管理層發言
Thank you so much for taking time to join us here today. And I'd like to begin the Honda FY '24 financial results press conference. First, the executives in attendance today are Toshihiro Mibe, Director President and Representative Executive Officer, Shinji Aoyama, Director, Executive Vice President, Representative Executive Officer, Eiji Fujimura, Managing Executive Officer and CFO. First, Mr. Mibe will give a summary of the results, followed by Mr. Aoyama who'll present the FY '24 results and FY '25 forecast and shareholder returns. Mr. Mibe, please.
Once again, good afternoon. I'm Mibe. I'd like to first thank all of you for taking time today and providing generous support to Honda's business. As a mobility company, Honda pilots its value proposition of zero environmental impact and absolute safety through the social values of environment and safety. We aim to realize our vision of future mobility and an attractive mobility society. This will enable us to manifest a new corporate path of growth. We see for continuing understanding and support for Honda's initiatives. I would now like to review our FY '24 financial results and explain our forecast for FY '25. FY '24 operating profit was a historical high, JPY 1,381.9 billion. Operating profit margin was 6.8%. In FY '25, we will steadily dedicate resources to electrification and aim for operating profit of JPY 1.420 billion, operating profit margin of 7%, 1 year ahead of our original plan.
FY '24 cash flows from operating activities, the source for future investment, excluding R&D expenses, was roughly JPY 3 trillion, up JPY 1 trillion year-on-year. We have the foundation to support future investment for growth. Shareholder returns is regarded as our top priority management issue. FY '24 dividend was JPY 68, up JPY 28 year-on-year. In FY '25, we will acquire a record high JPY 300 billion in the company's shares and realize a stable, continuous dividend policy. Next, I will review the initiatives we have taken towards establishing our earnings base. In our motorcycle business, in addition to our dominant position in Asia, we have expanded large motorcycle sales in advanced nations and expanded our product lineup in South America to further strengthen our business structure and build a well-balanced global income structure. Regarding the automobile business, where profitability was an issue, we increased the commonality ratio of car models such as CR-V, Civic, and Accord, reduced hybrid system costs, and enhanced product appeal to steadily improve our business structure.
We will further evolve the performance and cost of our hybrid system, targeting the second half of this decade. Regarding initiatives for enhancing corporate value, the PBR remains less than onefold. We believe there are three reasons as shown. To address this, we will optimize capital through proactive shareholder returns, build and maintain our earning base, and work out the granularity of our electrification strategy. For FY '25, we will acquire JPY 300 billion of our company shares and aim for an operating profit margin of 7%. The details of our electrification strategy and capital allocation will be explained at the 2024 Honda business briefing on May 16. Through these initiatives and continuing dialogue with stakeholders, we aim for an early achievement of our more than 1 PBR. Next, Mr. Aoyama will present the details of our financial results.
So let me explain about the actual results of FY 2024, followed by the FY 2025 outlook and shareholders' returns. With regard to the updates of the main markets, total bills, the market declined in China, but increase in the United States due to the stable demand has led to the overall sales exceeding last year. Our motorcycle business saw some declines, particularly in Vietnam due to the ongoing slowdown. However, unit sales in India and Brazil increased due to solid demand, contributing to the overall market being almost similar to last year. Regarding Honda's group's unit sales of motorcycles, we achieved 18.819 million units sold, mainly due to a decrease in North America. For our product urgencies, we achieved 3.81 million units due to this decline in North America. This is the summary of the consolidated financial results. Also, on the digital oil unit sales, thanks to improvements in model profitability, we achieved an operating profit of JPY 1.3819 trillion, up by JPY 601.2 billion.
We accomplished the highest ever results in operating profits, profit before income taxes, and profit for the year 2024, attributable to the parent. ROIC was 9.5%, and ROE was 9.2%. Let me explain factors of ups and downs of profits as compared to last year. There were some impacts from inflation, but due to effective price management that reflects the improved commercial value of the products and incremental auto bill unit sales, we achieved JPY 1.31 trillion in operating profit, up JPY 601.2 billion year-on-year. Profit before income taxes was JPY 1.64233 trillion, up by JPY 762.8 billion year-on-year. Regarding operating profit by business segment, motorcycle business is JPY 556.2 billion, the highest ever result. The automobile business is JPY 560.6 billion, and the financial services business came in at JPY 273.9 billion. For power products and other businesses, it recorded a negative JPY 8.8 billion.
Free cash flow of our business companies, excluding financial businesses, was JPY 1.4609 trillion, with a JPY 3.7616 trillion net cash balance at the end of the period. Regarding our expected sales of the Honda Group in FY 2025, for motorcycles, we expect 19.8 million units, reflecting growth in Asia, and 4.12 billion units of automobiles, primarily in Japan and North America. For Power Products, we expect 3.66 million units, reflecting a decline mainly in unit sales volume. Overall, on a consolidated basis, we expect unit sales to increase in both motorcycle and automobile businesses. Our outlook for FY 2025 consolidated financial results anticipates an operating profit of JPY 1.42 trillion with an operating profit ratio of 7%. The profit for the year attributable to the owners of the parent will be JPY 1 trillion. Foreign exchange assumption is set for JPY 140 for the dollar throughout the year.
Factors behind the profit before income taxes forecast include an increase in R&D and other expenses. However, thanks to the pricing strategy that reflects the commercial value of our products, profit before income taxes will be JPY 1.25 trillion, down by JPY 142.3 billion year-on-year. Operating profit will be JPY 1.42 trillion, up by JPY 38 billion year-on-year. These are the outlooks on capital expenditures, depreciation, amortization, and R&D spending for FY 2025 outlined on the slide. Lastly, let me touch upon shareholder returns. The annual dividend for FY 2024 is JPY 68 per share, a JPY 28 increase from the year before and JPY 10 higher than our previous projection. The dividend at the end of the year is set at JPY 39 per share. Annual dividends for FY 2025 are expected to be JPY 68 per share, the same as FY 2024. In the Board of Directors meeting today, we made a decision to execute share buybacks up to JPY 300 billion. That concludes my presentation. Thank you very much.
分析師問答
Thank you for listening. Now we would like to move on to the Q&A session. The first question comes from Mr. Nakamura of Yomiuri Shimbun.
Nakamura from Yomiuri Shimbun newspaper. I have two questions about your China business. Each of the manufacturers are having difficulty with the Chinese EV companies, which means that there are a lot of fans for ICE vehicles. So what is your marketing strategy going forward? And what about the optimization of excessive production capacity? Secondly, to Mr. Mibe: I think it is the first time you attended the financial results presentation meeting. So what is the reason for your attendance? Is there any message that you would like to deliver directly to us? If so, please introduce them to us.
First, thank you for your question, Mr. Nakamura. First about the Chinese business, I, Aoyama, would like to explain. Yes, there are a lot of Honda fans and ICE fans and I agree with you on that. As for our future marketing strategy, at the Beijing Motor Show, there was an announcement that we made about the YE series, the second of the series will be introduced in the first half of this fiscal year. Furthermore, in the second half of this fiscal year, we have already announced that the YE series, the first of the series will be launched as the first battery EV platform in China and the Middle East, the P7 and S7. Therefore, the YE Series will be expanded, and this is how we want to expand our business in China, especially in the battery EV space. We want to introduce a competitive range of products. This is our basic marketing strategy. Meanwhile, about the overall production capacity and optimization, with our joint venture partners, we are currently examining what can be done within the budget of FY '25. We have included some expenses towards these purposes. Regarding the specifics of how to optimize, we would like you to wait till we can make the announcement.
Next, Mibe would like to explain why I'm here today and the background. It is my first time attending this meeting. In the past, our presidents have not attended this meeting. I'm the first in the history of Honda to attend as president. This is because we are faced with a lot of challenges at this time of transformation. As president, I want to explain about the current management situation and also our short- to mid-term plans. I thought it was important to directly communicate that for FY 2025, we want to achieve the ROS. One year in advance, we aim to achieve this margin of 7%. This is something I personally have led, and I want to demonstrate my leadership this fiscal year as well to achieve this goal. In my presentation, I mentioned that we have less than a PBR of 1, and I view this as a major challenge. At the end of March, about 60% of the prime market companies listed market have exceeded one, while Honda has 0.76.
We must consider shareholder returns, and we need to make clear our growth path, especially for our plans for electrification. We want to update you on our progress, and there may be opportunities during the financial results meetings for this. I am unsure whether I will attend all quarterly meetings, but I would like to attend the final full-year announcement. We will elaborate on our strategy at the briefing session on May 16. I will talk about our outlook for electrification and all the other details. Please wait until the 16th for these details. I would like to continue to attend these meetings.
So next question, please.
Nihon Keizai, please.
R&D that is going to be the highest as well as R&D spend in order to strengthen the shareholders. How do you manage that? Also, what is the backdrop of having to reinforce your R&D efforts?
Let me explain the overall situation rather than the quarterly situation, as we said before, electrification and software. We mentioned that we are going to invest JPY 5 trillion by 2030. I will explain more details on the 16th of May. In the meantime, we have actually changed our strategy a little bit. Specifically, in terms of electrification, particularly regarding batteries, we had explained about Canada before. We are going to shift to a vertical type system to sustain the total electrification businesses. To do this, we need to invest in development as well. We have to internalize this technology, and that will be increasing as well. For the software, the core of the software has to be supported internally at Honda, and our R&D efforts will be focused more internally. Therefore, we have more petitions before the development of vehicles to strengthen that part. Specifically, for the model year 2027, we will continue to focus on ICE models based on hybrid technology.
For those ICE models, towards 2030, there will still be 60% of the ICE models produced; therefore, we need to earn from those businesses while also allocating resources to electrification. Thus, spending on both areas will be part of our efforts in the next three years. Maintaining a higher level of R&D spending going forward is essential for our growth, and we will focus on strengthening shareholder returns as part of our financial strategy. In terms of capital allocation, as mentioned previously, we will give more communication in the business update scheduled for May 16, where we will share more details.
Do you have more questions? What is your second question, please?
Specific question. Regarding unit sales by region, in China, it declined from the previous year, is that what you expect again? Also, you're going to provide a new series, right? What are the expectations? Additionally, you also mentioned that you're expecting growth in North America. Is that because of the SUV we're incurring more?
The unit sales for regions are mainly as follows. For China, as we said before, the YE series is going to be highly anticipated and will be launched in the second half of FY 2025. Therefore, it will be effective after that. We plan to provide 50,000 units of those in addition to the existing products. Comparatively, for North America, the Civic Hybrid is not yet launched. However, we are going to add the Civic Hybrid to the offering. In terms of incremental units, we have added BEVs in May and April this year, which will contribute to the growth in North America. That is the plan.
This is Yokoyama from Weekly magazine. I have two questions. First, about hybrid competitiveness and product appeal. Eiji, in your material, you referred to this slightly, but in North America and Europe, your competitors are doing well. You also said that you want to invest in ICE. But hybrid will be a crucial contributor. So within your electrification strategy, what is the positioning of hybrid?
I would like to respond to this question. Regarding hybrid competitiveness, we believe that in FY '24 about 800,000 units sold were hybrid. In FY '25, we are aiming for 1 million units, which represents roughly 4.12 billion in total sales. One out of four vehicles sold will be hybrid. Currently, our position on hybrid does make a difference in profitability. There is variance in profitability based on how we position hybrid, but the ICE and hybrid systems are expected to yield similar profits. If you compare the 2018 model year and the 2023 model year, the data presented speaks to improved efficiency and higher performance. However, cost-wise, we are trying to make it more affordable. For the model year 2027, we have developed a prototype which aims to increase our competitiveness, not just in cost but also in performance. In the second half of this decade, we will ramp up the production of battery EVs, and while the volume may decrease, the earning power per unit will increase significantly, creating an injection of resources towards electrification for battery EVs.
If I may add to what Mibe has said, we have one primary hybrid model we are focusing on. We have indeed been reducing costs. Comparatively, from a profitability perspective, ICE models have been more competitive as OEM has had performance that is at par or roughly close. For the automotive business excluding EV-related development expenses, we can expect an operating profit margin close to 8%. This speaks to how competitive we are, considering costs. In the second half of this decade, our evolution plan will ensure that even as hybrids, we remain competitive. As for sales volume, we're targeting 1 million hybrids this fiscal year, and by 2030, if successful, that might be close to 2 million units. This approach will give us the ability to generate cash and thus support our transition to electrification.
I have a second question. Regarding your automotive business, the margin compared to the previous quarter has gotten worse, and you mentioned an increase in expenses. What is your outlook for improving the operating margin of the automotive business?
Yes, the fourth quarter has seen an increase in expenses. However, it is better to discuss the full year outlook, not just the fourth quarter alone. Compared to last fiscal year, there has been an increase in the warranty expense ratio as well, and we account for a 1.2% warranty expense ratio. The support to suppliers amidst restructuring has yielded impairment. Excluding these effects, the margin is slightly less than 5%. Moving forward, our goal is to maintain profitability by focusing on fixed costs and continue to work hard in those areas. We aim to positively impact these areas in our major markets, primarily the U.S. and Japan. And we will try to reduce incentives and increase our product's perceived value. This approach should allow us to price competitively in line with the value we offer to customers while considering the support that needs to be provided to suppliers, especially considering the impacts of inflation.
Next question. From NHK, Mr. Obi.
NHK, Obi speaking. Thank you for your presentation today. I have two questions. First, your sales turnover revenue and operating profit achieved the highest ever. Given this context, what is your reaction to today's strong business performance? Second, the exchange rate, the yen, has depreciated significantly, currently around JPY 155. While this may positively impact your business, what is your overall thinking regarding the current exchange rate situation for Japan?
Regarding the first question, during the second part of 2010, we said that we would measure 6 million cars and 6 new units. We were expanding our businesses mainly and needed to shift our directions. We stated that we would solidify our basic businesses efficiently. For example, we've optimized our surplus capacity through fixed cost reduction and enhanced the commonality of parts. System cost reductions of hybrid cars with better performances have improved our commercial vehicles' value through appropriate pricing. The initiatives in the automobile businesses have noticeably improved. If we look solely at the EP businesses, we are approaching near 8% profitability now. Furthermore, our motorcycle businesses expanded profitability beyond Asian markets into Europe and South America. Overall, we've improved our business structure quite well. By 2030, we can envision the sale of 2 million EVs—that is part of our vision, with a business ROS of 5%.
This is our target as we continue to invest in R&D to solidify our foundation to achieve this vision. Regarding the yen's depreciation situation, we rely heavily on manufacturing processes. Therefore, abrupt forex changes are not welcomed. While the current situation is closely related to U.S. and Japan government policies, we also see a growing domestic demand meaning we can repatriate manufacturing to Japan. The current stock prices reflect this, clearly indicating increased demand for the yen. Our expectation or assumption is JPY 140 for the near term in this budget. This is somewhat conservative. We expect JPY 145 to JPY 135 based on interest rate adjustments. In the long run, we believe improved internal domestic demand will lead to appreciation, thus we don't believe we will see JPY 150 or JPY 160. While projections are difficult, the fluctuations in currency won't favor us through April and May, but we will adapt to the changing landscape.
Nikko, Japan Automotive Daily. Mr. Misododi, please.
This is Mr. Misododi from Japan Automotive Daily. Can you hear me?
Yes.
I have two questions. First, regarding the FY '25 forecast, you mentioned an operating profit increase with a selling price and cost impact being a positive of JPY 502 billion. Can you break this down? Secondly, in Japan for FY '25, you forecast 660,000 units, which relates closely to your target of 700,000 annual unit sales. However, with the semiconductor shortage seemingly ending, could you explain what is the reason that you are unable to reach 700,000? Additionally, Mr. Mibe, could you explain Honda's business position in Japan?
To explain the operating profit increase, the JPY 502 billion impact includes various factors. The increases in labor costs for suppliers contribute to that. We have been working on our motorcycle businesses to offset that. The main positive impact from our selling price has been about JPY 407 billion, addressing the inflation aspect while trying to introduce competitive products. There are special factors involved in the U.S. as we approach electrification. The changes in dealer margins, the profit previously allocated to dealers has shifted back to us, creating improved realization. We are not yet at pre-COVID levels, and competition has intensified, warranting a more modest incentive budget. This year, we can still raise our prices as we balance inflation with appealing products.
Regarding the sales target in Japan, historically, 700,000 units were common. We currently see marginal increases in the market. Thus, the expectation of 655,000 units is realistic considering market fluctuations. As for share targets, we are aiming for a 15% share, highlighting significant growth as we continue negotiations around new offerings for our product lines. We are optimistic about new launches boosting overall shares and achieving the numbers we aim for.
Examining the current situation, as Aoyama previously mentioned, at CES, we unveiled a new EV. On a global scale, we aim to introduce this product to Japan as well. Our focus remains on efficiency while shifting towards more compact models. This shift to electrification presents significant opportunities, and while many details are still being worked out, we can promise that changes are on the horizon that will enhance Honda's appeal in Japan.
Examining the current situation, as Aoyama previously mentioned, at CES, we unveiled a new EV. On a global scale, we aim to introduce this product to Japan as well. Our focus remains on efficiency while shifting towards more compact models. This shift to electrification presents significant opportunities, and while many details are still being worked out, we can promise that changes are on the horizon that will enhance Honda's appeal in Japan.
I have two questions. Can you hear me?
Yes.
Moving away from financial results, considering the president's presence, I like to understand your views on the status of the battery markets and Honda's positioning in negotiations with other companies regarding development and sales plans. With your Canadian plant under consideration, how do you see Honda navigating these market dynamics, especially with other companies facing EBITDA declines and slowing EV trends?
Regarding our business strategy, the current EV demand reflects visible market changes globally as you mentioned. However, since I became president, our goal of achieving 40% by 2030 and 80% by 2040, resulting in 100% FCEV or BEV by 2040, remains unchanged. These targets have not been altered. Currently, while we envision two million cars by 2030, we are working to build a solid business foundation to achieve these goals, including our investment plans. Our strategy remains the same within the evolving regulatory landscape. With the hybrid offering positioned as an optimal interim solution, we will keep pushing forward with our hybrids even as we pivot towards battery EVs. We are strategizing in small mobility segments, ensuring our operations align with expected market needs. We will take each step to achieve our goals. On collaboration with Nissan, I cannot dive into specifics but frequent discussions have been ongoing about what value can emerge from collaboration, emphasizing electrification, software development, and associated products supply. We believe this collaboration is crucial for growth, especially with shared development costs in electrification and software development. We are working closely to identify mutual benefits. We believe that by summer, we should be able to share more definitive outcomes on our discussions.
By summer, can you share a preliminary update on the collaborative discussions?
I anticipate that we will compile information and be prepared to share developing updates by the end of this year.
Apologize, but in the interest of time, next will be the last question.
In North America, your automotive business volume is increasing. Is the impact from the foreign exchange rate significant or is it due to consumer trends returning to ICE vehicles? What is driving the increase in unit volume?
The reasons for the increase in volume primarily stem from a combination of factors. While the exchange rate plays a role, it is not the dominant factor influencing results, particularly in FY '24. The FY '23 period was challenging due to semiconductor shortages which impacted our production capabilities. In FY '24, we expect our factories to utilize up to 100%, pushing increased production volumes. Our ability to raise selling prices in alignment with the attractiveness of our products significantly contributes to this increase along with hybrid performance enhancements and competitive reasons. Thus, profit margins are also benefiting from these improvements.
On page 10, you discuss historical operating income, citing reasons for the increase in selling price cost contributions. Could you elaborate further?
On page 10 we mentioned the changes in profit before income tax for FY '24 results. The price cost impact, including the gross profits, encompasses motorcycle segments and other regions. The automotive portion showed a profit increase driven predominantly by North America. The previous fiscal year was defined by semiconductor challenges; however, this year, we saw an increase with 420,000 unit growth in North America. The overall picture captures both the positive selling price impact alongside negative supplier and wage costs. The material increase accounted for several hundred billion in costs, yet the overall price increase still reflects strong product value.
Thank you very much. I now conclude the press conference for the financial results presentation today. The slide deck and transcript will be available on our website. Thank you for your participation.