No.1-7628

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF NOVEMBER 2020

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒    Form 40-F  ☐    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 

Contents

Exhibit 1:

On November 9, 2020, Honda Motor Co., Ltd. filed its consolidated interim financial statements for the fiscal second quarter ended September 30, 2020 with Financial Services Agency in Japan.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 17, 2020

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

September 30, 2020

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Results

Overview of Operating Performance

The global economy, which had slowed down due to the spread of coronavirus disease 2019 (COVID-19), has been on a recovery track for the three months ended September 30, 2020. However, it has still affected Honda’s consolidated financial results for the six months ended September 30, 2020.

Resulting from travel restriction measures by government, Honda’s production bases in Japan and overseas were also affected by suspended or reduced production mainly due to restrictions on employees’ commute to the workplaces and delays in the supply of parts within the supply chain. Some dealers in Japan and overseas were obliged to suspend business, shorten business hours, or reduce services such as inspections and repairs. As of the date of this report, Honda has been gradually resuming its business activities and the impact of the above has been decreasing.

Honda’s consolidated sales revenue for the six months ended September 30, 2020 decreased by 25.2%, to ¥5,775.1 billion from the same period last year, due mainly to decreased sales revenue in all business operations. Operating profit decreased by 64.2%, to ¥169.2 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales revenue and model mix, which was partially offset by decreased selling, general and administrative expenses. Profit before income taxes decreased by 53.0%, to ¥272.2 billion from the same period last year. Profit for the period attributable to owners of the parent decreased by 56.6%, to ¥160.0 billion from the same period last year.

Business Segments

Motorcycle Business

For the six months ended September 30, 2019 and 2020

 

		Units (thousands)
		Honda Group Unit Sales*																Consolidated Unit Sales*
		Six months ended Sep. 30, 2019				Six months ended Sep. 30, 2020												Six months ended Sep. 30, 2019				Six months ended Sep. 30, 2020
										Change				%												Change				%
Motorcycle Business			10,019				6,322				(3,697	)			(36.9	)			6,542				4,244				(2,298	)			(35.1	)
Japan			112				109				(3	)			(2.7	)			112				109				(3	)			(2.7	)
North America			149				141				(8	)			(5.4	)			149				141				(8	)			(5.4	)
Europe			141				124				(17	)			(12.1	)			141				124				(17	)			(12.1	)
Asia			8,953				5,502				(3,451	)			(38.5	)			5,476				3,424				(2,052	)			(37.5	)
Other Regions			664				446				(218	)			(32.8	)			664				446				(218	)			(32.8	)

 

*

Honda Group Unit Sales is the total unit sales of completed motorcycle, ATV and side-by-side products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

Sales revenue from external customers decreased by 27.3%, to ¥767.3 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 46.0%, to ¥79.6 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses.

Automobile Business

For the six months ended September 30, 2019 and 2020

 

		Units (thousands)
		Honda Group Unit Sales*																Consolidated Unit Sales*
		Six months ended Sep. 30, 2019				Six months ended Sep. 30, 2020												Six months ended Sep. 30, 2019				Six months ended Sep. 30, 2020
										Change				%												Change				%
Automobile Business			2,562				2,045				(517	)			(20.2	)			1,733				1,090				(643	)			(37.1	)
Japan			364				272				(92	)			(25.3	)			324				238				(86	)			(26.5	)
North America			928				619				(309	)			(33.3	)			928				619				(309	)			(33.3	)
Europe			68				50				(18	)			(26.5	)			68				50				(18	)			(26.5	)
Asia			1,094				1,054				(40	)			(3.7	)			305				133				(172	)			(56.4	)
Other Regions			108				50				(58	)			(53.7	)			108				50				(58	)			(53.7	)

 

*

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

Sales revenue from external customers decreased by 29.9%, to ¥3,622.5 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating loss was ¥70.5 billion, a decrease of ¥265.7 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses.

Financial Services Business

Sales revenue from external customers decreased by 7.9%, to ¥1,239.0 billion from the same period last year, due mainly to a decrease in revenues on disposition of lease vehicles. Operating profit increased by 24.7%, to ¥164.8 billion from the same period last year, due mainly to decreased selling, general and administrative expenses.

Life Creation and Other Businesses

For the six months ended September 30, 2019 and 2020

 

		Units (thousands)
		Honda Group Unit Sales / Consolidated Unit Sales*
		Six months ended Sep. 30, 2019				Six months ended Sep. 30, 2020
										Change				%
Life Creation Business			2,435				2,453				18				0.7
Japan			154				158				4				2.6
North America			1,109				1,171				62				5.6
Europe			352				346				(6	)			(1.7	)
Asia			693				640				(53	)			(7.6	)
Other Regions			127				138				11				8.7

 

*

Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In Life creation business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales since no affiliate and joint venture accounted for using the equity method were involved in the sale of Honda power products.

Sales revenue from external customers decreased by 6.4%, to ¥146.1 billion from the same period last year, due mainly to decreased sales revenue in Other businesses. Operating loss was ¥4.7 billion, an increase of ¥2.2 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses. In addition, operating loss of aircraft and aircraft engines included in the Life creation and other businesses was ¥15.3 billion, an improvement of ¥3.0 billion from the same period last year.

Cash Flows

Consolidated cash and cash equivalents on September 30, 2020 increased by ¥292.9 billion from March 31, 2020, to ¥2,965.3 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the same period last year, are as follows:

Net cash provided by operating activities amounted to ¥501.8 billion of cash inflows. Cash inflows from operating activities increased by ¥91.9 billion from the same period last year, due mainly to decreased payments for parts and raw materials, which was partially offset by decreased cash received from customers.

Net cash used in investing activities amounted to ¥303.2 billion of cash outflows. Cash outflows from investing activities decreased by ¥72.3 billion from the same period last year, due mainly to a decrease in payments for acquisitions of other financial assets as well as for additions to property, plant and equipment.

Net cash provided by financing activities amounted to ¥124.1 billion of cash inflows. Cash inflows from financing activities increased by ¥258.3 billion from the same period last year, due mainly to increased proceeds from financing liabilities.

Research and Development

The changes in research and development activities by Honda and its subsidiaries for the six months ended September 30, 2020 are as follows:

Honda and the automobile product development division excluding the design function etc. of Honda R&D Co., Ltd. were integrated and Honda merged with Honda Engineering Co., Ltd., with an aim to transition from the current structure where sales, manufacturing, development and procurement divisions operate independently to a new structure where each process of planning and concept making, development, launch and mass-production of a new product are coordinated closely. In addition, the Innovative Research Excellence – Power Unit & Energy center and the Design center were newly established in Honda R&D Co., Ltd. In the area of power unit technologies, which is a source of Honda’s competitive strength, the Innovative Research Excellence – Power Unit & Energy center will fully demonstrate the strengths of Honda as a company that has a broad range of technologies and strive to increase the value of its product for the future with integration of research and development functions for power unit and energy technologies for motorcycles, automobiles, power products and business jets. The Design center will strengthen the consistent Honda brand across products with integration of design functions for products of motorcycles, automobiles and life creation as well.

Employees

The number of employees of Honda as of September 30, 2020 increased by 10,934, to 36,313 from March 31, 2020, due mainly to the integration of Honda and the automobile product development division excluding the design function etc. of Honda R&D Co., Ltd. and the merger with Honda Engineering Co., Ltd. by Honda in Automobile business. There was no significant changes in the total number of employees of Honda and its subsidiaries for the six months ended September 30, 2020.

Unit Production and Sales

Unit production and sales in Honda and its subsidiaries for the six months ended September 30, 2020 in Motorcycle business and Automobile business decreased significantly from the same period last year. In addition, unit production in Life creation business decreased significantly from the same period last year. The decreased unit production in each segment was due to suspended or reduced production in Honda’s production bases in Japan and overseas resulted from the spread of COVID-19. For an increase or decrease in unit sales in each segment, see “Business Segment” in “Consolidated Financial Results”.

Plans for Capital Expenditures for Fiscal Year 2021

There is no decision relating to plans for significant capital expenditures for the six months ended September 30, 2020.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position

March 31, 2020 and September 30, 2020

 

						Yen (millions)
Assets		Note				March 31, 2020				September 30, 2020
						unaudited				unaudited
Current assets:
Cash and cash equivalents						¥	2,672,353			¥	2,965,334
Trade receivables							633,909				687,819
Receivables from financial services							1,878,358				1,657,479
Other financial assets							190,053				84,851
Inventories							1,560,568				1,509,539
Other current assets							365,769				314,314
Total current assets							7,301,010				7,219,336
Non-current assets:
Investments accounted for using the equity method							655,475				742,411
Receivables from financial services							3,282,807				3,335,679
Other financial assets							441,724				552,548
Equipment on operating leases			5				4,626,063				4,617,641
Property, plant and equipment			6				3,051,704				2,941,425
Intangible assets							760,434				790,660
Deferred tax assets							132,553				80,184
Other non-current assets							209,695				217,289
Total non-current assets							13,160,455				13,277,837
Total assets						¥	20,461,465			¥	20,497,173
						Yen (millions)
Liabilities and Equity		Note				March 31, 2020				September 30, 2020
						unaudited				unaudited
Current liabilities:
Trade payables						¥	958,469			¥	981,681
Financing liabilities							3,248,457				3,117,968
Accrued expenses							449,716				390,999
Other financial liabilities							209,065				198,113
Income taxes payable							43,759				42,642
Provisions			7				287,175				280,822
Other current liabilities							593,447				558,345
Total current liabilities							5,790,088				5,570,570
Non-current liabilities:
Financing liabilities							4,221,229				4,521,631
Other financial liabilities							303,570				286,409
Retirement benefit liabilities							578,909				600,544
Provisions			7				238,439				209,625
Deferred tax liabilities							698,868				670,193
Other non-current liabilities							344,339				344,232
Total non-current liabilities							6,385,354				6,632,634
Total liabilities							12,175,442				12,203,204
Equity:
Common stock							86,067				86,067
Capital surplus							171,823				171,918
Treasury stock							(273,940	)			(273,818	)
Retained earnings							8,142,948				8,235,636
Other components of equity							(114,639	)			(177,354	)
Equity attributable to owners of the parent							8,012,259				8,042,449
Non-controlling interests							273,764				251,520
Total equity							8,286,023				8,293,969
Total liabilities and equity						¥	20,461,465			¥	20,497,173

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the six months ended September 30, 2019 and 2020

 

						Yen (millions)
		Note				September 30, 2019				September 30, 2020
						unaudited				unaudited
Sales revenue			8			¥	7,725,356			¥	5,775,144
Operating costs and expenses:
Cost of sales							(6,123,574	)			(4,653,557	)
Selling, general and administrative							(783,943	)			(623,192	)
Research and development							(345,234	)			(329,130	)
Total operating costs and expenses							(7,252,751	)			(5,605,879	)
Operating profit							472,605				169,265
Share of profit of investments accounted for using the equity method							108,179				102,296
Finance income and finance costs:
Interest income							26,260				8,877
Interest expense							(7,595	)			(6,549	)
Other, net							(20,014	)			(1,605	)
Total finance income and finance costs							(1,349	)			723
Profit before income taxes							579,435				272,284
Income tax expense							(179,670	)			(99,715	)
Profit for the period						¥	399,765			¥	172,569
Profit for the period attributable to:
Owners of the parent							368,856				160,051
Non-controlling interests							30,909				12,518
						Yen
						September 30, 2019				September 30, 2020
Earnings per share attributable to owners of the parent
Basic and diluted			11			¥	209.63			¥	92.70

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the six months ended September 30, 2019 and 2020

 

						Yen (millions)
		Note				September 30, 2019				September 30, 2020
						unaudited				unaudited
Profit for the period						¥	399,765			¥	172,569
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans							—				—
Net changes in revaluation of financial assets measured at fair value through other comprehensive income							(4,693	)			18,246
Share of other comprehensive income of investments accounted for using the equity method							(604	)			(427	)
Items that may be reclassified subsequently to profit or loss
Net changes in revaluation of financial assets measured at fair value through other comprehensive income							164				114
Exchange differences on translating foreign operations							(167,710	)			(77,590	)
Share of other comprehensive income of investments accounted for using the equity method							(31,571	)			475
Total other comprehensive income, net of tax							(204,414	)			(59,182	)
Comprehensive income for the period						¥	195,351			¥	113,387
Comprehensive income for the period attributable to:
Owners of the parent							173,092				97,336
Non-controlling interests							22,259				16,051

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended September 30, 2019 and 2020

 

						Yen (millions)
		Note				September 30, 2019				September 30, 2020
						unaudited				unaudited
Sales revenue			8			¥	3,729,103			¥	3,651,369
Operating costs and expenses:
Cost of sales							(2,957,091	)			(2,884,258	)
Selling, general and administrative							(376,494	)			(317,939	)
Research and development							(175,382	)			(166,216	)
Total operating costs and expenses							(3,508,967	)			(3,368,413	)
Operating profit							220,136				282,956
Share of profit of investments accounted for using the equity method							63,949				62,302
Finance income and finance costs:
Interest income							12,065				4,282
Interest expense							(4,000	)			(4,716	)
Other, net							(2,526	)			893
Total finance income and finance costs							5,539				459
Profit before income taxes							289,624				345,717
Income tax expense							(79,451	)			(93,169	)
Profit for the period						¥	210,173			¥	252,548
Profit for the period attributable to:
Owners of the parent							196,554				240,922
Non-controlling interests							13,619				11,626
						Yen
						September 30, 2019				September 30, 2020
Earnings per share attributable to owners of the parent
Basic and diluted			11			¥	111.70			¥	139.53

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended September 30, 2019 and 2020

 

						Yen (millions)
		Note				September 30, 2019				September 30, 2020
						unaudited				unaudited
Profit for the period						¥	210,173			¥	252,548
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans							—				—
Net changes in revaluation of financial assets measured at fair value through other comprehensive income							1,655				14,037
Share of other comprehensive income of investments accounted for using the equity method							221				(956	)
Items that may be reclassified subsequently to profit or loss
Net changes in revaluation of financial assets measured at fair value through other comprehensive income							54				58
Exchange differences on translating foreign operations							(38,492	)			(86,409	)
Share of other comprehensive income of investments accounted for using the equity method							(17,312	)			5,668
Total other comprehensive income, net of tax							(53,874	)			(67,602	)
Comprehensive income for the period						¥	156,299			¥	184,946
Comprehensive income for the period attributable to:
Owners of the parent							144,815				177,103
Non-controlling interests							11,484				7,843

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

For the six months ended September 30, 2019 and 2020

 

						Yen (millions)
						Equity attributable to owners of the parent
		Note				Common stock				Capital surplus				Treasury stock				Retained earnings				Other components of equity				Total				Non-controlling interests				Total equity
Balance as of April 1, 2019 (unaudited)						¥	86,067			¥	171,460			¥	(177,827	)		¥	7,973,637			¥	214,383			¥	8,267,720			¥	298,070			¥	8,565,790
Comprehensive income for the period
Profit for the period																			368,856								368,856				30,909				399,765
Other comprehensive income, net of tax																							(195,764	)			(195,764	)			(8,650	)			(204,414	)
Total comprehensive income for the period																			368,856				(195,764	)			173,092				22,259				195,351
Reclassification to retained earnings																			146				(146	)			—								—
Transactions with owners and other
Dividends paid			12																(98,575	)							(98,575	)			(51,155	)			(149,730	)
Purchases of treasury stock															(4	)											(4	)							(4	)
Disposal of treasury stock															79												79								79
Share-based payment transactions											204																204								204
Total transactions with owners and other											204				75				(98,575	)							(98,296	)			(51,155	)			(149,451	)
Other changes																			(1,493	)							(1,493	)							(1,493	)
Balance as of September 30, 2019 (unaudited)						¥	86,067			¥	171,664			¥	(177,752	)		¥	8,242,571			¥	18,473			¥	8,341,023			¥	269,174			¥	8,610,197
						Yen (millions)
						Equity attributable to owners of the parent
		Note				Common stock				Capital surplus				Treasury stock				Retained earnings				Other components of equity				Total				Non-controlling interests				Total equity
Balance as of April 1, 2020 (unaudited)						¥	86,067			¥	171,823			¥	(273,940	)		¥	8,142,948			¥	(114,639	)		¥	8,012,259			¥	273,764			¥	8,286,023
Comprehensive income for the period
Profit for the period																			160,051								160,051				12,518				172,569
Other comprehensive income, net of tax																							(62,715	)			(62,715	)			3,533				(59,182	)
Total comprehensive income for the period																			160,051				(62,715	)			97,336				16,051				113,387
Transactions with owners and other
Dividends paid			12																(67,363	)							(67,363	)			(40,546	)			(107,909	)
Purchases of treasury stock															(2	)											(2	)							(2	)
Disposal of treasury stock															124												124								124
Share-based payment transactions											95																95								95
Equity transactions and others																															2,251				2,251
Total transactions with owners and other											95				122				(67,363	)							(67,146	)			(38,295	)			(105,441	)
Balance as of September 30, 2020 (unaudited)						¥	86,067			¥	171,918			¥	(273,818	)		¥	8,235,636			¥	(177,354	)		¥	8,042,449			¥	251,520			¥	8,293,969

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the six months ended September 30, 2019 and 2020

 

						Yen (millions)
		Note				September 30, 2019				September 30, 2020
						unaudited				unaudited
Cash flows from operating activities:
Profit before income taxes						¥	579,435			¥	272,284
Depreciation, amortization and impairment losses excluding equipment on operating leases							327,903				294,284
Share of profit of investments accounted for using the equity method							(108,179	)			(102,296	)
Finance income and finance costs, net							(37,602	)			34,301
Interest income and interest costs from financial services, net							(64,586	)			(63,235	)
Changes in assets and liabilities
Trade receivables							72,277				(47,843	)
Inventories							(102,759	)			32,367
Trade payables							(78,278	)			63,257
Accrued expenses							(58,310	)			(58,255	)
Provisions and retirement benefit liabilities							(26,074	)			5,204
Receivables from financial services							47,293				83,385
Equipment on operating leases							(173,982	)			(65,320	)
Other assets and liabilities							(12,447	)			(72,394	)
Other, net							(550	)			164
Dividends received							85,621				115,444
Interest received							145,241				118,369
Interest paid							(78,768	)			(60,381	)
Income taxes paid, net of refunds							(106,284	)			(47,446	)
Net cash provided by operating activities							409,951				501,889
Cash flows from investing activities:
Payments for additions to property, plant and equipment							(153,354	)			(141,869	)
Payments for additions to and internally developed intangible assets							(111,292	)			(111,093	)
Proceeds from sales of property, plant and equipment and intangible assets							8,668				4,739
Payments for acquisitions of subsidiaries, net of cash and cash equivalents acquired							(3,047	)			2,230
Payments for acquisitions of investments accounted for using the equity method							(2,401	)			(2,450	)
Payments for acquisitions of other financial assets							(197,620	)			(135,492	)
Proceeds from sales and redemptions of other financial assets							84,874				80,690
Other, net							(1,404	)			—
Net cash used in investing activities							(375,576	)			(303,245	)
Cash flows from financing activities:
Proceeds from short-term financing liabilities							4,123,201				4,809,435
Repayments of short-term financing liabilities							(4,268,863	)			(4,764,780	)
Proceeds from long-term financing liabilities							967,835				1,111,588
Repayments of long-term financing liabilities							(785,267	)			(907,621	)
Dividends paid to owners of the parent							(98,575	)			(67,363	)
Dividends paid to non-controlling interests							(36,377	)			(26,610	)
Purchases and sales of treasury stock, net							75				122
Repayments of lease liabilities							(36,255	)			(30,083	)
Other, net							—				(553	)
Net cash provided by (used in) financing activities							(134,226	)			124,135
Effect of exchange rate changes on cash and cash equivalents							(59,303	)			(29,798	)
Net change in cash and cash equivalents							(159,154	)			292,981
Cash and cash equivalents at beginning of year							2,494,121				2,672,353
Cash and cash equivalents at end of period						¥	2,334,967			¥	2,965,334

See accompanying notes to condensed consolidated interim financial statements.

 

 

1

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(1) Reporting Entity

Honda Motor Co., Ltd. (the “Company”) is a public company domiciled in Japan. The Company and its subsidiaries (collectively “Honda”) develop, manufacture and distribute motorcycles, automobiles, power products and others throughout the world, and also provide financial services to customers and dealers for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, Italy, France, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina and Brazil.

(2) Basis of Preparation

 (a) Compliance with Interim Financial Reporting Standards

The condensed consolidated interim financial statements of the Company have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended March 31, 2020, since the condensed consolidated interim financial statements do not include all the information required in the annual consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

 (b) Functional Currency and Presentation Currency

The condensed consolidated interim financial statements are presented in Japanese yen, which is the functional currency of the Company. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen, except when otherwise indicated.

 (c) Use of Estimates and Judgments

The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. These estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The condensed consolidated interim financial statements are prepared based on the same judgments and estimations as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2020.

(3) Summary of Significant Accounting Policies

The condensed consolidated interim financial statements are prepared based on the same accounting policies as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2020.

 

2

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(4) Segment Information

Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Life creation and other businesses, which are based on Honda’s organizational structure and characteristics of products and services. Operating segments are defined as the components of Honda for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for these reportable segments are consistent with the accounting policies used in the Company’s condensed consolidated interim financial statements.

Principal products and services, and functions of each segment are as follows:

 

Segment		Principal products and services		Functions
Motorcycle Business		Motorcycles, all-terrain vehicles (ATVs), side-by-sides (SxS) and relevant parts		Research and development Manufacturing Sales and related services
Automobile Business		Automobiles and relevant parts		Research and development Manufacturing Sales and related services
Financial Services Business		Financial services		Retail loan and lease related to Honda products Others
Life Creation and Other Businesses		Power products and relevant parts, and others		Research and development Manufacturing Sales and related services Others

   (a) Segment Information

Segment information as of and for the six months ended September 30, 2019 and 2020 is as follows:

As of and for the six months ended September 30, 2019

 

		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Life Creation and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	1,055,543			¥	5,167,970			¥	1,345,634			¥	156,209			¥	7,725,356			¥	—			¥	7,725,356
Intersegment			—				113,050				7,156				10,846				131,052				(131,052	)			—
Total			1,055,543				5,281,020				1,352,790				167,055				7,856,408				(131,052	)			7,725,356
Segment profit (loss)		¥	147,655			¥	195,293			¥	132,162			¥	(2,505	)		¥	472,605			¥	—			¥	472,605
Segment assets		¥	1,473,282			¥	7,903,911			¥	10,131,384			¥	336,266			¥	19,844,843			¥	476,146			¥	20,320,989
Depreciation and amortization			32,563				283,570				406,833				7,146				730,112				—				730,112
Capital expenditures			30,698				207,122				1,193,874				7,190				1,438,884				—				1,438,884

 

3

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

As of and for the six months ended September 30, 2020
		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Life Creation and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	767,316			¥	3,622,538			¥	1,239,092			¥	146,198			¥	5,775,144			¥	—			¥	5,775,144
Intersegment			—				100,284				6,423				8,836				115,543				(115,543	)			—
Total			767,316				3,722,822				1,245,515				155,034				5,890,687				(115,543	)			5,775,144
Segment profit (loss)		¥	79,664			¥	(70,503	)		¥	164,866			¥	(4,762	)		¥	169,265			¥	—			¥	169,265
Segment assets		¥	1,424,352			¥	7,706,715			¥	10,234,914			¥	348,192			¥	19,714,173			¥	783,000			¥	20,497,173
Depreciation and amortization			34,360				249,667				412,027				7,599				703,653				—				703,653
Capital expenditures			18,925				210,914				965,857				4,501				1,200,197				—				1,200,197
Segment information for the three months ended September 30, 2019 and 2020 is as follows:   For the three months ended September 30, 2019
		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Life Creation and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	522,525			¥	2,473,492			¥	657,233			¥	75,853			¥	3,729,103			¥	—			¥	3,729,103
Intersegment			—				57,388				3,532				5,958				66,878				(66,878	)			—
Total			522,525				2,530,880				660,765				81,811				3,795,981				(66,878	)			3,729,103
Segment profit (loss)		¥	77,782			¥	74,918			¥	66,380			¥	1,056			¥	220,136			¥	—			¥	220,136
For the three months ended September 30, 2020
		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Life Creation and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	493,094			¥	2,412,615			¥	663,258			¥	82,402			¥	3,651,369			¥	—			¥	3,651,369
Intersegment			—				54,484				3,255				4,395				62,134				(62,134	)			—
Total			493,094				2,467,099				666,513				86,797				3,713,503				(62,134	)			3,651,369
Segment profit (loss)		¥	68,462			¥	125,385			¥	93,298			¥	(4,189	)		¥	282,956			¥	—			¥	282,956

 

Explanatory notes:

 

1.

Segment profit (loss) of each segment is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs. Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

 

2.

Segment assets of each segment are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments are allocated based on the most reasonable measures applicable except for the corporate assets described below.

 

3.	Intersegment sales revenues are generally made at values that approximate arm’s-length prices.

 

4.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of September 30, 2019 and 2020 amounted to ¥751,369 million and ¥1,038,671 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.