Honda Motor Company, Ltd.

Thank you very much indeed for your participation despite your busy schedule today. And now I'd like to start our press conference, financial results press conference for the fiscal first quarter ended June 30th, 2024. To start with, I'd like to introduce the speakers today. Managing Executive Officer CFO, Mr. Eiji Fujimura. Fujimura, nice to meet you. Operating Executive, Head of Accounting and Finance Supervisory Unit, Mr. Masao Kawaguchi. Nice to meet you. So let's start with Mr. Fujimura's presentation about the quarter one of the AFI 2025 results and the forecast of the AFI 2025 full year. And Mr. Kawaguchi will elaborate on this a bit later. Thank you very much for your understanding of our business activities as usual. Let me present our first quarter business results of FY 2025. Starting with the highlights of the financial results, unit sales in the motorcycle business in the first quarter increased globally, mainly in India and Brazil. In the automotive business as well, we had robust sales of hybrid models, and thanks to the pricing scheme that reflects improved commercial values, the profits increased year on year in both motorcycle and automobile businesses. As a result, operating profit of the entire company marked the highest ever quarterly profit of ¥484.7 billion, or 9% of the operating profit margin. For China, where a tough market environment still continues, we will revise the volume forecast down by 220,000 units. Whereas we will maintain our previous guidance of the operating profit margin and the profit for the period attributable to the owner of the parents, Forex assumption will stay the same because the recent fluctuation of the currency is substantial. Then let me explain the outline of the financial results. Speaking of the main marketer situation of the automobile businesses, hybrid models have been successful, making the unit sales increased in Japan and in the United States. In China, due to expanding a new energy vehicle market and aggressive price competition, the unit sales declined year on year. In the motorcycle businesses, Unit sales declined due to economic slowdown in Thailand. However, the unit sales increased year on year due to steady demands in India and Brazil. Thus, on the whole, the total business increased year on year in this segment. Regarding the financial results of the first quarter of 2025, operating profit marked ¥484.7 billion, up by ¥90.2 billion year-on-year. Shares of profit of investments accounted for using the equity method was ¥1.4 billion, which was down by ¥41.4 billion. Profit for the quarter attributable to owners of the parent was 394.6 billion, up by 31.1 billion. Operating profit marked the highest ever as quarterly results. With regard to the consolidated business outlook for the FY2025, operating profit will be 1.42 trillion yen. Our previous forecast will stand the same. Shares of profit of investment accounted for using the equity method will decline due to the unit sales in China being revisited. Profit for the financial year attributable to the owners of the parents will be 1 trillion yen, for which the previous forecast will be maintained. Full-year forex assumption will stay the same at 140 yen for a dollar, no change of previous guidance. Annual dividends for FY 2025 is expected to be 68 yen per share, no change of the previous guidance. We announced the share buybacks in the press conference on May 10th, for which the progress as of the 31st of July was that we have acquired a total of 12.36 million shares worth 20 billion yen altogether. By the way, Honda is working on the improvements of the corporate governance as one of the priority issues of our business management. Recently, in the stock market, we are seeing the trends of reviewing the cross-holding of the shares. Honda will aim to unwind the cross-holding practice soon in order to enhance disciplines of corporate management furthermore. In July this year, Honda shares owned by non-life insurance or banking institutions have been sold off in the public as much as 500 billion worth. Having those shares available in public will help broaden our shareholders' base, and a wider range of shareholders can support us for medium and long-term perspective. Bringing them in co-creation with us, Honda will aim to build a stronger brand and a business foundation in order to realize further improvements of our corporate values. In addition, Honda sold the shares that we have been holding for those non-life insurance and banking institutions as well. Honda will take the lead to unwind cross-holding policy so that we can improve our corporate governance further on. Next, Mr. Kaguchi will explain the details of the financial results.

At this time, I'll let you explain the details of the results. First of all, Honda Group sales volume for the first three months is as follows compared to the same period last year. Sales in motorcycle business operations rose to 5,062,000 units mainly due to an increase in Asia. Due to a decline in China, automobile sales totaled 869,000 units. Sales in power product business operations totaled 822,000 units mainly due to sales declines in North America and Europe. The first quarter consolidated financial results for fiscal year 2025 is as explained earlier. I would like to explain the factors behind the increase or decrease in profit before tax compared to the same period last year. Operating profit increased by 90.2 billion yen compared to the same period last year and totaled 484.7 billion yen. As for the increase and decrease factors behind this change, sales impact, Although there was an increase in profit due to an increase in unit sales, an increase in incentives led to a negative impact of 28.4 billion yen. Selling prices and cost impact due to the effect of selling prices commensurate with the improvement of product value, a positive impact. of 159.8 billion yen was realized. Expenses negatively impacted profit by 61.5 billion yen, R&D expenses likewise 27 billion yen. The positive impact of exchange rates resulted in an increase of 47.5 billion yen. now profit before income taxes due to a decrease in sales volume in china there was a decrease in equity method profit however operating profit for the quarter increased by 44.5 billion yen compared to the same period last year and totaled 5 trillion 594 billion yen Now operating profit by business segment, motorcycle business achieved a record high of 177.6 billion yen for a quarter. For automobile business, the total was 222.8 billion yen. The total for financial services business was 84.9 billion yen. The result for power products business and others was an operating loss of 700 million yen. Free cash flow of operating companies excluding financial business operations was 73.9 billion yen. The quarter-end balance of net cash was 3 trillion 744.3 billion yen. Operating cash flow, excluding R&D, which represents the source of future investments, totaled 435 billion yen. Next, let me explain the details of the consolidated forecast for FY25. Group sales volume for motorcycle business operations is 19.8 million units, unchanged from our previous forecast. The automobile business forecast has been revised downwards to 3.9 million units, reflecting a decline in China, as well as other changes compared to the previous forecast. Power products business operations previous forecast of 3.66 million units remains unchanged. The consolidated financial forecast for FY25 is as explained earlier. The outlook for capital investment, depreciation and amortization, and R&D expenditures for FY25 remains unchanged. This concludes my presentation. Thank you very much for your attention.

Thank you for your attention.