HMC Harmonic Inc

TOKYO, April 25 /PRNewswire-FirstCall/ -- Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal fourth quarter and the fiscal year ended March 31, 2007. Fourth Quarter Results Honda's consolidated net income for the fiscal fourth quarter ended March 31, 2007 totaled JPY 176.1 billion (USD 1,492 million), a decrease of 19.7% from the corresponding period in 2006. Basic net income per Common share for the quarter amounted to JPY 96.70 (USD 0.82), a decrease of 19.3% compared to JPY 119.89 for the corresponding period in 2006. One of Honda's American Depository Shares represents one Common Share. Consolidated net sales and other operating revenue (herein referred to as "revenue") for the quarter amounted to JPY 3,087.8 billion (USD 26,157 million), an increase of 9.0% from the corresponding period in 2006. Honda estimates that if the exchange rate of the Japanese yen had remained unchanged from the corresponding period in 2006, revenue for the quarter would have increased by approximately 5.3%. Consolidated operating income for the quarter totaled JPY 250.2 billion (USD 2,120 million), a decrease of 26.6% compared to the corresponding period in 2006. This decrease in operating income was primarily due to the soaring raw material costs, the increased R&D expenses and accounting for the gain on return of the substitutional portion of the Employees' Pension Funds to the Japanese government ( the "gain on return" ) that was recorded in the fiscal fourth quarter ended March 31, 2006, which offset the positive impact of the increased profit attributable to higher revenue, continuing cost reduction effects and the currency effects caused by the depreciation of the Japanese yen. Consolidated income before income taxes and equity in income of affiliates for the quarter totaled JPY 239.0 billion (USD 2,025 million), a decrease of 29.4% from the corresponding period in 2006. Equity in income of affiliates amounted to JPY 19.9 billion (USD 169 million) for the quarter, a decrease of 12.2% from the corresponding period in 2006. The gain on return of JPY 138.0 billion (USD 1,170 million) was included in the result of consolidated operating income and consolidated income before income taxes for the fiscal fourth quarter ended March 31, 2006. Accordingly, the impact of such gain on return after tax was reflected in the consolidated net income for the fiscal fourth quarter ended March 31, 2006. The Company did a two-for-one stock split for the Company's common stock effective July 1, 2006. Concurrently, Honda's common stock-to-ADS exchange ratio was changed from one share of common stock to two ADSs, to one share of common stock to one ADS. Basic net income per common share and ADS were calculated based on the number of common shares after the stock split. Business Segment With respect to Honda's sales for the fiscal fourth quarter by business segment, unit sales of motorcycles totaled 2,408 thousand units, which was approximately the same level as the corresponding period in 2006. Unit sales in Japan was 79 thousand units, a decrease of 15.1%. Overseas unit sales was 2,329 thousand units, which was approximately the same level as the corresponding period in 2006, due mainly to the positive impact of the increased unit sales in other regions especially in Latin America, offsetting the negative impact of the decrease in unit sales in North America and Asia. Revenue from unaffiliated customers increased 7.7%, to JPY 421.7 billion (USD 3,572 million) from the corresponding period in 2006, due mainly to the positive impact of the currency translation effects. Operating income decreased by 27.0% to JPY 44.2 billion (USD 375 million) from the corresponding period in 2006, due mainly to the increased R&D expenses and the gain on return which was recorded in the fiscal fourth quarter ended March 31, 2006, offsetting the positive impact of the continuing cost reduction effects, the decreased SG&A and the currency effects caused by the depreciation of the Japanese yen. Honda's unit sales of automobiles was 957 thousand units, increased by 6.2% from the corresponding period in 2006. In Japan, unit sales was 189 thousand units, which was approximately the same level as the corresponding period in 2006. Overseas unit sales increased 8.0% to 768 thousand units, due to the increased unit sales in North America, Europe, Asia and other regions. Revenue from unaffiliated customers increased 8.0% to JPY 2,430.7 billion (USD 20,591 million) from the corresponding period in 2006, due to the increased unit sales and the positive impact of the currency translation effects. Operating income decreased 35.1% to JPY 157.7 billion (USD 1,337 million) from the corresponding period in 2006, due mainly to the negative impact of the soaring raw material costs, the increased SG&A expenses and the increased R&D expenses and the gain on return which was recorded in the fiscal fourth quarter ended March 31, 2006, offsetting the positive impact of the increased profit attributable to higher revenue, continuing cost reduction effects and the currency effects caused by the depreciation of the Japanese yen. Revenue from unaffiliated customers in financial services business increased 41.7% to JPY 117.4 billion (USD 995 million) from the corresponding period in 2006. Operating income increased 70.8% to JPY 40.9 billion (USD 347 million) from the corresponding period in 2006, due primarily to the increased profit attributable to higher revenue, the decrease in SG&A expenses and the currency effects caused by the depreciation of the Japanese yen. Honda's unit sales of power products was 2,128 thousand units, which was approximately the same level as the corresponding period in 2006. In Japan, unit sales totaled 139 thousand units, an increase of 0.7%. Overseas unit sales was 1,989 thousand units, which was approximately the same level as the corresponding period in 2006. Revenue from unaffiliated customers in power product and other businesses increased by 7.9% to JPY 117.9 billion (USD 999 million) from the corresponding period in 2006, due mainly to the positive impact of the currency translation effects. Operating income decreased 45.0% to JPY 7.2 billion (USD 62 million) from the corresponding period in 2006. This was primarily due to the negative impact of the gain on return which was recorded in the fiscal fourth quarter ended March 31, 2006, offsetting the positive impact of the decreased SG&A expenses and the currency effects caused by the depreciation of the Japanese yen. Geographical Segment With respect to Honda's sales for the fiscal fourth quarter by geographical segment, in Japan, revenue for domestic and exports sales was JPY 1,265.1 billion (USD 10,717 million), up by 7.2% compared to the corresponding period in 2006, due primarily to the increased revenue from exports in automobile business. Operating income was JPY 68.2 billion (USD 578 million), down by 63.1% from the corresponding period in 2006, due primarily to the negative impact of the soaring raw material costs, the increased SG&A expenses and the increased R&D expenses and the gain on return which was recorded in the fiscal fourth quarter ended March 31, 2006, offsetting the positive impact of the increased profit attributable to higher revenue, continuing cost reduction effects and the currency effects caused by the depreciation of the Japanese yen. In North America, revenue increased by 2.8% to JPY 1,671.4 billion (USD 14,159 million) from the corresponding period in 2006, due mainly to the increased unit sales in automobile business and the positive impact of the currency translation effects. Operating income increased by 21.3% to JPY 128.4 billion (USD 1,088 million) from the corresponding period in 2006, due primarily to the positive impact of the increased profit attributable to higher revenue, continuing cost reduction effects and the currency effects caused by the depreciation of the Japanese yen, which offset the negative impact of the soaring raw material costs. In Europe, revenue increased by 24.5% to JPY 440.1 billion (USD 3,728 million), from the corresponding period in 2006, due primarily to the increased unit sales in automobile business and the positive impact of the currency translation effects. Operating income increased by 28.8% to JPY 12.6 billion (USD 108 million) from the corresponding period in 2006, due primarily to the positive impact of the increased profit attributable to higher revenue, continuing cost reduction effects and the currency effects caused by the depreciation of the Japanese yen, which offset the negative impact of the increased SG&A expenses. In Asia, revenue increased by 28.4% to JPY 366.9 billion (USD 3,108 million) from the corresponding period in 2006, due primarily to the increased unit sales in automobile business and the positive impact of the currency translation effects. Operating income increased by 50.2% to JPY 19.2 billion (USD 163 million) from the corresponding period in 2006, due mainly to the positive impact of the increased profit attributable to higher revenue, which offset the negative impact of the increased SG&A expenses. In Asia, in addition to subsidiaries, many affiliates accounted for under the equity method manufacture and sell Honda-brand products. Accounting terms of some of the affiliates differ from the Company's. Operating income does not include income from these affiliates. Income from these affiliates is recorded as equity in income of affiliates and reflected in net income. In other regions, revenue increased by 43.4% to JPY 231.3 billion (USD 1,959 million) compared to the corresponding period in 2006, due mainly to the increased unit sales in all of the business segments and the positive impact of the currency translation effects. Operating income increased by 67.1% to JPY 19.5 billion (USD 165 million) from the corresponding period in 2006, due mainly to the positive impact of the increased profit attributable to higher revenue and the continuing cost reduction effects, offsetting the negative impact of the increased SG&A expenses. Fiscal Year Results Honda's consolidated net income for the fiscal year ended March 31, 2007 totaled JPY 592.3 billion (USD 5,018 million), a decrease of 0.8% from the fiscal year ended March 31, 2006. Basic net income per Common share for the period amounted to JPY 324.62 (USD 2.75), compared to JPY 324.33 for the fiscal year ended March 31, 2006. One of Honda's American Depository Shares represents one Common Share. Consolidated revenue for the period amounted to JPY 11,087.1 billion (USD 93,919 million), an increase of 11.9% from the previous fiscal year. Honda estimates that if the exchange rate of the Japanese yen had remained unchanged from the previous fiscal year, revenue for the period would have increased by approximately 7.4%. Consolidated operating income for the period totaled JPY 851.8 billion (USD 7,216 million), a decrease of 2.0% compared to the previous fiscal year. This decrease in operating income was primarily due to the negative impact of the change in model mix, the soaring raw material costs, the increased SG&A expenses, the increased R&D expenses and accounting for the "gain on return" that was recorded in the fiscal year ended March 31, 2006, which offset the positive impact of the increased profit attributable to higher revenue, continuing cost reduction effects and the currency effects caused by the depreciation of the Japanese yen. Consolidated income before income taxes and equity in income of affiliates for the period totaled JPY 792.8 billion (USD 6,716 million), a decrease of 4.5% from the previous fiscal year. The gain on return of JPY 138.0 billion (USD 1,169 million) was included in the result of consolidated operating income and consolidated income before income taxes for the fiscal year ended March 31, 2006. Accordingly, the impact of such gain on return after tax was reflected in the consolidated net income for the fiscal year ended March 31, 2006. Equity in income of affiliates amounted to JPY 103.4 billion (USD 876 million) for the period, an increase of 3.8% from the previous fiscal year. Forecasts for the Fiscal Year Ending March 31, 2008 In regard to the forecasts of the financial results for the fiscal year ending March 31, 2008, Honda projects consolidated results to be as shown below: FY2008 Forecasts for Consolidated Results First half ending September 30, 2007 Yen (billions) Changes from FY 2007 Net sales and other operating revenue 5,800 + 10.9% Operating income 355 - 10.5% Income before income taxes and equity in income of affiliates 360 + 1.4% Net income 275 + 1.4% Yen Basic net income per Common share 150.93 Fiscal year ending March 31, 2008 Yen (billions) Changes from FY 2007 Net sales and other operating revenue 11,750 + 6.0% Operating income 770 - 9.6% Income before income taxes and equity in income of affiliates 780 - 1.6% Net income 575 - 2.9% Yen Basic net income per Common share 315.59 These forecasts are based on the assumption that the average exchange rates for the Japanese yen to the U.S. dollar and the Euro will be JPY 116 and JPY 152, respectively, for the first half of the year ending March 31, 2007, JPY 113 and JPY 148, respectively, for the second half of the year ending March 31, 2007, and JPY 115 and JPY 150, respectively, for the full year ending March 31, 2008. More information for Honda's consolidated financial results can be found at Honda's Investor Relations website http://world.honda.com/investors/financialresult/ This announcement contains "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on management's assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that Honda's actual results could materially differ from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in Honda's principal markets and foreign exchange rates between the Japanese yen and the U.S. dollar, the Euro and other major currencies, as well as other factors detailed from time to time. The various factors for increases and decreases in income have been classified in accordance with a method that Honda considers reasonable. DATASOURCE: Honda Motor Co., Ltd CONTACT: Tetsuo Oshima of American Honda, +1-212-355-9191 ext. 16 Web site: http://world.honda.com/investors/financialresult

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