Honda Motor Stock price
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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👉 More detailed insights
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Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = ¥6.75t | Revenue (TTM) = ¥22.52t
Market Cap = ¥6.75t | Estimated Revenue = ¥23.83t
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = ¥15.31t | Revenue (TTM) = ¥22.52t
Enterprise Value = ¥15.31t | Forward Revenue = ¥23.83t
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
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Honda Motor Stock Analysis
Analyst Opinions
23 Analysts have issued a Honda Motor forecast:
Analyst Opinions
23 Analysts have issued a Honda Motor forecast:
Honda Motor Events
Past Events
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AUG
5
Q1 2027 Earnings Call
about 2 months ago
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MAY
13
Q4 2026 Earnings Call
5 months ago
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MAY
13
2026 Earnings Call
5 months ago
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MAR
12
Honda Motor Co., Ltd., Q4 2026 Guidance/Update Call, Mar 12, 2026
7 months ago
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FEB
10
Q3 2026 Earnings Call
8 months ago
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NOV
7
Q2 2026 Earnings Call
11 months ago
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StocksGuide Free
Honda Motor — Q1 2027 Earnings Call
1. Management Discussion
Thank you for taking time to join us today. We will now begin the announcement of Honda Motor Company Limited Fiscal First Quarter ended June 30, 2026 financial results. First, the executives in attendance. Masao Kawaguchi, Executive Officer and CFO.
This is Kawaguchi. How do you do?
Sumihiro Takaashi, Operating Executive, Head of Accounting and Finance Unit.
This is Takahashi speaking. How do you do?
Kawaguchi will outline the fiscal first quarter financial results and FY March 31, 2027 financial forecast, followed by Takaashi giving the details. Mr. Kawaguchi, please.
At the outset, I would like to express my heartfelt sympathies to all those affected by the earthquake that hit Kumamoto on July 28 and their families. I also sincerely pray for the swift recovery and reconstruction of the affected areas.
This slide shows the operating status of our major production sites after the 2026 Kumamoto earthquake. Regarding Kumamoto factory, production is suspended from the evening of July 28 till August 7 for 9 days and recovery efforts are underway. Thanks to these efforts, operations have been partially resumed today. We will continue to work towards full-scale operations. Regarding our automobile production sites, there have been parts shortages resulting from damage sustained by some suppliers. At Saitama factory, operations will be suspended for a total of 6 days until August 19, including the summer break. And at [ Suzuka ] factory, operations will be suspended from August 6 tomorrow to the 19th in total of 5 days, including the summer break. We will monitor developments and decide when to resume production and we'll announce at the appropriate timing.
Next, fiscal results for the first quarter of the fiscal year ending March 31, 2027. Operating profit for the first quarter was a record high JPY 530.7 billion. No EV-related losses were posted in this first quarter. Motorcycle Business, all-time high quarterly operating profit and operating profit margin were achieved, driven by strong global sales, particularly in India and Brazil. Automobile Business, despite struggle in China, unit sales steadily increased mainly in North America, resulting in operating profit of JPY 192.1 billion and an operating margin of 5.0%. Regarding consolidated business forecast for the fiscal year ending March 31, 2027, we revised the exchange rate assumption to JPY 155 per U.S. dollar. Operating profit has been revised upward by JPY 150 billion to JPY 650 billion.
Uncertainty in the Middle East calls for careful risk assessment regarding unit sales, material costs and other factors. Therefore, these assumptions remain unchanged from the previous forecast. EV-related losses have also been revised to reflect the updated currency assumptions. Excluding EV-related losses, adjusted operating profit is projected at JPY 1.17 trillion, up JPY 170 billion from the previous forecast.
Next, financial foundation and shareholder returns. As of the end of the first quarter, net cash of nonfinancial services business stood at JPY 3.3 trillion. We continue to maintain a substantial net cash position and a strong financial profile. Regarding shareholder returns, the forecast for the annual dividend for the fiscal year ending March 31, 2027, remains unchanged from the previous forecast at JPY 70 per share. While targeting DOE 3%, we will strive to provide stable and sustainable dividends.
Now the details of the financial results will be given by Mr. [ Takahashi ].
Next, I will explain the financial results. At first the first quarter total group unit sales year-on-year was motorcycle sales increased mainly in Asia and other regions, in particular, Brazil to 5,663,000 units. Automobile sales decreased to 786,000 units, led by lower sales in Asia, particularly China. Power Product sales decreased mainly in North America to 752,000 units.
Next, the Q1 consolidated financial results year-on-year. Operating profit increased by JPY 286.5 billion to JPY 530.7 billion. Equity method investment profit increased by JPY 18.4 billion to JPY 22.6 billion. Quarterly profit attributable to owners of the parent company increased by JPY 254.2 billion to JPY 450.9 billion. Next, I will explain factors behind changes in adjusted operating profit, excluding EV-related losses year-on-year. Adjusted operating profit was JPY 530.7 billion, up by JPY 164.5 billion year-on-year. Sales impact was negative by JPY 6.1 billion because of the incremental incentives despite our unit sales increase.
Price and cost impact, negative by JPY [ 3.2 ] billion due to the impact of the soaring material cost. Expenses impact, positive by JPY 6.7 billion. R&D impact is JPY 1.7 billion negative. Foreign currency impact, positive by JPY 90.8 billion and the tariff impact was positive by JPY 78.1 billion. Regarding operating profit by business segment.
In Motorcycle Business, operating profit was JPY 233.9 billion, marking the highest ever operating profit and its margin of the quarter. In Automobile Business, operating profit was JPY 192.1 billion. Financial Services business made JPY 105.8 billion and the Power Products and Other businesses ended in JPY 1.1 billion operating loss. For Motorcycle Businesses, we achieved JPY 233.9 billion operating profit, up by JPY 44.9 billion year-on-year.
Regarding factors for the changes, sales impact was positive by JPY 20.6 billion due to incremental unit sales, mainly in India and Brazil. Price and cost impact, negative by JPY 2.1 billion due to the impact of soaring material cost, expenses impact, positive by JPY 1.5 billion; R&D impact, JPY 2 billion negative. Foreign currency impact positive by JPY 28.5 billion and the tariff impact was negative by JPY 1.6 billion. For Automobile Business, we achieved JPY 192.1 billion adjusted operating profit, up by JPY 99.7 billion year-on-year. Regarding factors for the changes, sales impact was negative by JPY 38.6 billion due to incremental sales incentives, price and cost impact negative by JPY 1.9 billion due to the impact of soaring [ raw material ] costs, expenses impact, positive by JPY 5.6 billion. R&D impact, JPY 800 million positive. Foreign currency impact positive by JPY 52.2 billion and the tariff impact was positive by JPY 81.6 billion.
Regarding cash flow situations, free cash flows of our non-Financial Services businesses was JPY 128.3 billion. Net cash at the end of the period was JPY 3,331.8 billion and operating cash flows after R&D adjustment was JPY 737.1 billion.
Let me move on to the consolidated financial forecast for financial year ending in March 2027. We will keep the unit sales of the group same as the previous forecast, which will be Motorcycles, 22.8 million units; Automobiles, 3.39 million units and the Power Products, 3.65 million units. With regard to the consolidated financial forecast of financial year ending March '27, operating profit will be JPY 650 billion, up by JPY 150 billion over the previous guidance and the profit for the year attributable to owners of the parent will be JPY 400 billion, up by JPY 140 billion. Adjusted operating profit will be JPY 1.170 billion, up by JPY 170 billion. Assumption foreign currency will be JPY 155 for dollar throughout the year.
Regarding factors for changes in expected operating profit as compared to the previous forecast. Adjusted operating profit will increase by JPY 170 billion because of the ForEx assumption modified to JPY 155 for the dollar. Regarding factors behind the difference of forecasted operating profit from the results of the previous term, adjusted operating profit will increase by JPY 130.6 billion year-on-year, for which sales impact will be positive by JPY 266.7 billion due to increase of the unit sales of the Motorcycles and Automobiles. Price and cost impact will be negative by JPY 313 billion due to the impact of soaring material costs affected by Middle East and so on, although the cost reduction and the price revisions will work positively for the profit.
Expenses impact, negative by JPY 8 billion. R&D impact, JPY 10 billion positive. Foreign currency impact will be positive by JPY 28 billion, reflecting the updated assumptions and the tariff impact will be positive by JPY 147 billion. Forecast of capital expenditures, depreciation and amortization and R&D spending for FY March 2027 will be expected as in the table. CapEx will reflect additional investments and so on for the acquisition of the factory buildings of a joint battery manufacturing company with LG Energy Solutions in the United States. Last but not least, regarding dividends, annual dividends for FYE March 2027 will be no different from the previous guidance, keeping JPY 70 per share.
That is all. Thank you very much for your attention.
[Operator Instructions] The first question is from Asahi Shimbun Newspaper. Miura-san, please.
This is Miura from Asahi Shimbun. I have two questions. First, about the EV-related losses. In the first quarter, it is not factored in, but what is the reason? And also, throughout the year, it has increased to JPY 520 billion. But aside from the foreign exchange, are there other factors that affect this result? That's the first question.
Can you ask your second question, too?
Yes. The second question -- it is related to Automobile market. I do understand that you have continuing to have difficulty in China, but can you explain the details? Also, for the full year, I think the forecast is lower than expected. But yet you have not revised your forecast for the full year sales. And also in July, I think that we have entered into extension of maintenance contract.
Thank you for the question. About the first question, about the EV-related losses. Allow me to answer that question. First, about the EV-related losses. As you know, our North America EV strategy has changed. And as a result, in March, we made the announcement at maximum, JPY 2.5 trillion losses will be posted. And this is what we announced. In the previous year, of which already JPY 1.3 trillion has been included. And for this fiscal year, well, at the outset of this fiscal year, when we announced it, we were saying JPY 500 billion. The breakdown is the most of it is the compensation to our suppliers. About our suppliers and the negotiation that we're having vis-a-vis compensation.
Currently, we are just -- we've just started communication with the suppliers. And we cannot say at this point in time how much compensation will be required. That is the current status. And therefore, in this first quarter, it's not the case that we can include this in our numbers. So that is the current situation. However, through the various communications, the premise that we set out at the beginning of the fiscal year is not being impacted. So that is understanding. Therefore, this time, in our forecast, again, we have maintained the JPY 500 billion that we have originally forecast. And with the foreign exchange impact, it has been revised to JPY 520 billion. Most of our suppliers are in North America. So there is a big foreign exchange impact. And therefore, the foreign exchange impact has been reflected this time in our forecast.
The second question about automotive. Your sound was cut off. You were asking about China. Is that correct?
Yes. It's about China. In the forecast, I think you are forecasting 500,000 units. But looking at the actual sales, I think this is lower than expected. So what is your outlook? And also, excuse me, about an extension of the joint venture in July, can you explain about China.
First of all, overall, the market itself, the macroeconomics is very weak. And therefore, the overall market is not good. In addition to that, this is due to the oil price increase, I believe. But the breakdown is that ICE, Hybrid, these -- including EV, NEVs, new energy vehicles are seeing the numbers grow at this cost of ICE and Hybrid. So I think that as a result of the oil price increase, this transition is increasing. In the first quarter, just looking at China's ICE and Hybrid, compared to last year, I think that the market has shrunk by about 40%. So Honda has been selling mainly ICE and Hybrid. And that is the reason why we are seeing this impact.
In addition to that, Honda, we are in the transition point of a model change. And so this first quarter, the retail unit is slightly more than 80,000. So it's about 50% less than last fiscal year first quarter. As you pointed out, in the initial -- at the outset of this fiscal year, we were saying 480,000 for the whole year. So 80,000 plus is judging from what we said at the outset of this fiscal year behind schedule. Now one of the reasons for this is because as Miura-san has asked, well, GAC.
Well, we were originally planning to have the contract terminated in 2028. And amongst the Chinese companies, including the dealers, they were thinking that in 2028, the contract will not be extended. I think there are quite a few who are worried that the joint venture agreement would not be extended. And that was one of the reasons why we saw the sales growth low. But as for this contract, well, we knew that it will expire in 2028. And therefore, our joint venture partner, GAC, we have talked with them about future strategy, trying to come -- make a comeback recovery using local resources and also looking into how we should run the joint venture, we have had in-depth discussion with our partner. And as a result, we have looked into how we can see a recovery in the Chinese market. And we have an idea as to what strategy needs to be taken. And there were quite a few customers and dealers who are worried, but now we've reached this agreement to extend the contract. And this is the reason why we wanted to make this announcement early on, and we were early to extend the contract. That was the reason -- that was the situation.
So next question from [indiscernible] Shimbun Newspaper, Mr [indiscernible] please.
[indiscernible] speaking. Can you hear me?
Yes.
I have two questions. First one, the sales in China. Going forward, sales might stay low? And do you plan to have additional restructuring or something out of the plant, for instance, in the May update, you mentioned about the Chinese platform or the electronic supplies and so on. And what is the progress today? And what is your prospect about the upcoming progress in this regard? And the question 2, the collaboration and negotiation is going on with Nissan. And could you update me about the current status? And then for Honda -- what is the meaning of this collaboration with Nissan for Honda?
Thank you for your question. Question one about China. If the market still stays, what would happen? That's the question. And then until now, as Honda, we tried to adapt to the Chinese market by having a drastic and speedy adjustment of the production situations. For instance, ICE, we had 1.5 million car, the capacity before, but we had a lot of collaborations for the production adjustments with the 2 joint venture companies, with a high speed. And then in this term in June for the [ Guangzhou ] GAC, we decided to stop the line for China. Therefore, we had a capacity of a little less than 1.5 million cars. And then ICE and hybrid, we now have 700-plus capacity today. That is the current status of the production capacity.
And as for the fixed cost, of course, capacity is also supported by the indirect cost labor and so on that we need to streamline the sales force as well. And we have made a lot of progress in all of those areas. And then as I said before, currently, Chinese ICE and Hybrid market is shrinking, and that is more rapidly -- drastically progressing with the shrinkage of the market. Therefore, we do not have the specific measures as yet at the moment, but we will watch out the market situations, and we will keep discussing about the situations with the partner company.
And another thing about China, the utilization of the local suppliers. If you look at the Chinese market, [indiscernible] and advanced technologies developed very fast. And also we can [ commonize ] the parts and so on with the suppliers over there, which make them competitive. And the cars, which make the customers in China feel valuable about the cars that is quite successful over there in their part, then in order for us to deliver the cars to the satisfaction, it is important, critical to make a good use of the local suppliers for us.
And for ICE, the local suppliers can be utilized better. And for the next full model change, we are having very good discussions with suppliers for the next model change. And if we can complete those plans we have on the table, we will be able to provide competitive products for China. And for the EVs, we will have more discussions with the partner company trying to utilize their platform and discussions are going at the moment. So we will take advantage of them so that we can improve the lineup of the Chinese market to adapt to the market. This way, we can try to improve the competitiveness of the products for them.
And once we are successful there, I mean, it will take another year or so before we become truly successful in reality. And until now, we have to be working very hard. And those initiatives we have at the moment are going on track.
And the second question is about alliance with Nissan. In 2024 already, we -- even before the [indiscernible] possible integration of the companies, we were talking about possible collaboration, partnership and SEVs, and we were already talking about possible joint programs, [ SDV ], joint development, batteries and exchange or sharing of the vehicle platforms and so on. And then the management integration has been abandoned, unfortunately. And even that, we revisited the electrification efforts and so on. And in that backdrop, [ STB's ] importance still is there. So in each of those areas, we would like to work together with Nissan so that we can take advantage of the volume we have from each other.
And I think this is a very good strategy for both of us. At the moment, we do not have any specific [indiscernible] I can share. And of course, things going very fast there. And we will try and work hard so that we can give you some input sometime soon. And of course, we'd like to take advantage of the volume we have and there as well so that we can deliver the valuable products for the market.
Next question is from Yomiuri Newspaper Newspaper, Mr. Ukita, please.
This is Ukita speaking. Can you hear me? -- about the financial results, you say that you have an all-time high profit. So what is your impression? And I think the foreign exchange impact is large, but the reason for the increase in sales -- unit sales. And about Kumamoto earthquake, I think the impact is being prolonged. Well, all automobile manufacturers are being impacted. And I think that you are targeting for a recovery soon. But can you talk about what would happen if the suspension were to be prolonged?
Well, about the first quarter, how we see the numbers. Yes, we have an all-time high. So JPY 530 billion, this is a very powerful number, operating profit. And compared to our plan, though we have not disclosed this against that plan, it exceeds our original anticipation. Well, the first quarter, to begin with the case of Honda, the development costs and SG&A, it tends to be that it concentrates in the second half. And the numbers tend to be higher in the first quarter. But in addition to that, I think the foreign exchange impact.
Well, currently, there has been a joint U.S. and Japan intervention, but there has been a fluctuation. But the first quarter, the yen was weaker than we expected. And also the raw material cost, this, again, compared to initial estimate, from the beginning of this year, we have been seeing that the steel prices and other raw material costs were going up. So that was that impact and the Middle East outlook is uncertain. We were anticipating that there would be inflation. Therefore, in the beginning, we were thinking that there will be a JPY 360 billion cost increase. So this was factored in.
The first quarter in April, May, there were increase in raw material costs. But in June, it started to settle down. And therefore, compared to what we were assuming -- expecting, it did not go up as much as we had thought. And also the unit sales, as you said, the Motorcycle Business did well, plus Automobiles, too. As I said, China, we did struggle. But in North America, especially, we saw that our unit sales increased significantly. Well, the gasoline prices are high now. So the market and customers are trying to switch to low fuel consumption, hybrid vehicles. So this was an advantage. In April, May, our share increased to more than 10% for the first time in 5 years. And this also had contributed to the high operating profit in the first quarter.
Going forward, the Middle East impact will be seen in various areas. And it is hard for us to predict what will happen. And therefore, do you say -- do you think that this is as much as we can do?
Well, there is no onetime factor. But I say we have to look at what the automobile sales could be like in the United States. Well, July was good, but we have to carefully monitor what will be happening in the U.S. market. [indiscernible] about the motorcycle unit sales, India. Last year, well, the GST, the tax was cut, and therefore, the market was strong. And this is still continuing now. We are thinking that we wanted to increase the numbers more. But because of the production capacity and others, well, India, we are increasing the capacity, but I think we should be trying to increase it more. But thanks to the India as well as Brazil, the economy is stable. And thanks to that, we have increased our motorcycle production capacity in Brazil, too. So these were the contributors.
Now the second question about Kumamoto earthquake. If I may repeat, I would like to express my sympathy to those who have been affected by the mega earthquake. Our motorcycle plant is in Kumamoto. The impact of the earthquake there. We -- at the time of the earthquake, the sprinkler reacted. And so the plant was soaked in water, and we are trying to recover now. But as for the equipment, so far, we don't see that there has been any major damage to the equipment. Currently, within the plant, they are making the confirmation with safety first. And where we can start -- restart, we are restarting. So as soon as possibly, we would like to fully restart operations.
About Automobiles, the Saitama and Suzuka factories. Well, unfortunately, our suppliers have been hit by the earthquake, and we are communicating with them right now. And every day, the situation is changing. So we are keeping in close communication to understand when production can restart. But well, there will be a summer break next week. We were originally planning for the summer break. So up until that point in time, we have decided to suspend production. And after the summer break for about 2 days or 3 days rather, we will suspend operation. But during the summer break, up until the 19th, I think we will be getting a lot of information. And based on that, we would like to make the judgment.
Thank you. Next [indiscernible]. Kosuke-san please.
Thank Kosuke speaking. Kuramoto earthquakes, its impact.
Could you elaborate a little bit more about it? Saitama, Suzuka plant and your subsidiary, [ Autobody ] has a plan to stop. And specifically, what kind of parts or components affected by that? And the suppliers, there are -- well, how many suppliers have been affected causing some troubles with the supplies? And other automotive companies probably starting up again on the 6th of the month. And then there are some time differences of lags in case and what is the situation for you? Could you elaborate on that, please?
Kosuke-san, thank you for your question. So further information about it, right? And Saitama and Suzuka automotive plants and auto body as well. Several parts components, we are at the moment, checking on the situation. damper is one of those major products affected at the moment. And [ Astemo ] group company, they had a plant near the epicenter. And I heard that they had quite a big damage on that. And I'm sure that they are focusing on the recovery. And we are talking with each other, trying to find out when they can restart again. And of course, they are working very hard, tracking to restart. And at the moment, we -- it is kind of difficult to get precise information. Same story for [ ASIMO ], but they are working very hard on that. And as far as we know at the moment, well, up until now, we decided that we should stop for a while until the recovery could come. And situation is quite dynamic changing every day, and I'm sure they're working very hard. But if there are any updates, we will let you know.
The next question please. [indiscernible].
2. Question Answer
This is [indiscernible] speaking. Can you hear me?
Yes.
I would like to ask about sales. Mr. Kawaguchi said that North America is doing well. On Page 7, about the factors that are contributing to the operating profit, you say that the product mix is plus. But about incentives, you said that incentives are increasing. So I think there might be an offset there. Incentives, they are mainly in North America, I believe. Well, Hybrid is strong, but I think it might be that incentives are increasing because of the competitive market. Can you explain about the situation in North America? That's one.
Plus, the second question is about the domestic situation. Domestic sales is also doing well and [indiscernible], you are trying to increase the sales. But what are the factors contributing to this increase? And what is the outlook at the same time? Plus everyone is asking about this about the Kumamoto earthquake, I think this have an impact on sales. At this point in time, can you estimate how much impact it will have on unit sales and what you plan to do to recover, please?
Yes. Thank you for the question. About North America, as I said, the gasoline prices are soaring. And therefore, the customers are wanting to purchase hybrids. And even gasoline ICE vehicles, I think that because our fuel economy is very good, our models are popular. About incentives compared to last year, well, the models themselves, major models are on the verge of a model change. And this is as originally planned. But from the fourth quarter of last fiscal year, we have increased incentives because of the competition with the competitors. And therefore, we have tried to compete in terms of sales. Well, this is the incentive as planned.
Well, last fiscal year, looking back, we had the issue of tariffs. And there was a special demand coming for people rushing in to buy before the tariffs were introduced. So compared to the first quarter, well, you might say that you cannot see the numbers clearly. But just looking at the first quarter alone, even if you look at just the first quarter, you will see and also from the share perspective and incentive perspective, I think that we have had a very solid result in this first quarter. Going forward, I think that the competitors will intensify competition. I mean we will try to bring down the incentives as much as possible. Looking at the July actual numbers, I think we are progressing well. The rest is up to the gasoline price. I think the customers' preference will be impacted by how the gasoline prices hover. So that is something that we have to look into.
And about Japan, registered cars -- and well, I think that we have exceeded the previous year. Looking at the market, it's about 107% increase year-on-year. And we are saying 108%. So I think the market average was 107%, whereas we are 108%. Registered cars, especially [indiscernible] this model has been very popular amongst our customers. Of course, there was partially the subsidy that has been explained, but it is equipped with Boost mode, and it's very Honda-like. So the fans appreciate the EV because of its Honda identity, and Vezel and [indiscernible] wagon and Freed these models too. We have carried out sales promotion, and this has been very effective. So thanks to that, we are seeing this growth in the domestic market.
Now what about the outlook?
Well, this fiscal year, I think that we will carry out model change, which will be appealing to our customers. And therefore, we want to grow sales through these new models. But the BYD [indiscernible] is a big topic. And if you look at the details, I think the Chinese have been very conscious about the preference of Japanese customers. Price-wise also it's very strategic, and it is a threat. But looking at it from a different perspective, the Japanese EV market is only about 2%. EV is not that popular.
So with this new EV player, so to say, it might be that this would have a positive impact on the market. And Honda also, we want to try to introduce different EV models to the Japanese market. And therefore, we want to try to build up the EV market here in Japan. Thank you.
About the earthquake impact, how about that?
Yes. To be very honest, we don't know how much impact it will have on our unit sales at this point in time. That's our honest situation -- position. But I don't think that there will be such a big impact. But at this point in time, I cannot give you any numbers as to how much impact it will have.
Next question from [indiscernible] Mr [ Yamada ], please.
Yamata from [indiscernible]. So Motorcycles very good. And you talked about India, Brazil, there utilizing the full capacity of the plant, I heard. And as for the plans, your unit sales plans is kept unchanged. And is this something you anticipated from the beginning? Or is that because of some other reasons behind such as the scheduling and so on, not confidence, for instance?
And another question is the EV-related losses. In the quarter 1, you do not have a full inclusion because of the supplier negotiations still going on. And can we expect some of those losses to be put up in the second quarter onward or little by little in the second half and onwards? What is the plan to handle those losses?
Thank you for your question. Second question will be addressed by Takahashi-san. And Motorcycles, the net sales is really good. And quarter 1, it is better than our immediate plans, our plans at the moment. And for the second half, at this moment, we do not have major concerns or anything. Maybe one thing could be the regulations in Vietnam.
Since last year, we were talking about the restrictions of those riders, riding of the motorcycles in some areas. However, they have a stepwise approach, and therefore, it is not causing a serious effect on that. And the Middle East, no one knows at the moment as to what is the impact to be for the global economy. We have to monitor what's going on and including Motorcycle Businesses, we will watch carefully what's going on to update the plans for the sales.
EVs Okay. So EV-related losses, we announced that in March. And from April, we have many negotiations with them talking about what kind of losses are expected from now. And we are still in the middle of the negotiations with them. And in the first quarter period, the negotiation went on continually. So we were not able to put it up in the book. And then we had lots of conversation with many suppliers. And then we will have more information once we get more confidence in those impact by that, we will be able to put them up as we go so much on the first half, so much on the second half and so on. So those will be calculated and factored into those financial results in stepwise approach as we go. So please understand how we do.
The next question, please. NHK, [ Taruno-san ], please.
This is Taruno from NHK. Can you hear me?
Yes.
I also have a question in relation to the Kumamoto earthquake. From the 19th onwards, you say that you'll make a judgment looking at the situation. But are you going to think about -- well, are you going to look into alternative sourcing? Or is it up to ASIMO that you will make the judgment? You say that you don't know at what point in time the recovery can take place. So am I correct in understanding that, that is the current situation? About -- the other question is about the foreign exchange. I think one of the major reasons for this good result is the currency. So I believe that the impact is about JPY 10 billion per JPY 1 fluctuation. But over the past 10 years, it has been going down. Yen is weak, and this is a positive for you. But -- so what is your thinking towards foreign exchange? If it's a weaker yen, is it an advantage for you? Or is that not necessarily the case? Can you explain?
Well, about the Kumamoto impact, we are saying we will resume on the 9th for automotive. But as we said [indiscernible], we have Tier 1, Tier 2, Tier 3 suppliers who have been affected. And we don't know at this point in time what the situation will be. So we don't have a 100% understanding of what the current status is. But as far as the information that we have at hand, we believe that at least until the 19th, we should suspend production. That is our current status. Its the case where we will have a drastic plan to source alternatively. Well, we have to talk with our suppliers about that. So at this point in time, we cannot say that it will be necessary to source from alternative sources or not. Unfortunately, we cannot say anything definitive.
But despite this mega earthquake, everyone is making every effort to try to recover. And we also want to keep in close communication with the people there. That is the only thing that we can do at this point in time.
About the currency impact and about the sensitivity. Well, in principle, we try to produce where the demand is. Like others, Honda, we are not exporting that much from Japan to the United States. That is the system that we have. Meanwhile, we have a large profit in the U.S. So when we convert this back into Japanese yen on our financial statements, we do see that the numbers are large. And taking all these things into consideration, we think the sensitivity is between JPY 10 billion to JPY 12 billion per. And so we say the EV-related losses. But we have a lot of American suppliers and payment to these suppliers because the U.S. denominated compensation will be [indiscernible] the weaker yen will be a disadvantage.
For currency, especially in Asia and also in motorcycles, Brazil, well, we are doing this is in different markets. And for example, from India, we are exporting to different destinations. And I think so that also has an impact. So we cannot simply say that once the yen moves from JPY 1, then we have a JPY 10 billion impact. It's not as simple as that. So there are areas which are good and other areas that are bad. So we can offset. And this is what we think is necessary to meet these fluctuations in the currency. That is all.
Because of the time constraints, the next question is going to be the last one. Nikkei Automotive, [indiscernible] san.
[indiscernible] speaking. Can you hear me?
Yes.
So semiconductor supplies, DRAM memory, GM and Ford have a long-term supply agreement. And recently, AI provides a lot of demand for the memories and so on. But are there risks for the soaring prices or supply risks? Are there any impact on your businesses? And what is the countermeasures in the future for the semiconductors?
Thank you for your question. And as you said right now, DRAM and NAND memories. As you know, the cars have meters, ADAS, ECU display, audios, which require semiconductors. And then cars will be more intelligent going forward and will need more semiconductors going forward. And as you mentioned, needs for the memories actually, the needs from the data centers and other businesses are very strong for this site. And then memory suppliers are trying hard as well to try to keep the good balance of the supply. And probably after the year '27, the efforts will be more effective in terms of the supplies.
But for Honda, we try to get a stable procurement based on the various initiatives. For instance, for the Automobile legacy memories, let's say, we are quite positive about those legacy type memories, and we would have more dealing with those suppliers of the semiconductor of the legacy ones. And then we would go for the long-term agreement where possible. And we have many initiatives that are trying to get hold on those semiconductor. I cannot give you the details at the moment. However, Honda has a good hands, the measures to get the supplies, and I do not have any problems. We don't have any problems about the procurement of that.
However, the cost is soaring, getting more expensive then because of the supply-demand situation, the memory prices are going up. And right from the beginning of the financial year, we gave you the forecast. And then we already factored in the additional JPY 20 billion, JPY 30 billion cost increase because of the supply of the semiconductors, and we already know that. Thank you.
And with this, we would like to conclude our briefing session. As for the materials that we've used, they are posted on our website for you to refer to. Once again, we thank you for your participation.
Honda Motor — Q1 2027 Earnings Call
Strong Q1 profit driven by motorcycles and FX; guidance raised but EV-related losses and China and earthquake risks remain.
📊 Quarter at a Glance
- Operating profit: JPY 530.7bn (record; +JPY 286.5bn YoY)
- Net profit: Quarterly profit attributable JPY 450.9bn (+JPY 254.2bn YoY)
- Motorcycles: Operating profit JPY 233.9bn (all‑time high; +JPY 44.9bn YoY)
- Automobiles: Operating profit JPY 192.1bn (5.0% margin; +JPY 99.7bn YoY)
- Net cash: Non‑financial services net cash JPY 3.33tn
🎯 What Management Says
- EV losses: No EV losses booked in Q1; company is negotiating supplier compensation and cannot yet quantify final charges
- China focus: Extended JV arrangements with GAC, planning local supplier use and model changes to regain competitiveness, but recovery may take ~1 year
- Capital policy: Strong balance sheet, capex for US battery JV with LG Energy Solutions, dividend maintained at JPY 70 (targeting 3% DOE)
🔭 Outlook & Guidance
- Revised targets: FY operating profit raised to JPY 650bn (+JPY 150bn); adjusted operating profit excluding EV losses JPY 1.17tn (+JPY 170bn)
- EV charge: EV‑related losses now assumed JPY 520bn (up from JPY 500bn due to FX at JPY 155/USD)
- Unit sales: Guidance unchanged — Motorcycles 22.8m, Automobiles 3.39m, Power Products 3.65m; risks include Middle East, material costs and supplier talks
❓ Analyst Q&A
- EV details: Management said supplier negotiations ongoing; will book losses stepwise as confidence increases, timing and amounts uncertain
- China weakness: ICE/hybrid market contraction and model transition cut sales; JV extension aims to stabilize dealer/customer confidence but turnaround will take time
- Earthquake impact: Kumamoto disruption suspended production at several plants and suppliers; operations partially resumed but impact on volumes is still indeterminate
⚡ Bottom Line
- Implication: Q1 confirms operational strength (motorcycles, North America, FX tailwind) and a cash-rich balance sheet, but shareholder outcomes hinge on unresolved EV supplier costs, China market recovery and supply disruptions from the Kumamoto quake.
Honda Motor — Q4 2026 Earnings Call
1. Management Discussion
We now like to resume. Mr. Mibe-san, please.
And now in light of the financial results I explained, I would like to introduce the future direction of Honda's automobile business. With the aim of carbon neutrality by 2050, Honda has been taking initiatives towards the popularization phase of EVs. Yet we decided to discontinue launch of 3 EV models in North America as we have already announced. This, however, by no means is an indication that Honda is withdrawing from the EV business. We'll continue EV sales in regions such as Japan and Asia to meet local customer needs in line with EV adoption speed. In North America as well, we will carefully monitor market conditions, customer demand and lay the groundwork to deliver compelling products when the timing is right.
And that said, the fundamental issue facing our automobile business is not simply the slowdown in the EV market. In the past, Honda's Automobile business underwent deep structural transformations to the point where gasoline ICE and hybrid models alone generated close to JPY 1 trillion operating profit, excluding EV-related losses. However, in North America, Honda's principal market currently, our profit is down due to failure to fully absorb cost burden. And in China and ASEAN countries where competition is increasingly intense with emerging OEMs, our loss of competitiveness in sales prices and speed of offering new value to market is pushing down unit sales.
We, therefore, believe the key to restructuring our Automobile business is to: One, improve our cost structure; two, increase development efficiency; and three, concentrate corporate resources in regions where we choose to take a more proactive approach and enhance the lineup with compelling products. Going forward, we will first focus on rebuilding our Automobile business structure over the next 3 years. Combined with the continued growth of our Motorcycle and Financial service businesses, which enjoys solid profit structure, we will strive to recover operating profit to a record high by the fiscal year ending March 31, 2029.
In parallel, starting in 2027, we will begin introducing next-generation hybrid models and in North America, Japan and India, our priority regions and introduce new products in underserved product categories while carefully assessing customer needs, thereby expand our product lineups.
We will not rely fully on ourselves, but we will adopt a flexible approach that also leverages external resources in implementing these initiatives. In line with this direction, we have defined 3 key pillars: Strategic reallocation of corporate resources; two, a thorough strengthening of our manufacturing structure; three, strategic utilization of external resources.
Let me explain one by one. The first pillar is strategic allocation of corporate resources. Our initiatives will be broadly divided into 2. First is the reassessment of the powertrain portfolio with an eye on future demand trends. To be more specific, we will reallocate more development and production resources into hybrid models. In doing so, we will accelerate the market launch of hybrid models ahead of the original schedule and increase compelling products.
Based on our belief that hybrid models, where Honda has strength, will continue to be the key to addressing environmental challenges until around 2030, when EVs will be more popular. From 2023, we will begin launching our next-generation hybrid models featuring both an all-new hybrid system and platform. We plan to launch 15 next-generation hybrid models globally by the end of the fiscal year ending March 2030, primarily in North America. In this hall, there are 2 prototypes, the Honda hybrid sedan prototype and Acura hybrid SUV prototype. Both are scheduled to be launched within the next 2 years.
We will continue to roll out new models equipped with our next-generation hybrid technology across both the Honda and Acura brands to further strengthen our hybrid vehicle lineup. To meet strong demand for large-sized hybrid vehicles in North America, in 2029, we will launch large-sized hybrid models in the D segment or above, featuring powerful driving and turning capability with high environmental performance. Our next-generation hybrid system will realize the world's most efficient powertrain through advancements such as an expansion of engine high-efficiency range and increased drive efficiency of the hybrid unit.
By combining our next-generation platforms all around evolutions, such as steering stability, crash safety and further weight reduction with the electric AWD unit, Honda will strive to improve the fuel economy by more than 10% and further evolve driving experience unique to Honda. And also to reduce cost of many key components such as batteries and motors, we will engage in various co-creation activities with suppliers, further improve production efficiency and pursue commonization of parts and components. We aim to reduce cost of our next-generation hybrid system by more than 30% vis-a-vis our 2023 models.
We are also -- we will also offer new mobility experience to our customers with models equipped with our next-generation ADAS under development from 2028, and we will plan to start introducing the next-generation ADAS into more than 50 models over a 5-year period. By installing Honda's next-generation ADAS to our affordable hybrid models, we want more customers to experience Honda's unique value proposition that combines the joy of driving at will and a stress-free and comfortable mobility experience.
To consistently meet demand, we will strengthen our production and parts supply operations for hybrid models. At our auto plants in Ohio, we will reallocate all of the excess capacity to production of gasoline, ICE and hybrid models. Furthermore, we will make auto parts in North America capable of producing hybrid models.
Next, batteries, the key to increase in production. We are working towards the production and supply of highly competitive batteries by converting part of the EV battery production lines at L-H Battery Company, our joint venture with LG Energy Solutions to hybrid battery production. As for motor and inverters, we will further increase the local content of AC and component parts by more than 4x to reduce risk of supply shortage and mitigate impacts of tariffs.
Our second initiative, the enhancement of product lineup in each of our priority regions. We have postponed North America and Japan -- we have positioned, rather, North America, Japan and India as priority markets for our future growth strategy and we will strategically allocate our resources to these markets. Since I have already covered North America, let me explain initiatives we will take in other regions.
Japan. First, Japan, the home market of Honda, is not really a market where Honda seeks volume and share. Rather, it plays a critical role as a market where we redefine new technologies and value proposition and demonstrate the level of maturity to global market. First is EV. In Japan, we will expand our EV model lineup, starting from the mini vehicle K-car category. Mini vehicles are popular in Japan and align well with EVs, which are clean and quiet.
To be more specific, following the market launch of the Honda N-VAN e in 2024 and the N-ONE e in 2025, we are preparing to launch in 2028, the EV version of the N-Box, which has been the best-selling new vehicle in Japan for 11 consecutive years. For registered cars, the all-new EV Insight was launched in April and the Super-ONE compact EV will go on sale later this month. In Japan, we will focus on offering a broad EV lineup and amass know-how for the future popularization of EVs.
Moreover, in addition to the sport line and trial line models announced at the Tokyo Auto Salon this January, starting in 2027, we will introduce next-generation hybrid models, mostly in the SUV category. Then from 2028 onwards, starting with the all-new Vezel, we will equip our key models with our new next-generation ADAS. Through these initiatives, we will enhance the lineup of high value-added products in all vehicle categories. We will strive to: One, achieve new vehicle sales greater than the current unit sales; and two, establish a solid business foundation.
Next is India. India is one of the few markets in the world where growth is expected. However, currently, Honda has presence in only a limited range of product segments and has not been able to fully expand unit sales due to an insufficient number of competitive models in each segment. One contributing factor is that we have not been able to deliver products that meet customer characteristics and preferences in India. It has been our standard practice to develop and sell all products based on global standard performance specifications regardless of target countries and regions. However, climate conditions, vehicle usage, customer preferences and others vary significantly from country to country and region to region. Environmental and other regulations are different.
Our global standard approach may have been somewhat excessive. Therefore, we will redefine the best specifications that fully match the market environment and customer needs in India. And then in 2028, we will begin introducing strategic models tailored to the Indian market, seeking optimal balance of performance and price to satisfy customers in India. More specifically, we will launch our strategic models in 2 categories: vehicles under 4 meters in length, the largest volume segment and midsized category. We will proactively utilize local development resources, including external resources and introduce new models as quickly as possible. The solid motorcycle business will be our key strength in this market.
In India, Honda's annual motorcycle sales nears 6 million units and has the largest UIO, units in operation and sales network. Honda has also a robust supply chain. In India, the price range of motorcycles is close to the price range of entry-level automobiles. So we will fully utilize our competitiveness in Motorcycle business and strive to grow by steadily capturing customers upgrading from motorcycles to automobiles.
Moreover, this April, we established Honda Digital Innovation India, a digital platform company, which will utilize the Honda Digital Foundation to address the diverse needs of our customers. We will enhance synergies between our Motorcycle and Automobile business in India. In addition, our captive finance company in India is scheduled to become operational before the end of the current fiscal year ending March 2027. Strengthening our financial services business will help expand sales opportunities for our motorcycles and automobile products.
The last part of our regional strategy is China, where we need to fundamentally strengthen our competitiveness. As you know, competition in the Chinese market is intensifying, and Honda is facing a very challenging business environment, including a decline in production and unit sales. Here are some initiatives we are taking to continue competing in the market. First, for the China domestic market, we will pursue cost reduction using locally sourced standard components while incorporating local technologies for next-generation technologies such as ADAS to keep pace with the overwhelming speed of advancement of intelligent technologies in China.
Furthermore, by introducing NEVs built on platforms provided by local partners, we will better serve the needs of customers in China. We will also apply initiatives to improve development efficiency in China, such as the use of standard components to market outside China to strengthen our products and cost competitiveness in ASEAN and other regions.
The second pillar, in order to deliver competitive products, we will focus on strengthening our lean and agile manufacturing structure. I will introduce 3 specific initiatives we are undertaking. First is a fundamental cost reduction, particularly with the cost of outsourced parts, we will improve our cost structure on a global basis, one, by reassessing Hondas specific standards and utilizing standardized components; and two, by incorporating the competitiveness of local businesses in China and India. The second is a thorough improvement of development efficiency. This initiative addresses 3 challenges we face in competition with emerging OEMs.
They are: One, development costs, development duration, and three development man-hours or workload. We will reassess the so-called engineering chain management and increase our production efficiency by reducing each of the 3 items by half vis-a-vis 2025. And we call this Triple Half. In addition to improving efficiency in design, testing and production separation through the use of digital environment and AI, we will transform our development process by reassessing development requirements as well as product planning and development management to reduce development costs and man hours and shorten the development time.
Starting this fiscal year, we will reduce the development time for minor model change by half. Full model change development time will also be halved, starting with development projects that start in 2028. This will enable us to introduce up-to-date products more quickly and continuously.
Finally, the building a manufacturing structure resilient to business environment changes. To establish a robust manufacturing structure capable of securing profitability even when market conditions call for reduced production, we will aim for a 20% improvement in production efficiency over the next 5 years by; one, efficiently injecting and allocating resource, investment in new models and equipment; and two, increased efficiency and speed through the use of digital technologies.
The third pillar is the strategic use of external resources. To build the future competitiveness, in-house sourcing of the technologies, resources and parts can be one of the effective approaches. However, it will require substantial investment and allocation of resources. And in an increasingly uncertain market environment, it might lead to the loss of competitive advantage. Therefore, as I mentioned already, we will strategically leverage the cost competitiveness and speed of local businesses in China and India and other countries or the use of industry standard components and so on so that we can improve our competitiveness by flexible and strategic use of the external resources.
As for batteries, we will not pursue complete in-house sourcing for the time being. Instead, we will maximize the use of batteries facilities. Keeping an eye on future demand growth for EVs, we will push forward the operational efficiencies catering for highly demanded hybrid vehicles and other applications for some time so that our battery procurement strategy will be correlated focusing on the competitiveness in North America. Based on such a strategy, we have decided of our indefinite suspension of project to build a comprehensive value chain in Canada, which we announced last year, for its postponements about 2 years. We will carefully monitor the market conditions and we will continue to reassess our procurement strategies. While working on the -- while working on to further refine the core of our competitive advantage, we will proactively leverage external competitiveness and resources in the areas where we determined that they can increase speed, flexibility and cost competitiveness, thereby strengthening our overall competitiveness.
Up to this point, I have explained the 3 pillars of our strategy to rebuild our mobile business structure towards 2030. From here, I'd like to explain the direction beyond 2030. In the mid and long term and in the even more uncertain business environment, we must lay a solid technological groundwork while ensuring the greater flexibility and wide range of options so that we will be well prepared to meet demand when it emerges. First of all, our direction to achieve carbon neutrality by 2050 remains unchanged because we believe it is a responsibility we must pursue as long as conducts businesses as a comprehensive mobility company.
Besides, we will carefully assess the market environment demand trends in each region and take a multifaceted approach to achieving carbon neutrality, which we will include not only EVs but also various other technologies such as hybrid vehicles, carbon-neutral fuels, carbon offset technologies and so on. As I mentioned in the beginning, we continue laying groundwork for the sake of the EV demands that may expand again. And in order to launch compelling products in a timely manner when the time comes, we are continuing to work to prepare for highly competitive EV hardware platforms as well as the research and development of all solid-state batteries for the future.
Furthermore, we continue to pursue initiatives to enhance application of intelligent technology in order to offer new mobility experiences on board. Looking ahead, we will apply ASIMO OS, the original vehicle OS of Honda to a wide range of vehicles from ICE to EVs so that the value of cross-domain mobilities will improve. Moreover, for the E&E architecture, the key to embody the initiative, we adopted a domain-based architecture that can flexibly address changes in customer needs and market conditions as well as the utilization of the external resources. With the adoption of unified software architecture, we will be able to achieve highly efficient development. This will enable us to continually deliver new value to customers in a timely manner while pursuing growth flexibility and competitiveness. So far, I have explained the initiatives we are taking for Automobile businesses.
Now let me move on to the Motorcycle business that shows a remarkable growth. As I mentioned earlier in the financial results announcement, our Motorcycle sales for the fiscal year ended March '26 reached 22.1 million units, which is approximately 40% share of the global market. The global motorcycle market is expected to grow from the current sale of 50 million units to 60 million units by 2030. We will further increase our market share and enhance our presence in the market by introducing products aligned with the increasingly diverse customer needs and by optimizing production capabilities.
For example, India, largest market, our market share is approximately 28% at the end of the fiscal year ending March '26, delivering approximately 5.8 million units. However, customer demand is showing a trend stepping up from the current most popular 150 class to 125 or 160 classes. A similar trend is observed in Central South America, too. We will steadily address the shift of demand by implementing initiatives to launch attractive products and to enhance the sales network and service capabilities. In Central and South America, emerging motorcycle OEMs from India and China are beginning to strengthen their presence. We will be definitely taking aggressive approach by taking advantage of the competitive resources leveraged from India and China, just like the Automobile segment.
Moreover, we will further strengthen production operations to accommodate the global expanding demand in India. We plan to expand our production capacity from the current 6.25 million units to approximately 8 million in further facilities there as an export hub. So various initiatives such as in-house production of parts, modularization of the chassis, acceleration of the local procurement and so on, cost competitiveness and speed will be enhanced. Thereby, we can expand exports to Central South America where the conditions of the roads and the customer [ that are ] close to India. Indonesia, Philippines, Brazil, we will progressively strengthen motorcycle production supply operations to establish business environment to accommodate the demand over there. In addition, we will further sophisticate the commercial value of the products with the development of the dual-clutch transmission on the e-clutch number of original technologies, Honda continues to offer joy of riding and joy of [indiscernible] for customers. Going forward, we will create new values with local technologies unique to Honda to differentiate from other emerging competitors.
Regarding EVs, growth momentum of the electrification market is slowing as compared to initial projection. Nevertheless, we are observing the case like Vietnam, where the shift to electric models progresses rapidly because of the environmental regulation changes, the outlook of the motorcycle market is uncertain. In India, we will introduce electric motorcycle models that meet customer needs as planned and proceed with the construction of a facility factory dedicated to EV models. The development of EV models will proceed relentlessly, and we will capture changes in the market environment and customer demand and take a flexible and agile approach to product launches and establishment of production operations.
Now I'll explain our financial strategy in light of what I discussed so far. As I mentioned earlier, over the next 3 years, we will focus on rebuilding our Automobile business structure and transform the business into a stable and profitable business. In the meantime, we will continue to make investments for future growth. EV-related investments will be controlled at a certain level while ensuring the readiness to respond quickly to future EV demands.
In addition, for hybrid vehicles, we will prepare to enhance our product lineup to the priority markets explained today. As a result of those initiatives, our financial targets of FYE March '29. 3 years from now, we will achieve operating profit beyond JPY 1.4 trillion, the all-time high. That is our aim. During 2 years after that, based on the rebuilt business structure, we will introduce compelling products prepared for the priority markets on the basis of such business structure as established. That way, we can enhance the business for our growth strategy.
In March 2031, 5 years from now, the model launches in new model segments in North America, India, Japan will take effect. Initiatives like Triple Half in the development domain will be actively showing the results. Thus, our business efficiency will enhance dramatically to aim for a target of 10% that have been adversary for long.
Now let me explain our capital allocation plans until FYE March '29. In those 3 years, we will reallocate resources, which are the scheduled for EVs to the hybrid vehicles instead. Regarding resource allocation for EVs, though we will continue to prepare for the recovery of the EV demand in the future. For the time being, it will be kept controlled to approximately JPY 0.8 trillion level over 3 years. For the software, given the software application essential for all including hybrid models, we plan to allocate the resources of approximately JPY 1 trillion. That is consistent with the original plan. ICE and hybrid models, we will make a strategic investment for future growth in the priority market. So we plan to invest a total JPY 4.4 trillion for the 3 years.
The investment for those 3 years will be JPY 6.2 trillion in total. As for operating cash flow after adjustment due to turnaround of the Automobile segment and powerful cash generation of the Motorcycle businesses, it will be expected to be more than JPY 7 trillion, excluding EV-related losses. Consequently, we will continue to invest for the future growth whilst steadily securing the funds for shareholder returns. After FYE March 2030, we will carefully assess the trend of the EV demands in North America and make decisions for EV investment further.
Regarding investment decisions in highly uncertain business environment, we will utilize assets of the past investments or leverage external resources not persisting on our internal resources only so that the investment efficiencies will be much improved. Finally, regarding dividends. As you can see here, since 2008 global financial crisis, Honda has faced with a challenging business environment, Great East Japan Earthquake, and COVID-19 but we have positioned the stable and continuous dividend payout as one of our key corporate management priorities.
Our payouts have never been reduced. And going forward, we will aim to maintain stable and continuous payouts with a target of DOE 3%. Though we'll balance the realization of rebuilding of business structure, which as investment for future growth and shareholder returns. We will make sure to lead enhance the corporate values in medium, long-term perspective.
Lastly, I'd like to explain the evolution of the corporate governance structures. Since transitioning to company to 3 committees in 2021, Honda has significantly expanded the scope of authority delegated from the Board of Directors executive officers aiming for to ensure greater agility in management by the executive officers. We have strengthened the supervisory functions of each committee and the Board of Directors through various measures by appointing chairpersons of the 3 committees from independent directors. We have advanced our governance structures according to the external environment. However, our management team recognized the importance of continuously and consistently seeking institutionalizing optimal corporate governance structure in the light of the pressures expected by the shareholders and customers.
And we expect our business environment will continue to be uncertain for the foreseeable future. We decided to once again our governance structure to accelerate advance. In order to ensure steady execution of its business strategy as well as and transparent decision-making necessary for such strategy execution. First, to strengthen the supervisory function of the Board of Directors and enable more transparent decision-making, Board of Directors will be composed of a majority of outside directors, aiming to further enhance the effectiveness of the Board and Board -- Chair of the Board will be assumed by outside person.
Finally, to ensure more transparent decision-making regarding the appointment and the dismissal of the directors, evaluation and the compensation of the directors and the executive officers, all the members of the Nominating and Compensation Committees will be composing of the outside directors. The business environment surrounding Honda is unprecedentedly uncertain and tough. Even under such circumstances, we will sincerely and steadily execute initiatives of building our automotive business that we outlined today. We are committed to achieve a strong growth strategy with a strong Motorcycle business and solid financial foundation.
We would like to set up another opportunity before the end of the current fiscal year to share more details about the technologies and strategies for our next-generation hybrid models. So please keep an eye on to our announcement.
Thank you for your attention.
Thank you for listening. Now I'd like to proceed to Q&A. So please wait while we prepare the stage.
Ladies and gentlemen, we would like to proceed Q&A. [Operator Instructions]
The person is closest to me, the person in the second row here.
Yasunaga from NHK. To Mr. Mibe, about the business update, I'd like to ask questions. First, 2050, your carbon neutrality target, you said that this is in place. But up until you were talking about the EV FCEV 100% by 2040. What happened to this target?
Mr. Yasunaga, thank you very much. Yes. well, carbon neutrality by 2050. As I've already explained in my presentation, this is something that the society on the whole has to engage in. And as the corporate responsibility will not change this target. Now as a means, in the past, we were saying EV FCEV sales ratio will be managed, but we have been given numbers. But because of the uncertainty in the business environment and also the customer demand, is changing beyond our expectation. And therefore, we have judged that it will be difficult to achieve. So about the sales ratio target, we have decided to withdraw this. Now going forward, hybrid battery EV included, electrification and carbon-neutral fuel, carbon offset technology. Well, I'm combining all these, we, as a target, the total CO2 reduction will be our target.
So about the sales ratio target, well, the reason why we set this out was because it was easy to understand for both people inside and outside our company. And therefore, we set the sales ratio target. But at this opportunity, well, I think it's more important for us to look at the CO2 reduction, and this should be the objective. And therefore, we have decided to change our target aligned with this. But it's very difficult to predict because of uncertainty, and it's difficult to set out specific milestones.
I cannot communicate to you any specific milestones. But at 2035, we are working on numbers that we would like to achieve by 2035. And once this is finalized, I think that we can announce this to you. By 2040, [ CV-EV ] 100% well, that ratio, I think is not realistic as of now. As I said, we have withdrawn this target. And instead, we are going to set our target based on the total CO2 emission. That's all from me.
So you will not present any sales ratio?
So the next target will not be sales ratio but it's a total CO2 emission.
Another question. about -- we were trying to break away from engine. And in 5 years or so, well, the environment, as you've said, has changed significantly, and you had to revise your plan. So what is your take on this, Mr. Mibe? And about the outlook, I think there's a lot of uncertainty going ahead. So can you share your thoughts on the outlook?
Well, Honda, the North's American market is our main market and the significant changes in the market does impact us a great deal, just as we see in this case. Well, the electrification strategy was made under the Obama-Biden administration. It was in line with the administration's environmental policies. But a year ago, there has been a drastic change, and we have seen a shift from a focus from environment to the opposite. And therefore, the major reason for this massive impairment is because the Zero series that we're planning for, we have been developing it. And as of 2024, we had the development phase completed, and we had been entering into phase producing the dies. And so seeing this major change in the U.S. administration, we were not able to flexibly respond.
Now what we explained today, well, is due to the change in geopolitics and also environmental policies. But going forward, we want to be able to have a strategy in place which can even endure such challenges. And so rather than just focusing on EV, we want to be flexible whether we need to head towards EV or the other direction. So once we see what direction we have to head towards, I think we can focus our efforts and be more focused in ingesting our resources. But at this point in time, because it is uncertain and we think that uncertainty will continue, we want to have a more flexible strategy. So this is a change that we want to make. And this was the gist of today's business update.
Next question, please name.
[indiscernible] I have 2 questions. First question, China and India, the cost competitiveness and speed now to be utilized by itself. And you had reverse import, let's say, from there until now but obviously changes going forward. And you had a supply chain already there and are you going to destroy the supply chain over there from now? Or in China, you are saying that you're going to utilize a local partner platform. Do they are going to use their Dongfeng, Dolphin well, the partner company platform. When are you going to start with that?
Thank you for your question. And China and India cost suppliers. And in India and China, we've developed our businesses so far. And as I said today, Honda has global requirements and we protected them and we prioritized the quality to accommodate for that in our production activities but it was not probably good enough in this business today for EV. But now -- in China and India, there are some standard parts that are suitable for their markets, and there are some track record of utilizing them over there. So we can build vehicles based on their standard parts. If that is not a problem, we can expand the use of those standard parts components from there to build more vehicles. So we can change idea of Honda a little bit now.
And then we can try to look at the cost and the local requirements in a good balance so that we can reduce the cost overall. So first of all, I'd like to check its effectiveness and approach, the effectiveness in India and China. And then if it works, we can expand globally. And then what happens to the Japanese suppliers? I think that's your question. So we are not necessarily defining to work with Chinese suppliers or Indian suppliers only and so on. There is no definite way because 40% of the market is supported by the emerging competitors. And then they are sort of setting up the competitive standard and we need to change a bit to -- but against that.
Therefore, as long as they meet with the standard, whoever the supplier of whichever the country we work together so that we can improve our commercial value of the product. And I don't want to mislead. It don't mean that we are going to use more Chinese and Indian suppliers more and more going forward. It does not really mean only that way. They would be giving a kind of the standard as well.
And platforms, we are still in the discussions with the partner company. So I cannot give you the details today. But there are 2 companies only, I suppose, that with partners, we can utilize their platform to build new products. That is all I can say today.
one more question. So about HEV. In 2030, you had target of 2.2 million units. And are you going to keep the targets? Or do you set new targets? And also the fuel efficiency improvement, the intelligence use, do you have a profitability target as well, not just those volume targets?
So I said that we will strengthen our business in hybrid. And I'm not sure if I should talk about volume specifically. But based on our plans, 2.2 million, that was the number we had for which our intent is to try to go and reach 2.5 million. And Hybrid Plus, of course, we need to get the profits based on the new hybrid system. And we have the hybrid system of 2023, and we are trying to reduce the cost of that by 30% against that year. And I think we could have a 50% cost reduction against that in '27 also, I suppose. And then new platform will be coming in. Therefore, cost-wise, 10% and by weight, 90 kilograms reduction expected. Therefore, platform, new hybrid system, both together will give us good businesses and ensure the good Honda vehicle performance. Would that be right?
Next question, please. The person in the middle, second row. Please ask the 2 questions at once.
[indiscernible] About the business update. In the next 3 years, ICE hybrid investment JPY 4.4 trillion. This is a huge amount. And so this means that you have an internal combustion engine, but a new engine, are you going to develop a new internal combustion engine? Is that the correct understanding? That's the first question.
And the next question, no one going to ask this, I'm going to. Ever since you've listed, the first time that Honda is posting a deficit. And Mr. Mibe, as President, how do you take your responsibility? Please share with us your thoughts about your responsibility.
On your first question about hybrid, the engine. Up until 2030, we are thinking the business will be mainly focused on hybrid. So putting aside the deficit this time, we were continuing our development of hybrid. And the first is going to be launched next year in '27 and the performance cost included, I think we are going to see a major advancement. And the engine to be installed, well, this it's not a new framework. It's going to be the conventional engine series, but the heat efficiency will be better. On hybrid, the area in which the engine is used is limited. So within that range, the heat efficiency is improved. And so that development is underway and have a new system. And with the engine heat efficiency improvement, the fuel economy will be improved by around 10%. So it's not just cost. I think this will be a powerful tool and weapon for us.
And about EV development, cancellation and this huge massive deficit. Well, I repeat myself but we are facing a very harsh business environment. And the automotive industry itself is entering into a major structural transformation period. We also have been prudent and been investing in EV with prudency. But as of 2024 already, Zero Series, the EV development well, the dies were already ordered, and we were preparing in the beginning of '25 to the extent where we could not go back. And so the impact of the tariffs and the easing of the environmental restrictions and also the change in policy has had a major impact on our business. But it was either cancel or sell. And we were following carefully our business environment.
And ultimately, GHG regulation was to be abolished and the EV market. But at this time, the EV market in the United States was thought to reach 15% -- but last month, it was 5.6% or 5.8%. So it was more than -- less than half of the originally anticipated size. And therefore, it was far below the planned unit sales that we had in mind. So if we were to go ahead with this, we knew that in the future, we will generate loss. So as Honda Motor, although, we did not, even with those difficulties, have any deficit but we understood that we needed as management to decide to go back on a growth trajectory and post this massive loss to make that happen.
Well, about this deficit, I take this very seriously. as a management. And based on that, we have come up with that recovery plan that I've just explained. What I've explained today, we have to try to stop the bleeding as soon as possible and try to pave the way for future growth. And amidst uncertainty, we have to establish a structure where we can tolerate such changes. So we quickly have to work on this. And I believe that, that is the biggest responsibility that I currently have. And at this point in time, I would like to focus my attention and effort on this point. That's all.
Next question, please. Third row from the left, the front table, please.
[indiscernible] my name is I have a question about the financial results. Earlier, you talked about EV deficit. And then in specific terms, what included according to your presentation in March, you talked about your compensation for the suppliers and revisiting your development projects and so on. And do you have a gap of what we assess now and what you assess at the time? And is it possible to complete all of those deficits put up by March 27?
And second question is about the business update to Mr. Mibe. You talked about external resource utilization. Since you became the President, you talked about going away from the all internalizing or internal-based resource strategy. And when you say utilization of external resources, how would you explain the issues, especially as to the Honda's policy for getting the internal resources only for instance?
Thank you for your question, Mr. [ Muda. ] And for your question about EV deficit on March 12, as we said before, we had 3 EV developments for the U.S. to be withdrawn. And then the largest possible deficit to be JPY 2.5 trillion, as we said at the time. And out of those JPY 2.5 trillion, we announced the one for the March '26 in the past term. And idea was JPY 1.3 trillion to be recognized for March '26 as according to our announcement last month in March. And then reality now is that for the March '26, we are now finding out there are some to be putting up in the current fiscal year, not the March '27.
But now some of those we were expecting to put up in March '27 is now brought forward to March '26. That means we have higher deficit for March '26. And then out of the deficit for March '26, there are some which are assessed to be lower in terms of the value. Therefore, we have those ups and downs quite equally. Therefore, in March '26, we are ending up with the JPY 1.3 trillion deficit recognized in March '26. That is a starting point, let's say. And in the announcement of the financial results earlier, Mibe-san explained about JPY 500 billion deficit to be expected now. And one thing is that originally, we were trying to recognize the amount. We actually recognized that in earlier previous term. And then we, at the same time, have supplier negotiations and so on. And it's already in the beginning, and we couldn't see how the outcome would be at that time.
And then finally, we believe that we would be having JPY 500 billion that covers all that. And JPY 1.3 trillion deficit is now putting up for March '26, that's impaired and that's it. And the remainder is JPY 1.8 trillion and JPY 700 billion is still remaining. The question may be, would that be impaired as much as that value or would that be put up in the management decision or when and so on. But actually, we have to let you know later on when all those things are sorted out and then we are clear about those values and financial status.
So the external resource utilization and our Honda's internal resource utilization. So external resources, meaning allowances and so on, which is one of the things I would think we would need, as we said before. So we have to work on that. Of course, within Honda, there are, of course, have a basic idea where we want to get our own sources for everything we could support. And then in the businesses like in China, when we have a struggle, we would have Honda drawings for ICE, and we're working on the cost reduction based on that drawing in China, utilizing resources out there. And we are trying to assess how much cost reduction we could achieve with that. And we know how much we could reduce based on that, and we could use a platform with the partner. And we have a good understanding of how much we could reduce based on that platform with the partner. And now we recognize that we perceive is the standard today in the businesses.
And as long as we are happy with those, we don't have to stick to our principle of getting all the Honda sourced technology. So of course, if we are not winning, we have to make it work, we have to work harder. And then we have to grab the [ earth ] technology and so forth that is ready that way to win. And we already have the measures in place. And now we have to involve those in the field to fight further to win. And of course, depending on the regions, but we are now thinking about positive utilization of the external resources in different places.
And then in North America, the question is, could we use that standard from elsewhere in North America? That's another question. But we have to formulate the strategy for the supplies and the supplier value chains and so on, and we are working on that. And then we haven't really touched upon a specific strategy outside of China. We talked about India a bit today, where the parts prices in India is formulated in a different way from that of China. But away from that, we could try to find out and identify the quality standard that can be utilized in all different regions. And if that is acceptable from the cost perspective, of course, we will take it and utilize that going forward. That is what we wanted to say.
Next question, please. The row that is furthest away, the person in the third row.
I'm freelancer, [ Watanabe. ] About the business update, I have 2 questions. About the domestic market, you say that you will launch new models more than the current unit sales. And how many are you thinking of? And what specific measures do you have in mind? So how are you planning to increase unit sales is my first question.
And also the K ratio is 43% and the Japan average is 36%, so it's above the average. So the K-centered sales approach? Are you going to maintain this? Are you going to reduce the portion of K mini cars? And are you going to introduce more the registered regular passenger cars? So I'd like to ask you about domestic sales and marketing.
Kaihara will respond.
Currently, as you say, in regards to Japan, the K, the mini car ratio is high. And even compared to the Japanese average, we believe that we are high. And this is because we have this strong model and the dealers are succeeding, and therefore, they are relying on this single model. But this time, in Japan, the registered cars. We want to try to expand our lineup, strengthen our lineup of registered cars and increase our presence in this category. And so for this, currently -- well, currently, unit sales is low, but we want to introduce a model to boost this. So we have a plan for that. But we are -- before that, trying to establish a strong network, dealer network. And we want to rebuild or reorganize our dealer network. Well, I think through integration, we can strengthen our marketing capability and thereby have better touch -- customer touch. And we want to strengthen our digital sales and marketing, too.
And on the EV front, already and the mini category, we have 3 EVs launched. And going forward, Insight will be coming up and Super-ONE, too. So for EV, too, we are going to strengthen our lineup. Therefore, for the future EV in Japanese market, we want to lay the groundwork so that in the future, we have EV and hybrid to support our presence in Japan. About the K mini-car category, we will also strengthen our presence and add to -- add on to K, the registered cars. And with EV, we want to offer to as many customers to increase unit sales. That is all.
Because of the interest of time, I could take only 2, 3 questions for the rest. Thank you. So from here, please. Second row from the left, the front table, please.
[indiscernible] Question one about financial results, EV-related losses. And you said that JPY 1.3 trillion losses and some of them have been brought forward to recognize. And then you talked about the compensation for the suppliers. And I'd like to know what -- which part is actually brought forward to recognize.
And second question, hybrid vehicles to be focused going forward. And then you, of course, had quite a bit of investment in EVs. I wouldn't say that you were behind. However, you had a different focus, I suppose, because other companies had many hybrid cars out competitors did. But as compared to the competitors, what is the winning strength? What is your strength in this field with hybrid?
Thank you for your question. For EV-related losses, some of them have been brought forward to recognize in the financial statements. And then of that is development assets and write-off of the facilities and also additional costs associated with the impairments and so on. And I can't really say, which part is really corresponding to the suppliers and compensation and so on because we have the other party involved. But writing off the equipment facilities, those are to be done according to the accounting standard. Therefore, it would not really have totally different kind of practice of recognizing them in a standard way.
So hybrid vehicle strength, we have a long history of hybrid vehicles, 3 motor hybrid, we used to have a long ago, and we have the 2-motor hybrid that is more efficient now. And now we have a compact side and midsize and we have hybrid cars in those segments for the global markets. And this time, 2029 or so or late '28 and so on, we are going to launch offer or launch the large-size hybrid models. And several years ago, we said that we would strengthen the hybrid as well, not just EV, especially on the large-sized hybrid, which we didn't have at the time. So we started the development of that. And now we have a full-fledged effort on them, and we want to launch those models as soon as we can. So now once it's there, we are having their all sizes for all segments.
And then you have to give it a try, drive it have to have feel because there are different kind of hybrid feel. And we are really confident in our hybrid ONE. And we have S-Series, you can enjoy the driving nicely. And also the ADAS is a good affinity to a hybrid model because CPU SoC driven with a lot of power consumption impact and EVs and plug-in hybrid could be the mainstream for those CPU things. Some hybrid, of course, but we have a strength in the hybrid, especially for the power generation plant, we have a strength as well. We can supply the power to without any problems. Therefore, that could be a good strength to offer, starting with the Vezel 28. With that, we can combine the next-generation ADAS as well, and we are quite able to do that.
So that's the strength, and I wouldn't talk about competitors' products. However, we have absolute confidence in our hybrid models. And we try to appeal our products so that customers understand its appeal.
I see a lot of hands but I'm sorry. The next person will be the last. And please raise your hand. The person in the middle, the third row with a white jacket might be a tough question.
[indiscernible] There might be a tough question about Mr. Ozawa-san. As far as I know, with Nissan partnership or Sony, he was playing a leading role. And Mibe-san, I think this is the person that you mostly trusted. And Aoyama-san also quit. And Mibe-san only is staying in Honda. Now you lost your 2 close aides and yet can you carry out your Mibe reform? This is what I want to confirm with you.
About the personnel issues, I think this has been announced. About Ozawa, well, this change in our strategy over the past 3 years, this has been a very challenging reform. And in addition, this was not mentioned today but when it comes to our management and operation, DX AI included, we have been having to do a massive reform. And in Honda, we had few people capable of doing so. So initially, I was taking the lead. And so I was the corporate reform leaders. But in carrying out this reform, I wanted to focus on this part. And when it came to the digital and others, strategy-wise and also operation-wise, digital AI is something that we cannot avoid.
So to strengthen digital AI, Shikama, who has knowledge, is at the top of corporate planning. So in addition to what was explained today, the company's operation will also be changed. And that is the reason why we have decided on this -- made this HR decision. So Ozawa will step down following the shareholders' meeting. We have a lot of talent at Honda. And with a new lineup, we would like to continue to strive.
Thank you. Thank you very much. And with this, we would like to conclude today's meeting, the financial results and business update. And thank you for your attendance.
Honda Motor — Q4 2026 Earnings Call
Honda pivots from an EV-first plan to a hybrid-led, region-focused recovery with short-term impairments and a FY Mar‑2029 profit target.
📢 Key Message
- Core point: Management withdrew prior EV sales‑ratio targets and reframes carbon‑neutrality around total CO2 reduction, pursuing a mix of hybrids, EVs, carbon‑neutral fuels and offsets tailored by region.
- Priority: Rebuild the automobile business over three years, concentrate resources on North America, Japan and India, and leverage motorcycles and financial services as stable profit engines.
🎯 Strategic Highlights
- Product shift: Accelerate hybrids — launch next‑generation hybrid models starting 2027 and roll out 15 global next‑gen hybrid models by end of fiscal 2030; large D‑segment hybrids planned by 2029 for North America.
- Manufacturing & R&D: “Triple Half” target to halve development cost, duration and man‑hours vs 2025; aim for 20% production efficiency improvement over five years and commonize parts to cut costs.
- External partners: Use local platforms and standard components in China/India, convert some EV battery lines to hybrid battery production with JV partner L‑H (LG Energy Solutions), and indefinitely suspend the planned Canada battery value chain.
🔭 New Information
- Financial plan: Total investment JPY 6.2 trillion over three years; JPY 4.4 trillion to ICE/hybrid, ~JPY 1.0 trillion to software, EV investments controlled at ~JPY 0.8 trillion.
- Cost & performance goals: Target >30% reduction in next‑gen hybrid system cost vs 2023 models, >10% fuel‑economy improvement, and ~90 kg weight reduction on new platforms.
- ADAS & software: Next‑generation ADAS introduction from 2028 into more than 50 models over five years; unified software/E&E architecture to speed development.
❓ Analyst Q&A
- EV target withdrawal: Management confirmed it removed the EV/FCEV sales‑ratio target because of market and policy uncertainty and will set future targets based on total CO2 reduction; specific 2035 numbers under preparation.
- Impairment & exposure: Management reconfirmed a JPY 1.3 trillion impairment recognized in FY Mar‑2026 related to cancelled U.S. EV projects; earlier worst‑case cited up to JPY 2.5 trillion and remaining exposure is under supplier negotiation and review.
- Hybrid competitiveness: Honda defends hybrid strength (new hybrid system, broader segment coverage) and signaled ambition to exceed the prior 2.2m HEV 2030 target toward ~2.5m units; CEO accepted responsibility for the recent losses and emphasized execution of the turnaround.
⚡ Bottom Line
- Conclusion: Honda has reset strategy from an EV‑first path to a pragmatic, hybrid‑led, regionally tailored approach while reallocating capex and pressing for deep cost and development efficiency gains; shareholders face near‑term execution and market risks but are offered a clear path to restore operating profit above JPY 1.4 trillion by FYE Mar‑2029 and a continued dividend policy (DOE target ~3%).
Honda Motor — 2026 Earnings Call
1. Management Discussion
Thank you very much for taking time out of your busy schedule. And I'd like to make start the financial results for the fiscal year ending March 31, 2026, and the 2026 Business briefing update.
My name is [indiscernible] And let me introduce the speakers today. The Director, President and Represent Executive Officer, Toshihiro Mibe.
Nice to meet you. My name is Mibe.
Director, Executive Vice President and Representative Executive Officer, Noriya Kaihara.
Kaihara speaking, nice to meet you.
Executive Officer and Chief Financial Officer, Masao Kawaguchi.
My name is Kawaguchi. Nice to meet you.
Mr. Mibe will give you the summary of the financial status now, followed by Mr. Kaihara to talk about the FYE March '26 results and expectations for March '27. Later, Mr. [indiscernible] will give you the business updates for Honda. The floor is yours.
Thank you for sharing understanding towards Honda's business activities. I'll now explain our financial results for the fiscal year ended March 2026 and our outlook for this fiscal year.
First, a summary of results. In the fiscal year ended 2026, the EV business environment underwent significant change. In response, we swiftly reorganized our EV business and related investments. By the third quarter, we recorded EV-related losses of JPY 267.1 billion, including provisions for losses and impairment losses on EVs already being sold in the United States.
In addition, as explained on March 12, the North America produced EV models launched and development were canceled. In the fourth quarter, we posted additional JPY 1,310.6 billion in losses. As a result, the fiscal year ended March 2026, EV-related losses totaled JPY 1,577.8 billion. Consequently, operating profit for the fiscal year ended March 2026 was a loss of JPY 414.3 billion.
Excluding the part of EV-related losses that correspond to operating profit, i.e., JPY 1,453.6 billion, operating profit was JPY 1,039.3 billion. Motorcycle business due to sales increase mainly India and Brazil, we achieved record high unit sales and operating profit. Automobile business facing harsh business environment due to higher tariff burden and drop in unit sales due to semiconductor supply shortage and others, we made company-wide effort to reduce costs and consequently, excluding EV-related losses, we were profitable.
Operating cash flow after R&D adjustments, which represents the source of future investments came to JPY 2,657.9 billion, maintaining strong cash-generating capability as was the case in the previous fiscal year.
Next, consolidated earnings outlook for FY ending March 2027. Regarding EV-related losses, while it is difficult at this point to give a precise amount, we reviewed details to our best needs and set the EV-related losses at JPY 500 billion for the fiscal year ending March 2027. Though there is concern over the current Middle East situation and impact of rising material prices, operating profit, excluding EV-related losses is forecast to be JPY 1 trillion. Operating profit, including EV-related losses is forecasted to be a surplus of JPY 500 billion.
By business segment, motorcycle business, with the expansion of production capacity in India to capture the strong demand, we will aim for record unit sales of 22.8 million units. Automobile business in Asia due to model change, unit sales will be retained, while gasoline hybrid model sales will be enhanced, mainly in North America to boost profitability. Shareholder returns in the fiscal year ending March 2027 will be an annual dividend of JPY 70, the same year-on-year.
About our financial soundness. As explained, R&D adjusted operating cash flow will maintain strong cash-generating capability. The operating company's net cash balance at the end of March 2026 was JPY 3.3 trillion, meaning we have ample cash at hand.
Regarding equity-to-asset ratio, supported by retained earnings accumulating from the past, the financial position of our operating companies, excluding financial services business, maintains an equity ratio of 55%, showing a high level of financial soundness. Next, the details of our financial results will be explained by Mr. Kaihara.
First, results of the fiscal year ended March 2026, followed by the outlook for the fiscal year ending March 2027. Fiscal year ending March 2026, total group unit sales year-on-year were motorcycles, mainly due to increase in Asia and South America, 22,101,000 units. Automobile business due to drop in Asia, mainly China, 3,387,000 units. Power Products, mainly due to decline in Asia, 3,589,000 units.
The consolidated financial results of the fiscal year ended March 2026, both fiscal years ending March 2026 and '27 will post EV-related losses due to revising Honda's automobile electrification strategy. This makes it difficult to see the underlying business performance. Therefore, we are disclosing operating profit before reflecting EV losses referred to as adjusted profit.
The consolidated results of the fiscal year ended March 2026 compared to the previous year are as follows: operating profit, a loss of JPY 414.3 billion, down JPY 1,627.8 billion. Share of profit loss of investments accounted for by equity method, a loss of JPY 162 billion, down JPY 163 billion. Net profit loss profit loss attributable to owners of the parent was a loss of JPY 223.9 billion, down JPY 1,259.7 billion. Excluding EV-related losses, adjusted operating profit was JPY 1,039.3 billion. Adjusted net profit attributable to owners of the parent, JPY 795.5 billion.
And next, the change in operating profit compared to the previous fiscal year. Operating profit, a loss of JPY 414.3 billion, down JPY 1,627.8 billion. Contributing factors are sales impacts due to mainly semiconductor supply shortage though automobile unit sales declined motorcycle unit sales increased, reaching an increase of JPY 117.8 billion. Price and cost impact, price revision effect, up JPY 292.3 billion. Expenses down JPY 118.5 billion. R&D down JPY 41.7 billion. Foreign currency effect, down JPY 77 billion. Tariff impact down JPY 346.9 billion. Adjusted operating profit, excluding EV-related losses, JPY 1,039.3 billion.
Next, regarding operating profit by business segment. For Motorcycles, operating profit was JPY 731.9 billion, achieving the record high. Automobiles due to the impact of the related losses of JPY 1.4536 trillion, we put up the losses of JPY 1.4113 trillion. However, adjusted operating profit, excluding EV-related losses marked JPY 42.5 billion.
Financial Service businesses marked the operating profit of about JPY 275.5 billion and the Power Products and other businesses, JPY 10.6 billion losses. Operating profit of motorcycle businesses was JPY 731.9 billion, up by JPY 68.4 billion year-on-year. Breakdown of the factors for changes are sales impact, positive by JPY 86 billion due to sales unit increase mainly in Asia and South America.
Price and cost impact was positive by JPY 70.4 billion due to effective price revisions and so on. Expenses impact was negative by JPY 51.5 billion. R&D impact was positive by JPY 3.6 billion. Foreign currency impact negative by JPY 28 billion and tariff impacts as negative by JPY 12.1 billion.
Operating profit of businesses dropped by JPY 1.6549 trillion ended up in operating losses of JPY 1.4111 trillion year-on-year. Breakdown of the factors for changes, sales impact due to the impact mainly of the supply shortages of the semiconductors resulting in the drop of sales volume and the increase of incentives impact was negative by JPY 47.8 billion. Price cost impact was positive by JPY 222 billion due to effective price revisions and so on. Expenses impact positive by JPY 44.1 billion. R&D impact was negative by JPY 47.3 billion. Foreign currency impact negative by JPY 41.6 billion and tariff impact was negative by JPY 331.6 billion. The adjusted operating profit, excluding EV-related losses was JPY 42.5 billion.
Let me move on to the cash flow situation. Free cash flows, excluding financial service businesses was JPY 1.058 trillion as of the fiscal year ended March '26. Net cash balance at the end of the fiscal year was JPY 3.3245 trillion, and operating cash flow after R&D adjustment was JPY 2.6579 trillion.
Let me explain consolidated forecast for FYE March 2027. Regarding group sales volume year-on-year, the unit sales of the motorcycle business is expected to be 22.8 billion units with slight incremental businesses mainly Brazil and automobiles slightly increase mainly in automation and the [indiscernible] in China and Asia, it will be 3.39 million units. Power production businesses, 3.65 million units are expected mainly reflecting incremental businesses in Asia.
Regarding consolidated financial forecast of FYE March '27, operating profit will be JPY 500 billion. Profit for the period attributable to the owners of the parent is expected to be JPY 260 billion. Operating profit after adjustment will be equivalent to the one of the previous fiscal year, JPY 1 trillion and profit for the period attributable to the owners of the parent adjustment will be JPY 620 billion. Currency assumption for the full year is set at [ JPY 145 ] for dollar.
Let me explain factors for changes of the adjusted operating profit year-on-year. Adjusted operating profit is down by JPY 39.3 billion year-on-year for which impact [indiscernible]. The sales impact would be positive by JPY 266.7 billion due to increase of sales related to motorcycles and automobiles.
Price and cost impact, the positive effect by cost reduction and price revisions would be expected because of soaring material prices due to the impact, including Middle East situations, JPY 313 billion negative effect is expected. Expenses negative by JPY 8 billion, R&D impact positive by JPY 10 billion; foreign currency negative impact by JPY 142 billion and the tariff impact by -- will be positive by JPY 147 billion.
Expected capital expenditures, depreciation, amortization and R&D spending for FYE March '27 will be as follows on the slide. Reflecting the increase in CapEx for acquisition of factory buildings and so on of the battery production JV with LG Energy Solutions. Those are the numbers we would put up.
Regarding payouts, end of the fiscal year dividend will be JPY 35 per share for FYE March 2026 with annual payout to be JPY 70. Expected annual dividend of FYE March '27 will be JPY 70 per share, same as the preceding year.
Thank you very much for your attention.
Now I'd like to proceed to the 2026 business update, but please wait until arranged at this stage.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]
Honda Motor — 2026 Earnings Call
Honda booked huge one‑time EV losses in FY26 but underlying businesses stayed profitable and cash-rich; management pivots EV strategy while keeping the dividend.
📊 Quarter at a Glance
- EV losses: Total JPY 1,577.8 billion for FY2026 (JPY 267.1B by Q3; additional JPY 1,310.6B in Q4) tied to reorganizing EV programs and impairments.
- Operating profit: Loss JPY 414.3 billion headline; excluding EV-related losses adjusted operating profit was JPY 1,039.3 billion (operating profit before EV losses).
- Net profit (adj): Adjusted net profit attributable to owners JPY 795.5 billion.
- Motorcycles: Record unit sales 22,101,000 and operating profit JPY 731.9 billion.
- Cash position: Operating cash flow after R&D adjustments JPY 2,657.9 billion; net cash balance JPY 3.3245 trillion.
🎯 What Management Says
- EV pivot: Rapid reorganization and cancellation of North America EV models/development to limit further losses; large one‑time charges booked in FY26.
- Focus mix: Boost gasoline‑hybrid sales (especially in North America) while scaling battery JV capacity with LG Energy Solutions to support future EVs.
- Core strength: Motorcycles and financial services remain cash generators; company emphasizes cost control and R&D prioritization.
🔭 Outlook & Guidance
- FY2027 EV charge: Management budgets JPY 500 billion of EV‑related losses for FY ending Mar 2027 (estimate, subject to revision).
- Profit targets: Operating profit excluding EV losses forecast JPY 1 trillion; operating profit including EV losses JPY 500 billion (positive).
- Volumes & payout: Motorcycle target 22.8 million units; automobiles ~3.39 million; annual dividend maintained at JPY 70 per share; currency assumption JPY 145/USD. Risks include Middle East tensions, material cost inflation and tariff effects.
⚡ Bottom Line
- Investment takeaway: FY26 headline results reflect strategic write‑downs on EVs not deterioration of core operations; strong cash and record motorcycle profits give flexibility, but near‑term earnings will absorb further EV transition costs and commodity/tariff risks.
Honda Motor — Honda Motor Co., Ltd., Q4 2026 Guidance/Update Call, Mar 12, 2026
1. Management Discussion
Thank you for your attendance today despite such a short notice. Now I would like to -- we would like to hold a press conference regarding the timely disclosure in the press release announced today at 3:30. First, we would like to introduce attendants today. Director, President and Representative Executive Officer, Toshihiro Mibe; Director Executive Vice President and Representative Executive Officer, Noriya Kaihara; Director, Managing Executive Officer, Eiji Fujimura.
First, Mibe will walk you through the background that led to the management decision this time, followed by Kaihara's explanation of the future direction towards the construction of Honda's automobile business in mid- to long term.
Now the floor is yours, Mibe-san.
Good afternoon, ladies and gentlemen. This is Mibe speaking. Thank you for taking time to join us despite the short notice.
As you may have come to know through sources such as our news release today, we announced a forecast revision in the fiscal year ending March 31, 2026. Though challenging, we will explain the background of this decision and future direction for rebuilding the mid- to long-term automobile strategy.
Honda has been working to realize carbon neutrality by 2050. To this end, led by small-sized mobility products, including passenger cars, Honda shifted strategic direction towards EV popularization based on our belief that EVs will be the optimal long-term solution. In this journey, we anticipated increasingly stringent environmental regulations would come into full effect in various countries in the latter half of the 2020s. For example, under the U.S. ACC II automotive environmental regulation, penalties up to $20,000 per vehicle would be imposed on noncompliant vehicles.
On this premise, we spent the last several years steadily preparing for widespread adoption of EVs. We decided to allocate more resources to EV business after a comprehensive study of various factors, including U.S. IRA incentives and projected profitability of our ICE and hybrid models upon introduction of EV. Above all, we made the decision to take initiatives towards carbon neutrality. We believe this is our responsibility to our children and future generations as a mobility company.
However, during the past few years, our business environment has drastically changed at a speed far exceeding our projection. First, in the U.S., as you know, easing of environmental regulations and discontinuation of EV incentives significantly slowed EV market growth. This trend is expected to continue for some time.
In contrast, the EV market has expanded in China. Competitors have launched products and deployed electrification and intelligent technology faster than expected. Even in ASEAN, we are facing strong competition from emerging OEMs. In this competitive environment, Honda was unable to deliver products that offer better value for money, resulting in a decline in competitiveness.
We recognize our automobile business is facing tough earnings due to various factors, including our ability to respond flexibly to changes and also the decline in our gasoline and hybrid model profitability due to newly imposed tariffs. Against this backdrop, we decided to cancel market launch and development of the Honda 0 SUV, Honda 0 Saloon and Acura RSX.
To achieve carbon neutrality by 2050, electrification is an unavoidable challenge. In this context, through the Honda 0 Series, we have consistently pursued new value Honda aspires to offer in the coming age. However, due to the above changes in our business environment, EV demand has declined significantly, mostly in America. Despite our measures, it will be extremely difficult to ensure profitability of our EV models. If you were to move into the production and sales phase, this would likely result in further losses in the long run.
We are fully aware many Honda associates, business partners and those on the sales front line have devoted and embraced passion to the EV model sales with high expectations coming from many customers. This decision was by no means an easy one. Nevertheless, we made this decision believing that introducing these 3 models without an outlook for business viability may result in early production discontinuation. This would cause concern and inconvenience to our customers due to damage to our brand and others. We believe introducing these models will not be in the best interest for the future of Honda.
We take this decision seriously and will address each effective supplier partner individually with due care. And based on this management decision, we now expect to record impairment and write-off losses on tangible and intangible assets intended to be used for EV model production as well as additional losses. The maximum total losses estimated as of today is JPY 2.5 trillion, of which approximately JPY 1.3 trillion will be recorded as addition to the fiscal year forecast announced on February 10.
The estimated breakdown is JPY 820 billion to JPY 1.12 trillion operating losses, JPY 110 billion to JPY 150 billion, the loss of investments using the equity method in China and other regions. We plan to record the remaining losses of JPY 1.2 trillion for the most part in next fiscal year ending March 31, 2027.
It's regrettable that we must record such a large loss. However, what is expected of the Honda management team now is not to justify the past, but to face this reality squarely and transition our automobile business to a structure that enables mid- to long-term growth.
Next, Executive Vice President, Kaihara, will explain the direction for rebuilding our strategy.
Thank you. I would like to elaborate on the direction for the rebuilding the mid- to long-term strategy. First, we will reassess the allocation of our resources previously focused on EV business. And towards the second half of 2020s, we will introduce new hybrid models, improve immediate profitability and strengthen the foundation of our automobile business.
As for EVs, assuming that EVs demand will grow again in the future, we will maintain investment discipline to lay the groundwork from a long-term perspective. In addition, as part of our regional strategy, in addition to the U.S. and Japan, we will define India as our focused country and strengthen our initiatives.
In the U.S. market, in light of this change in resource allocation, in addition to the existing plans, we are planning to introduce new hybrid models towards the second half of the 2020s. Moreover, as we've been saying, from 2027 onwards, we will start applying our next-generation hybrid system to key models in stages.
Also, in the D or larger segment, which represent a significant market size, we are planning to further expand our HEV lineup by applying a newly developed large-sized hybrid system. In addition, this is already in the development phase with on-road testing in the U.S., but we plan to apply our next-generation ADAS to key hybrid models and continue to expand the lineup. By making the new hybrid models equipped with the next-generation ADAS as our main axis, we will improve the model mix through which we will further grow our North America operations in both volume and profit.
In the Japanese market, in addition to the recently announced sport line and trail line model launches, we will start full-fledged application of our next-generation hybrid system from 2027 onwards. The next-generation ADAS will be introduced to Japan market by fully matching to the complex road environment and unique driving preferences of customers in Japan.
The next-generation ADAS is a novel technology for most customers in Japan, and we believe it could change the concept of driving for them. That's why we would like to offer our next-generation ADAS to as many customers as possible, and we will apply it to all new vessel. We will offer them in an affordable and competitive price range to popularize them in Japan. Through these initiatives, we will elevate our product lineup, which currently has a high ratio of mini and small-sized models and further strengthen the Honda brand in Japan.
In India, we are not ready to share any details today, but we are discussing various initiatives. We will talk to strengthen our automobile business, including enhancement of the model lineup by introducing new models tailored to demand in India.
Meanwhile, in China, where the conditions of the business environment, including the progress of electrification is different from other regions, we take regional characteristics into account and enhanced application of intelligent electrification while building a competitive supply chain optimized for the Chinese market to fundamentally enhance our product and cost competitiveness.
In addition to these regional strategies, in order to fundamentally enhance the competitiveness of our automobile business and ensure sustainable growth into the future, we will transform our manufacturing operations focused on shortening the development period, improving production efficiency and strengthening supply chains. We would like to share more details on each initiative at a later time. But as for supply chains heavily impacting our automobile business, in addition to stable procurement of high-risk components like semiconductors and rare earth materials, we will enhance our supply chains based on the business environment in each region.
In North America, when new tariffs have significantly have impact on our business, we will further increase the local procurement ratio, mostly with our next-generation hybrid models, which will be launched from 2027 onwards, especially as for batteries, one of the core components of a hybrid system, discussion is moving forward as part of JV joint venture partnership with LG Energy Solution to localize production on hybrid batteries by converting EV battery production lines to hybrid battery lines at our joint venture company, LH Battery.
With this approach, we will strive to respond to high demand for HEV in North America, mitigate the tariff impact and achieve a stable operation of LHB, all at the same time. While pursuing these initiatives, from a financial perspective, we will thoroughly control disciplined expenditure to achieve a fixed cost structure appropriate for the business scale. To be more specific, we will tighten the criteria for setting investment caps based on earnings, and we will enforce even more disciplined decision-making than before. Based on the strategic importance and profitability, we will be more selective and focused in making investment, and we will continue monitoring past investment earnings performance.
Due to these EV-related impairments this time, our consolidated earnings will bottom out in the fiscal year ending March 31, '26 and March 2027. However, excluding the impact of these one-off losses, we estimate operating profit will remain at the level of JPY 1 trillion.
Furthermore, through the initiatives outlined today, we will put our automobile business back on growth trajectory. In particular, from the fiscal year ending March 2028 onward, positive effects of introducing new models in the U.S. and next-generation hybrid models globally can be expected for multiple models and for the entire fiscal year. With these efforts, we will steadily regain the inherent earnings power of our automobile business.
By increasing our product competitiveness and improving model mix, we will strengthen our earnings structure, both in volume and profitability, with which we will transition to a stable profit-generating business structure. Moreover, though additional expenses may be recorded next fiscal year and after, thanks to solid earning power and cash-generating capability of our motorcycle and financial service businesses, the operating cash flow adjusted for R&D expenses for the fiscal year 9 months remained at par year-on-year.
From a financial stability perspective, we will continue to hold cash on hand equivalent to 1 month's revenue considered appropriate and borrowing remains relatively low, thereby, we maintain a relatively high credit rating compared to other OEMs. With this robust cash-generating capability and solid balance sheet, we will continue to provide stable shareholder returns based on the DOE indicator. And despite forecast revision, the forecast for dividends this fiscal year remains unchanged.
Thank you, Kaihara-san. As explained, we will reassess additional EV-related investments. However, we will fully leverage the software technologies and expertise we have amassed through EV development. In particular, the new values we intended to offer through Honda 0 Series, such as ASIMO OS and next-generation ADAS will be offered through our hybrid models without significant delay. As of today, EV demand is declining in North America and other regions. However, this trend will not be permanent.
To achieve carbon neutrality when EV demand resumes, Honda will be ready to fulfill customer expectations and offer compelling products unique to Honda. We must lay the groundwork for EV business with a long-term and flexible perspective while monitoring profitability and demand trends. This is the reason for our decision to step back and reassess and rebuild our earnings structure. Today, I explained the direction we will take to rebuild our mid- to long-term strategy. We will share more details at our May press conference.
Thank you for your attention.
[Operator Instructions] First question from Nikkei, [ Okinaga ].
This is [ Okinaga ] from Nikkei. As of Honda, I think this is the largest deficit you posted since being listed. And about the management responsibility and compensation. So can you explain your thoughts as to how the management will take responsibility? And also, will there be a revision to your target for 2040, 100% EV?
Well, I'd like to answer the first question about including the possibility of resignation, how the management will take responsibility. As I earlier stated in the United States, the environmental regulations and also trade policies have changed drastically and slowed down the EV market and also the emerging OEMs are rising. So there are different factors. But essentially, we believe that the automotive market structure is being shaken, and automobile OEMs are all facing a transition at this point in time.
And having said that, as a result, in hindsight, we believe that there are a lot of uncertainties in our business outlook. We have to look at the market and also the policy trend and be flexible. In other words, we have to have multiple scenarios in place. But even with this effort, I think that we were not able to meet the requirements.
Ultimately, the responsibility lies with me. And that is the reason why as a management decision, without putting off, we didn't want to put off losses to the future. And though it was a hard decision, we had to discontinue the EVs that we had planned for.
In February, we changed about our change in organization, but I myself as a Chief Transformation Officer, will try to play my role as the officer responsible for transformation. So first, we have to stop the bleeding. And then we have to think about how to rebuild our business competitiveness and produce results. I think that is the biggest responsibility that I have, and I would like to focus on this.
Also about your second question, the 2040 carbon neutral target and whether or not this will be revised. Well, we are seeing global warming, and it is a social issue. And as a company, we have to deal with this. And this remains unchanged and will not give up. But as a means of achieving, we were trying to accelerate popularization of EVs until today. But currently, due to various factors, battery EV, the market included is slowing down. And as a milestone, there was a need to reassess. So the 2040 target that you mentioned, well, we were saying 100% EV, but this target, well, realistically, it will be difficult to achieve.
Now as for the long-term road map and also our strategy, we are redrawing. And therefore, the details will be given to you at our business update in May. We'll present to you our new strategy at that time. That's all from me.
Next question from [ TV ] Tokyo, [ Abe-san ], please.
Can you hear me? I'm [ Abe ] from [ TV ] Tokyo. Yes. Okay. So this time, you decided to discontinue the 3 models development. And last year's fourth mobility show, Mibe-san was advertising those models with pride. But that's what I remember, when I was listening to you at that time, the EV was not improving. And because of the slowing registration of EV, you said that's the time to develop EVs. And within 6 months since then, you've decided not to develop. So from that time, did you have a thought that it would be difficult? Or did you make a sudden decision at this point? So we would like to know from the last fall, what went on to make decision like this? And also Honda 0 Alpha, so you will continue developing and do mass production to sell this model. I would like to know if that's the case.
Thank you for your question, [ Abe-san ]. So as for JMS, Japan Mobility Show, since I made a speech at that time, what changed? So from that time, EV market was growing, but we were hitting the ceiling. So at that time, we had a tariff impact and also the incentive topics were coming in. So we have been focusing on these topics.
And from that time, in 2025, the 8% of the Americas new models were from EV. And as our plan, ACC II, our prediction at that time was in 2026, the 12% to 18% growth was projected at that time. That was the market growth we anticipated in 30% in 2030, and that was a general perspective. But since then, what changed to include greenhouse regulation was removed. And also because since then, in America, the consumer sentiment was really down and were lowered. So January in the February ratio of 2026, it went down to about 5%. So that led to production volume declines.
So our plan, the volume got dropped so much. So -- and a large incentive needed to be given, but also, our gross profit became negative. And more than our plan, the negative become larger than we expected. And we also studied whether those 3 models cancellation will recover our status and that those models development will impact our future direction. So with heavyhearted, we made this decision. So since JMS, the market became so lowered. So that's one of the reasons.
And meanwhile, we came up with a lot of cost down measures. And also, we reviewed our volumes setting, but we took a lot of countermeasures in order to deliver as much product as possible to our customers. But in reality, it was still very difficult, and we decided -- we made this decision because this will impact our future business.
So as for 0 Alpha, the main market for this model is not North America, it's mainly India, Japan, and that's the market we are looking at. So the environment surrounding this region has also changed, and we can see profitability in the future in these regions. That's why we decided to keep this model. That's all.
Next question, Yomiuri, [ Ukita ], please.
So this [ Ukita ] From Yomiuri Newspaper. Can you hear me?
Yes.
Well, in your presentation, you talked about shortening the production and development period. Well, in China, in order to compete against these new players, there was a need to shorten this period. But you said that you're still working out the details, but for example, using AI or other measures. If you have anything that you can share with us in terms of the direction, please do so now.
Well, today, Kaihara did explain about that. And also in the materials that we have provided you, it does make reference to that. The emerging OEMs, especially the Chinese OEMs -- well, outside of the United States, they have entered into all markets. And the Chinese OEMs, unless we can compete against them, it will be very difficult for us to do business. And as a means to win, for example, drastically shortening the development period, also drastically improving the production efficiency. Well, these types of measures need to be taken. But that included, we are trying to change the structure of our automotive business and the details will be explained in May. That is all.
Next question from [ Beskar, Terasako-san ], please.
[ Terasako-san from Beskar ] So Honda 0 Series development and production will be canceled. So I would like to know more details. So earlier, as you mentioned, the 3 models in North America development will be canceled. What I was surprised is that Alpha will continue. So in that sense, so 0 Series, it doesn't mean that you will discontinue everything. But Honda Series will be existing, but depending on the models, it will be continued or discontinued. Because last year, in the Mobility Show, 2027, you said as for 0 Alpha introduction of the market will be implemented. So that plan is still running. The Honda 0 Series itself, I would like to know that more specifically what your plan is.
[ Terasaka-san ], thank you for your question. So it was maybe difficult to understand, but in those 3 models that we showed in Japan Mobility Saloon and SUV and Alpha. So those are 3 models, the top 2, Saloon and SUVs. So the main market is North America, especially the U.S. So that was the precondition and that's the precondition for the development, but the BEV market is slowing down in the U.S. So our market -- this business will be so much lower than what we had expected. That's why we decided not to do it. But as for Alpha, like I said earlier, India market and Japan market and also some Asia markets, that's the main market where we are developing this model. So although we see some changes, it's not a major changes in the market. So -- and we still see some profitability in that market. So we will stick to our plan to sell them.
So as for Honda 0 Series, so it will continue, right?
Yes. In that sense, yes, we will continue 0 Alpha. So it doesn't mean that all 0 Series will be canceled.
Next question, NHK [ Nishizono-san ], please.
Can you hear me? This is [ Nishizono ] speaking.
Yes, I can hear you.
I don't know if I should be asking this to Mibe-san or Kaihara-san. The JPY 2.5 trillion, the breakdown, can you elaborate to the extent possible, please?
Yes. Fujimura will explain.
[ Nishizano-san ], thank you for the question. JPY 2.5 trillion, the breakdown you asked. Well, this time, these 3 models development will be canceled. And in making this decision, impairment, the development assets, we have had development assets, and we have to write them off or the dies and dedicated facilities also exist, and we have to have impairment of those assets. Plus -- well, to our suppliers, well, because they have made a lot of preparation for our EVs, we have to sincerely negotiate with them one by one and provide compensation. So those are included coming to JPY 2.5 trillion.
Another -- this is a separate issue, but this box, which talks about the equity method. As you know, we, in China have struggled -- our Chinese business. And so we have been putting on our balance sheet, the share of investments accounted for using the equity method. But for those which we have difficulty, this will be put under impairment.
Now the portion will be half and half. This fiscal year, JPY 1.3 trillion and next fiscal year, JPY 1.2 trillion at maximum. And the cash items and noncash items, well, this fiscal year FY '26 is JPY 0.6 trillion to JPY 0.8 trillion. These are noncash items. And so JPY 1.7 trillion is cash item. This will be generated under the current fiscal '26. It's different from the JPY 2.5 trillion. But as Kaihara has explained already, this loss -- by posting these losses, we believe that EV related, especially North America, the losses -- the future losses, I think, it can be written off more or less. Of course, this is our estimate as of today. I cannot guarantee that there will not be any additions, but it will not be the same size as you see here in terms of the addition.
And the JPY 1.7 trillion cash out, this is a large portion. But as said, on a consolidated basis, we have a gross cash of JPY 4 trillion. And also, the balance sheet, I think we have a very solid balance sheet. And therefore, the level of cash at hand and also next fiscal year, we will be able to earn operating cash flow the same as this year.
Excluding these losses this year, I think you will be at par as this year. And therefore, in terms of the health and also security of our balance sheet, I think you can be rest assured. We've switched to DOE, and stable dividends will be something that we will work on. Of course, the details, please wait until we make an announcement of our final financial results in May. And there, we would like to respond to your question further in detail. That is all for me. Thank you.
About JPY 1.3 trillion for next fiscal year. This is also related to the 3 models, the tangible intangible write-offs? Or is it China?
For next -- what we're saying next fiscal year is more -- I cannot state any specific names of our suppliers, but it will be mostly compensation to our suppliers. We have rationally estimated the maximum amount of compensation to be paid to our suppliers.
So JPY 1.3 trillion is for the 3 China-related models. And next fiscal year, JPY 1.2 trillion will be more or less for supplier compensation for the 3 model related compensation to our suppliers?
Yes.
Okay, we have next question [ Shimasta-san ].
Can you hear me okay?
Yes.
So it was very convincing this time like the next hybrid completion progress. Listening to that, maybe it's going to the good direction. But on the other hand, we feel kind of sad hearing the discontinuation. But for new Honda, we would like -- maybe some people are wondering about the Sony Honda, but is the [ liberty bill ], are those separated? And also the development of these models, I think Afeela models or what will happen to this model. So if there is anything that you can share about this model?
As for Sony Honda Mobility, we started with the Sony Group. It's an SPC strategy. It's a very important project. And that will -- we will -- our shareholders will discuss the future of this project, and we haven't made any decision at this point yet.
So we have -- you have already started discussions?
Yes. But we have discussed a little bit earlier, but we will continue discussing among our shareholders about this Sony Honda.
So because unless we know anything until May, we will be very concerned. So I would like you to share as soon as possible.
[ Mira-san ] from Asahi Shimbun Newspaper, please.
[ Mira ] from Asahi Shimbun Newspaper. I have a question also to Mibe-san. In your explanation, you said that you have not been posting deficits for a long time, but this time, you are. So historically speaking, I think this could be regarded as a crisis for Honda. Now historically speaking, how do you recognize this case? And of course, it is attributable to the market environment. But compared to your competitors, I think it appears to be that Honda has a greater impact. What are the factors that have led to this result?
Well, how do we perceive this historically? Well, this -- well, ever since we have shifted to this accounting standard, it's the first time that we're posting a deficit. So I think that this announcement and impact is something that we need to take seriously.
Now why has it come to be such a large sum of losses? Well, over the past few months, we have been discussing this internally, including myself. We were able to have a very open discussion. And we don't think that this is attributable to our governance. But ACC II, this is a very tough regulation in California. And if we fail to achieve it, there will be a penalty of $20,000. Well, this is not just Honda, but all companies, auto companies doing business in U.S. were thought of this as a bottleneck. And therefore, we had tried to comply this regulation. The investment was very large, and we wanted to comply with this regulation at a minimum level. And though we have done that, the sum was large.
Plus the EV market in the United States is suffering a downturn, and it is less than half of what we were assuming. That is how much the market has shrunk. And if we could proceed as is, we thought this would further undermine our profitability. And therefore, this decision was made.
Of course, we wanted to launch these models and our associates and suppliers who were involved and ultimately, our shareholders too. We do understand that we have put a lot of impact on these parties, and we do take this seriously. But yes, I think that is the reason why the number is so large.
Okay. It's time now. So now we would like to end today's press conference. Thank you for your participation.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]
Honda Motor — Honda Motor Co., Ltd., Q4 2026 Guidance/Update Call, Mar 12, 2026
Honda Motor — Honda Motor Co., Ltd., Q4 2026 Guidance/Update Call, Mar 12, 2026
🎯 Key Message
- Takeaway: Honda is overhauling its mid‑ to long‑term auto strategy after a sharp forecast revision. It will cancel three EV programs and book up to 2.5 trillion yen of impairment (about 1.3 trillion added to the FY forecast). The 2050 carbon‑neutral goal remains, but 100% EV is unlikely. Focus shifts to hybrids, next‑gen ADAS, regional growth, tighter investments, and a stronger balance sheet to sustain dividends; May update to follow.
🗺️ Strategic Highlights
- EV to Hybrid shift Reallocate resources from a broad EV push to hybrids; introduce new hybrid models in the late 2020s; apply next‑gen hybrid system to key models from 2027 and expand the HEV lineup with advanced ADAS.
- Regional focus India becomes a core market; China emphasizes intelligent electrification; expand North American local procurement; LH Battery JV to localize hybrid battery production.
- Financial discipline Tighten investment criteria, preserve cash flow, and maintain dividends while boosting efficiency and refining product mix to stabilize earnings.
🔭 New Information
- Impairment details Up to 2.5 trillion yen in impairment and asset write‑offs tied to canceled EV programs; about 1.3 trillion added to the FY forecast; 1.7 trillion cash items and a robust 4 trillion cash balance cited.
- Plan cadence Details of the rebuilt strategy to be shared at the May business update; Honda 0 Alpha remains in play for select markets; discussions on Sony Honda Mobility continue with shareholders.
❓ Analyst Q&A
- Accountability Mibe accepts responsibility for the revisions, stressing the need to stop losses and rebuild competitiveness.
- 2040 target Unchanged in principle; 100% EV target acknowledged as unlikely; strategy realignment under way.
- Sony Honda & 0 Series No final decision yet; ongoing shareholder discussions; 0 Alpha persists in certain regions; more clarity expected in May.
⚡ Bottom Line
- Implication for shareholders: A difficult but deliberate pivot to restore long‑term profitability via hybrids, software, and disciplined investments. A strong balance sheet and steady dividends support investors as earnings recover from FY2028, with further detail due at the May update.
Honda Motor — Q3 2026 Earnings Call
1. Management Discussion
Thank you very much for taking time out of your busy schedule to attend our briefing today. We would now like to start Honda Motor Company Limited's financial results briefing for third quarter of fiscal year to March '26. First of all, allow me to introduce the attendees today. Mr. Noriya Kaihara, Director, Executive Vice President and Representative Executive Officer.
Good to see you, everyone.
We have Mr. Eiji Fujimura, Director, Managing Executive Officer.
Thank you.
And Mr. Masao Kawaguchi, Operating Executive Head of Accounting and Finance Unit.
This is Kawaguchi, good to see you, everyone.
Mr. Kaihara will first present the financial results of third quarter ended December '25, and forecast of consolidated results for the fiscal year ending March '26. Then Mr. Fujimura will present the details.
Over to you, Mr. Kaihara.
Thank you very much for your continued support for Honda's activities. I would like to present to you the financial results for the third quarter of fiscal year to March 2026. I would like to start with the highlights of the financial results. Our operating profit for the third quarter of the year to March '26 was JPY 591.5 billion. Motorcycle operations saw solid global unit sales led by India and Brazil. And in addition, the restriction on ICE vehicles in Vietnam, which was a concern, had only limited impact to sales compared to our assumption.
For results up to third quarter, we've attained record high unit sales, operating profit and operating margin. Automobile operations saw declines in profit due to nonrecurring expenses related to EV in addition to impact from tariffs. Operating cash flow after R&D adjustment, which indicates the resource available for future investments, came to JPY 1.8558 trillion, generating cash on par with the same period last year.
The forecast for the consolidated results for the term ending in March '26 is operating profit of JPY 550 billion and profit for the year of JPY 300 billion, unchanged from the previous forecast. Impact from tariffs were initially forecast at JPY 450 billion at the beginning of the term, but our prospects are now that it will be reduced to JPY 310 billion. Toward the end of the term, though we expect growth in profit due to yen depreciation, the competitive environment for automobiles in Asia will intensify requiring incentives. Taking into consideration uncertain business environment, we are maintaining the previous forecast.
Going by business segments, for motorcycle operations, with the tailwind of solid sales in India and Brazil, we continue to aim for 21.3 million units, the highest record sales. For automobiles, we will maintain the forecast of 3.34 million units, unchanged from last forecast. The shortage of semiconductor supply experienced in third quarter now has good prospects for preventing recurrence. On the other hand, we are beginning to see signs of supply risk for other materials such as rare earth metals and memories, and we will closely monitor the situation and take actions as needed.
To give you the consolidated results for the third quarter of the year to March '26, operating profit was JPY 591.5 billion, lower by JPY 548.4 billion compared to the same period last year. Investment earnings due to the equity method was JPY 24.0 billion, higher by JPY 51.3 billion. And the quarter profit attributable to the owner of the parent was JPY 465.4 billion, lower by JPY 339.8 billion.
Next, I'd like to cover the forecast for the consolidated results for the term ending March '26. Compared to the previous forecast, we maintain our forecast of operating profit of JPY 550 billion, and then the profit of the year attributable to the owner of the parent of JPY 300 billion, which is unchanged. The exchange rate against the U.S. dollar is assumed at JPY 140 (sic) [ JPY 148 ] for the full year period.
Next, for shareholder returns. Forecast for the full year dividend for the fiscal year ending March '26 is JPY 70 per share, unchanged from the previously published forecast. In addition, the Board of Directors meeting held today has resolved on cancellation of treasury stocks. We will execute cancellation of 747 million treasury stocks.
So let me explain about the details of the financial performance, and Mr. Fujimura is going to explain. Let me start. So regarding cumulative group unit sales for 3 months (sic) [ 9 months ] up to the third quarter year-on-year, for motorcycles, 16.44 million units sold due to the increase in India, Pakistan and Brazil. For automobiles, 2.561 million units due to decline in Asia, mainly in China. And for power products business, 2.507 million units sold due to some incremental sales in Europe and decline mainly in Asia. We have explained the consolidated performance up to the third quarter already.
Next, I will explain factors for changes of operating profit year-on-year. Operating profit was JPY 591.5 billion, down by JPY 548.4 billion year-on-year. Factors behind for changes. Sales made a positive impact by JPY 38.1 billion because of the increase in motorcycle unit sales as well as profit in financial businesses, though automobiles unit sales declined due to the shortage of semiconductor supplies.
Price/cost impacts were positive by JPY 225.9 billion due to effective price revisions. Expenses impact was negative on profit by JPY 108.6 billion. R&D impact negative by JPY 35.7 billion. Foreign currency impact negative by JPY 111 billion. Onetime EV-related expenses impact negative by JPY 267.1 billion. And the tariff impact squeezed the profit by JPY 289.8 billion. Excluding onetime EV-related expenses and the tariff impact, the operating profit would be JPY 1.1485 trillion.
Regarding operating profit by business segment. Motorcycle business, JPY 446.5 billion (sic) [ JPY 546.5 billion ] operating profit. Automobile business, JPY 166.4 billion losses. Financial service business, JPY 218 billion profit. And the power products and other business, JPY 6.5 billion losses. Operating profit of motorcycle business increased by JPY 44.8 billion year-on-year to JPY 546.5 billion.
Factors for changes. Sales impact was positive JPY 61.2 billion due to incremental sales units, mainly in Asia and South America. Price/cost impacts were positive by JPY 48.6 billion due to effective price revisions and so on. Expenses impact negative by JPY 24.1 billion. R&D impact was positive by JPY 4.6 billion. Foreign currency impact negative by JPY 37.7 billion. And tariff impact negative by JPY 7.7 billion. Operating profit of automobile business went down by JPY 569 billion year-on-year, resulting in the operating losses of JPY 166.4 billion.
Breakdown of factors for changes. Sales had a negative impact by JPY 82.8 billion due to unit sales decline, mainly due to semiconductor supply shortage, losses associated with the reorganizing of the affiliated company of the group and so on. Price/cost impacts had a positive impact by JPY 177.3 billion due to effective price revisions. Expenses had a negative impact by JPY 11.7 billion. R&D impact, negative by JPY 42.1 billion. Foreign currency impact negative by JPY 62.9 billion. Onetime EV-related expenses had a negative impact by JPY 267.1 billion. And the tariff impact was negative by JPY 279.5 billion.
Cash flow situations now. Free cash flows, excluding financial service business, was JPY 917.4 billion. Net cash as of the end of third quarter was JPY 3.1707 trillion and the operating cash flows after R&D adjustment was JPY 1.8558 trillion.
Let me explain consolidated forecast for FY ending March 2026. Regarding group unit sales, we will keep the previous forecast of 21.3 million units of motorcycles, 3.34 million units for automobiles, and 3.67 million units for power products volume. And we have already explained the consolidated financial forecast for FYE March 2026.
As for factors for changes in operating profit year-on-year for those forecasts, operating profit would be down by JPY 663.4 billion year-on-year. With factors for changes, sales would have a negative impact by JPY 162 billion due to semiconductor supply shortage and so on. Price/cost impact will be positive by JPY 330 billion (sic) [ JPY 230 billion ] due to effective price revisions and so on. Expenses impact, JPY 106.5 billion negative. R&D impact, JPY 166 billion negative. Foreign currency impact, JPY 149 billion negative. And the tariff impact negative by JPY 310 billion.
Regarding factors for changes in the forecast of the operating profit, we will keep the previous forecast of the operating profit, for which sales impact will be negative by JPY 10 billion. Expenses impact negative by JPY 15 billion. R&D expenses impact negative by JPY 40 billion. And foreign currency will make a positive impact by JPY 65 billion due to the change of the exchange rate assumption to JPY 148 for $1.
Expected capital expenditures, depreciation, amortization and R&D spending of FYE March 2026 will be as follows, reflecting increase in CapEx for acquisition of factory buildings and so on of the battery production JV with LG Energy Solution.
Lastly, I would like to speak about the future direction of our operations in view of the current business environment. For automobiles operations, with the expertise we have accumulated on internal combustion engines and hybrid technologies, our results of the third quarter confirmed that we are maintaining a business environment -- business characteristics that continually give us profit if we exclude the nonrecurring impact from EV and impact from tariffs.
On the other hand, we are faced with issues, including stagnated growth of EV market, less stringent environmental regulations in different country markets, retreat of multilateral free trade system due to protectionist policies, heightened supply chain risk due to expansion of global procurement, further exacerbated by intensifying global competition from emerging OEMs. Thereby, we need to conduct a fundamental review of our strategies to rebuild our competitive strength.
In this situation, we believe that our current tasks are to build lean business characteristics to enable flexible actions against changing business environment and to realize product features and cost competitiveness that overwhelm those of emerging OEMs. To address those issues, firstly, we are working to completely settle, within this fiscal year, the losses related to EVs currently sold in North America. In addition, we are striving to make prompt management decision in line with EV markets, such as disciplined expenditure control, EV product range and review of CapEx plans aligned with the business environment.
At the same time, to further enhance the earning capability of hybrid models, we are preparing to launch next-generation hybrid system as well as equipping the hybrid models with next-generation ADAS. We will communicate our review of fundamental medium- to long-term strategy at an appropriate timing sometime during the coming fiscal year.
Honda has multiple business domains, including motorcycle and finance business operations, forming a well-balanced business portfolio, each of which help us to generate cash flow and to maintain a sound balance sheet. Because of this, we have adopted a DOE indicator, which allows us to ensure stable returns and dividends aligned with the company's growth even in an uncertain and extremely volatile business environment. Through these initiatives, we will continue to strive to enhance corporate values so that we will remain a company expected to exist in the eyes of our stakeholders.
This completes my presentation. I thank you very much for your attention.
Thank you very much for your attention. So now we'd like to take questions from the audience. [Operator Instructions] Then the first question. This is from Mr. Yokoyama of Toyo Keizai.
This is Yokoyama from Toyo Keizai. Can you hear me?
Yes.
I have 2 questions. First question is I just would like to check your outlook for the full year. You are progressing beyond your budget already. But it is true that the fourth quarter, you tend to get a lot of expenses, but you have been saying that the expenses would be JPY 650 billion for the full year. There was one gap. So I just wanted to check that.
And then for the automobile profitability, I would just like to check. There was tariffs impact. If we exclude that, that would be IOS of 3.6%. But if you include hybrid, I think earlier, you mentioned like 8% of profitability. So if you say 3.6%, I thought it was kind of sounds lower. So I would like to ask for your evaluation of the profitability of automobiles and then would like to see what your real values are.
Okay. Thank you very much for your question, Mr. Yokoyama. First of all, for the specific numbers for that, this will be covered later. But this time, for the fourth quarter, we slided the results from fourth to third quarter. So let me try to answer how we expect the financial results would land toward the end of the year. So compared with the third quarter results, the tariff impact will work on the positive side.
And then the motorcycle and automobile unit sales, because we had favorable results in the Vietnam motorcycle -- well, I should not say favorable, but the damage was less than we had assumed in Vietnam. So I think motorcycle, it will go positive compared to our budget. That is our assumption as well. However, for North America automobile market, if you look at that, and then going forward, I believe there will be further impact from BEV. So the sales will become difficult. So we will have to increase a bit of the incentive. That's one thing we are considering.
But as a downside, another downside is that so far, we had the BEV with GM. Well, Mr. Fujimura will explain this later. But we need to do this in negotiation with GM considering the compensation. So depending on how that comes out, we might have a little bit more expenses to be covered. So with that, that is why we're giving those numbers as a forecast.
And then as the BEV environment, how it develops, maybe the GHG credit, and then in the finance, we might have our losses from a residual value on the lease. So basis of those, we believe we are just assuming for fourth quarter, the outlook is still maintained.
Okay. So I would like to ask Mr. Fujimura to give a little bit more details then.
Okay. Thank you very much for your questions, Mr. Yokoyama. As you mentioned, the negative JPY 650 billion. So, so far, we had a battery EV of negative JPY 650 billion, battery EV, that's what we have been saying. So when we talked about the JPY 650 billion, so the GM-related issues that we talked about, and then of the models that we are developing, let's say, we were doing a review of those models so as to write off certain assets. So with that, we recognized JPY 250 billion, and then JPY 400 billion of R&D. So we put total of JPY 650 billion in the budget.
This time, in the results, this is not for the GM portion, but for models in China, because according to the discussions with the partner, we have reviewed our product lineup. Some of the models or some of the development assets, those have been written off. So up until 9 months of this year, we have JPY 270 billion. So that's JPY 270 billion for the 9 months. But if we turn it into budgeted, let's say, amount, it will come to JPY 290 billion, plus JPY 400 billion for R&D. So it is getting close to JPY 700 billion range. So those are the numbers that we have put into the budget.
So this JPY 270 billion has already been incurred and then JPY 290 billion for the full year. So the JPY 20 billion remaining, the difference, this is up to the negotiation with GM. So the negotiation with them still has not been established. We have not been offered any number concerning that. So we are assuming -- sorry, we don't know if the JPY 20 billion is sufficient or not. So because of that, looking at the sales situation and then maybe if you think about the exchange rate, that might be upside, but this could be a downside factor. So that is why we are keeping the outlook forecast unchanged.
This JPY 700 billion BEV portion, next year -- well, if this JPY 200 billion is no longer there next year, then it will only be JPY 400 billion. That will be the starting line for next fiscal year. But at the end, as Mr. Kaihara explained to you, currently, considering the current EV market, I think we need to rebuild our framework of our strategy. So we'll take this -- well, are we going to really take this JPY 400 billion as a starting point, or are we going to review this? We don't know how much of the disciplined expense cost control is going to be. We are still in the process of formulating those plans. So we hope to be able to issue outlook prospect of that sometime in the future.
When it comes to ICE, it was like JPY 900 billion or close to JPY 1 trillion earnings is something we have. However, we do see declines in unit sales in Asia, and we see some impact from exchange rate. And then the semiconductor impact, we are recovering a little bit of that, even though this is onetime. So without the tariff -- that's JPY 700 billion. And then let's say, if there's no tariff, it will be JPY 400 billion. So on the plus. So JPY 400 billion probably would be the starting line. So JPY 300 billion tariff impact, it cannot be recovered just immediately next fiscal year. So we want to closely monitor the cost, so we might proceed with more expanding of our local procurement and try to control costs more closely. I hope that answers your question.
Well, when it comes to talks about the upside, you are assuming the exchange rate at JPY 148 per dollar. But I think this would go toward the upside, right?
I think if things progress as things are going right now, yes. As I might have mentioned, so per dollar, JPY 1 would give us an earning plus of JPY 10 billion or so throughout the year, that is, of course. So we slashed up by 4 to get a quarter-on-quarter number per JPY 1 against the dollar fluctuation.
Next question, please, from Asahi Shimbun Newspaper, Mr. Miura, please.
Asahi Shimbun Newspaper, Miura. I have 2 questions. One, Page 20, EV market trends with the model lineup prioritization and focus, as we mentioned here. Could you elaborate on that, please, the basic idea and the directions, please explain about that to me.
And another question is also on the Page 20 about reorganizing the long and midterm strategies. And please tell us about the directions of those strategies.
Thank you for your question, Mr. Miura. So EV market and our attitude for that. Basically, BEV market for us are in the North America and in China for North America. The market environment, for instance, there is ACC now validated and credit for BEV, we cannot really see the values anymore today and demand environment for EV is quite negative today for us. And recent EV situation today would be leading to the idea of reorganizing the EV strategies for that market. And then last year, we had some tax credits, and we had accelerated some prior to the September period. However, now the market is slowing down in this end.
In that regard, EV strategies in the future have to be revisited. And therefore, China EV market is -- last year, for instance, half of the market share in the China are supported by the EVs or BEV in China. And then in terms of Honda EVs, unfortunately, there are local EV manufacturers over there. And in terms of the prices, UI, UX perspectives, we are not there. We are behind those companies. And then in terms of the competition in the software environment, we are still behind other companies. Unfortunately, we do not have the established image of the business in the EV area over there. So we have to go back to scratch and then rebuild our strategies for EV.
For the cost perspective, the local suppliers over there or engineering companies over there, we would have to make use of those present that way. We have to turn our direction dramatically, so that we can then gain our cost competitiveness utilizing them. NOA, ADAS, those will be updated with them, so that we can be competitive again to challenge the markets once again. In that regard, as I mentioned the other day, the timing of the launches will be revisited in order to have our entry once again in the EV market over there. Thank you very much.
Next question come from Nikkei Paper, Mr. Okinaga.
This is Okinaga from the Nikkei Newspaper. I'd like to ask about the EV again. So throughout the year, you said JPY 290 billion for the year. Is there a possibility of, let's say, further impairment booking or posting of impairment losses? So that's one question. And the other question is concerning semiconductor. So you said that you have good prospects for preventing recurrence of this shortage problem happening. So I just would like to know what you have been doing. And then JPY 150 billion negative for China. So any impact for Japan and China? So I would like to know how the situation has been for China and Japan.
Thank you very much, Mr. Okinaga. First, about the EV, the impairment losses for the nonrecurring one.
Well, we don't know what's going to happen, but we have been processing this in accordance with the accounting principles. So whatever we know, we have incorporated into our books. However, as mentioned by Mr. Fujimura, we don't know what kind of compensation issues might come up with GM. So there is a bit of an unclear future prospects.
And then actually, as I've explained, because the EV market is dramatically changing. So we would need to monitor our sales volume trends. And then we might have to take some actions if needed.
Any details you can add?
Okay. Then if the intention of your question is about the impairment losses for the EV business in general, like at other OEMs, because we are not sure what's happening at other companies, so I would like to refrain from mentioning anything about other companies. But what we are saying is that with the models that we have developed as the die and tooling and then the development R&D assets, some of those have to be written off. And then this is not really impairment, but we would need to do some compensation. So because of the review that we have conducted as a product lineup, we are booking some temporary losses, those expenses that are incurred.
But you asked about the impairment, but impairment means that -- this is a CGU that we use. Whether this leads to cash generation in the future, and then how the business environment has been doing, and what management decision has been in view of those. And then in view of all of those, we are getting audited, and then with the auditors included, we discuss. So we are not recognizing any impairment like that have happened in other companies. But we have been talking with the accounting. We have been discussing on a continuous basis. And then we have been discussing how we at management should assess those costs and expenses. So I just wanted to mention that whatever that were incurred up until 3 quarters, those are only those associated with the product lineup review. We don't know if it's going to be enough, but we have included whatever we can so far.
And then the second question, you asked about semiconductor. So last year, in North America, from the end of October, we had to go into production adjustment and a production suspension in Mexico. So the impact actually is, I think I mentioned, 120,000 units affected. We hope that we are able to recover a bit. So the affected will be 110,000 units. But it would be JPY 150 billion impact we assume.
So of that -- this is unfortunate, but for Japan and China, we have had some disruptions in production. From China, we had about 3 weeks or so from the beginning of the year -- end of the year, sorry. And then for Japan, we have had to suspend production like at Suzuka for 2 or 3 days, and then did some production adjustment for a few days after that. So because of that, even though there was an impact once, but for Japan and China, we have the capacity to sufficiently recover. So we will be able to complete the recovery of those lost production before the end of this fiscal year. So in terms of business impact, it is very limited. So we have not considered that into our business. But anyway, we have faced those problems.
So basically to the suppliers, so I'd say, we are trying to do a multi-sourcing of the suppliers, and then we have been asking them to keep appropriate inventory levels. However, some of the suppliers, unfortunately, have not provided us with that much of the details. So to be blunt, we have been relying heavily on our suppliers. So that's something we are reviewing fundamentally, so that we will keep a close watch over our supply chain all the way up to upstream and then see what kind of risk there may be, and then we will do appropriate risk assessment and then keep appropriate inventory management or go multi-sourcing as well.
And then that needs to be done from the development stage as well. So at the earlier development stage, we have been looking at the cost sourcing. Well, in view of that, there are some single-sourcing strategies as well. But in terms of business continuity strategy, if we go single-sourcing, we will pay careful attention to upstream of each of those components containing semiconductor, and then we will decide how much of inventory we will hold. And then we will do a review about what is going to happen if we go multiple sourcing and then take actions accordingly.
Currently, as you may know, the semiconductor issue, in addition to what we have experienced so far for the memory and then, of course, the rare earth issues are there. We are aware of those. So when those issues arise, we would -- of course, at this point in time, I don't think there is anything that would lead to immediate problems right now. But in the future, of course, well, it is not very clear. So we will work closely together with the suppliers and take actions as needed. However, for the rare earth metals, it is nothing that one single corporate entity can do anything about. As you may know, at the JAMA level as well, this is being discussed. And also with the governmental agencies included, this needs to be reviewed. So we would like to deepen our collaboration with different entities. Thank you very much. This concludes my answer.
Next question, Ms. Ukita from Yomiuri Newspaper, please.
Ukita from Yomiuri Newspaper. I have 2 questions. One is about tariff impact. Little by little compared to the start of the year, it is coming down. It is down from the JPY 386 billion from the beginning now. And could you tell me more about the reasons behind this? And then the other question is about sales situation of the automobiles. Your target is there, but it's not achieved. And in order to achieve the target volume of the sales, what are you going to do with the Japan and North American market?
So tariff, Mr. Fujimura is to address.
Thank you very much for your question, Ms. Ukita. And as you said, until last time, a gross impact in the first half, JPY 385 billion impact expected because of tariff, and the recovery of the cost expected JPY 50 billion. And then JPY 338 billion (sic) [ JPY 335 billion ] net impact. And then 110,000 units reduced in the U.S. because of the semiconductor situation. And then including that, JPY 338 billion net actually is because of the foreign exchange and so on, it will be about JPY 360 billion. That's the actual gross and JPY 50 recovery. So net was JPY 310 billion impact incorporated in the accounting.
And then the recovery part, they were realized. Therefore, JPY 310 billion, this is the number finalized, let's say, for this. And what kind of recovery plans are incorporated in the JPY 50 billion? And with the suppliers and others, we had made adjustment looking at the logistics and so forth. And then additional local procurements were progressed as well to achieve USMCA, and we are more confident in achieving that. Plus within U.S. credit, utilization is also to be added. And we scrutinized how far we can incorporate from that, and we had a broad consideration. And then eventually, JPY 50 billion recovery plan is realized into the JPY 310 billion figure.
And as for the sales strategy, let me address that question. For the North America, as I mentioned a little earlier, IRA credits were pushed toward the end of the period, and it was included in the BEV drops quite dramatically. Therefore, going forward, it will be staying at a very low level. And then going forward, we have to be focusing on the hybrid brand, taking advantage of the brand to make sure that those models will be selling more.
And then as of today, in North America, various companies had the impact of the tariff. And then we were thinking that they will be increasing the selling prices. However, we do not see the dramatic selling price increases. And then we had seen some incentives utilized in the different areas. And then the actual prices on the decreasing trend, practically speaking. Therefore, we have to use incentives. At the same time, we have to appeal the hybrid models. And customers who are looking for the affordable models, the ICE models can be provided to. So we try to cater for the needs of the customers to try to get by the situation here. And together with the dealers, we have to do the marketing activities. And we were not really focusing too much. However, in the area of the fleet, which was not really focused before. We have to work on that to sell more cars in the fleet customer field.
And Japan, hybrid models, that is very focused in the Japanese market. In Japan, rather than the competition, I think it is more of the customers and how we can include and support those customers. The dealers will make sure that they have a close contact with the customers, for instance, one-on-one strategy, one person looking at one customer, one-on-one strategy to try to satisfy their needs for sure. And that is very down to the ground activity, let's say, but it is what we are up to. And then next year onward, MMC and other campaigns expected to try to maintain the market share or improve the market share with those plans.
The next question come from NHK, Mr. Yasunaga.
This is Yasunaga from NHK. One question. The rare earth metals supply concern, concerning that explanation. So there is an export restriction on China. Is my understanding correct? And also about the diversification of supply chain. So for rare earth metal, you have no choice but to rely on China. But what would be your appropriate action in response to this situation?
Okay. Thank you very much, Mr. Yasunaga. For the rare earth metal concern, yes, as you said, currently, rare earth metal, those are subjected to export restriction from China. But currently, are the exports stopped? No. All we can do is apply for exports, and we do see those exports coming through. But sometimes it just takes some time, a longer time. So if you ask us, can we get the exports coming through as expected, not really. So as you know, rare earth metals, those are used in different various components. So if the supply stops, the risk is high. So we need to ensure, as I mentioned, we need to apply without any delay, apply for permission for exports.
And then, of course, when it comes to fundamental countermeasure is to go without use of rare earth, but that will take a long time for development. So currently, we will take some parts that are difficult to switch over or take a longer development. All we can do is to simply hold inventory. But currently, we don't have any actual problem in the supply. But how is it going to be in the future? We don't know. It is very uncertain, as I mentioned. So the supply, we need to work closely together with our suppliers, get interviewed them, and then ask them what kind of supply chain our supplier have for the rare earth that's needed for their components. So we will continue to consider our permanent or long-term countermeasure. And this will be for more medium term, but we will consider development of parts and components that do not use the rare earth.
But for the time being, all we can do -- the first thing we can do is to secure inventory. And then also secondly, to apply for export permissions on a timely manner. So those are the things that we can do currently. I hope that answers your question.
This rare earth-free components, specifically, what kind of components do you have in mind? And where would be the real critical point?
Well, there are different components, but there are different types of rare earth. So some are used in motor, some used in meters. So for each and every component that uses rare earth, for every one of them, we are looking into what can be done to replace them without rare earth.
Ms. Nagai from TV Tokyo.
Question one about the third quarter alone sales in the period for automobiles. Excluding the automobile sales, you had a reduction of the volume. And excluding the impact by the semiconductor, what is the situation as compared to the expectations in the beginning of the year?
And the second question is about Page 20. As Kaihara-san said, the direction of the businesses going forward. You said that it is going to be a dramatic revisiting of that. And as I heard about incentives in the North America, there could be kind of limitation to improve the profitability by doing by itself alone, but I suppose that you're still speaking to Nissan or Mitsubishi, not just those 2, I thinking about possibility of the collaboration with other companies other than those 2.
Thank you very much, Ms. Nagai, for your question. And 3 months volume, right? That's your question, right?
Yes, correct.
And then volume, you mentioned that the volume had declined for the period year-on-year, I suppose. But for the automobiles, actually, the volume sales increased as compared to the plan for the automobile businesses for the third quarter. You're comparing from same time last year, right? And for the original plans, third quarter, we had actually overachieved the plan for the third quarter automobile. And as compared to last year, it declined because of the next 3-year semiconductor impact that is the largest, and also Chinese market for ICE.
EV -- NEV market is increasing or expanding in China and ICE market is shrinking in China, because of which volume in China is in a tough situation. So year-on-year, it dropped. That is about the volume.
And what was the next question? Alliance question, right? And Nissan Alliance. Well, actually, with Nissan, the integration possibility, we do not talk about that at all now. And I have to say that. And another thing is that as you said now, development cost will be needed in the future, for instance, software, architecture and so forth require investments. And for the future EVs, batteries, e-axle, if we can commonize those or have a co-development together, that will help reduce the development cost, or cost itself may reduce, thanks to that. However, for those matters, we continue to discuss with Nissan.
However, not just Nissan, if it is possible to build a relationship like them with other alternative companies, of course, as long as we can expect a win-win results altogether, of course, for those, we will continue to consider other possibilities. And that is all for your question.
Our next question from Mr. Fujiwara from Nikkan Jidosha Shimbun, Daily Automotive Newspaper.
This is Fujiwara from Daily Automotive Newspaper. I have 2 questions as well. My first question is about the automobile, the factors for press. You had a big contribution from the selling cost that helped to grow your revenues. So I wanted to know what region and what products. And then second question. This may have been covered by Toyo Keizai's question, but the hybrid volume has grown by about 5% in the third quarter. So I would like to know what kind of contribution this 5% growth of HEV volume in the third quarter?
Okay. Thank you for your questions. This is from year-on-year comparison, I believe. Sorry, the selling price and cost impact that work to the plus, that was for automobiles, there was a bit of a plus in the selling price and cost impact. If we look at the total graph, it's about JPY 60 billion. There was about JPY 40 billion for automobiles, because this is from selling price impact.
When we say selling price, per year, at the beginning of the term or in fall, we do go through price hikes. So of the JPY 40 billion or so, about half of it happens in the States. And then for the other regions, those are just prorated -- if you can prorate it to different regions by the volume.
And then the hybrid volume for the third quarter, for the hybrid, the unit sales in the states -- well, particularly in the states, hybrid is doing very well. And then how we do the incentive, incentive can be kept low relative to the ICEs. However, the competitors are coming into the hybrid market. So our favorable condition, of course, is not going to last forever. So on our part, we will be getting into the transition period for different models. Our competitors are going to come up with new models. So we need to kind of maybe build up -- spend some more incentives. But the hybrid requires relatively lower incentive compared to petrol engines. But in the future, we might have to spend some more incentives in the future.
But on the other hand, for the petrol, gasoline engine vehicles, so we do need incentives more than hybrid for ICE. However, if you look at the contents of the components, gasoline engine requires less tariff impact. So in that sense, petrol engine, gasoline engine contribute better. So we need to strike a good balance between those 2 groups.
And then recently, if we look at the transaction -- one of the reasons why transaction prices are deteriorating in the States is that the model type variants which cost lower are attracting customers. So because we do have both gasoline and hybrid, we need to strike a good balance. And then we need to survive through this transition period between those different models using those good mix.
So due to time, the next question will be the last one for the day. Mr. [ Tsurumi ] from Mainichi Newspaper, please.
Earlier, you talked about the alliances with Nissan. And based on the reports, the models in the U.S. with Nissan and powertrain commonization and so forth. You talked about that earlier. And what is the progress today? Are there any updates for us as much as you could share with us? That is all for me.
Thank you for your question. So in conclusion, there is no specific information I can share with you today. But with Nissan, as I said earlier, in many different field areas, we try to explore different possibilities. And as you said, the complementary supply of the models or production, the models from each other. If those are complementary to the other company, we could look for the possibility, and also one company produce a model of cars and then provide or make supplies. We have discussion about it. However, we have not decided on any specific plans yet. We simply continue our discussion.
And then as I said earlier, the commonization of the software or architectures, such topics are, of course, one of the discussion topics for the development. However, both of us have made progresses in individual projects. Therefore, it is not yet the time to make a conclusion yet, but we continue to discuss positively with each other. So once any output or plans are solidified, we will make sure that we will share with you.
Thank you. So now that concludes our press conference for the business performance results. And those materials and handouts are available from our website of Honda. Thank you very much for your participation, everyone. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]
Honda Motor — Q3 2026 Earnings Call
Honda Motor — Q2 2026 Earnings Call
1. Management Discussion
I thank you very much for taking time out of your busy schedule to attend our briefing today. We would now like to start Honda Motor Company Limited's financial results briefing for second quarter of fiscal year to March '26. First of all, allow me to introduce the attendees today. Director, Executive Vice President and Representative Executive Officer, Mr. Noriya Kaihara.
Good to see you.
Director, Managing Executive Officer, Mr. Eiji Fujimura.
Good to see you, everyone.
Operating Executive, Head of Accounting and Finance Unit, Mr. Masao Kawaguchi.
Good to see you, everyone.
Mr. Kaihara will first present the financial results of second quarter ended September 30 of 2025, and forecast of consolidated results for the fiscal year ending in March '26. Then Mr. Fujimura will present the details. Over to you, Mr. Kaihara.
I thank you very much for your continued support for Honda's activities. I would like to present to you the financial results for the second quarter of financial year to March '26. I'd like to start with the highlights of the financial results. Our operating profit for the second quarter of the year to March '26 came to JPY 438.1 billion.
Motorcycle operations saw unit sales decline in Vietnam, but global sales trended solidly and strongly, led by Brazil. For results up to second quarter, we've attained a record high unit sales, operating profit and operating margin. In Automobile operations, though there was some positive profit impact due to price revisions, we saw a decline in profit due to impact from tariffs and onetime expenses related to EV.
Operating cash flow after R&D adjustment, which indicates the resource available for future investment, came to JPY 1,281.3 billion, on par with the same period last year. The forecast for the consolidated results for the term ending in March '26 is operating profit of JPY 550 billion and profit for the year of JPY 300 billion. We are revising the previous forecast, considering the decline in Automobile unit sales and the reduction in production volume expected as of now due to semiconductor shortage, though we expect profit growth due to yen depreciation.
In Motorcycle operations, while we expect declines in unit sales in Vietnam, we hope to recover this in other regions, thus we maintained 21.3 million units. For Automobiles, in addition to lower sales volume, mainly in China and ASEAN, declines due to semiconductor shortage has been taken into consideration for North America. We are revising down from 3.62 million to 3.34 million units.
To give you the consolidated results for the second quarter of the year to March '26, Operating profit was JPY 438.1 billion, lower by JPY 304.4 billion compared to the same period last year. Investment earnings due to the equity method were JPY 10.8 billion, higher by JPY 31.6 billion. And the half year profit attributable to the owner of the parent was JPY 311.8 billion, lower by JPY 182.8 billion.
Next, I'd like to cover the forecast for the consolidated results for the term ending in March '26. Compared to the previous forecast, our forecast is operating profit of JPY 550 billion, down by JPY 150 billion and the profit for the year attributable to the owner of the parent of JPY 300 billion, down by JPY 120 billion. The exchange rate against the U.S. dollar is assumed at JPY 145 for the full year period. Forecast for the full year dividend for the fiscal year ending March '26 is JPY 70 per share, unchanged from the previously published forecast.
Next, Mr. Fujimura will present the details of the results.
Allow me to present the results. The group unit sales during the 6 months to the second quarter were as follows: compared to the same period last year, for Motorcycle operations, though there was a decline in Vietnam with growth mainly in Brazil and the Philippines, it came to 10.763 million units. For Automobile business, it came to 1.68 million units due to declines mainly in China. For Power Products, though there were declines in Asia, Europe led the growth and the total came to 1.699 million units. The consolidated results during the 6 months to the second quarter were as explained earlier.
Next, I'd like to present the factor analysis of operating profit for second quarter compared to the same period last year. Operating profit was JPY 438.1 billion, down by JPY 304.4 billion compared to the same period last year. Factors affecting the operating profit were: first, impact from sales was positive by JPY 83.9 billion due to expanding motorcycle unit sales. Selling price and cost factors was an increase of JPY 162.4 billion due to effective price revision. Expenses gave us a negative impact of JPY 26 billion. R&D expenses led to a profit decline of JPY 20.4 billion. Currency effect resulted in a negative impact of JPY 116.2 billion. EV-related and onetime expense led to a negative impact of JPY 223.7 billion and impact from tariffs led to a profit decline of JPY 164.3 billion. Our trial calculation, excluding the EV-related onetime expenses and the tariff impact, comes to operating profit of JPY 836.2 billion (sic) [ JPY 826.2 billion ], on par with the same period last year.
Regarding operating profit by business segment, Motorcycles, JPY 368.2 billion; Automobiles, JPY 72 billion of losses; and Financial Services, JPY 143.2 billion profit; and the Power Products and other businesses, we put up JPY 200 billion of losses. Operating profit of Motorcycles business was JPY 368.2 billion, up by JPY 42.4 billion year-on-year due to the following factors.
Regarding sales impact, JPY 60.2 billion increase by additional sales volume mainly in Asia and South America. Regarding price and cost impact, profit increased by JPY 32.3 billion due to the effective price revisions and so on, JPY 7 billion decline of the profit due to expenses, JPY 3.5 billion positive profit by R&D and JPY 41.3 billion profit decline due to the foreign currencies and JPY 5.3 billion decline of the profit due to tariffs.
In Automobiles business, operating profit declined by JPY 351 billion year-on-year, resulting in JPY 72 billion operating losses due to the following factors. Regarding sales impact, profit declined by JPY 24.5 billion, accounting for the losses associated with the restructuring of the group companies. Price cost impact, increase of the profit by JPY 130 billion due to the effective price revisions and so on. Expenses, JPY 33.8 billion increase of profits. Research and development, JPY 24.4 billion decline. Foreign currency effect, JPY 64 billion decline. Onetime EV-related expenses, JPY 223.7 billion decline. And tariff impact, profit declined by JPY 158.1 billion.
Next, regarding the cash flow situation. Free cash flow, excluding Financial Services business was JPY 760.6 billion. Net cash balance at the end of the first half was JPY 3,053.9 billion and operating cash flow after R&D adjustment was JPY 1,281.3 billion.
Next, I'll explain consolidated forecast for fiscal year ending March 2026. Regarding the group's unit sales as compared to the previous forecast, in Motorcycles business, reflecting reduction in volume in Asia and increase in regions mainly in Brazil and others, we will maintain the volume of 21.3 million units. In Automobiles business, in addition to the volume decline mainly in Asia, we reflect a volume reduction by 110,000 units in North American region due to the impact of the semiconductor shortages. Thus, we would expect the volume to be 3.34 million units. In Power Products business, there are some regional reviews to be reflected, we will keep the previous forecast of 3.67 million units. I've explained the consolidated business forecast of the fiscal year ending March 2026.
Next, I'll explain factors of ups and downs of operating profits year-on-year. The operating profit would decline by JPY 663.4 billion year-on-year because of the following factors. Regarding the sales impact, although losses were put up in conjunction with the group company's restructuring, thanks to the unit volume increase of Motorcycles and so on, we expect the profit to increase by JPY 3.3 billion.
Regarding price and cost impact, JPY 280 billion increase of the profit is expected due to the price revisions and so on. Expenses declined by JPY 91.5 billion. R&D expenses declined profit by JPY 126 billion. Foreign currency impacts declined by JPY 214 billion, and gross tariff impact decline of profit by JPY 385 billion. And the potential decrease of the production volume due to the semiconductor supply shortages is incorporated in the forecast based on the current assumptions, which would be JPY 150 billion negative.
Next, I'll explain the factors behind the operating profit changes in expectations comparing to the previous forecast. Operating profit is expected to decline by JPY 150 billion from the previous guidance because of the -- regarding the sales impact, incentive hikes and unit sales decrease of Automobiles and so on, the profit would decline by JPY 83 billion.
Regarding price cost impact, we revisited the recovery from the tariff impact. Thus, the profit would decline by JPY 70 billion. Regarding foreign currency impact, because of changes of the exchange rate to JPY 145 for $1, JPY 88 billion positive profit on that. For tariff, we scrutinized the impact in values, and it will be JPY 65 billion positive. And regarding semiconductor shortage, the impact will be JPY 150 billion negative for the profits. Lastly, this is the forecast of the capital expenditures, depreciation and amortization and R&D expenditures.
That is all. Thank you very much for your attention.
Thank you very much for your attention. Then we'd like to proceed to the Q&A session. [Operator Instructions].
Okay. The first question, Ms. Ukita from Yomiuri Newspaper.
I hope you can hear my voice.
Yes, we can.
My first question is, so the Motorcycles is operating great. And then for Automobiles, it's JPY 73 billion losses. So I'm sure there are tariffs and semiconductor impact. But I just want to ask for your input or your general comment on your prospects for the future.
Okay. Let me take that question, our overall perception. And then for details, I will ask Mr. Fujimura for some more comments. First of all, so for Motorcycles, we had the best record high results. So we had a decline in Vietnam. But in Brazil and Thailand, we were able to maintain our good profit. For the second half, so for the full year, we expect things to proceed fairly well. So we need to be considering about whether we can cover the potential decline in Vietnam. But I think generally speaking, it should be okay.
For Automobiles, so the ICE and HEV gave us some cash so far. Now we need to spend that money into intelligence and hybrid -- sorry, electric vehicles. So we have been doing okay. In North America, we had the HEV good sales revenues. So we believe that the profitability has been increasing -- improving. However, because of the tariff directive and also due to the changes in environmental regulations, so the business environment has been changing dramatically.
For tariffs, I think compared to other OEMs, we have a pretty high local procurement ratio in North America. So in that sense, I think the impact should be limited. Still, we have over JPY 300 billion impact. So for the tariffs, actually, in a sense, as Mr. Fujimura mentioned, we consider this as a new normal, which we believe would continue for some time. And while we can maintain the good results in North America, the sales volume in China and Asia has been declining. Particularly in Asia, the profitability in the ICE worsened beyond our expectations. So we would need some fundamental changes in actions for those.
So for future actions, what we are thinking of, we need to maintain the build in Asia and Oceania, the profitability structure to make gains from ICE and HEV. So the number of models and the number of volume, so we need to revise our investment plans, so that we need to further reinforce the competitiveness of HEV. So we need to further enhance the profitability in ICE and HEV. So we do need to review our product lineup, and then we need to focus our attention in our profitable models, and then we need to invest in those. So we need to really bring up the overall volume. And in particular, in line with the current situation, we need to rationalize the fixed expenses. I think that's something we need to work on quickly.
And also for BEV, so far, we have been, well, making quite a lot of expenditures. So for future by shifting over to our own BEV, so we would need to have a breakeven at least. So we need to curb the losses, I would say, going forward. And then for tariffs, as I mentioned, we believe this is going to continue into the future as well. So we want to go by the policy of produce where there is demand, so that we can combat, through our supply chain, the impact from the tariffs. That's something we will continue. Particularly for the improvement of profitability for Automobiles, that's something we need to do. And overall, we need to improve our profitability overall.
Anything you want to add in terms of number?
Okay. Ms. Ukita, thank you for your question. This time, we have the JPY 438 billion. So the Automobiles is JPY 73 billion losses. And then for Motorcycles, it's JPY 370 billion positive. So for Motorcycles, it's the best highest record. So those are pretty peculiar numbers that we've got here. But as we've mentioned from the beginning of the term, there's a lot of noise from kind of external factors. So to add a little bit about the JPY 438 billion, we have this impact, this negative of JPY 450 billion. That's the onetime cost. So the JPY 890 billion, that's our normal standardized performance, I'd say.
This JPY 450 billion negative, as introduced in the material, we have JPY 160 billion due to tariffs and then the EV provision for losses, we will allocate JPY 250 billion throughout the year. So we have put it in the budget. And then of that, we allocated JPY 225 billion of that into the first half. And then we have the group restructuring. So we have some losses from the transfer of our subsidiary, which is JPY 43 billion. And also in the financial operations and in the U.S. and the U.K., we had some settlement of like JPY 20 billion for litigation. So put them together, it's JPY 890 billion. So we have like JPY 20 billion for financials, but most of this was related to Automobiles. So all of those included, we have this JPY 73 billion losses for Automobiles. So versus the plans, as I mentioned, those noises or the external factors had almost been incorporated. What may have been excluded may have been the financial operations and then also the Asia and China volume decline. Those were worse than our initial anticipation.
So for the impact for the full year, at the beginning of the fiscal year, what I mentioned was that we were thinking of JPY 500 billion. That was the target that we mentioned at the very beginning. But compared to the last fiscal year, we have a negative JPY 450 billion due to exchange rate, and we need to recover from that. So that's another tariff, JPY 450 billion, so JPY 900 billion. So all of that put together. So JPY 1.4 trillion, that's our actual performance. But we put it together, the prospects or the forecast for the year is, against the JPY 550 billion, because of the exchange rate, semiconductors and the tariffs, it came to like JPY 1.3 trillion. That's about the idea we have.
Initially, we used to say JPY 1.4 trillion. That we said JPY 1 trillion was the Financial operations and Motorcycles, and the rest was Automobiles, and then the battery EV of JPY 600 billion negative. But for the Motorcycles and Finance, we have the Vietnam in decline, but we used to say JPY 1 trillion, but we have recovered. So it's JPY 1 trillion is okay. But for the JPY 100 billion decline, at that time, we were thinking of BEV losses from JPY 600 billion, but we had a provision of JPY 50 billion. So put that together, JPY 650 billion.
We used to say ICE of JPY 1 trillion back then. Now that came down to JPY 900 billion. That's as far as it declined. So putting those together, because of our business structure, as Mr. Kaihara mentioned, first, we need to reboost our profitability in the ICE. And then for battery EV, it's JPY 650 billion. This is the gross profit of JPY 250 billion. That's all for the provisions. Now we have ended putting in the provision. So we're going to start the -- we will try to eliminate -- we will try to bring down the negative from the gross profit level as close as 0 to possible. The rest will be for R&D expenditures. So probably we will come to JPY 450 billion. So that will be the baseline for the next year. And then for the tariffs as well, of course, net, we do have JPY 330 billion or so impact. So we will need to work through those, how much of this recover in a few years.
I just mentioned P&L a little bit, but the cash expenditure control is well in place. So if you look at the balance sheet and the cash flow, the strength of those are continuing as well. So particularly for the cash control, we need to have a good monitor over that. And then with the need to recover our P&L for the Automobiles quickly. And then having said that, of course, we need to put in our resources to prepare ourselves for the future. So we want to put those together.
And then we want to do a stable dividend with the DOE. So we want to be able to provide a stable dividend to our shareholders as well. So we want to have a good P&L and balance sheet balance. We want to have a good, well-balanced structure. And so we want to recover our profitability for the time being now and also get prepared for the future. For Automobiles, as I mentioned, we do have a keen sense of crisis, and then we are ready to take actions. Thank you very much.
One more question, may I? You said already perhaps about impact by the chips. It's already incorporated in those values, about JPY 150 billion. And in North America, there is this impact in reality. But what is the prospect for the procurement? And do you think the situation will improve or getting worse? Do you have a risk of such? Please tell us?
I will answer the question then. So for the semiconductors, for the customers, suppliers, we are causing the troubles with that. Sorry about it. As we said right at the beginning, it's already reported in the media, a company called Nexperia. The chips from the company has been stopped, suspended. Therefore, we have impact on the procurement. And then we work together with the Tier 1 manufacturers to try to minimize the impact on the production. And as for the 27th of October, in the production plant in North America, we are adjusting the production situation today. So as of now, we have an impact of 110,000 units that's reflected. And then I said JPY 250 billion, but operating profit of JPY 150 billion that is put up in this announcement today.
And I heard that shipment has resumed in China now. And we have already started our communications to the suppliers, and we are trying our best so that we can get supplies of those chips as much as we can. And going forward, it is difficult to tell definitively. But as of now, in the week of 21st of November, probably in that week, we wish to resume our production eventually, and we are trying to achieve that now. And as of today, the parts that are coming up now back in the network and then getting better, and we are seeing some signs. However, it is not definitive as of yet. So we are communicating with this very closely, so that we can try to resume and that is the situation today. Thank you.
Thank you. Thank you to Ms. Ukita as well. We'd like to take the next question from Nikkei Newspaper, Mr. Okinaga, please.
This is Okinaga from Nikkei Newspaper. For the impact from Nexperia, I'd like to ask another follow-up question. So why has Honda suffered such a big damage? And then you said that you hope to start production on the week of November 21. But have you considered procuring alternative parts? So do you think that the impact should not go beyond JPY 150 billion?
Okay. First of all, so the reason why we have this much impact is this time, the components -- well, I cannot give you any details about the component, but the components was sourced from one supplier. That was one major factor. And another thing is, in the past, for semiconductors, yes, we have had some impacts such as this. So we have worked together with the supplier to hold the kind of interim inventory or appropriate inventory level. We asked them to hold that. That has happened. However, it was single sourced. And then also in North America, the sales have been going very well that we have been producing almost at full capacity. So in that sense, well, the interim inventory was getting low as well. So because of that, the supplier was impacted. Then promptly that impact led to impact our production as well.
For whether we are considering some alternative sourcing, of course, yes, we are considering alternative, let's say, products or off-the-shelf products. So to the extent we are able to find out, yes, we are using them. So at an as early stage as possible, we want to apply whatever we can utilize. So that is why sometime during the week of November 21, we believe we should be able to resume production.
So for future supplies in China, if they ever stop shipping shipment again, we will never know the impact. But should that ever happen, if you're asking me, that's going to be another impact. I cannot say for 100% sure, no. But at this point in time, as far as we know, from the intelligence that we have, we should be able to resume operation by the date that I mentioned. That concludes my answer. Thank you very much.
I would ask another question. The reason for your downward revision. So at August, you said JPY 650 billion EV-related onetime expenses. Has this gotten better? And then for sales, in North America, I think is it difficult to raise prices in North America? So that turned out to be negative. So I just want to know the reason. And then you said that you want to bring down the gross profit -- gross losses to 0. So I would like to ask about what you plan to do.
Okay. Thank you very much for the second question. Let me try to answer that. For the EV-related onetime expenses -- sorry, first, the tariffs impact. Against the number that we gave you last time, we have been able to minimize the impact. So therefore, our profitability, it is getting better. And then for the EV impact, we have put in some more amount. So in that sense, the impact has become greater.
For the price hikes in North America, initially, for North America, we were assuming that we will be able to raise prices and then we have been prepared for that. However, price hikes, it's nothing we can do easily by ourselves. So we need to evaluate the market situation. What has happened is that in North America, particularly in the U.S., other OEMs incentives have been getting higher. So the actual market selling price has not gone up in real terms. Therefore, of course, we have done the annual price revisions. However, looking at the other companies' status, we found it difficult to raise prices due to the tariffs impact. So we were not quite able to gain that positive impact due to the price hikes that we had anticipated at the very beginning. Unfortunately, we cannot expect that. So for the second half of this year as well, for the price hike, I don't think we can really expect good impacts to come from that at all. That completes my answer.
So I'll explain those numbers in addition. And then last time, JPY 450 billion negative gross tariff impact and then JPY 100 billion recovery, so JPY 350 billion net impact from tariff. And then this time, gross JPY 385 billion. And actually, gross impact is less of JPY 685 billion. And then recovery is about JPY 150 billion, and net impact is about JPY 335 billion. Eventually, that is the net impact. And then the gross impact, JPY 650 billion. Of course, we had an accurate understanding today. But for as much as JPY 500 billion, we have export from Thailand or Asian countries to U.S., and we were concerned about a possible recession and its impact over there. So we incorporated that in our expectation before, but now we released it. And that means we have less of JPY 650 billion from gross. And then we have a net recovery from JPY 1,100 billion to JPY 650 Billion. Actually, in the Automobiles market, it is difficult to revise the prices. So therefore, we need to delete that part for the Automobiles, and that is why we have those numbers.
Thank you very much, Mr. Okinaga. So if you have questions, please tell us 2 questions in sequence. Okay. We'll take the next question from Yasunaga-san from NHK.
This is Yasunaga from NHK. Can you hear my voice?
Yes.
Just one question because others have asked the same questions. In the Automobiles business, China and Asia, you had some declines, you said. But in your company, you are very much struggling with your sales in China. That's the impression. So there was GT. GT's launch timing has been postponed. I'd like to hear about the facts about it. And then what are you going to do? And then where is the difficulty of the market. So I'd like to hear about that.
Okay. Thank you very much, Mr. Yasunaga. For the China market, let me try to answer that question. For Chinese market -- overall market, actually, because of the incentive has been reduced. So the total market has been declining slightly. But basically, it's sideways movement. That's the total market. And then for this time, for Honda, particularly for ICE, well, actually, the price discount has been staying at a high level. So we have been struggling a lot. So in a sense, value for money, we are behind others. We are aware of that.
And then for BEV, so for the features, the NOA, navigate on autopilot, that's not provided on our cars. So people consider our cars pricey. And then other companies put in this to put the momentum and then offer it at a lower price. So that is why it's difficult actually. And then that is the situation in China.
And then for electric vehicle, as pointed out earlier, the E-Series, the 1, 2 and 3 were in our horizon, but we felt the need to completely review this. So we came up with a GT we had assumed. However, we did have to postpone it in reality. So this we were thinking of next year -- initially, for next fiscal year, sorry. However, we will, for the time being -- I cannot tell you exactly when that's going to be, but we will postpone that. And then from the planning stage as well, we need to consider right from the planning stage how we want to launch this model. So for electric vehicle, this current situation will continue for some time.
And then against that kind of business environment, for ICE, we need to make solid sales from those. Fortunately, we have completed depreciation of all the factories. So we need to enforce our business structure in the indirect and then also optimize manpower and then do a more precise sales prediction and then we'll try to make our business more profitable. That is what we are doing right now. And then this is all I can say for now.
Thank you very much, Mr. Yasunaga. Next question from Asahi Shimbun, Mr. Miura, please.
Miura from Asahi Newspaper. I have 2 questions. One, in the Motorcycles business, Vietnam, you had a decline of their businesses. And then they had restrictions on the electrification vehicles. And how much of those impacts did do you incorporate in this statement? And then what is your action against it?
And question 2 is about Automobiles, about specifically EVs in China. And you said that you're going to have a radical action. And then what is the reason why you have a struggle in the Chinese market? What do you think is the cause for that?
Mr. Miura, thank you for your question. To start with Vietnam for Motorcycles. In Vietnam, as you know -- well, it is not yet implemented in the market; however, ICE motorcycles now would be regulated, especially in the city area. And then they said that they might apply this new regulation starting middle of the next year or so. However, with that in place, actually, when the announcement was made last summer, people started refraining their buying of the products. And then we were expecting some negative impact on the Vietnamese business. However, in October, we are seeing the business is coming back slightly. And then probably other things that this regulation is still only -- we don't know if that is practically to be applied in Vietnam. So for some time, probably current model of the ICE-based vehicles will suffice. And then, of course, electrification will start sometime later. And then starting this year, we have already launched the 2 ICON e and CUV e, those 2 electrified vehicles over there in Vietnam and the idea is to try to sell more of those EV over there.
And in Thailand, we have a plan to start the production of a new EV model. And we are thinking about accelerating the start of this model production. And sometime earlier next year, probably in March, April time next year, we would like to try to bring over those new EVs to Vietnam. So even when they have the new regulations practically in place over there, we can offer the EV vehicles over there. So this time, we are expecting unit volume be a little bit less. However, we have Brazil businesses and Thai businesses quite well. So that will compensate for the situations in Vietnam. So that is our Motorcycles business in Vietnam.
China EV, may I?
Please.
So EVs in China, as we said earlier, basically, Ye series, the new products are over there. And looking at the vehicle in comparison to others, for instance, the price range, they are higher, more expensive than the other products; CNY 150,000 for other products, whereas ours CNY 200,000. And our product is not price competitive so much. And also, we have NOA, navigation on autopilot system. It's an automated driving system, basically. The competitors' product have NOA; however, not on our product yet.
Therefore, going forward, we will change the models in the future, and we will try to do that earlier. And the moment the local autopilot system could be obtained so that we can add this autopilot system to our products. Doing so, we can strengthen the intelligence of the products and also cost competitiveness, we need to approach, to0. So currently, we are trying to expand the local procurement in China. That way we can improve the competitiveness of the product, and that is what we are trying.
The next question from Toyo Keizai Weekly, Yokoyama-san, please.
This is Yokoyama from Toyo Keizai.
Yes, we can hear you all right.
I have 2 questions as well. The first question, your full year prospects with the impact from semiconductor JPY 150 billion, and then you have JPY 450 billion profit, and then you are thinking of JPY 550 billion. So I guess you do have quite a plan for your profit to suffer in the second half. So can you give me some numbers about what the factors why you see a lower profit for the second half?
And my second question is for the profitability in Automobiles business. So right now, for the Automobiles, the ICE IOS, 8% is what you're thinking about for the ICE. For BEV, you're going to have your own battery and then you start from 0 gross profit. But when would it turn into profits? When would it? And also, do you have any additional measures to gain more profits? So I think it might be difficult sensitive whether you're going to get into the profit for the Automobiles this year. So I just want to know.
Okay. First of all, thank you for the question, Yokoyama-san. For the difference between the first half and the second half, of course, we have this JPY 150 billion tariff impact that will continue in the second half as well. But on the onetime expense, we have the BEV provision that was in the first half. So those would offset each other. Well, that's what we expect it to do. And then for the first half and the second half, there will be a negative of JPY 40 billion about the foreign exchange and the rest will be the substantial portion. Maybe it's better to tell you the numbers. We have JPY 440 billion, and it goes down to JPY 110 billion. So JPY 320 billion, that will be the difference between the first and the second half. So let me explain that, first of all.
So as I said, with the semiconductor and the onetime expenses, those will offset each other. And then so JPY 320 billion and then we take away JPY 40 billion for the impact and then JPY 290 billion, that would be the actual substance difference. So concerning this difference between first half and second half, as you can imagine, so the expenses and R&D, there is a difference between the first and the second half. I hope you can see that, which is [indiscernible].
And then for quality-related issues based on the sales base, there's a bit of a difference in calculation. But anyway, those are mainly those numbers. Incentives, when it comes to incentive, we have this negative of 110,000 units decline in North America. We don't know how we're going to use this incentive. But going by the original expected volume for North America, we were able to keep the original target. However, maybe we need to increase the incentive a little bit. But now that accounts for the difference between the first half and the second half. We have not really decided -- we need to discuss with American Honda how we're going to make those work actually. Okay. That's all for the numbers.
Okay. And then let me try to answer the rest about the EV, the gross profit for EV. For North America, that's the assumption for the answering my question. So this year, we do have losses. We have JPY 650 billion. We have that. So this includes onetime expenses as well. So next business year, I think we will start from a JPY 400 billion range level, that level. And then from there, of course, we won't have the IRA subsidy. So the business environment is very, very challenging. So because of that, we cannot be pursuing a far larger sales volume.
However, we do have good prospects for the supply from GM. So now we will have more and more BEV of our own development. So now we need to think about focus on how to reduce the manufacturing cost for own BEV, and then also, it's important to consider whether we can produce at a very efficient way. And then with those efforts, we need to minimize the losses to the best we can. However, looking at the market, it's very difficult to read how the market would move. So at the very beginning of mass production, of course, the burden of fixed cost will be heavy. So we just need to work on how best we can flexibly produce, reduce cost so as to enhance or improve profitability. If you ask me when, I guess all I can say is that as soon as we can, we want to make it to profit. Thank you.
So the Automobiles business, at this time do you have any disclosure for the expectations, the profit or losses?
So we do not disclose as per product levels. JPY 550 billion, and we have to subtract from that level. So for the Motorcycles, it will be about JPY 600 billion to JPY 700 billion, same as last year; and JPY 300 billion for Finance, like last year. And both together, we would earn JPY 1 trillion. We said that, and then we could actually assume from that. For the Automobiles, we would end up in losses. But for EV, onetime JPY 250 billion; for also chips, onetime JPY 150 billion again. Both together JPY 400 billion negative altogether. Plus this term, we have a tariff impact as well on the top. So the number will be including all those factors. And then as we said before, we need to earn money, revenue based on ICE; and losses coming from the BEV should be controlled better. And not just P&L, we have to look into the spending out of the cash flow. We have to control the time line of spending too. So that is how I'd like to manage.
I do see a lot of hands raised, but due to the time restriction, we'd like to make the next question the last. From TV Tokyo, Ms. Nagaya.
Can you hear me?
Yes, we can hear you.
One question. For this fiscal year's forecast, 3 months ago, you revised upward. But this time, you're revising downward. So when you make the forecast, are you -- I just want to know about the approach, are you being very conservative? The second is your forecast for the unit sales for -- I think you covered a lot of China. But excluding China, for other ASEAN markets, I think there is a bit of a decline. Compared to 3 months ago, we are struggling in Asia so much. What's the reason? What are the factors?
Thank you very much for your question, Ms. Nagaya. So how to put up our plans. So I wouldn't say we are conservative putting together those plans, because usually, the idea is that the transparency is our focus. So whatever we get to know, we try to incorporate in those explanations to give you the explanation. And then tariff issue, for instance, we would have those -- the alleviation of tariff impact and then calculating all those returns, refund, we would have that much of refund included. And then these are the well calculated impacts. And exchange rate, ForEx, for JPY 70 billion plus, we include that too. The chips, that is the extra one, that is a bit of a special one, but JPY 50 billion tariff impact that is included, as we said, and plans are put together based on the principle that it is not always conservative. Please be acknowledged about it.
And then the forecast of the unit sales in ASEAN regions, the decline of the unit sales is a bit significant as what you said is quite right, because in ASEAN region, the unit sales, the volume is expected to be down a bit, 750,000 units less. So it is a significant reduction as compared to the first forecast. And then especially Indonesia, Thailand, in those countries, or Malaysia as well. There are the government policies to be looked at also and also the market is a bit shrinking too, because of which we have expected a reduction of the volume in Thailand.
The competitors' competition is something that accounts for the situation too. For instance, selling prices, we are losing price competitiveness against the others. And so sales are stagnant, and we need to react and take actions against the situation, especially in ASEAN countries. We need to have radical measures against it. And then from this term -- next term, next year, we do not have a new launch models, big minor change of the city. That's one thing I can share with you. And then the big minor change of the city, the timing of that could be a kind of opportunity to take advantage for us to get back to the ASEAN market. But nevertheless, the ASEAN market is tough. And because of that, we decided to revise our expectations.
And then again, the conservativeness about the volume expectations. It is rather a solid conservative number, I thought. And also you mentioned about the competition of the competitors. Would that include the Chinese supplier, that is always the case. Is that right?
So in terms of the volume of the sales, this is the number that we will commit to achieve. That is how we set up this volume. And about the competitors, of course, the Chinese suppliers, their accounts as well. But in the ASEAN markets, there are emerging Chinese products coming in. And against them, the existing manufacturers are providing more incentives, prices are kind of discounted against Chinese. And then that is making the situation more competitive in terms of the prices. That is the market situation over there. Thank you very much. Thank you, Ms. Nagaya.
Okay. Thank you very much. We would like to close now the financial results briefing. The material is listed on our website. So please refer to it. Thank you very much for your participation.
Thank you very much.
Honda Motor — Q2 2026 Earnings Call
Financial data from Honda Motor
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 22,517,856 22,517,856 |
4%
4%
100%
|
|
| - Direct Costs | 18,637,432 18,637,432 |
9%
9%
83%
|
|
| Gross Profit | 3,880,424 3,880,424 |
14%
14%
17%
|
|
| - Selling and Administrative Expenses | 2,517,211 2,517,211 |
5%
5%
11%
|
|
| - Research and Development Expense | 1,490,962 1,490,962 |
27%
27%
7%
|
|
| EBITDA | 1,170,271 1,170,271 |
31%
31%
5%
|
|
| - Depreciation and Amortization | 1,298,020 1,298,020 |
77%
77%
6%
|
|
| EBIT (Operating Income) EBIT | -127,749 -127,749 |
113%
113%
-1%
|
|
| Net Profit | -169,696 -169,696 |
127%
127%
-1%
|
|
In millions JPY.
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Honda Motor Stock News
Company Profile
Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services. The Power Product and Other Businesses segment offers power products and relevant parts. The company was founded by Soichiro Honda on September 24, 1948 and is headquartered in Tokyo, Japan.
StocksGuide Premium
| Head office | Japan |
| CEO | Mr. Mibe |
| Employees | 194,173 |
| Founded | 1948 |
| Website | www.honda.co.jp |


