Honda Motor Company, Ltd.

Thank you very much indeed for your participation today.

Let's now make a start of the financial results press conference for the second quarter A42035. Let me introduce the participants today. Director, Executive Vice President, and the Representative Executive Officer, Mr. Shinji Aoyama. Director, Executive Officer, CFO, Mr. Eiji Fujimura. Mr. Oyama is going to present the outline of the results of the second quarter FY2025 and a full year outlook of the FY2025 followed by Mr. Fujimura to present details of the financial results. Mr. Oyama, the floor is yours. Thank you very much for your understanding of our business activities as usual. Let me present our second quarter results of FY2025. Starting with the highlights, operating profit of the first half of FY2025 was 742.6 billion yen, with operating profit margin at 6.2%. The unit sales on consolidated automobile businesses enjoyed steady sales of ICE and HEV models in North America, as well as the full-fledged start of the EV sales. We had additional sales of the 64,000 units year-on-year. Total unit sales across the group declined by 155,000 units due to the reduction of the unit in China. Regarding motorcycle businesses, we had favorable unit sales globally and had achieved the cumulative sales of two quarters, reaching 10 million units. Operating cash flow after R&D adjustment was 1.2851 trillion yen, the same level last year. Regarding the full-year consolidated forecast for 2025, despite the impact by strengthened incentives for EV sales in North America with the recovery of motorcycle businesses, we will keep the same forecast from the previous guidance, that is 1.42 trillion yen. As for the current profits, due to the decline in China, a profit decline of domestic affiliates causing less investment or profits based on equity methods, we will change the previous forecast down to 950 billion yen, less by 50 billion. With regard to the shareholders' returns, we made a decision in the Board of Directors meeting today of interim dividend of 34 yen and annual dividend 68 yen, which will be maintained from the same amount from the previous forecast. As for the share buybacks, in addition to 300 billion yen, which we made a decision on as of May 10th, 2024, we have made a resolution to add up to 100 billion of the further acquisitions. Let me explain the situations of main market. For the automobile businesses, unit sales increased in Japan and the U.S. However, due to the impact by the growing new energy vehicle market intensifying price competition in China and so on, the total unit sales declined below the level last year. For the motorcycle businesses, despite unit sales decline in Thailand due to economic slowdown, we had a steady demand in India, incremental unit sales in Vietnam by economic recovery. Total unit sales exceeded year-on-year. This is the financial result of the first two quarters of FY 2025. Operating profit was 742.6 billion yen, up by 46 billion yen year-on-year. Investment, profit, and loss based on the equity method was negative at 20.7 billion yen, down by 87.4 billion year-on-year. The profit attributable to the owners of the parents for the interim period was 494.6 billion yen, down by 121.6 billion. Next, regarding the consolidated financial outlook for FY2025, We will maintain the forecast of operating profit of 1.43 trillion yen. Previous guidance still stands. The profit attributable to the owners of the pairs for the year will be down by 50 billion yen, that is to be 950 billion. Forex assumption will be set at 143 yen for a dollar for the second half of the year, and for the free year, 148 yen. Regarding the dividends, interim payouts for FY2025 is ¥34 per share. Guidance for annual payout will stay the same at ¥68, no change from the previous guidance. In the Board of Directors meeting held today, we made a decision of share by backs. We will execute it with the upper limit of ¥100 billion. Next, Mr. Fujimura will explain the financial details.

Next, I will explain the second quarter results details. First, the FY 2025 second quarter Honda Group six-month unit sales. Motorcycle business, 10,382,000 units, due mainly to year-on-year increase in Asia. Automobile business, 1,779,000 units, mainly due to a drop in Asia, in particular China. Power products business, 1,653,000 units mainly due to drop in North America and Europe. The consolidated six-month financial results have already been explained. Next, the changes in profit before income taxes for the six months compared to the same period last fiscal year. Operating profit increased 46 billion yen. The change factors are as follows. Those sales impacts saw a positive impact on profit due mainly to increase in unit sales. Increase in incentive led to a 28 billion yen decline in profit. Price and cost impacts was positive due to pricing commensurate with product value, resulting in a 268.6 billion yen profit increase. Expenses, increase in personnel, and outsourcing costs had a negative impact of 105.5 billion yen. R&D expenses increased 80 billion, negatively impacting profit. Current currency effects was negative impact of 9 billion yen. Profit before income taxes declined by 137.3 billion yen due to a decline in unit sales in China Decrease in equity method profit due to drop in domestic related companies' profit and appraisal loss of foreign currency denominated assets due to stronger yen compared to last year end. Next, operating profit by business segment. ¥325.8 billion in motorcycle business, ¥258 billion in motorcycle business, ¥162.7 billion in financial services business, power products business and others, and saw a loss of ¥3.9 billion. Next, cash flow. The FY2025 six-month free cash flow of operating companies excluding financial business operation was 372.3 billion yen. Net cash balance at the end of the second quarter was 3 trillion 492.3 billion yen. R&D adjusted operating cash flows was 1 trillion 285.1 billion yen. Next. the FY 2025 full-year consolidated financial forecast. Honda Group motorcycle unit sales forecast is 20.2 million units, an increase compared to previous forecasts due to increase in mainly Asia. Automobile is 3.8 million units, reflecting drop in Asia. Power products business, although we have reviewed the forecast by region, the last forecast of 3.66 million units remains unchanged. FY 2025 consolidated financial forecast has already been explained. Next, the change factors behind forecasted profit before income taxes. Operating profit up. 39 billion yen from last fiscal year. The change factors are the following. Sales impacts, though there is an increase in profit due to increase in unit sales, increased incentives and other factors will result in a 170.5 billion yen profit decline. Price and cost impacts. Positive effect of pricing reflecting increased product value will increase profit by 550 billion yen. Expenses, negative 68.5 billion yen. R&D expenses will increase by 125 billion yen. Currency impacts will have a 148 billion yen negative impact. Profit before income taxes will fall due to drop in unit sales in China and domestic related companies' profit equity method profit. Since exchange rate is assumed to see the yen appreciate against the end of last fiscal year, there is appraisal loss of foreign currency denominated assets resulting in 207.3 billion yen drop in profit. Next, changes from previous forecast. Operating profit forecast remains unchanged. Breakdown is as follows. Sales impacts due to increase in incentives amongst others, negative 99.5 billion yen. Price and cost impacts. positive 48 billion yen due to pricing commensurate to the product value increase, expenses positive due to a 2.5 billion yen cut. R&D expenses negative due to 4 billion yen increase. Currency effects, an increase of 53 billion yen. Profit before income taxes down 45 billion yen due to decline in unit sales in China, resulting in a negative equity method profit. Lastly, the forecasts for capital expenditures, depreciation, and R&D expenditures for FY 2025 are as shown. This concludes my explanation.