Honda Motor Company, Ltd.

Thank you very much for taking time to join us here today. Then I'd like to begin Honda FY24 Financial Results Press Conference.

First, the executives in attendance today are Toshihiro Mide, Director-President and Representative Executive Officer. I'm Mide, and thank you very much. Shinji Aoyama, Director Executive Vice President, Representative Executive Officer. I'm Aoyama, thank you.

Eiji Fujimura, Managing Executive Officer and CFO.

I'm Fujimura, thank you very much.

First, Mr. Mide will give a summary of the results, followed by Mr. Aoyama, who will present the FY24 results and FY25 forecast and shareholder returns.

Mr. Mide, please. Once again, good afternoon.

I'm Mibe. I would like to first thank all of you for taking time today and providing generous support to Honda's business. As a mobility company, Honda upholds its value proposition of zero environmental impact and absolute safety. Through the social values of environment and safety, we aim to realize our vision of future mobility and an attractive mobility society. This will enable us to manifest a new corporate path of growth. We seek for a continuing understanding and support towards Honda's initiatives. I would now like to review our FY24 financial results and explain our forecast for FY25. FY24 operating profit was a historical high, 1,381.9 billion yen. Operating profit margin was 6.8%. In FY25, we will steadily dedicate resources to electrification and aim for operating profit of ¥1,420,000,000, operating profit margin of 7%, one year ahead of our original plan. FY24 cash flows from operating activities, the source for future investment, excluding R&D expenses, was roughly 3 trillion yen, up 1 trillion yen year-on-year. We have the foundation to support future investment for growth. Shareholder returns is regarded as our top priority management issue. FY24, dividend was 68 yen, up 28 yen year-on-year. In FY25, we will acquire a record high 300 billion yen of the company's shares and realize a stable, continuous dividend policy.

Next, I will review the initiatives we have taken towards establishing earnings base.

Motorcycle business, in addition to our dominant position in Asia, we have expanded large motorcycle sales in advanced nations and expanded product lineup in South America to further strengthen our business structure and build a well-balanced global income structure. Regarding automobile business where profitability was an issue, we increased commonality ratio of core models such as TRV, Civic and Accord, reduced hybrid system cost and enhanced product appeal to steadily improve our business structure. We will further evolve performance and cost of a hybrid system targeting the second half of this decade.

Next, initiatives for enhancing corporate value.

Currently, the PBR remains less than one-fold. We believe there are three reasons as shown. To address this, we will optimize capital through proactive shareholder returns, build and maintain earning base, and work out granularity of electrification strategy. As for FY25, we will acquire 300 billion yen of our company's shares and aim for an operating profit margin of 7%. The details of our electrification strategy and capital allocation will be explained at the 2024 Honda Business Briefing on May 16th. And through these initiatives and continuing dialogue with stakeholders, we will aim for an early achievement of more than one PBR. Next, Mr. Aoyama will present the details of our financial results.

Let me explain about the actual results of FY2024 followed by FY2055 outlook and shareholders' returns. With regard to the updates of the main markets of the mobiles, the market declined in China, but increased in the United States due to the stable demand has led to the overall sales exceeding the same period last year. For motorcycle businesses, the market in Vietnam declined because of the economic slowdown. However, the unit sales increased in India and Brazil due to the solid demands contributing to the overall market almost similar to last year. Regarding Honda Group's unit sales of the motorcycles, mainly due to incremental units in Europe, as compared to last year, we achieved 18.819 million unit sales. For builds, 4.109 million units sold, mainly due to decrease in North America. And for power production purchases, we achieved 3.812 million unit sales due to decline in North America. This is the scenario of the consolidated financial results. On top of the additional oil bill in its sales, thanks to the improvements of the model profitability, we achieved the operating profit of 1.3819 trillion yen, up by 601.2 billion. We accomplished the highest ever results in operating profits. Profit before income taxes and profit for the year attributable to others of the clients. ROE was 9.1% and ROE 9.3%. Let me explain factors of ups and downs of the profits as compared to the last year. There were some impacts by inflation and so on. However, due to the effective price scheme that reflects improved commercial value of the products and incremental auto sales, we achieved 1.3819 trillion yen operating profit up by 601.2 trillion yen year-on-year. Profit before income taxes was 1.6423 trillion yen up by 762.8 trillion yen year-on-year. Riga Dinker, operating profits by business segments. Motorcycle business is 556.2 billion yen, the highest ever results. Automobile business is 560.6 billion yen. Financial services business is 273.9 billion. And for power products and other businesses, it was a negative 8.8 billion yen. Free cash flow of business companies excluding financial businesses was 1.4609 trillion yen with 3.7616 trillion yen of net cash balance at the end of the period. Next, let me explain financial forecast over FY2025 on consolidated basis. We got expected in sales of Honda Group. Compared to the last year for motorcycles, we expect 19.8 million units, reflecting the growth in male in Asia. 4.12 million units of automobiles expected, reflecting the incremental increase mainly in Japan and North America. And for power products, I expect a 3.66 million units, reflecting the decline mainly in Europe. Inexhaustible on a consolidated basis will increase in motorcycle and automobile businesses. Moving on to the outlook of the Consolidated Financial Results of IFA 2025, operating profit will be 1.42 trillion yen with the operating profit ratio of 7% and the profit for the year attributable to owners of the parent will be 1 trillion yen. Foreign exchange assumption is set for 140 yen for dollar throughout the year.

Factors behind those profits before income taxes forecast are as follows.

R&D and other expenses will increase.

However, thanks to the pricing scheme that reflects the commercial value of the products, profit before income taxes will be 1.5 trillion yen, down by 142.3 billion yen year-on-year, and operating profit will be 1.42 trillion yen, up by 38 billion yen year-on-year. These are the outlook of capital expenditures, depreciation, amortization, and R&D spending for FY2025 on the slide. Lastly, let me touch upon shareholder returns. Annual dividends for FY2024 is 68 yen per share, 28 yen more from the year before, and 10 yen higher than our previous projection. Dividends at the end of the year is 39 yen per share. Annual dividend for FY2025 is expected to be 68 yen per share, same as FY2024. In the Board of Directors meeting today, we made a decision to execute a share by box up to 300 billion yen.

That concludes my presentation. Thank you very much.

Thank you for your listening. And now we would like to proceed to Q&A.

We have provided you with a Zoom function, so please ask a question through Zoom. And in the interest of time, please limit your questions to two per person. And when you ask a question, please turn on both your microphone and camera.

We seek your cooperation.

Anyone have any questions, please raise your hand.

The first question comes from Yomiuri Shimbun newspaper, Mr. Nakamura.

Can you hear me? Yes? Please?

Nakamura from Yomiuri Shimbun newspaper.

I have two questions.

First, about your China business, based on the manufacturer's... They are having difficulty challenging the Chinese EV companies. Meanwhile, I think that there are a lot of fans for ICE vehicles. So what is your marketing strategy going forward? And what about the optimization of excessive production capacity? And secondly, is...

to Mr. Mibet.

I think it is the first time since you've become president that you're attending the Financial Results presentation meeting. So what is the reason for your attendance? Is there any message that you would like to deliver directly to us? If so, please introduce them to us.

First, thank you for your question, Mr. Nakamura.

First, about the Chinese business, I, Aoyama, would like to explain Well, yes, there are a lot of Honda fans, ICE fans, and I do agree with you on that. And as for future marketing strategy, well, at the Beijing Motor Show and also prior to that, there was an announcement that we made. But the Yen series, the second of the series, will be introduced. And this will be done in the first half of this fiscal year. Furthermore, the second half of this fiscal year, as we've already announced, the Ye series, the first of the series, will be, well, as the first battery EV platform in China released, the P7S7 will be launched. And therefore, the ES series will be expanded, and this is how we want to expand our business in China, especially the battery EV. We want to introduce competitive products, and this is a basic marketing strategy. Meanwhile, about the overall production capacity and the excessive capacity, With our joint venture partners, we will consult, and we are currently examining what can be done. And for this fiscal year, within our budget, FY25, we have included some expenses towards that purpose. About the specifics of how to optimize, we would like you to wait until we can make the announcement.

Next, I would like to explain why I'm here today.

the background well um it is my first time but um in the past um there are presidents um have not attended this meeting and so i'm the very first in the history of honda that i'm attending as president well um this is because we are faced with love challenges at this time of transformation and i as president i wanted to explain about the current management situation and also our short to mid-term plans i thought it was important i directly communicate this but as i mentioned today for this, well, we want to achieve the ROS, but we, one year in advance, we'd like to achieve this margin, profit margin, 70%. So this is something that I personally have led, and I want to demonstrate my leadership this fiscal year as well to achieve this goal. And in my presentation, yes, we have less than one PBR, and I think that this is a major challenge that we currently face. And as of the end of March, about 60% of the prime market companies, the market have exceeded one, but Honda, we have 0.76 fold. So this is a major challenge on the part of Honda. As I said, shareholder returns, we have to look at the investment balance and consider this. But what's most important is for us in order to, well, first of all, we have to make clear our growth path. In particular, we want to make clear what our plans are for electrification, our future vision of electrification. And that included, we would like to update you on the progress we're making. And I think that there will be opportunities at the financial results meetings to present this. I don't know if I'll be attending all the quarterly meetings, but at the final full year announcement, I would like to attend this meeting. in the future. About making clear the granularity of electrification strategy. On May 16th, we are going to have a meeting, a briefing session to elaborate on our strategy. And we'll talk about our outlook for electrification and all the other details. So please wait until the 16th for the details. And I would like to continue to attend this meeting. Thank you.

Thank you very much, Mr. Nakamura.

So, next question, please. Nihon Keizai Shinbun, Okinawa-san, please.

From Nihon Keizai Shimbun, Mr. Otinaga, please.

Please ask your question.

R&D, that is going to be the highest as well, R&D, in order to strengthen the shareholder research, how do you manage that, and also what is the backdrop of having to reinforce your R&D efforts? So let me explain about its positioning of the overall situation rather than the each quarter situation as we said before, electrification and software and intelligent infrastructure. And we said that we are going to invest 5 trillion yen by 2030. And then I'm going to explain more of the details on the 16th of May. In the meantime, we actually changed our strategy a little bit. For instance, in terms of electrification, specifically speaking of the batteries, we had explained about Canada before. And we are going to be shifting to the vertical type system in order to sustain the total electrification businesses. To do that, we need to have the investment, development as well. We have to internalize those technology and that will be increased as well. And for the software too, core of the software have to be supported by Honda itself and R&D will be toward more of the internal kind of efforts. Therefore, we have more spending on that. Fujimura-san is going to give us more details about the spending. And then, thank you for the question. As for the R&D spending, it is going to be the highest ever. As we said now, 1 trillion yen spending for that would include the upcoming electrification-related model development expenditures. And also, in the first place, we have to support a foundation for the electrification going forward. We call it DR. which is the functionality and that's the evolution. And in our R&D efforts, we have to put more efforts in the process before the development of the vehicles to strengthen that part. And specifically for the model year 2027, there will be still more efforts of the ICE model, based on the hybrid, basically. And for those ICE models, towards 2030, there will be still a 60% of the ICE model to be run. Therefore, we need to earn from those businesses. Therefore, we need to allocate some resources to do that as well. So we have to spend on both. and which will be in the next three year efforts and those will be important and we will keep up with the higher level of R&D spending going forward for the growth going forward and we will be more aggressive on that part and the rationale for that effort is such that now after the R&D assessment we have this operations cash flow. That is a new kind of indicator. And for this past fiscal year, we had a 3 trillion yen and two years before it was a 2 trillion yen. So we are adding 1 trillion yen more to that But that means we try to improve the profitability of the ICE models that we have supported so far, and that is going to be earning more going forward. That is why we can testify such as spending. And then we are going to spread the 1 trillion R&D again, and cash flow after the R&D adjustment will be staying around 3 trillion yen or so. based on the earnings strength. And then we would like to be based on such a stronger earnings structure and then spend more on the R&D. At the same time, we are going to strengthen our shareholders' return as well. That is our financial strategy. And in terms of the capital allocation, as we said, up until 2030, As we said before, we are going to give you more communication in the business update scheduled on the 16th of May, and we will give you more details on that point on that day.

Thank you very much.

One more. Do you have one more question? What is your second question, please? Okinaga-san. May I ask a second question?

Sure, please. So, the unit sales, as for the regions, in China, it declines from the previous year. Is that what you expect again? You're going to provide a new series, right? What is your expectations? And you also said that you're expecting a growth in North America. Is that because of the HGV growing more? So there are unit sales provisions, as we were speaking, and for China, as we said before, the EAEA series is going to be very... And it is going to be launched in the second year of FY2025, second half of this year. Therefore, it will be effective after that. And we plan to provide 50,000 units of those in addition to the existing IS and HAV products. Therefore, compared to the previous year, it is going to be on the decline. And for North America, Civic Hybrid, which is not yet launched, however, we are going to add Civic Hybrid, which will be added to the growth.

And in terms of the incremental limits, battery EVs,

In May and April this year, we are adding a map, and that part will be the incremental portions in North America. That is the plan.

Thank you. The next question. Toyo Keizai, Mr. Yokoyama, please.

This is Yokoyama from Weekly Magazine. I can hear me, yes. Thank you. I also have two questions. The first about hybrid and competitiveness and product appeal. I'd like to ask one question about this. Yes, in your material, you did refer to this slightly, but in North America and Europe, your Japanese competitors are also doing well, but also you say that you're going to invest in ice But the earning phase, I think hybrid will be a very important contributor. So within your electrification strategy, what is the positioning of hybrid? That's my first question.

Yes, I would like to respond to this question.

Yes, hybrid competitiveness. First of all, volume-wise, we believe that in FY24, about 800,000 units were sold. That is hybrid. But in FY25, this fiscal year, we are aiming for 1 million units. Well, it's 4.12 million in total, so one out of four vehicles will be hybrid. That's our plan. About our earning power, well, I'm currently looking at our current situation. How we position hybrid will make a difference in terms of our profitability. And there's a variance in profitability as how we position hybrid. But ICE and hybrid, these two are expected to bring about more or less the same profit. And if I add the 2018 model year and 2023 model year, If you compare these two, system-wise, it is more efficient, and also the performance is higher. And despite that, we've seen that cost-wise, we are trying to make it more affordable. And therefore, in FY, well, rather the 2027 model, we are currently developing the model. But here, again, we want to increase our competitiveness, not just in terms of cost, but also in terms of performance. That is how we are addressing this. In the second half of this decade, we will increase battery EV, and therefore the volume will fall, but the earning power per unit will increase so that we can earn profit. And this will be happening also in the second half of this decade. And this is going to be the source for injecting resources into electrification. If I may add? Well, hybrid, yes. We have one hybrid that we're focusing on. Yes, we have been reducing the cost. But in the past, from the perspective of profit, ICE was much more competitive, as OEM has just said. Now it's at par, more or less. And so if we had, for example, this fiscal year in the automotive business, if EV-related development expenses were excluded and if it were only hybrid and ICE alone, if we carve out just these two operating profit margin-wise, then we can expect 8%. So competitiveness-wise, including cost, it is quite strong. But in addition to that, in the second half of this decade, it will further evolve. We have one evolution plant, and therefore the current hybrid is doing quite well. But up until 2030, we want to... be able to compete in North America with the current competitors we have. Unit volume is 1 million this fiscal year by 2030. If things go well, then I think we'll come close to 2 million units. And that is what we have, including our suppliers. We are trying to meet this increase so as to be able to achieve a scale of 2 million. That is how we are preparing for hybrid. And if we can lead this, then I think that we will have more power to generate cash, and thereby we will be able to make a transition to electrification. So hybrid was to begin with a strong weapon, and we want to enhance this technology, this technology that we are already strong in. And that is how we want to do our business. Thank you. Second question, about the possibility of your automotive business. Well, in the fourth quarter, I think the margin compared to the third quarter, I think has... I think you mentioned that there's an addition of expenses here, but looking about the profit margin of the courage automobile business, and I think that you will also have to support the suppliers. So how about you said I think it's about 5%, a little less than 5%, but including the support to suppliers, how are you going to try to increase the operating margin of your automotive business? Thank you. Well, about the fourth quarter, yes, there is a tendency for the expenses to increase. And therefore, if you look at the full year, I think it's better to talk about the full year, not just the fourth quarter. As you pointed out, yes. there's been a 4% or so ratio at the end of the fiscal year. And after the first quarter, as I've been explaining, this fiscal year – well, last fiscal year, there was an increase in the – quality related to expenses but it used to be 1% versus the sales but we are seeing that the warranty has increased in this fiscal year based on that we are accounting for 1.2% warranty expense ratio and so that is the ratio and also the support to suppliers because of the restructuring yet you know There was impairment, and so excluding those, it's a little less than 5%. So last fiscal year, rather, I've been saying this. Sorry, it's last fiscal year. I think that is the actual result that we obtained. But then going forward, how are we going to improve this? Well, those areas that we have been trying to work on, the profitability and also the fixed cost part. We want to continue to work hard on those things, and so we've tightened, and therefore the top line, where possible, will be raised for this fiscal year in the United States and in Japan. I think these will be major markets, but in those areas we want to pose the positive. and also will reduce the incentives, et cetera. I think that our product feel has increased, and therefore we can do this. And based on that and also the pricing, though we'll be more prudent, we think that in each of the domains, we will try to price in line with the value that we're offering our customers. Now, about the support to suppliers, for our suppliers, especially in Japan and U.S., there is the impact of UAW, and it's not just in-house production, but also our suppliers. At the same time, I have to give consideration to this. It's on a negotiation basis, so it's one by one. But still, there's the inflation part that we have to take into account. So we have budgeted so that we can provide support for inflation.

Now, what's different from...

Prior to COVID, we have stable production, and we're doing monozukuri together with our suppliers, manufacturing. So we have to think about where we can improve our cost competitiveness together with our suppliers. So we want to do co-creation with our suppliers. That is the sort of budget that we have compiled this time. That is all. Thank you.

Thank you. Thank you very much, Mr. Yokoyama.

Next question. From NHK, Mr. Obi, please.

Can you hear me?

Yes.

Thank you. Thank you for your presentation today.

I have two questions. First one, the sales turnover, revenue and OP, you are achieving the highest ever and your business is very good, very well going. And then in this context, what is your impression, reaction to this good business today? And the second question is a bit away from the financial results of today. Speaking about yen depreciation today in Japan, it is quite commonplace today, 155 yen for a dollar today, as of today. However, that may be good for you, that is quite supportive for the businesses for you. For Japan on the whole, what is your thinking about current exchange rate situation today? What is your thought about it? So first question I'd like to address. In the second part of 2010, we said that we would envision 6 million cars, 6 million units. We were on expansion of the businesses mainly and then we needed to shift our directions. And then we said that we would solidify our basic business use with efficiency. For instance, we would optimize the surplus capacity by fixed cost reductions and then less derivatives, more commonality of the parts components and system cost reduction of the hybrid cars with the better performance. to enjoy the cost of production effectiveness. This way we could improve value of the commercial vehicles with the appropriate prices. With those initiatives in, the automobile businesses have improved a lot. And if you look at the EV businesses alone, we are reaching near 8% today. In addition to that, for the motorcycles, we are relying on the Asian markets quite a lot. heavily, but we now have expanded our profitability in other areas too, in Europe 20%, in Asia 80% and South America 20% and Asia 60%. And then for both motorcycle and automobile businesses, both of them we have improved our structure of the businesses quite nicely. All together, we were successful in that regard. Because of that, now for 2030, for instance, we can envision 2 million EVs in the air. That is our vision. Plus, our business is ROS 5% EV. That is our target. And we will keep spending for research and development so that EV businesses in 2030 will be something like that. And we have solidified our foundation to achieve that vision finally. And in terms of the yen depreciation situation today, of course, we are in a manufacturing businesses situation. And we rely on the air facilities and equipment. Therefore, abrupt changes of the air for works is not really welcome. But recently, of course, it is related to the air policies of the U.S. and the Japan government. Bank of Japan's initiative, U.S. counterpart, when they're going to move to reduce the weight and so on, Of course, they are all related. And then the fundamentals behind such ups and downs of the forex situation today is actually related to the actual demands for the yen currency. I think that is my thought. And the actual demands for the yen today will be related to the export from Japan, because it was export-oriented so far, heavily. But now, in this situation, we would have more internal domestic demands, meaning that we could repatriate our manufacturing businesses back in Japan. And then... Japanese stocks, the share price is now appreciating too, reflecting that. That probably indicates that demand for yen will be improved going forward. And then our expectation or assumption is 140 yen for the time being in this budget. You might take it quite conservative, perhaps. And the reason behind 140 yen is maybe in the first half it will be something like 145 yen per dollar in the first half of the year. And then in the second half, 135 yen because of the interest rates changes as well, that is expectations. But in the long run, as I said before, the power of the Japanese businesses will be appreciated better with the better actual demands within Japan. Therefore, it would not go to 150 or 60. I wouldn't think it will be the case. However, of course, it is not possible to project. However, the abrupt changes of the currency is difficult for us in the April. The main situation of the forex is not really... favorable to us. However, we have to adapt to the changes out there in terms of how we operate every day basis. Thank you very much. Thank you very much for your answer. Thank you.

Next question.

Nikko, Japan Automotive Daily.

Mr. Mizutori, please.

This is Mizutori from Japan Automotive Daily.

Can you hear me? Yes, thank you. I have two questions. First, FY25 forecast, about this forecast, operating profit increased. You say the selling price and cost impact is positive of... Can you give the breakdown in relation to that? I want to know about the price increase impact. I think it was a part of the last fiscal year. The price increase itself, has it completed the cycle, or is it the case where this fiscal year again you want to continue and try to increase the profit through the price increase? That's the first question. And the second? is about the business in Japan. In FY25, your forecast says that 660,000 units. I think you said that Honda, to begin with, in Japan, your annual unit sales is around 700,000. I think that's more or less the target. But the shortage of semiconductors has ended, and I think the fact that you cannot reach 700,000, what is the reason? And also to Mr. Mibe, once again, how do you position your business in Japan? Can you explain about that as well? Thank you. Allow me to, about the operating profit and increase in degrees, and so there is an impact of $502 billion, and what is the breakdown of this? That's your question, but I think that was mentioned earlier, but in Japan and the United States, there's an increase in labor costs. I think this is true also for the suppliers. And so this is included. We have been working to increase the cost of together. And we can reflect this in our motorcycle business. So we have offset that. But mainly it's the selling price, the positive price. impact of the selling price. It's about $407 billion worth. And, well, the inflation part, well, we have to try to use competitive products to increase their price.

But there are some special factors included. In the United States, with the upcoming electrification dealers and we the manufacturers, we have to change the roles that we play.

I think that we have to factor in this change. The dealer margin, therefore, on our part, we have done a lot of consultation and we have reduced the dealer margin. In other words, the profit was on the allocated to the dealer has been allocated to us. Well, the new car business will be like that, but in the future, the maintenance and those parts, as a touchpoint for the customers, the dealers will be a very strong business partner for us, so that will continue to be the case. So that profit, within the 470, I think about $100 billion is included. And therefore, if you subtract that, that will be the price increase. And that has been budgeted. Meanwhile, recently, in North America especially, We have been reducing our inventory and we're trying to reduce the incentives. That's our operation. But prior to COVID, well, we have not yet reached the level of the prior to COVID. And I think that the competition is more fierce these days for the competitors, and therefore we have to budget more the incentive. And in the operation, The pricing and incentive, we are trying to reduce this, hold this down, but we have to offset where needed. So 500 billion, this is a large number, but these factors are included here. So please understand this number to mean that. And this fiscal year, whether we can continue to raise that price, as we said earlier, we have to comply with the inflation and also introduce appealing products and try to tap on these strengths that we have. That's all.

But this is in Japan.

Mr. Aoyama will first answer. Yes, 700,000 has been the benchmark in the past. That is true. So 700,000 units. At one time, we were selling that much, and so that was regarded as more or less the benchmark. So you are correct in saying so. But in the mid to long term, we think that the Japanese automotive market is... declining unfortunately we have to admit this overall and therefore FY25 as well the market itself there will be a marginal increase and that is how we look at it and so we have the 655,000 units listed here, but the registration is about 700,000 units. For the share-wise, if you calculate this in terms of share this fiscal year, 15% or so is what we're aiming towards, and therefore 15% share is what we want to gain.

And this is the highest in

So this is a plan that we have already. We are receiving bookings in advance, the new freed before launch, and so we want to sell this, and also in addition to that, At the end of last fiscal year, we launched WRV, so this product, blast the bezel, minor model change. So all these included, we wanted to introduce competitive products so as to achieve this 15% high share. And that is how we are looking at this fiscal year.

And that is...

And I'd like to talk about our positioning of our Japanese business. Well, looking at the current situation, as Oyama has already explained, well, at the beginning of this year, at the CES, we announced that Honda Zero, well, this is a new EV, and this also, within the global market, We want to introduce this to Japan, too, as a global market. The product lineup also, the N series included, we have the smaller minivans, and we are shifting more to the smaller size models. And therefore, this is one of the reasons why we're seeing a slightly slow increase in unit volume. Electrification is a key word that we're using. This is a new direction that we're aiming towards, and this is a good opportunity for us. And within this process of electrification, once again, of course, we are a Japanese company based in Japan. The Japanese market is a very important market for us, and therefore, in addition to what we were doing in the past, newly, we want to introduce a new lineup to be able to and raised our appeal, the appeal of Honda in Japan. Currently, we are working on the details, and therefore we cannot make an announcement today. But it will not be the same as the past. That is as far as I can say for now. But please expect that we will be making changes and look forward to our strategy in Japan. Thank you.

Thank you.

So next question. Reuters, can you hear me? Reuters, can you hear me?

So, away from the financial results, because of the President being here, I'd like to ask this opportunity. As of today, what do you think about the status of the battery markets and Honda's position today in terms of your negotiation with the other companies and development and sales plans of that? Please tell us your frank view on that. And as for the Canadian plant, for instance, recently, for your EV sales goal, for instance, you have today, you're probably having those steps done, absolutely. But other companies are facing with a bit of a decelerating trend of their EVs, and also discount is being seen in competitive markets. In that, I'm slowing down today, reminding that I do think it is a kind of good time for you to... take advantage to accelerate yourself away from others being slow down situations? Or do you think you have to accelerate further the businesses you have today? What is the position today of your company in the current situation? And the second question is about collaboration. potential with the Nissan. I understand it is still under consideration, but I'd like to ask Mibe-san, what is the topics that you are talking about with them today in the negotiation process? Maybe as far as you can, could you share with us in the topics with them? Would you talk about EV, sales goals and so on? Maybe you would tell us about it in the business update opportunity, but do you have changes on your strategy and so on? With regard to their talks with them, for the first question about businesses, the EV demand is a little bit down according to what you said. Of course, it is what we are seeing today globally. But since I became the president, our goal is to... achieve 40% by 2030 and 80% in 2040, 100% FCV or VEV by 2040. And, of course, that is the kind of back-testing goal based on the CN in 2050. And it's been three years since I became the president, and those goals, those stand, no change at all. So for the goals of 2013 and 35, of course, if we related the regulations and laws in different countries might change as we go toward those goal years, and that was something we were expecting already. And this is what we experienced today, for instance, to achieve 2 million cars in 2030. And we'd like to establish the foundation for that business in order to be able to achieve it. And then we are making plans now, including the investment plans and so on. On the current EV situation, we still keep up with our original strategy, no change. And in terms of the investments, maybe the opportunities, the timing of the investments of those might be a little bit shifted within the range that we would anticipate. But there's no change to the goal, no strategy changes at all. And in terms of the hybrid, It is a good technology as a tentative solution, and we have the business piece of that today with hybrid, and we are not denying the hybrid business at all. But after 2030, the global regulations and so forth would require battery EVs for sure in order to achieve a capital reality. And then we have a working... We have been working on the small mobilities today. The battery EVs could be the best solution for those small mobility ones. And then we have those milestones one after another and we'd like to take on achieving those steps as we go. And with regard to the collaboration with Nissan, we announced it on March 15th. And since that time, we've had frequent discussions between the two companies with different groups of people. And then, as was announced by... Mr. Uchinov, Nissan, the other day, actually, I've checked the progress, participating in some of those meetings, and what sort of values can we provide by this collaboration? We are actually discussing about it right now, and I cannot disclose what is being discussed at the moment. However, we are coming to a good conclusion nearly, and once that is well summarized, we can share with you. And as we said on the March 15th, basically it will be in the area of electrification and software. and also complementary product supplies and so on. And for the growth in the future, it will be in electrification software. Those two will be very important for the growth purpose. And then software, especially with AA included and semiconductor together, The development, of course, will be enormous, and that area is one of the potential collaborative areas. And also for the scalability, for the electrification, scalability can be quite advantageously obtained with the collaboration, I suppose, with electrification efforts. And we are... having discussions closely on those points. And once we find and identify the benefits, we will start working together. And I cannot give you much today. However, we are having discussions in a very broad scope in front of us. And on the 16th of this month, I don't think I can give you the clear answers for the discussion items that we did today. But, of course, the discussion will not go forever. Sometime very soon, I can give you some ideas about the collaborative talks. So, by summer, maybe, can you give us a kind of a first run of the... sharing with us the information by summer time. What is your goal? For instance, I wouldn't think it would be until the end of this year. It is long. Maybe by then I'd like to come up with some sort of idea that we can share with you. That is what I think, and we will focus on the discussions, really. so that, of course, including whether or not we go for that or not go for that, we will be able to summarize the talks sometime very soon.

Thank you. Thank you.

I apologize that in the interest of time, next will be the last question.

Asahi Shimbun newspaper, Matsuoka-san, please.

Can you hear me? Yes. Matsuoka from Asahi Shimbun newspaper.

But North America, your automotive business is growing. The unit volume is increasing. Is it because of the foreign exchange rate? Is it because the selling price has been reduced because of exchange rate? Or is it because people are returning goods? From EV, what is the reason for the increase in unit volume? Well, the reason why we're seeing an increase in not just volume by profit, I understand. Sorry, yes. Well, exchange rate is one factor, but it's not the case where the exchange rate is the dominant factor. Especially... In FY24 results, I'm looking at the FY24 results, FY23 was the time in which due to the semiconductor shortage, we could not fully supply, or we could not fully produce. And so that was the situation. Therefore, FY24 or FY25 as well, North America, the factory utilization rate is 100% or even slightly more than 100%. That is the utilization rate at the U.S. factories. And therefore, as a result... We are able to raise the price, selling price, in line with the appeal of our products. I think that this is the major contributor. Plus, there was also, as I've answered in a separate question, hybrid. After the 2023 model year, the performance has increased, and also the business competitiveness has increased, including cost. And therefore, the profit-rate ratio is equal to ICE, but in terms of the profit amount, it is slightly more.

So that included hybrid is doing very well.

And so further boosting our profits. I think.

Page 10. You talk about the historical operating income and give the reasons.

I thought that this was a big contributor. Can you elaborate on this? Page 10, did you say?

Page 10. Profit before income tax.

The change in profit before income tax, FY24 results. Yes, you're talking about FY24, right.

Okay.

So there is the price-cost impact, sales impact, and it includes the gross profit. Well, a motorcycle and other regions are included here, but yes, for automotive, 317.9. Yes, underneath it says that there is... This number of 4487 for the revenue model mix. And this is coming mainly from North America. Well, in the previous fiscal year, we had difficulty acquiring semiconductors, but this year we have seen an increase, and there was a 420,000 unit increase in North America. And I think that this has contributed mainly to North America. And about the price-cost impacts, Well, roughly speaking, of the 124.7 motorcycle or automobile, it's about 328-something. But the supplier and also the wage increase, these are negative. We put it here. But the raw material cost, this is big. So I said 360 billion for automotive, but still... I think the raw material cost, this includes precious metal and steel too, but it's about 490 or 200 billion. So this is the material related. So this is a positive. And the selling price increase is about 360 and minus 200. So it's about 160 that remains. The cost increase in supplier and the wage increase, the cost increase factors are also factored in, and we believe that the price impact was that much. This is not just North America, by the way, but for automotive, that is the situation. Have I answered your question?

Thank you.

Thank you, Mr. Matsuoka.

Thank you very much, and I can conclude the press conference for the financial results presentation today, and those slides and materials will be available on our website. Thank you very much for your participation today.