61        (23     (27.4

Asia

     4,378        1,572        (2,806     (64.1     2,721        938        (1,783     (65.5

Other Regions

     334        111        (223     (66.8     334        111        (223     (66.8

 

*

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 48.6%, to ¥274.2 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 84.0%, to ¥11.2 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses.


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Automobile Business

For the three months ended June 30, 2019 and 2020

 

     Units (thousands)  
     Honda Group Unit Sales*     Consolidated Unit Sales*  
   Three months
ended
Jun. 30, 2019
     Three months
ended
Jun. 30, 2020
                 Three months
ended
Jun. 30, 2019
     Three months
ended
Jun. 30, 2020
              
   Change     %      Change     %  

Automobile Business

     1,321        792        (529       (40.0     905        337        (568     (62.8

Japan

     181        129        (52     (28.7     161        113        (48     (29.8

North America

     495        159        (336     (67.9     495        159        (336     (67.9

Europe

     34        16        (18     (52.9     34        16        (18     (52.9

Asia

     554        473        (81     (14.6     158        34        (124     (78.5

Other Regions

     57        15        (42     (73.7     57        15        (42     (73.7

 

*

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 55.1%, to ¥1,209.9 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating loss was ¥195.8 billion, a decrease of ¥316.2 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses.

Financial Services Business

Sales revenue from external customers decreased by 16.4%, to ¥575.8 billion from the same period last year, due mainly to a decrease in revenues on disposition of lease vehicles. Operating profit increased by 8.8%, to ¥71.5 billion from the same period last year, due mainly to decreased selling, general and administrative expenses.

Life Creation and Other Businesses

For the three months ended June 30, 2019 and 2020

 

     Units (thousands)  
     Honda Group Unit Sales / Consolidated Unit Sales*  
   Three months
ended
Jun. 30, 2019
     Three months
ended
Jun. 30, 2020
              
   Change     %  

Life Creation Business

     1,280        1,083        (197     (15.4

Japan

     74        80        6       8.1  

North America

     605        524        (81     (13.4

Europe

     198        170        (28     (14.1

Asia

     347        257        (90     (25.9

Other Regions

     56        52        (4     (7.1

 

*

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 20.6%, to ¥63.7 billion from the same period last year, due mainly to decreased consolidated unit sales in Life creation business. Operating loss was ¥0.5 billion, an improvement of ¥2.9 billion from the same period last year, due mainly to decreased research and development expenses as well as decreased selling, general and administrative expenses, which was partially offset by 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 ¥7.1 billion, an improvement of ¥2.0 billion from the same period last year.


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Cash Flows

Consolidated cash and cash equivalents on June 30, 2020 decreased by ¥64.5 billion from March 31, 2020, to ¥2,607.7 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 used in operating activities amounted to ¥71.7 billion of cash outflows. Cash outflows from operating activities increased by ¥267.3 billion from the same period last year, due mainly to a decrease in cash received from customers, despite decreased payments for parts and raw materials.

Net cash used in investing activities amounted to ¥109.3 billion of cash outflows. Cash outflows from investing activities decreased by ¥58.8 billion from the same period last year, due mainly to decreased payments for acquisitions of other financial assets as well as decreased payments for additions to property, plant and equipment.

Net cash provided by financing activities amounted to ¥111.9 billion of cash inflows. Cash inflows from financing activities increased by ¥195.7 billion from the same period last year, due mainly to increased proceeds from financing liabilities.

Research and Development

The changes in research and development activities by Honda and its subsidiaries for the three months ended June 30, 2020 are as follows:

Honda and the automobile product development division excluding the design function etc. of Honda R&D Co., Ltd. were integrated and Honda merged with Honda Engineering Co., Ltd., with an aim to transition from the current structure where sales, manufacturing, development 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. In addition, the Innovative Research Excellence – Power Unit & Energy center and the Design center were newly established in Honda R&D Co., Ltd. In the area of power unit technologies, which is a source of Honda’s competitive strength, the Innovative Research Excellence – Power Unit & Energy center will fully demonstrate the strengths of Honda as a company that has a broad range of technologies and strive to increase the value of its product for the future with integration of research and development functions for power unit and energy technologies for motorcycles, automobiles, power products and business jets. The Design center will strengthen the consistent Honda brand across products with integration of design functions for products of motorcycles, automobiles and life creation as well.

Employees

The number of employees of Honda as of June 30, 2020 increased by 10,912, to 36,291 from March 31, 2020, due mainly to the integration of Honda and the automobile product development division excluding the design function etc. of Honda R&D Co., Ltd. and the merger with Honda Engineering Co., Ltd. by Honda in Automobile business. There was no significant changes in the total number of employees of Honda and its subsidiaries for the three months ended June 30, 2020.


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Unit Production and Sales

Unit production and sales in Honda and its subsidiaries for the three months ended June 30, 2020 in Motorcycle business, Automobile business and Life creation business decreased significantly from the same period last year. The decreased unit production in each segment was due to suspended or reduced production in Honda’s production bases in Japan and overseas resulted from the spread of COVID-19. For the decreased unit sales in each segment, see “Business Segment” in “Consolidated Financial Results”.

Plans for Capital Expenditures for Fiscal Year 2021

Our management mainly considers economic trends of each region, demand trends, situation of competitors and our business strategy such as introduction plans of new models in determining the future of projects.

The estimated amounts of capital expenditures for the fiscal year ending March 31, 2021 are shown below.

 

     Fiscal year ending
March 31, 2021
 
     Yen (millions)  

Motorcycle Business

   ¥ 32,600  

Automobile Business

     305,600  

Financial Services Business

     200  

Life Creation and Other Businesses

     11,600  
  

 

 

 

Total

   ¥ 350,000  
  

 

 

 

 

Explanatory notes:

 

1.

There is no plan for significant disposal of assets except ordinary modernization of production facilities.

2.

Capital requirement will be covered by own funds and loans.

3.

The estimated amount of capital expenditures for Financial services business in the above table does not include equipment on operating leases.

4.

Intangible assets are not included in the table above.

In Motorcycle business, we will make capital expenditures of ¥32,600 million in the fiscal year ending March 31, 2021. Funds will be allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

In Automobile business, we will make capital expenditures of ¥305,600 million in the fiscal year ending March 31, 2021. Funds will be allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

In Financial services business, we will make capital expenditures of ¥200 million in the fiscal year ending March 31, 2021.

In Life creation business, we will make capital expenditures of ¥11,600 million in the fiscal year ending March 31, 2021. Funds will be allocated to the improvement, streamlining and modernization of production facilities, and improvement of R&D facilities.

There is no decision relating to plans for significant capital expenditures for the three months ended June 30, 2020.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position

March 31, 2020 and June 30, 2020

 

          Yen (millions)  
Assets    Note    March 31,
2020
    June 30,
2020
 
          unaudited     unaudited  

Current assets:

       

Cash and cash equivalents

      ¥ 2,672,353     ¥ 2,607,760  

Trade receivables

        633,909       609,222  

Receivables from financial services

        1,878,358       1,684,860  

Other financial assets

        190,053       176,902  

Inventories

        1,560,568       1,651,700  

Other current assets

        365,769       334,919  
     

 

 

   

 

 

 

Total current assets

        7,301,010       7,065,363  
     

 

 

   

 

 

 

Non-current assets:

       

Investments accounted for using the equity method

        655,475       675,141  

Receivables from financial services

        3,282,807       3,262,447  

Other financial assets

        441,724       469,325  

Equipment on operating leases

   5      4,626,063       4,587,433  

Property, plant and equipment

   6      3,051,704       2,991,499  

Intangible assets

        760,434       772,428  

Deferred tax assets

        132,553       87,384  

Other non-current assets

        209,695       200,714  
     

 

 

   

 

 

 

Total non-current assets

        13,160,455       13,046,371  
     

 

 

   

 

 

 

Total assets

      ¥   20,461,465     ¥   20,111,734  
     

 

 

   

 

 

 
          Yen (millions)  
Liabilities and Equity    Note    March 31,
2020
    June 30,
2020
 
          unaudited     unaudited  

Current liabilities:

       

Trade payables

      ¥ 958,469     ¥ 781,767  

Financing liabilities

        3,248,457       3,334,751  

Accrued expenses

        449,716       372,092  

Other financial liabilities

        209,065       221,456  

Income taxes payable

        43,759       41,489  

Provisions

   7      287,175       267,787  

Other current liabilities

        593,447       530,972  
     

 

 

   

 

 

 

Total current liabilities

        5,790,088       5,550,314  
     

 

 

   

 

 

 

Non-current liabilities:

       

Financing liabilities

        4,221,229       4,308,804  

Other financial liabilities

        303,570       302,042  

Retirement benefit liabilities

        578,909       588,867  

Provisions

   7      238,439       245,811  

Deferred tax liabilities

        698,868       638,493  

Other non-current liabilities

        344,339       340,495  
     

 

 

   

 

 

 

Total non-current liabilities

        6,385,354       6,424,512  
     

 

 

   

 

 

 

Total liabilities

        12,175,442       11,974,826  
     

 

 

   

 

 

 

Equity:

       

Common stock

        86,067       86,067  

Capital surplus

        171,823       171,811  

Treasury stock

        (273,940     (273,817

Retained earnings

        8,142,948       8,013,714  

Other components of equity

        (114,639     (113,535
     

 

 

   

 

 

 

Equity attributable to owners of the parent

        8,012,259       7,884,240  

Non-controlling interests

        273,764       252,668  
     

 

 

   

 

 

 

Total equity

        8,286,023       8,136,908  
     

 

 

   

 

 

 

Total liabilities and equity

      ¥   20,461,465     ¥   20,111,734  
     

 

 

   

 

 

 

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 three months ended June 30, 2019 and 2020

 

          Yen (millions)  
     Note    June 30,
2019
    June 30,
2020
 
          unaudited     unaudited  

Sales revenue

   8    ¥   3,996,253     ¥   2,123,775  

Operating costs and expenses:

       

Cost of sales

        (3,166,483     (1,769,299

Selling, general and administrative

        (407,449     (305,253

Research and development

        (169,852     (162,914
     

 

 

   

 

 

 

Total operating costs and expenses

        (3,743,784     (2,237,466
     

 

 

   

 

 

 

Operating profit (loss)

        252,469       (113,691
     

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

        44,230       39,994  

Finance income and finance costs:

       

Interest income

        14,195       4,595  

Interest expense

        (3,595     (1,833

Other, net

        (17,488     (2,498
     

 

 

   

 

 

 

Total finance income and finance costs

        (6,888     264  
     

 

 

   

 

 

 

Profit (loss) before income taxes

        289,811       (73,433

Income tax expense

        (100,219     (6,546
     

 

 

   

 

 

 

Profit (loss) for the period

      ¥ 189,592     ¥ (79,979
     

 

 

   

 

 

 

Profit (loss) for the period attributable to:

       

Owners of the parent

        172,302       (80,871

Non-controlling interests

        17,290       892  
          Yen  
          June 30,
2019
    June 30,
2020
 

Earnings (loss) per share attributable to owners of the parent

       

Basic and diluted

   11    ¥ 97.92     ¥ (46.84

See accompanying notes to condensed consolidated interim financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2019 and 2020

 

          Yen (millions)  
     Note    June 30,
2019
    June 30,
2020
 
          unaudited     unaudited  

Profit (loss) for the period

      ¥      189,592     ¥      (79,979

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

        (6,348     4,209  

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

        (825     529  

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

        110       56  

Exchange differences on translating foreign operations

        (129,218     8,819  

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

        (14,259     (5,193
     

 

 

   

 

 

 

Total other comprehensive income, net of tax

        (150,540     8,420  
     

 

 

   

 

 

 

Comprehensive income for the period

      ¥ 39,052     ¥ (71,559
     

 

 

   

 

 

 

Comprehensive income for the period attributable to:

       

Owners of the parent

        28,277       (79,767

Non-controlling interests

        10,775       8,208  

See accompanying notes to condensed consolidated interim financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

For the three months ended June 30, 2019 and 2020

 

          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 (loss) for the period

            172,302         172,302       17,290       189,592  

Other comprehensive income, net of tax

              (144,025     (144,025     (6,515     (150,540
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

            172,302       (144,025     28,277       10,775       39,052  

Reclassification to retained earnings

            (2     2       —           —    

Transactions with owners and other

                 

Dividends paid

    12             (49,287       (49,287     (44,226     (93,513

Purchases of treasury stock

          (3         (3       (3

Disposal of treasury stock

          79           79         79  

Share-based payment transactions

        78             78         78  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        78       76       (49,287       (49,133     (44,226     (93,359
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

            176         176         176  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2019 (unaudited)

    ¥ 86,067     ¥ 171,538     ¥ (177,751   ¥ 8,096,826     ¥ 70,360     ¥ 8,247,040     ¥ 264,619     ¥ 8,511,659  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

          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, 2020 (unaudited)

    ¥ 86,067     ¥ 171,823     ¥ (273,940   ¥ 8,142,948     ¥ (114,639   ¥ 8,012,259     ¥ 273,764     ¥ 8,286,023  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                 

Profit (loss) for the period

            (80,871       (80,871     892       (79,979

Other comprehensive income, net of tax

              1,104       1,104       7,316       8,420  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

            (80,871     1,104       (79,767     8,208       (71,559

Transactions with owners and other

                 

Dividends paid

    12             (48,363       (48,363     (31,555     (79,918

Purchases of treasury stock

          (1         (1       (1

Disposal of treasury stock

          124           124         124  

Share-based payment transactions

        (12           (12       (12

Equity transactions and others

                  2,251       2,251  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        (12     123       (48,363       (48,252     (29,304     (77,556
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2020 (unaudited)

    ¥ 86,067     ¥ 171,811     ¥ (273,817   ¥ 8,013,714     ¥ (113,535   ¥ 7,884,240     ¥ 252,668     ¥ 8,136,908  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 three months ended June 30, 2019 and 2020

 

            Yen (millions)  
     Note      June 30,
2019
    June 30,
2020
 
            unaudited     unaudited  

Cash flows from operating activities:

       

Profit (loss) before income taxes

      ¥ 289,811     ¥ (73,433

Depreciation, amortization and impairment losses excluding equipment on operating leases

        170,016       149,419  

Share of profit of investments accounted for using the equity method

        (44,230     (39,994

Finance income and finance costs, net

        (9,127     6,752  

Interest income and interest costs from financial services, net

        (32,344     (28,354

Changes in assets and liabilities

       

Trade receivables

        9,919       33,546  

Inventories

        (12,930     (91,946

Trade payables

        (53,045     (134,776

Accrued expenses

        (34,712     (87,180

Provisions and retirement benefit liabilities

        10,907       9,395  

Receivables from financial services

        6,582       199,194  

Equipment on operating leases

        (53,086     16,833  

Other assets and liabilities

        (83,469     (35,335

Other, net

        1,866       (2,402

Dividends received

        26,632       5,468  

Interest received

        73,532       58,567  

Interest paid

        (32,873     (27,577

Income taxes paid, net of refunds

        (37,861     (29,945
     

 

 

   

 

 

 

Net cash provided by (used in) operating activities

        195,588       (71,768

Cash flows from investing activities:

       

Payments for additions to property, plant and equipment

        (97,415     (84,090

Payments for additions to and internally developed intangible assets

        (58,172     (50,151

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

        7,885       3,231  

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

        —         2,230  

Payments for acquisitions of investments accounted for using the equity method

        (2,401     —    

Payments for acquisitions of other financial assets

        (60,055     (38,460

Proceeds from sales and redemptions of other financial assets

        42,018       57,920  
     

 

 

   

 

 

 

Net cash used in investing activities

        (168,140     (109,320

Cash flows from financing activities:

       

Proceeds from short-term financing liabilities

        2,049,304       2,847,881  

Repayments of short-term financing liabilities

        (2,318,708     (2,687,827

Proceeds from long-term financing liabilities

        494,872       405,004  

Repayments of long-term financing liabilities

        (219,727     (376,788

Dividends paid to owners of the parent

        (49,287     (48,363

Dividends paid to non-controlling interests

        (22,967     (9,282

Purchases and sales of treasury stock, net

        76       123  

Repayments of lease liabilities

        (17,400     (18,291

Other, net

        2       (555
     

 

 

   

 

 

 

Net cash provided by (used in) financing activities

        (83,835     111,902  

Effect of exchange rate changes on cash and cash equivalents

        (46,546     4,593  
     

 

 

   

 

 

 

Net change in cash and cash equivalents

        (102,933     (64,593

Cash and cash equivalents at beginning of year

        2,494,121       2,672,353  
     

 

 

   

 

 

 

Cash and cash equivalents at end of period

      ¥ 2,391,188     ¥ 2,607,760  
     

 

 

   

 

 

 

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, 2020, 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, 2020.

(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, 2020.


Table of Contents

 

2

 

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

   (a) Segment Information

Segment information as of and for the three months ended June 30, 2019 and 2020 is as follows:

As of and for the three months ended June 30, 2019

 

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

Sales revenue:

                  

External customers

   ¥ 533,018      ¥ 2,694,478      ¥ 688,401      ¥ 80,356     ¥ 3,996,253      ¥ —       ¥ 3,996,253  

Intersegment

     —          55,662        3,624        4,888       64,174        (64,174     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     533,018        2,750,140        692,025        85,244       4,060,427        (64,174     3,996,253  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 69,873      ¥ 120,375      ¥ 65,782      ¥ (3,561   ¥ 252,469      ¥ —       ¥ 252,469  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,500,514      ¥ 8,104,744      ¥ 10,076,682      ¥ 338,134     ¥ 20,020,074      ¥ 286,628     ¥ 20,306,702  

Depreciation and amortization

     17,072        146,891        206,866        3,579       374,408        —         374,408  

Capital expenditures

     13,552        101,076        576,451        3,058       694,137        —         694,137  


Table of Contents

 

3

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

As of and for the three months ended June 30, 2020

 

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

Sales revenue:

                

External customers

   ¥ 274,222      ¥ 1,209,923     ¥ 575,834      ¥ 63,796     ¥ 2,123,775     ¥ —       ¥ 2,123,775  

Intersegment

     —          45,800       3,168        4,441       53,409       (53,409     —    
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     274,222        1,255,723       579,002        68,237       2,177,184       (53,409     2,123,775  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

   ¥ 11,202      ¥ (195,888   ¥ 71,568      ¥ (573   ¥ (113,691   ¥ —       ¥ (113,691
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment assets

   ¥ 1,386,342      ¥ 7,641,611     ¥ 10,202,227      ¥ 352,249     ¥ 19,582,429     ¥ 529,305     ¥ 20,111,734  

Depreciation and amortization

     16,775        126,793       206,150        3,888       353,606       —         353,606  

Capital expenditures

     8,550        89,371       396,701        2,082       496,704       —         496,704  

 

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 June 30, 2019 and 2020 amounted to ¥551,689 million and ¥820,941 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

 

4

 

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 three months ended June 30, 2019

 

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

Sales revenue:

               

External customers

  ¥ 594,300     ¥ 2,213,126     ¥ 155,392     ¥ 844,102     ¥ 189,333     ¥ 3,996,253     ¥ —       ¥ 3,996,253  

Inter-geographic areas

    556,455       102,919       50,838       175,163       1,943       887,318       (887,318     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    1,150,755       2,316,045       206,230       1,019,265       191,276       4,883,571       (887,318     3,996,253  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

  ¥ 36,672     ¥ 102,701     ¥ 2,600     ¥ 97,961     ¥ 8,479     ¥ 248,413     ¥ 4,056     ¥ 252,469  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 4,766,236     ¥ 11,200,662     ¥ 639,831     ¥ 3,043,833     ¥ 619,899     ¥ 20,270,461     ¥ 36,241     ¥ 20,306,702  

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

  ¥   2,922,170     ¥   4,653,618     ¥ 94,351     ¥ 673,137     ¥   142,292     ¥     8,485,568     ¥ —       ¥ 8,485,568  

As of and for the three months ended June 30, 2020

 

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

Sales revenue:

               

External customers

  ¥ 471,450     ¥ 1,061,689     ¥ 90,628     ¥ 444,317     ¥ 55,691     ¥ 2,123,775     ¥ —       ¥ 2,123,775  

Inter-geographic areas

    295,730       78,816       14,109       89,674       524       478,853       (478,853     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    767,180       1,140,505       104,737       533,991       56,215       2,602,628       (478,853     2,123,775  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

  ¥ (61,934   ¥ (77,886   ¥ 4,854     ¥ 23,303     ¥ (5,576   ¥ (117,239   ¥ 3,548     ¥ (113,691
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 4,712,594     ¥ 11,123,120     ¥ 682,541     ¥ 2,799,058     ¥ 473,595     ¥ 19,790,908     ¥ 320,826     ¥ 20,111,734  

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

  ¥ 2,991,617     ¥ 4,672,911     ¥ 57,515     ¥ 661,518     ¥ 106,492     ¥ 8,490,053     ¥ —       ¥ 8,490,053  

 

Explanatory notes:

 

1.

Major countries 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 June 30, 2019 and 2020 amounted to ¥551,689 million and ¥820,941 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

 

(5) Equipment on Operating Leases

The additions to equipment on operating leases for the three months ended June 30, 2019 and 2020 are ¥575,586 million and ¥395,691 million, respectively.

The sales or disposals of equipment on operating leases for the three months ended June 30, 2019 and 2020 are ¥313,409 million and ¥211,419 million, respectively.

(6) Property, Plant and Equipment

The additions to property, plant and equipment for the three months ended June 30, 2019 and 2020 are ¥71,555 million and ¥60,844 million, respectively.

The sales or disposals of property, plant and equipment for the three months ended June 30, 2019 and 2020 are ¥10,462 million and ¥9,441 million, respectively.

(7) Provisions

The components of and changes in provisions for the three months ended June 30, 2020 are as follows:

 

     Yen (millions)  
     Product
warranties*
    Other     Total  

Balance as of April 1, 2020

   ¥ 380,689     ¥ 144,925     ¥ 525,614  
  

 

 

   

 

 

   

 

 

 

Provision

   ¥ 34,863     ¥ 3,207     ¥ 38,070  

Write-offs

     (32,480     (13,100     (45,580

Reversal

     (1,168     (2,474     (3,642

Exchange differences on translating foreign operations

     (56     (808     (864
  

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2020

   ¥ 381,848     ¥ 131,750     ¥ 513,598  
  

 

 

   

 

 

   

 

 

 

Current liabilities and non-current liabilities of provisions as of March 31, 2020 and June 30, 2020 are as follows:

 

     Yen (millions)  
     As of March 31,
2020
     As of June 30,
2020
 

Current liabilities

   ¥ 287,175      ¥ 267,787  

Non-current liabilities

     238,439        245,811  
  

 

 

    

 

 

 

Total

   ¥ 525,614      ¥ 513,598  
  

 

 

    

 

 

 

 

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

 

6

 

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 three months ended June 30, 2019 and 2020 are as follows:

For the three months ended June 30, 2019

 

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

Revenue arising from Contracts with Customers

              

Japan

   ¥ 18,490      ¥ 393,752      ¥ 28,995      ¥ 19,694      ¥ 460,931  

North America

     48,734        1,537,646        325,564        33,831        1,945,775  

Europe

     47,822        92,409        —          13,477        153,708  

Asia

     338,200        549,878        3        10,065        898,146  

Other Regions

     79,771        120,178        —          3,289        203,238  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 533,017      ¥ 2,693,863      ¥ 354,562      ¥ 80,356      ¥ 3,661,798  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     1        615        333,839        —          334,455  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 533,018      ¥ 2,694,478      ¥ 688,401      ¥ 80,356      ¥ 3,996,253  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

For the three months ended June 30, 2020

 

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

Revenue arising from Contracts with Customers

              

Japan

   ¥ 19,353      ¥ 284,078      ¥ 31,544      ¥ 10,321      ¥ 345,296  

North America

     45,505        509,750        217,750        28,939        801,944  

Europe

     34,767        42,609        —          11,928        89,304  

Asia

     146,625        337,874        1        9,681        494,181  

Other Regions

     27,083        30,690        —          2,879        60,652  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 273,333      ¥ 1,205,001      ¥ 249,295      ¥ 63,748      ¥ 1,791,377  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     889        4,922        326,539        48        332,398  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 274,222      ¥ 1,209,923      ¥ 575,834      ¥ 63,796      ¥ 2,123,775  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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

 

7

 

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.


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8

 

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.


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9

 

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, 2020 and June 30, 2020 consist of the following:

 

     Yen (millions)  

As of March 31, 2020

   Level 1      Level 2      Level 3      Total  

Other financial assets:

           

Financial assets measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 19,215      ¥ —        ¥ 19,215  

Interest rate instruments

     —          76,589        —          76,589  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          95,804        —          95,804  
  

 

 

    

 

 

    

 

 

    

 

 

 

Debt securities

     18,175        34,949        5,224        58,348  

Financial assets measured at fair value through other comprehensive income:

           

Debt securities

     —          9,069        —          9,069  

Equity securities

     78,493        —          99,508        178,001  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 96,668      ¥ 139,822      ¥ 104,732      ¥ 341,222  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other financial liabilities:

           

Financial liabilities measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 24,834      ¥ —        ¥ 24,834  

Interest rate instruments

     —          90,334        —          90,334  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          115,168        —          115,168  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ —        ¥ 115,168      ¥ —        ¥ 115,168  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2020.

 

     Yen (millions)  

As of June 30, 2020

   Level 1      Level 2      Level 3      Total  

Other financial assets:

           

Financial assets measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 19,826      ¥ —        ¥ 19,826  

Interest rate instruments

     —          86,218        —          86,218  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          106,044        —          106,044  
  

 

 

    

 

 

    

 

 

    

 

 

 

Debt securities

     20,794        35,718        5,279        61,791  

Financial assets measured at fair value through other comprehensive income:

           

Debt securities

     —          9,388        —          9,388  

Equity securities

     86,049        —          98,928        184,977  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 106,843      ¥ 151,150      ¥ 104,207      ¥ 362,200  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other financial liabilities:

           

Financial liabilities measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 20,613      ¥ —        ¥ 20,613  

Interest rate instruments

     —          94,794        —          94,794  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          115,407        —          115,407  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ —        ¥ 115,407      ¥ —        ¥ 115,407  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between Level 1 and Level 2 for the three months ended June 30, 2020.


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10

 

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 three months ended June 30, 2020.

(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, 2020 and June 30, 2020 are as follows:

 

     Yen (millions)  
     As of March 31,
2020
     As of June 30,
2020
 
     Carrying
amount
     Fair value      Carrying
amount
     Fair value  

Receivables from financial services

   ¥ 5,161,165      ¥ 5,173,553      ¥ 4,947,307      ¥ 5,052,004  

Debt securities

     62,204        62,210        39,141        39,141  

Financing liabilities

     7,469,686        7,408,800        7,643,555        7,742,575  

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


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11

 

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.


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12

 

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 three months ended June 30, 2019 and 2020 are calculated based on the following information. There were no significant dilutive potential common shares outstanding for the three months ended June 30, 2019 and 2020.

 

     2019      2020  

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

   ¥ 172,302      ¥ (80,871

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

     1,759,566,817        1,726,618,878  

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

   ¥ 97.92      ¥ (46.84

(12) Dividend

(a) Dividend payout

For the three months ended June 30, 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

For the three months ended June 30, 2020

 

Resolution

   The Board of Directors Meeting on May 12, 2020

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   48,363

Dividend per share (yen)

   28.00

Record date

   March 31, 2020

Effective date

   June 3, 2020

(b) Dividends payable of which record date was in the three months ended June 30, 2020, effective after the period

 

Resolution

   The Board of Directors Meeting on August 5, 2020

Type of shares

   Common shares

Resource for dividend

   Retained earnings

Total amount of dividends (millions of yen)

   18,999

Dividend per share (yen)

   11.00

Record date

   June 30, 2020

Effective date

   September 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 August 6, 2020.