Honda Motor Company, Ltd.

for spending your time to join us here today at the announcement of Honda Motor Company's FY21 financial results. And I'd like to convene the meeting. I'll be serving as the emcee. My name is Okamoto from Corporate Communications. Thank you. First, allow me to introduce the executives attending. Executive Vice President Seiji Kuraishi. Senior Managing Director, Kohei Takeuchi. First, Executive Vice President, Kuraishi, will give the outline of FY21 financial results and FY22 financial forecast, please.

Let me explain FY2021 financial results. First, regarding FY2021 unit sales of Havi Groups, For motorcycle businesses, 15.132 million units. Automobile businesses, 4.546 million units. And light creation businesses, it was 5.623 million units. I'll explain main market situations next. Total market in Japan dropped from last year due to COVID-19 pandemic impact. M-Box and others mapped strong sales results. However, hundreds of sales declined year on year. M-Box series won the top unit sales out of the new launches in mini vehicle segment for six years in a row. In March, we launched a new legend in Japan equipped with the Honda Sensing Elite, which is the world's first automated driving technology level 3. Total market in FY 2022 still remains uncertain going forward due to the concern of resurgent COVID-19. However, Honda expects the results will exceed the year before thanks to the effective launch of a new model vessel. Total market in the U.S. declined year-on-year. Nevertheless, as the gradual reopening of economic activities since May, the market slowly recovered, though it ended up still below the last year. Honda recovered their businesses mainly with a CR-V and pilot. finally being close to the market results. During the fourth quarter, many of light track models have upgraded those sales records of the month of March, outperforming the market growth. Total market for 2022 is expected to be better year-on-year thanks to increasing vaccinations for COVID-19 and efficient economic policies. Honda will enjoy the effective launch of a new model Civic, as well as the sales expansions, mainly with the light trucks, so that our results will exceed the level last year. The total market in China exceeded the level of last year, with effective and stimulative measures for consumption by the government. Honda enjoys a strong sales over breeze, CRV, Vizzle, and so on. And thanks to the extended EV lineups across leading models, we have marked the record highest sales units so far. Regarding the total market of the calendar year 2021, we are expecting the growth from the year before along with economic recovery. Honda will launch new models and will further improve EV lineups aiming for this highest sales result than the preceding year. In April, in Shanghai Motor Show, Honda made a world premiere showing of a SUV, e-prototype, or the first Honda brand EV in China. Moving on to the motorcycle business, The markets have recovered in China, US and Suwon, its largest market of Asia, showing a moderate recovery. However, it resulted below the level last year. Honda's results declined year on year. In India, since third quarter, the sales recovered to the level same period last year. In Indonesia, the sales of the fourth quarter have recovered to 83% of the same time last year. China and Pakistan exceeded the level last year. Total market of FY 2022 is expected to grow from the year before, despite the concern of the COVID-19 flare-up. Honda expects the sales to exceed year-on-year, mainly in Indonesia. Let's conclude our financial performance of FY 2021. Despite the declining demands due to COVID-19 impact, we have revisited our business activities to control SG&As and to reduce costs, and with the positive effect of credit loss provisions in this term for the financial businesses, the operating profit was 660.2 billion yen, outperforming the year before. Profit attributable to the owners of the parent was 657.4 billion yen, also favored by the increased investment of profit based on equity method. This slide also presents a unit sales and P&L. And next, With regard to the FY2022 forecast, we plan to increase unit sales year-on-year across all business areas of Honda Group. Regarding operating profit, albeit the impact by soaring raw material prices and concerns over supply shortages of semiconductors, as well as the effects of accredited loads provisions, We will press forward the actions to increase unit sales, to optimize our production capabilities, to improve efficiencies of product manufacturing, and to fortify existing businesses expecting to achieve 660 billion yen this year. Regarding the impact of the semiconductor supply shortages, as of now, we are withholding production at some facilities. Supply situations of those parts are changing day by day. However, Harvard managed to coordinate the production activities globally so that we can minimize its impact on production throughout the year. For the expected business performance, we plan to defend 660 billion yen operating profit by catching up with the production together with our corporate efforts and etc. Speaking of dividends, Annual dividends for FY 2021 is ¥110 per share, with ¥28 more added to the previous expectation we announced, and dividends for the fourth quarter is ¥54 per share. Expected annual dividends for FY 2022 will be ¥110 per share, same as for FY 2021. Our dividend policy is to keep the consolidated payout ratio aiming at 30% despite the changing business environment going forward. We decided to revise them as shown here, making efforts to provide stable and continuing profit returns to shareholders. Now I'd like to hand over to Mr. Takeuchi.

He will give you the details of the financial results and financial forecast. Allow me to begin my presentation. First, the fourth quarter results. Honda Group unit sales. Motorcycles, despite drop in Indonesia and others, unit sales was up in markets such as India, Pakistan, and China. Automobiles, despite decline in markets such as U.S., there was increase in markets like China. Life creation saw increase in such markets like China but decrease in the United States. And next, income statement. Sales revenue was up in all business categories, reaching 3,623,800,000,000 yen, up 4.8% from the same period last year. Operating profit due to drop in STNA and increase in profit attributable to increase in revenue model mix. Operating profit was 213.2 billion yen. Share of profit of investments accounted for using the equity method was 68.1 billion yen due to profit increase derived from increase in sales revenue model mix in China. And moving on to change in profit before income taxes. FY21 fourth quarter profit before income tax was 255.3 billion yen, up 251.5 billion yen from the same quarter last year. Operating profit due to lower SG&A expenses, profit increase coming from difference in the provision for credit losses and change in revenue model mix amongst others, operating profit was 213.2 billion yen, up 218.8 billion from the same period last year. And please look at page 14, sales revenue operating profit by business segment. Motorcycle business operating profit due to profit increase from increase in unit sales and model mix combined with cost reduction effect was 72.2 billion yen. Next, automobile sales related operating profit included in automobile and financial services business was 140.4 billion yen combined. Automobile business operating profit due to profit in SG&A and as well as profit increase from unit sales model mix change reached 37.6 billion yen. Financial services business operating profit mainly due to difference in the provision for credit losses was 106.3 billion yen. And next, life creation and other businesses recorded operating loss of 3 billion yen. of which aircraft and aircraft engine operating loss was 7.8 billion yen. And next, FY21, 12 months, financial results are as shown. Please look at page 16, change in profit before income taxes. The profit before income taxes was ¥914 billion, ¥124.1 billion year-on-year operating profit. Though there was decline in profit due to drop in revenue model mix, Thanks to a cut in SDNA, difference in the provision for credit losses, cost reduction effect amongst others, operating profit reached 660.2 billion yen, up 26.5 billion yen year on year. And next, cash flows of non-financial services businesses. Free cash flow was 303.8 billion yen. Cash and cash equivalents at the end of period was 2,528,000,000,000. Also, net cash was 2 trillion, 48.3 billion yen. Next, FY22 consolidated forecast. Beginning with Honda Group unit sales, motorcycles due to increase in major market, we are forecasting 18 million units, up 2.86 million from last fiscal year. Automobiles, though there is concern over semiconductor supply shortage due to market recovery and introduction of new models, we are forecasting 5 million units, up 450,000. Life creation business, we are forecasting 5.9 million units, up 270,000 units, mainly coming from North America. FY22 consolidated financial forecasts are shown on this slide. FY22 Forecast Change in Profit Before Income Tax Despite decreased factors such as increase in FG&A, including a difference in the provision for credit losses and lesser cost reduction effect, due to increase in profit coming from revenue model exchange, we are forecasting the operating profit to be the same as FY21, 660 billion yen. Cost reduction effect is minus 51 billion yen, but this is mainly due to sharp rise in raw material costs. Meanwhile, we are planning for cost reduction of more than 200 billion yen and price increase. Lastly, FY22 capital expenditures, depreciation, and R&D forecast are as shown on this slide. And this concludes my presentation. Thank you for your attention.