Honda sales rise in 2005, income falls

Japan’s Honda Motor Co., Ltd. said net income for the fiscal third quarter ended Dec. 31, 2005, was JPY 133.1 billion ($1.128 billion), down 11.7% from the same period in 2004.
Basic net income per common share for the quarter amounted to JPY 144.81 ($1.23), compared to JPY 161.78 for the same period in 2004. Two of Honda’s American Depository Shares represent one common share.
Honda’s consolidated net sales and other operating revenue for the quarter were JPY 2,472.0 billion ($20.937 billion), up 15.8% compared to the same period in 2004.
Operating income increased by 161.3% to JPY 13.4 billion ($114 million), due mainly to the positive currency effects caused by the depreciation of the Japanese yen and increased profits attributable to higher revenue, offsetting the negative impact of an increase in unrealized profit in inventories and the increased R&D expenses.
Third quarter motorcycle unit sales totaled 2.788 million units, an increase of 12.3% from the same period in 2004. Overseas unit sales were 2.712 million units, an increase of 12.8% from the same period in 2004, due mainly to an increase in unit sales of parts for local production at affiliates accounted for under the equity method in Asia, such as Indonesia and India.
Honda’s motorcycle business in North America during the third quarter accounted for 30% of its total motorcycle business, ahead of Asia (27.7%), Europe (11.6%), Japan (7.6%) and other regions (20.4%).
Third quarter motorcycle unit sales in North America were up from 135,000 units to 160,000 units; sales in Japan decreased from 78,000 units to 76,000 units; sales in Europe dropped from 71,000 units to 61,000 units; and sales in Asia skyrocketed from 1.965 million units to 2.225 million units.
In North America, revenue for the third quarter period was JPY 1,478.9 billion ($12.526 billion), up 24.5% from the same period in 2004. Honda said this was due mainly to the positive currency translation effects and increased unit sales in the motorcycle and automobile businesses.
Operating income increased by 30.6% to JPY 106.7 billion ($904 million) from the same period in 2004.
Nine-Month Results
Honda’s consolidated net income for the fiscal nine months ended Dec. 31, 2005, totaled JPY 377.5 billion ($3.197 billion), a decrease of 3.7% from the same period in 2004. Basic net income per common share for the fiscal nine months amounted to JPY 409.43 ($3.47), compared to JPY 418.99 for the same period in 2004.
Consolidated net sales and other operating revenue for the period was JPY 7,074.2 billion ($59.916 billion), up 12.3% compared to the same period in 2004.
Operating income for the fiscal nine months totaled JPY 528.0 billion ($4.473 billion), an increase of 7.6% over the same period in 2004. This was primarily due to positive currency effects caused by the depreciation of the Japanese yen, increased profit attributable to higher revenue and continuing cost reduction effects, which offset the negative impact of increased SG&A and R&D expenses.
Honda’s motorcycle unit sales during the first nine months of the company’s business year totaled 7.858 million units, up 1.2% from the same period in 2004. Total overseas unit sales numbered 7.583 million units, up 1.4% from the same period in 2004, mainly due to a increase in unit sales of parts for local production at affiliates accounted for under the equity method in Indonesia and favorable sales in Thailand and Brazil.
Honda’s motorcycle business in North America for the first nine months of the company’s business year accounted for 25.7% of its total motorcycle business, behind Asia (27.4%) but ahead of Japan (9.0%), Europe (16.9%) and other regions (20.4%).
Motorcycle unit sales in North America fell from 413,000 units in 2004 to 404,000 units in 2005; sales in Japan dropped from 285,000 to 275,000; sales in Europe increased from 247,000 units to 255,000 units; and sales in Asia jumped from 6.127 million to 6.157 million
In North America, nine-month revenue was JPY 3,990.9 billion ($33.802 billion), up 16.7% from the same period of the previous year. Honda said positive currency translation impact and increased unit sales in automobile and power product businesses accounted for the rise. Operating income in North America was JPY 248.0 billion ($2.101 billion), which was approximately the same level as the corresponding period in 2004.
Net sales of Honda-brand motorcycle products that are 100% locally procured, manufactured and sold by overseas affiliates accounted for under the equity method are not included in net sales and other operating revenue, in conformity with U.S. generally accepted accounting principles. Accordingly, these unit sales are not included in the financial results and forecasts.
For the fiscal third quarter, the number of products 100% locally procured, manufactured and sold by affiliates in India and China increased to approximately 600,000 units.
For the fiscal nine months, the number of products 100% locally procured, manufactured and sold by affiliates in India and China increased to approximately 1.530 million units. psb