Honda Motor Company, Ltd.

Thank you very much for viewing Honda Motor Company Limited's live broadcast of financial results announcement for the second quarter of the fiscal year ending in 21. My name is Watanabe from Corporate Communications, the moderator for this announcement. First of all, I'd like to introduce the attendants attending today. We have Mr. Seiji Kureishi, Executive Vice President, Representative Director. Good to see you, everyone. And then we have Mr. Kohei Takeuchi, Senior Managing Director. Good to see you, everyone, as well. This financial results announcement with the COVID impact, we have no audience on site, and this is going to be a live broadcast. Thank you very much for your understanding and cooperation. So first of all, we'd like to have Mr. Kuraishi, Executive Vice President, to explain the financial results for this term. The COVID-19 which spread around the world since the end of the fiscal year ending in March 2020 continues to rage around the globe even today, bringing serious damages to the economy. However, in the second quarter of this fiscal year ending in 2021, economic activities have been reopened in many markets with resulting gradual recovery in demand. In some markets, the second wave of the pandemic has arrived and the situation remains unpredictable, but Honda will continue to be thorough in its actions to prevent infection and proceed to supply products to the market in a timely manner. Now, I would like to present to you the outline of the financial results for the second quarter and the full year forecast for the fiscal year ending in 2021. Starting with the unit sales of Honda Group cumulative to the second quarter of this fiscal year, it was 6,302,000 units for motorcycles, 2,045,000 units for automobiles, and 2,453,000 units for life creation business. Next, I'd like to explain the situation in each of the main markets. First, to look at the Japan market, the total market is showing a moderate recovery from the impact of the COVID-19 since May. However, due to the last-minute demand before the consumption tax hike in the previous year, the total demand was considerably lower than compared with the same period last year. Honda's unit sales undercut last year's number, but looking at the unit sales by model, N-Wagon and New Fit surpassed the sales in the same period last year, meaning a recovery in the second quarter. LBOC series set number one in new car sales for the first half of the fiscal year ending in 21. Our outlook for the total market demand for the fiscal year ending in 21 remains unchanged from the previous forecast. and it is expected to be lower than previous year. Due to the market slowdown, Honda expects to see lower sales compared to the previous year, but in view of the recent sales results, we have revised our forecast upward from the previous forecast.

In the U.S.

market, the total market demand has been gradually recovering since May due to the phased easing of regulations and economic activities and reopening of the TDO business. But demand was lower than the same period last year due to the decline in the fleet market. Honda's unit sales were lower than the same period last year, but we are seeing recovery at a better-than-market pace, mainly with CR-V and Civic, and Civic maintained the lead in this segment with its high product features. Also, at the end of September, a new TLX was launched as well. Total market demand for the full year ending in 2021. Beginning with the second half of September, COVID-19 cases have been increasing again in number, mainly in the Midwest, so the outlook remains uncertain. The forecast is for lower demand compared to the previous year. Honda expects to see lower year-on-year results in the face of this uncertainty of the market. Next, looking at China. In addition to the resumption of economic activities, consumption stimulus measures were taken so the total market exceeded the same period last year. Honda has favorable sales of models such as Breeze, Vezel, and XRV. And also in the second quarter, we launched three models, namely Civic Hatchback Fit and Envix Hybrid, which actually brought us better than market growth. From July to September, single-month sales results marked record high numbers consecutively for those three months. For calendar year 2020, the total market demand exceeded that of last year from April to September, but as the market took a huge decline due to COVID-19 in January to March, the impact of which could not be fully recovered, so the total market is expected to be lower than last year. Honda, with the launch of new models and running factories at full capacity to increase supply to the market, is aiming to exceed sales higher than previous year. We have revised our forecast upward from the previous forecast on the basis of the recent sales report. Now turning to motorcycles. The impact of COVID-19 differs significantly from one country to another. In China and in the U.S., due to the trend of using motorcycles instead of public transport, added to the heightening outdoor leisure demand, the market has almost fully recovered. On the other hand, in Asia, the largest market, in addition to the impact of COVID-19, due to the tightening of long screening criteria in Indonesia, the market contracted in Asia year on year. Honda, despite strong sales in China and the US, and in India and Brazil, we started production in June and it's steadily recovering sales, but still we saw its sales fall below the same period last year. The total market demand for the fiscal year ending in 21, we expect that even though the recovering trend continues in many markets, Indonesia will still see continued decline in personal spending due to the tightening of loans, therefore no prospect for rapid decline, that the market will be lower than the previous year. Honda expects lower sales in Indonesia and some other markets, but higher sales in markets including India, Brazil, and the U.S. So our forecast on a global basis is for sales equivalent to the previous forecast. Now moving on to the outline of the six-month results for the fiscal year ending in 2021. The first quarter brought us a very challenging situation with the impact of COVID-19. But with this environment of living with COVID, we have proceeded with solidifying our existing businesses further, and at the same time, we have made a fundamental review of our business activities across all areas to secure a strong, resilient business constitution that supports future growth. As a result, better control of SG&A expenses and cost reduction, those brought us a turnaround from the first quarter, bringing an operating profit of 169.2 billion yen for the sixth month. Profit for the period under review was due to the contribution from profit from investment based on the equity method. It was 160.0 billion yen. Unit sales and income statement are as shown on the slide shown here. Moving on to the forecast for the fiscal year ending in 21. For unit sales, we have increased our automobile forecast from the previous forecast considering the favorable sales in China and other markets, and also increased our life creation business forecast in view of the strong sales in North America. For operating profit, incorporating the business constitution reinforced in the first half, where our estimate is 420.2 billion yen, an upward revision of 220.0 billion yen from the previous forecast. Though the future of the market remains uncertain due to the COVID-19, but with our initiatives to curb SG&A expenses and to reduce costs further, Honda will aim to enhance its business characteristics further. Profit before taxes, due to the increased investment profit share due to the equity method, are expected to be 660.0 billion yen. Once again, the unit sales and income statement are as shown. Next, about the dividend. Forecast for the full-year dividend for the fiscal year ending in 2021 is Due to the operating profit and the increased investment profit based on equity method, compared to the previously published forecast, dividend per share is increased by ¥24 to ¥68 per share, and for the end of second quarter, it will be ¥19 per share. Next, I'd like to hand over the microphone to Mr. Takeuchi, Senior Managing Director, Chief Financial Officer, to present the details of the financial results and forecast.