6-K 1 d771148d6k.htm FORM 6-K Form 6-K
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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 AUGUST 2019

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):  ☐

 

 

 


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Contents

Exhibit 1:

On August 6, 2019, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal first quarter ended June 30, 2019 with Financial Services Agency in Japan.


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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.

 

 

HONDA GIKEN KOGYO KABUSHIKI KAISHA (HONDA MOTOR CO., LTD.)

/s/ Masao Kawaguchi

Masao Kawaguchi

General Manager

Finance Division

Honda Motor Co., Ltd.

Date: August 27, 2019


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

June 30, 2019


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Results

Overview of Operating Performance

Honda’s consolidated sales revenue for the three months ended June 30, 2019 decreased by 0.7%, to ¥3,996.2 billion from the same period last year, due mainly to decreased sales revenue in Automobile business, Motorcycle business, Life creation and other businesses operations as well as negative foreign currency effects, which was partially offset by increased sales revenue in Financial services business operations. Operating profit decreased by 15.7%, to ¥252.4 billion from the same period last year, due mainly to increased selling, general and administrative expenses, a decrease in profit attributable to decreased sales revenue and model mix as well as negative foreign currency effects, which was partially offset by continuing cost reduction. Profit before income taxes decreased by 19.1%, to 289.8 billion from the same period last year. Profit for the period attributable to owners of the parent decreased by 29.5%, to ¥172.3 billion from the same period last year.

Business Segments

Motorcycle Business

For the three months ended June 30, 2018 and 2019

 

     Units (thousands)  
     Honda Group Unit Sales*     Consolidated Unit Sales*  
   Three months
ended
Jun. 30, 2018
     Three months
ended
Jun. 30, 2019
                 Three months
ended
Jun. 30, 2018
     Three months
ended
Jun. 30, 2019
              
   Change     %      Change     %  

Motorcycle Business

     5,352        4,921        (431       (8.1     3,615        3,264        (351     (9.7

Japan

     49        51        2       4.1       49        51        2       4.1  

North America

     72        74        2       2.8       72        74        2       2.8  

Europe

     80        84        4       5.0       80        84        4       5.0  

Asia

     4,840        4,378        (462     (9.5     3,103        2,721        (382     (12.3

Other Regions

     311        334        23       7.4       311        334        23       7.4  

 

*

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 3.9%, to ¥533.0 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 24.2%, to ¥69.8 billion from the same period last year, due mainly to a decrease in profit attributable to decreased sales volume and model mix as well as increased selling, general and administrative expenses, which was partially offset by continuing cost reduction.


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Automobile Business

For the three months ended June 30, 2018 and 2019

 

     Units (thousands)  
     Honda Group Unit Sales*     Consolidated Unit Sales*  
   Three months
ended
Jun. 30, 2018
     Three months
ended
Jun. 30, 2019
                 Three months
ended
Jun. 30, 2018
     Three months
ended
Jun. 30, 2019
              
   Change     %      Change     %  

Automobile Business

     1,305        1,321          16          1.2          952           905        (47     (4.9

Japan

     162        181        19       11.7       145        161          16       11.0  

North America

     518        495        (23     (4.4     518        495        (23     (4.4

Europe

     42        34        (8     (19.0     42        34        (8     (19.0

Asia

     520        554        34       6.5       184        158        (26     (14.1

Other Regions

     63        57        (6     (9.5     63        57        (6     (9.5

 

*

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 3.7%, to ¥2,694.4 billion from the same period last year, due mainly to decreased consolidated unit sales. Operating profit decreased by 20.6%, to ¥120.3 billion from the same period last year, due mainly to increased selling, general and administrative expenses as well as a decrease in profit attributable to decreased sale volume and model mix, which was partially offset by continuing cost reduction.

Financial Services Business

Sales revenue from external customers increased by 16.7%, to ¥688.4 billion from the same period last year, due mainly to an increase in revenues on disposition of lease vehicles and operating lease revenues. Operating profit increased by 15.0%, to ¥65.7 billion from the same period last year, due mainly to an increase in profit attributable to increased sales revenue.

Life Creation and Other Businesses

For the three months ended June 30, 2018 and 2019

 

     Units (thousands)  
     Honda Group Unit Sales / Consolidated Unit Sales*  
   Three months
ended
Jun. 30, 2018
     Three months
ended
Jun. 30, 2019
              
   Change     %  

Life Creation Business

     1,341        1,280        (61     (4.5

Japan

     72        74        2       2.8  

North America

     575        605        30       5.2  

Europe

     229        198        (31     (13.5

Asia

     395        347        (48     (12.2

Other Regions

     70        56        (14     (20.0

 

*

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 2.0%, to ¥80.3 billion from the same period last year, due mainly to decreased consolidated unit sales in Life creation business. Operating loss was ¥3.5 billion, an increase of ¥1.9 billion from the same period last year, due mainly 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 ¥9.1 billion, an improvement of ¥0.8 billion from the same period last year.


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Cash Flows

Consolidated cash and cash equivalents on June 30, 2019 decreased by ¥102.9 billion from March 31, 2019, to ¥2,391.1 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 ¥195.5 billion of cash inflows. Cash inflows from operating activities decreased by ¥18.8 billion from the same period last year, due mainly to increased payments for parts and raw materials, which was partially offset by decreased payment of income taxes.

Net cash used in investing activities amounted to ¥168.1 billion of cash outflows. Cash outflows from investing activities decreased by ¥75.8 billion from the same period last year, due mainly to decreased payments for acquisitions of other financial assets, which was partially offset by a decrease in proceeds from sales and redemptions of other financial assets.

Net cash used in financing activities amounted to ¥83.8 billion of cash outflows. Cash outflows from financing activities increased by ¥23.4 billion from the same period last year, due mainly to an increase in repayments of financing liabilities, which was partially offset by an increase in proceeds from financing liabilities.

Research and Development

The changes in research and development activities by Honda and its subsidiaries for the three months ended June 30, 2019 are as follows:

Honda and the motorcycle development division of Honda R&D Co., Ltd. were integrated with an aim to transition from the current structure where sales, development, manufacturing 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.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position

March 31, 2019 and June 30, 2019

 

          Yen (millions)  
Assets    Note    March 31,
2019
    June 30,
2019
 
          unaudited     unaudited  

Current assets:

       

Cash and cash equivalents

      ¥   2,494,121      ¥   2,391,188   

Trade receivables

        793,245       771,359  

Receivables from financial services

        1,951,633       1,892,869  

Other financial assets

        163,274       151,895  

Inventories

        1,586,787       1,559,036  

Other current assets

        358,234       350,061  
     

 

 

   

 

 

 

Total current assets

        7,347,294       7,116,408  
     

 

 

   

 

 

 

Non-current assets:

       

Investments accounted for using the equity method

        713,039       736,942  

Receivables from financial services

        3,453,617       3,385,135  

Other financial assets

        417,149       432,848  

Equipment on operating leases

   5      4,448,849       4,408,620  

Property, plant and equipment

   6      2,981,840       3,132,937  

Intangible assets

        744,368       754,026  

Deferred tax assets

        150,318       149,801  

Other non-current assets

        162,648       189,985  
     

 

 

   

 

 

 

Total non-current assets

        13,071,828       13,190,294  
     

 

 

   

 

 

 

Total assets

      ¥ 20,419,122     ¥ 20,306,702  
     

 

 

   

 

 

 
          Yen (millions)  
Liabilities and Equity    Note    March 31,
2019
    June 30,
2019
 
          unaudited     unaudited  

Current liabilities:

       

Trade payables

      ¥ 1,184,882     ¥ 1,054,752  

Financing liabilities

        3,188,782       3,001,424  

Accrued expenses

        476,300       442,990  

Other financial liabilities

        132,910       188,300  

Income taxes payable

        49,726       57,503  

Provisions

   7      348,763       311,324  

Other current liabilities

        599,761       572,437  
     

 

 

   

 

 

 

Total current liabilities

        5,981,124       5,628,730  
     

 

 

   

 

 

 

Non-current liabilities:

       

Financing liabilities

        4,142,338       4,171,839  

Other financial liabilities

        63,689       301,018  

Retirement benefit liabilities

        398,803       407,055  

Provisions

   7      220,745       231,858  

Deferred tax liabilities

        727,411       732,074  

Other non-current liabilities

        319,222       322,469  
     

 

 

   

 

 

 

Total non-current liabilities

        5,872,208       6,166,313  
     

 

 

   

 

 

 

Total liabilities

        11,853,332       11,795,043  
     

 

 

   

 

 

 

Equity:

       

Common stock

        86,067       86,067  

Capital surplus

        171,460       171,538  

Treasury stock

        (177,827     (177,751

Retained earnings

        7,973,637       8,096,826  

Other components of equity

        214,383       70,360  
     

 

 

   

 

 

 

Equity attributable to owners of the parent

        8,267,720       8,247,040  

Non-controlling interests

        298,070       264,619  
     

 

 

   

 

 

 

Total equity

        8,565,790       8,511,659  
     

 

 

   

 

 

 

Total liabilities and equity

      ¥ 20,419,122     ¥ 20,306,702  
     

 

 

   

 

 

 

See accompanying notes to condensed consolidated interim financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended June 30, 2018 and 2019

 

          Yen (millions)  
     Note    June 30,
2018
    June 30,
2019
 
          unaudited     unaudited  

Sales revenue

   8    ¥   4,024,133     ¥   3,996,253  

Operating costs and expenses:

       

Cost of sales

        (3,162,696     (3,166,483

Selling, general and administrative

        (371,656     (407,449

Research and development

        (190,398     (169,852
     

 

 

   

 

 

 

Total operating costs and expenses

        (3,724,750     (3,743,784
     

 

 

   

 

 

 

Operating profit

        299,383       252,469  
     

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

        54,302       44,230  

Finance income and finance costs:

       

Interest income

        11,913       14,195  

Interest expense

        (2,963     (3,595

Other, net

        (4,353     (17,488
     

 

 

   

 

 

 

Total finance income and finance costs

        4,597       (6,888
     

 

 

   

 

 

 

Profit before income taxes

        358,282       289,811  

Income tax expense

        (91,560     (100,219
     

 

 

   

 

 

 

Profit for the period

      ¥ 266,722     ¥ 189,592  
     

 

 

   

 

 

 

Profit for the period attributable to:

       

Owners of the parent

        244,330       172,302  

Non-controlling interests

        22,392       17,290  
          Yen  
          June 30,
2018
    June 30,
2019
 

Earnings per share attributable to owners of the parent

       

Basic and diluted

   11    ¥ 137.75     ¥ 97.92  

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2018 and 2019

 

          Yen (millions)  
     Note    June 30,
2018
    June 30,
2019
 
          unaudited     unaudited  

Profit for the period

      ¥      266,722     ¥      189,592  

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

        124       (6,348

Share of other comprehensive income of investments accounted for using the equity method

        (1,284     (825

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

        (1     110  

Exchange differences on translating foreign operations

        71,534       (129,218

Share of other comprehensive income of investments accounted for using the equity method

        (13,841     (14,259
     

 

 

   

 

 

 

Total other comprehensive income, net of tax

        56,532       (150,540
     

 

 

   

 

 

 

Comprehensive income for the period

      ¥ 323,254     ¥ 39,052  
     

 

 

   

 

 

 

Comprehensive income for the period attributable to:

       

Owners of the parent

        302,588       28,277  

Non-controlling interests

        20,666       10,775  

See accompanying notes to condensed consolidated interim financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

For the three months ended June 30, 2018 and 2019

 

          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, 2018 (unaudited)

    ¥ 86,067     ¥ 171,118     ¥ (113,271   ¥ 7,611,332     ¥ 178,292     ¥ 7,933,538     ¥ 300,557     ¥ 8,234,095  

Effect of changes in accounting policy

            (46,833     (208     (47,041     6       (47,035
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance as of April 1, 2018

      86,067       171,118       (113,271     7,564,499       178,084       7,886,497       300,563       8,187,060  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                 

Profit for the period

            244,330         244,330       22,392       266,722  

Other comprehensive income, net of tax

              58,258       58,258       (1,726     56,532  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

            244,330       58,258       302,588       20,666       323,254  

Reclassification to retained earnings

            80       (80     —           —    

Transactions with owners and other

                 

Dividends paid

    12             (48,013       (48,013     (51,861     (99,874

Purchases of treasury stock

          (43,441         (43,441       (43,441
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

          (43,441     (48,013       (91,454     (51,861     (143,315
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2018 (unaudited)

    ¥ 86,067     ¥ 171,118     ¥ (156,712   ¥ 7,760,896     ¥ 236,262     ¥ 8,097,631     ¥ 269,368     ¥ 8,366,999  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
          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

            172,302         172,302       17,290       189,592  

Other comprehensive income, net of tax

              (144,025     (144,025     (6,515     (150,540
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

            172,302       (144,025     28,277       10,775       39,052  

Reclassification to retained earnings

            (2     2       —           —    

Transactions with owners and other

                 

Dividends paid

    12             (49,287       (49,287     (44,226     (93,513

Purchases of treasury stock

          (3         (3       (3

Disposal of treasury stock

          79           79         79  

Share-based payment transactions

        78             78         78  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        78       76       (49,287       (49,133     (44,226     (93,359
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

            176         176         176  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2019 (unaudited)

    ¥ 86,067     ¥ 171,538     ¥ (177,751   ¥ 8,096,826     ¥ 70,360     ¥ 8,247,040     ¥ 264,619     ¥ 8,511,659  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the three months ended June 30, 2018 and 2019

 

            Yen (millions)  
     Note      June 30,
2018
    June 30,
2019
 
            unaudited     unaudited  

Cash flows from operating activities:

       

Profit before income taxes

      ¥ 358,282     ¥ 289,811  

Depreciation, amortization and impairment losses excluding equipment on operating leases

        186,819       170,016  

Share of profit of investments accounted for using the equity method

        (54,302     (44,230

Finance income and finance costs, net

        (39,201     (9,127

Interest income and interest costs from financial services, net

        (29,870     (32,344

Changes in assets and liabilities

       

Trade receivables

        25,256       9,919  

Inventories

        12,510       (12,930

Trade payables

        (55,189     (53,045

Accrued expenses

        (42,209     (34,712

Provisions and retirement benefit liabilities

        (26,241     10,907  

Receivables from financial services

        (48,179     6,582  

Equipment on operating leases

        (48,399     (53,086

Other assets and liabilities

        (21,513     (83,469

Other, net

        158       1,866  

Dividends received

        23,344       26,632  

Interest received

        65,751       73,532  

Interest paid

        (25,757     (32,873

Income taxes paid, net of refunds

        (66,818     (37,861
     

 

 

   

 

 

 

Net cash provided by operating activities

        214,442       195,588  

Cash flows from investing activities:

       

Payments for additions to property, plant and equipment

        (144,899     (97,415

Payments for additions to and internally developed intangible assets

        (37,608     (58,172

Proceeds from sales of property, plant and equipment and intangible assets

        7,022       7,885  

Payments for acquisitions of investments accounted for using the equity method

        (2,401     (2,401

Payments for acquisitions of other financial assets

        (150,294     (60,055

Proceeds from sales and redemptions of other financial assets

        84,214       42,018  
     

 

 

   

 

 

 

Net cash used in investing activities

        (243,966     (168,140

Cash flows from financing activities:

       

Proceeds from short-term financing liabilities

        1,882,899       2,049,304  

Repayments of short-term financing liabilities

        (1,824,528     (2,318,708

Proceeds from long-term financing liabilities

        267,458       494,872  

Repayments of long-term financing liabilities

        (253,164     (219,727

Dividends paid to owners of the parent

        (48,013     (49,287

Dividends paid to non-controlling interests

        (29,227     (22,967

Purchases and sales of treasury stock, net

        (43,441     76  

Repayments of lease liabilities

        (12,340     (17,400

Other, net

        —         2  
     

 

 

   

 

 

 

Net cash used in financing activities

        (60,356     (83,835

Effect of exchange rate changes on cash and cash equivalents

        497       (46,546
     

 

 

   

 

 

 

Net change in cash and cash equivalents

        (89,383     (102,933

Cash and cash equivalents at beginning of year

        2,256,488       2,494,121  
     

 

 

   

 

 

 

Cash and cash equivalents at end of period

      ¥ 2,167,105     ¥ 2,391,188  
     

 

 

   

 

 

 

See accompanying notes to condensed consolidated interim financial statements.


Table of Contents

 

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, 2019, 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, 2019.


Table of Contents

 

2

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(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, 2019, except for the changes below.

IFRS 16 “Leases”

Honda has adopted IFRS 16 “Leases” with a date of initial application of April 1, 2019. Honda used the modified retrospective approach, under which the cumulative effect of initial application was recognized as an adjustment to the opening balance of equity at the date of initial application. Therefore, the comparative information has not been restated and continues to be reported under the previous accounting policy.

Previously, Honda determined at contract inception whether an arrangement was or contained a lease under IAS 17 “Leases” and IFRIC 4 “Determining whether an Arrangement contains a Lease”. Honda assesses whether a contract is or contains a lease under IFRS 16 on or after April 1, 2019. Honda applied the practical expedient to grandfather the assessment of which a contract was or contained a lease when applying IFRS 16. Therefore, Honda applied IFRS 16 to all contracts entered into prior to April 1, 2019 and identified as leases under IAS 17 and IFRIC 4.

IFRS 16 introduced a single on-balance lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. In addition, expenses related to leases change from straight-line operating lease expenses to depreciation charge for right-of-use assets and interest expense on lease liabilities. At transition, Honda recognized the lease liabilities for leases previously classified as an operating lease under IAS 17, and measured these liabilities at the present value of the remaining lease payments, discounted using Honda’s incremental borrowing rate as of April 1, 2019. The weighted average rate applied was 1.19%. The right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the statement of financial position immediately before the date of initial application. In addition, Honda applied the following practical expedients when applying IFRS 16.

 

   

Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

 

   

Adjusted the right-of-use assets by the amount of any provision for onerous leases under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” recognized immediately before the date of initial application as an alternative to performing an impairment review.

 

   

Excluded initial direct costs from the measurement of the right-of-use assets at the date of initial application.

In the condensed consolidated statements of financial position, lease liabilities are included in other financial liabilities and right-of-use assets are included in property, plant and equipment.

Honda recognized additional lease liabilities of ¥272,232 million and total assets, mainly right-of-use assets were recognized approximately in the same amounts in the condensed consolidated statements of financial position as of April 1, 2019.

The difference between the future minimum lease payments under non-cancelable operating leases as of March 31, 2019 disclosed in the consolidated financial statements immediately before the date of initial application, and the lease liabilities recognized as of April 1, 2019 is as follows:

 

     Yen (millions)  

Future minimum lease payments under non-cancelable operating leases as of March 31, 2019

     115,634  

Discounted using the incremental borrowing rate as of April 1, 2019

     108,147  
  

 

 

 

Add: Finance lease obligations

     62,308  

Add: Cancelable operating leases

     11,612  

Add: Extension options reasonably certain to be exercised

     152,473  
  

 

 

 

Lease liabilities recognized as of April 1, 2019

     334,540  
  

 

 

 


Table of Contents

 

3

 

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

 

Explanatory notes:

 

*

Power product business has been renamed Life creation business from April 1, 2019. Honda expands the concept of our Power product business and continues pursuing it under a new concept of “Life Creation Business”. This renaming of the business represents our intention to evolve our business as a function to create new value for “mobility” and “daily lives”, which includes our existing Power product business as well as new businesses for the future, including energy business.

   (a) Segment Information

Segment information as of and for the three months ended June 30, 2018 and 2019 is as follows:

As of and for the three months ended June 30, 2018

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

   ¥ 554,907      ¥ 2,797,336      ¥ 589,895      ¥ 81,995     ¥ 4,024,133      ¥ —       ¥ 4,024,133  

Intersegment

     —          47,855        3,290        5,847       56,992        (56,992     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     554,907        2,845,191        593,185        87,842       4,081,125        (56,992     4,024,133  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 92,130      ¥ 151,681      ¥ 57,179      ¥ (1,607   ¥ 299,383      ¥ —       ¥ 299,383  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,501,577      ¥ 7,930,533      ¥   9,783,246      ¥ 306,719     ¥ 19,522,075      ¥ 129,729     ¥ 19,651,804  

Depreciation and amortization

     17,703        164,631        190,329        3,410       376,073        —         376,073  

Capital expenditures

     9,750        122,615        504,192        2,442       638,999        —         638,999  


Table of Contents

 

4

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

As of and for the three months ended June 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

   ¥ 533,018      ¥ 2,694,478      ¥ 688,401      ¥ 80,356     ¥ 3,996,253      ¥ —       ¥ 3,996,253  

Intersegment

     —          55,662        3,624        4,888       64,174        (64,174     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     533,018        2,750,140        692,025        85,244       4,060,427        (64,174     3,996,253  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

   ¥ 69,873      ¥ 120,375      ¥ 65,782      ¥ (3,561   ¥ 252,469      ¥ —       ¥ 252,469  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,500,514      ¥ 8,104,744      ¥ 10,076,682      ¥ 338,134     ¥ 20,020,074      ¥ 286,628     ¥ 20,306,702  

Depreciation and amortization

     17,072        146,891        206,866        3,579       374,408        —         374,408  

Capital expenditures

     13,552        101,076        576,451        3,058       694,137        —         694,137  

 

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 June 30, 2018 and 2019 amounted to ¥417,739 million and ¥551,689 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

   (b) Supplemental Geographical Information

In addition to the disclosure required by IFRS, Honda provides the following supplemental information for the financial statements users:

Supplemental geographical information based on the location of the Company and its subsidiaries

As of and for the three months ended June 30, 2018

 

    Yen (millions)  
    Japan     North
America
    Europe     Asia     Other
Regions
    Total     Reconciling
Items
    Consolidated  

Sales revenue:

               

External customers

  ¥ 554,143     ¥ 2,177,299     ¥ 172,979     ¥ 918,723     ¥ 200,989     ¥ 4,024,133     ¥ —       ¥ 4,024,133  

Inter-geographic areas

    586,072       136,051       64,262       176,989       2,346       965,720       (965,720     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    1,140,215       2,313,350       237,241       1,095,712       203,335       4,989,853       (965,720     4,024,133  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

  ¥ 14,712     ¥ 110,360     ¥ 7,035     ¥ 122,514     ¥ 22,635     ¥ 277,256     ¥ 22,127     ¥ 299,383  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 4,373,497     ¥ 11,140,457     ¥ 666,118     ¥ 2,981,065     ¥ 610,157     ¥ 19,771,294     ¥ (119,490   ¥ 19,651,804  

Non-current assets other than financial instruments and deferred tax assets

  ¥ 2,581,488     ¥ 4,707,715     ¥ 97,930     ¥ 666,829     ¥ 144,446     ¥ 8,198,408     ¥ —       ¥ 8,198,408  


Table of Contents

 

5

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

As of and for the three months ended June 30, 2019

 

    Yen (millions)  
    Japan     North
America
    Europe     Asia     Other
Regions
    Total     Reconciling
Items
    Consolidated  

Sales revenue:

               

External customers

  ¥ 594,300     ¥ 2,213,126     ¥ 155,392     ¥ 844,102     ¥ 189,333     ¥ 3,996,253     ¥ —       ¥ 3,996,253  

Inter-geographic areas

    556,455       102,919       50,838       175,163       1,943       887,318       (887,318     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    1,150,755       2,316,045       206,230       1,019,265       191,276       4,883,571       (887,318     3,996,253  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

  ¥ 36,672     ¥ 102,701     ¥ 2,600     ¥ 97,961     ¥ 8,479     ¥ 248,413     ¥ 4,056     ¥ 252,469  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 4,766,236     ¥ 11,200,662     ¥ 639,831     ¥ 3,043,833     ¥ 619,899     ¥ 20,270,461     ¥ 36,241     ¥ 20,306,702  

Non-current assets other than financial instruments and deferred tax assets

  ¥ 2,922,170     ¥ 4,653,618     ¥ 94,351     ¥ 673,137     ¥ 142,292     ¥ 8,485,568     ¥ —       ¥ 8,485,568  

 

Explanatory notes:

 

1.

Major countries or regions in each geographic area:

North America    United States, Canada, Mexico
Europe    United Kingdom, Germany, Belgium, Italy, France
Asia    Thailand, Indonesia, China, India, Vietnam
Other Regions    Brazil, Australia

 

2.

Operating profit (loss) of each geographical region 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.

 

3.

Assets of each geographical region are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets.

 

4.

Sales revenues between geographic areas are generally made at values that approximate arm’s-length prices.

 

5.

Reconciling items include elimination of inter-geographic transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of June 30, 2018 and 2019 amounted to ¥417,739 million and ¥551,689 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

(5) Equipment on Operating Leases

The additions to equipment on operating leases for the three months ended June 30, 2018 and 2019 are ¥503,699 million and ¥575,586 million, respectively.

The sales or disposals of equipment on operating leases for the three months ended June 30, 2018 and 2019 are ¥264,856 million and ¥313,409 million, respectively.

(6) Property, Plant and Equipment

The additions to property, plant and equipment for the three months ended June 30, 2018 and 2019 are ¥113,309 million and ¥71,555 million, respectively.

The sales or disposals of property, plant and equipment for the three months ended June 30, 2018 and 2019 are ¥12,063 million and ¥10,462 million, respectively.


Table of Contents

 

6

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(7) Provisions

The components of and changes in provisions for the three months ended June 30, 2019 are as follows:

 

     Yen (millions)  
     Product
warranties*
    Other     Total  

Balance as of April 1, 2019

   ¥ 458,482     ¥ 111,026     ¥ 569,508  
  

 

 

   

 

 

   

 

 

 

Provision

   ¥ 53,645     ¥ 16,518     ¥ 70,163  

Write-offs

     (70,284     (10,428     (80,712

Reversal

     (3,311     (494     (3,805

Exchange differences on translating foreign operations

     (7,888     (4,084     (11,972
  

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2019

   ¥ 430,644     ¥ 112,538     ¥ 543,182  
  

 

 

   

 

 

   

 

 

 

Current liabilities and non-current liabilities of provisions as of March 31, 2019 and June 30, 2019 are as follows:

 

     Yen (millions)  
     As of March 31,
2019
     As of June 30,
2019
 

Current liabilities

   ¥ 348,763      ¥ 311,324  

Non-current liabilities

     220,745        231,858  
  

 

 

    

 

 

 

Total

   ¥ 569,508      ¥ 543,182  
  

 

 

    

 

 

 

 

Explanatory notes:

 

*

Honda recognizes provisions for product warranties to cover future product warranty expenses. Honda recognizes costs for general warranties on products Honda sells and for specific warranty programs, including product recalls. Honda recognizes general estimated warranty costs at the time products are sold to customers. Honda also recognizes specific estimated warranty program costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. These provisions are estimated based on historical warranty claim experience with consideration given to the expected level of future warranty costs as well as current information on repair costs. Provision for product warranties are utilized for expenditures based on the demand from customers and dealers.


Table of Contents

 

7

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(8) Sales Revenue

As stated in Note 4, Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Life creation and other businesses.

The sales revenue disaggregated by geographical markets based on the location of the customer and the reconciliation of the disaggregated revenue with the four reportable segments for the three months ended June 30, 2018 and 2019 are as follows:

For the three months ended June 30, 2018

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
     Total  

Revenue arising from Contracts with Customers

              

Japan

   ¥ 19,626      ¥ 364,777      ¥ 23,906      ¥ 17,595      ¥ 425,904  

North America

     44,553        1,591,977        264,861        32,436        1,933,827  

Europe

     51,731        104,736        —          15,481        171,948  

Asia

     360,516        593,999        26        12,056        966,597  

Other Regions

     78,481        136,183        —          4,427        219,091  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 554,907      ¥ 2,791,672      ¥ 288,793      ¥ 81,995      ¥ 3,717,367  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     —          5,664        301,102        —          306,766  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 554,907      ¥ 2,797,336      ¥ 589,895      ¥ 81,995      ¥ 4,024,133  

 

Explanatory notes:

 

*

Revenue arising from the other sources primarily includes lease revenues recognized under IAS 17 and interest recognized under IFRS 9.

For the three months ended June 30, 2019

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life Creation
and Other
Businesses
     Total  

Revenue arising from Contracts with Customers

              

Japan

   ¥ 18,490      ¥ 393,752      ¥ 28,995      ¥ 19,694      ¥ 460,931  

North America

     48,734        1,537,646        325,564        33,831        1,945,775  

Europe

     47,822        92,409        —          13,477        153,708  

Asia

     338,200        549,878        3        10,065        898,146  

Other Regions

     79,771        120,178        —          3,289        203,238  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 533,017      ¥ 2,693,863      ¥ 354,562      ¥ 80,356      ¥ 3,661,798  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue arising from the other sources*

     1        615        333,839        —          334,455  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 533,018      ¥ 2,694,478      ¥ 688,401      ¥ 80,356      ¥ 3,996,253  

 

Explanatory notes:

 

*

Revenue arising from the other sources primarily includes lease revenues recognized under IFRS 16 and interest recognized under IFRS 9.


Table of Contents

 

8

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(9) Fair Value

(a) Definition of Fair Value Hierarchy

Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:

 

Level 1    Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date
Level 2    Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly
Level 3    Unobservable inputs for the assets or liabilities

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety. Honda recognizes the transfers between the levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(b) Method of Fair Value Measurement

The fair values of assets and liabilities are determined based on relevant market information and through the use of an appropriate valuation method.

The measurement methods and assumptions used in the measurement of assets and liabilities are as follows:

(Cash and cash equivalents, trade receivables and trade payables)

The fair values approximate their carrying amounts due to their short-term maturities.

(Receivables from financial services)

The fair value of receivables from financial services is measured primarily by discounting future cash flows using the current interest rates applicable for these receivables of similar remaining maturities. Fair value measurement for receivables from financial services is classified as Level 3.

(Debt securities)

Debt securities consist mainly of mutual funds, corporate bonds, local bonds and auction rate securities.

The fair value of mutual funds with an active market is measured by using quoted market prices. Fair value measurement for mutual funds with an active market is classified as Level 1.

The fair values of corporate bonds and local bonds are measured based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurements for corporate bonds and local bonds are classified as Level 2.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

The subsidiary’s auction rate securities are A to AAA rated and are insured by qualified guarantee agencies, and reinsured by the Secretary of Education and the United States government, and guaranteed at approximately 95% by the United States government. To measure fair value of auction rate securities, Honda uses a third-party-developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction. Fair value measurement for auction rate securities is classified as Level 3.

(Equity securities)

The fair value of equity securities with an active market is measured by using quoted market prices. Fair value measurement for equity securities with an active market is classified as Level 1.

The fair value of equity securities with no active market is measured mainly by using the comparable company valuation method and other appropriate valuation methods. Fair value measurement for equity securities with no active market is classified as Level 3. In addition, in the case that cost represents the best estimate of fair value, fair value for the equity securities with no active market is measured at cost.

Price book-value ratio (PBR) of a comparable company are used as a significant unobservable input in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as PBR of a comparable company rise (decline). Such fair value measurements are conducted in accordance with the group accounting policy approved by the appropriate person of authority and based upon valuation methods determined by personnel in accounting divisions of Honda.

(Derivatives)

Derivatives consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements and interest rate swap agreements.

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are measured by using market observable inputs such as spot exchange rates, discount rates and implied volatility. The fair values of currency swap agreements and interest rate swap agreements are measured by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. Fair value measurements for these derivatives are classified as Level 2.

The credit risk of the counterparties is considered in the valuation of derivatives.

(Financing liabilities)

The fair value of financing liabilities is measured by discounting future cash flows using interest rates currently available for liabilities of similar terms and remaining maturities. Fair value measurement of financing liabilities is mainly classified as Level 2.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(c) Assets and Liabilities Measured at Fair Value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and June 30, 2019 consist of the following:

 

     Yen (millions)  

As of March 31, 2019

   Level 1      Level 2      Level 3      Total  

Other financial assets:

           

Financial assets measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 12,233      ¥ —        ¥ 12,233  

Interest rate instruments

     —          34,164        —          34,164  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          46,397        —          46,397  
  

 

 

    

 

 

    

 

 

    

 

 

 

Debt securities

     21,090        31,551        5,439        58,080  

Financial assets measured at fair value through other comprehensive income:

           

Debt securities

     —          10,495        —          10,495  

Equity securities

     108,879        —          98,156        207,035  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥    129,969      ¥      88,443      ¥      103,595      ¥    322,007  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other financial liabilities:

           

Financial liabilities measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 35,449      ¥ —        ¥ 35,449  

Interest rate instruments

     —          34,042        —          34,042  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          69,491        —          69,491  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ —        ¥ 69,491      ¥ —        ¥ 69,491  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2019.

 

     Yen (millions)  

As of June 30, 2019

   Level 1      Level 2      Level 3      Total  

Other financial assets:

           

Financial assets measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 16,743      ¥ —        ¥ 16,743  

Interest rate instruments

     —          36,813        —          36,813  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          53,556        —          53,556  
  

 

 

    

 

 

    

 

 

    

 

 

 

Debt securities

     20,696        33,553        5,174        59,423  

Financial assets measured at fair value through other comprehensive income:

           

Debt securities

     —          8,533        —          8,533  

Equity securities

     102,102        —          99,951        202,053  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥    122,798      ¥      95,642      ¥      105,125      ¥    323,565  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other financial liabilities:

           

Financial liabilities measured at fair value through profit or loss:

           

Derivatives

           

Foreign exchange instruments

   ¥ —        ¥ 36,434      ¥ —        ¥ 36,434  

Interest rate instruments

     —          41,950        —          41,950  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          78,384        —          78,384  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ —        ¥ 78,384      ¥ —        ¥ 78,384  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between Level 1 and Level 2 for the three months ended June 30, 2019.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

There were no significant effects of the measurements on profit or loss or other comprehensive income in Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended June 30, 2019.

(d) Financial Assets and Financial Liabilities measured at amortized cost

The carrying amounts and fair values of financial assets and financial liabilities measured at amortized cost as of March 31, 2019 and June 30, 2019 are as follows:

 

     Yen (millions)  
     As of March 31,
2019
     As of June 30,
2019
 
     Carrying
amount
     Fair value      Carrying
amount
     Fair value  

Receivables from financial services

   ¥ 5,405,250      ¥ 5,417,297      ¥ 5,278,004      ¥ 5,315,373  

Debt securities

     54,964        54,952        61,362        61,367  

Financing liabilities

     7,331,120        7,355,632        7,173,263        7,221,201  

The table does not include financial assets and financial liabilities measured at amortized cost whose fair values approximate their carrying amounts.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(10) Contingent Liabilities

Claims and Lawsuits

Honda is subject to potential liability under various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position or results of operations.

Loss related to airbag inflators

Honda has been conducting market-based measures in relation to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to the product recalls arise, however, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

For the related civil lawsuits mainly in the Unites States, Honda did not recognize a provision for loss contingencies because the conditions for a provision have not been met as of the date of this report. Therefore, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report because there are some uncertainties, such as the period when these lawsuits will be concluded.


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13

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(11) Earnings Per Share

Earnings per share attributable to owners of the parent for the three months ended June 30, 2018 and 2019 are calculated based on the following information. There were no dilutive potential common shares outstanding for the three months ended June 30, 2018 and 2019.

 

     2018      2019  

Profit for the period attributable to owners of the parent (millions of yen)

   ¥ 244,330      ¥ 172,302  

Weighted average number of common shares outstanding, basic (shares)

     1,773,751,970        1,759,566,817  

Basic earnings per share attributable to owners of the parent (yen)

   ¥ 137.75      ¥ 97.92  

(12) Dividend

(a) Dividend payout

For the three months ended June 30, 2018

 

Resolution

   The Board of Directors Meeting on April 27, 2018

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   48,013

Dividend per share (yen)

   27.00

Record date

   March 31, 2018

Effective date

   May 30, 2018

For the three months ended June 30, 2019

 

Resolution

   The Board of Directors Meeting on May 8, 2019

Type of shares

   Common shares

Total amount of dividends (millions of yen)

   49,287

Dividend per share (yen)

   28.00

Record date

   March 31, 2019

Effective date

   June 3, 2019

(b) Dividends payable of which record date was in the three months ended June 30, 2019, effective after the period

 

Resolution

   The Board of Directors Meeting on August 2, 2019

Type of shares

   Common shares

Resource for dividend

   Retained earnings

Total amount of dividends (millions of yen)

   49,287

Dividend per share (yen)

   28.00

Record date

   June 30, 2019

Effective date

   August 30, 2019

(13) Approval of Release of Condensed Consolidated Interim Financial Statements

The release of the condensed consolidated interim financial statements was approved by Takahiro Hachigo, President and Representative Director, Chief Executive Officer and Kohei Takeuchi, Senior Managing Director and Chief Financial Officer on August 6, 2019.