6-K 1 d920159d6k.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 MAY 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):  ☐

 

 

 


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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: May 14, 2020


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May 12, 2020

HONDA MOTOR CO., LTD. REPORTS

CONSOLIDATED FINANCIAL RESULTS

FOR THE FISCAL FOURTH QUARTER AND

THE FISCAL YEAR ENDED MARCH 31, 2020

Tokyo, May 12, 2020 — Honda Motor Co., Ltd. today announced its consolidated financial results for the fiscal fourth quarter and the fiscal year ended March 31, 2020.

Fourth Quarter Results

The spread of coronavirus disease 2019 (COVID-19) have caused the global economic slowdown and also have affected Honda’s consolidated financial results for the three months ended March 31, 2020.

Consolidated sales revenue for the three months ended March 31, 2020 decreased by 14.6%, to JPY 3,458.0 billion from the same period last year, due mainly to decreased sales revenue in Automobile business operations, which was partially offset by increased sales revenue in Financial services business operations. Operating loss was JPY 5.6 billion, a decrease of JPY 47.9 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 continuing cost reduction as well as decreased selling, general and administrative expenses. Profit before income taxes decreased by 96.6%, to JPY 3.7 billion from the same period last year. Loss for the period attributable to owners of the parent was JPY 29.5 billion, an increase of JPY 16.5 billion from the same period last year.

Loss per share attributable to owners of the parent for the quarter amounted to JPY 17.01, an increase of JPY 9.61 from the corresponding period last year. One Honda American Depository Share represents one common share.

Fiscal Year Results

The spread of COVID-19 have caused the global economic slowdown and also have affected consolidated financial results for the three months ended March 31, 2020.

Consolidated sales revenue for the fiscal year ended March 31, 2020 decreased by 6.0%, to JPY 14,931.0 billion from the fiscal year ended March 31, 2019, due mainly to decreased sales revenue in Automobile business operations as well as negative foreign currency translation effects, which was partially offset by increased sales revenue in Financial services business operations. Operating profit decreased by 12.8%, to JPY 633.6 billion from the previous fiscal year, due mainly to 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 as well as decreased selling, general and administrative expenses. Profit before income taxes decreased by 19.3%, to JPY 789.9 billion from the previous fiscal year. Profit for the year attributable to owners of the parent decreased by 25.3%, to JPY 455.7 billion from the previous fiscal year.

Earnings per share attributable to owners of the parent for the year amounted to JPY 260.13, a decrease of JPY 85.86 from the previous fiscal year.

 

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Consolidated Statements of Financial Position for the Fiscal Year Ended March 31, 2020

Total assets increased by JPY 42.3 billion, to JPY 20,461.4 billion from March 31, 2019 due mainly to an increase in cash and cash equivalents, equipment on operating leases as well as property, plant and equipment which includes right-of-use assets through the adoption of IFRS 16, despite decreased foreign currency translation effects. Total liabilities increased by JPY 322.1 billion, to JPY 12,175.4 billion from March 31, 2019 due mainly to an increase in financing liabilities as well as other financial liabilities which includes lease liabilities through the adoption of IFRS 16, despite decreased foreign currency translation effects. Total equity decreased by JPY 279.7 billion, to JPY 8,286.0 billion from March 31, 2019 due mainly to a decrease attributable to acquisition of the Company’s own shares as well as foreign currency translation effects, despite an increase in retained earnings attributable to profit for the period.

Consolidated Statements of Cash Flows for the Fiscal Year Ended March 31, 2020

Consolidated cash and cash equivalents on March 31, 2020 increased by JPY 178.2 billion from March 31, 2019, to JPY 2,672.3 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the previous fiscal year, are as follows:

Net cash provided by operating activities amounted to JPY 979.4 billion of cash inflows. Cash inflows from operating activities increased by JPY 203.4 billion compared with the previous fiscal year, due mainly to a decrease in receivables from financial services, despite increased payments for parts and raw materials.

Net cash used in investing activities amounted to JPY 619.4 billion of cash outflows. Cash outflows from investing activities increased by JPY 41.9 billion compared with the previous fiscal year, due mainly to increased payments for additions to and internally developed intangible assets as well as decreased proceeds from sales and redemptions of other financial assets, which was partially offset by decreased payments for additions to property, plant and equipment.

Net cash used in financing activities amounted to JPY 87.4 billion of cash outflows. Cash outflows from financing activities increased by JPY 110.3 billion compared with the previous fiscal year, due mainly to increased repayments of financing liabilities as well as purchases of treasury stock.

 

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Forecasts for the Fiscal Year Ending March 31, 2021

Amid restrictions on movement and activity in many countries due to the spread of COVID-19, the situation of stagnant consumer consumption and corporate activities or business operations continues.

Honda’s first priority is the safety of our stakeholders, including customers, suppliers and employees. Honda is taking appropriate measures to prevent the spread of COVID-19 in accordance with government policies in each country where Honda conducts business. Honda is continuing to focus on our activity to minimize the impacts on our stakeholders and its business operations.

Under these circumstances, it is difficult to predict when COVID-19 will subside and how situations in each country and region will develop, so that the market trends and economic conditions are expected to remain uncertain.

Honda is currently unable to provide a reasonably calculated forecast of the consolidated financial results for the fiscal year ending March 31, 2021, due to impacts relating to the spread of COVID-19. Honda will provide the forecasts of the consolidated financial results for the fiscal year ending March 31, 2021 as soon as they become available.

Dividend per Share of Common Stock

Fiscal fourth quarter dividend is JPY 28 per share of common stock. The total annual dividend per share of common stock for the fiscal year ending March 31, 2020, is JPY 112 per share.

The dividend forecast for the fiscal year ending March 31, 2021 is undetermined, as Honda is currently unable to provide a reasonably calculated forecast of the consolidated financial results for the fiscal year ending March 31, 2021, due to impacts relating to the spread of COVID-19.

This announcement contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on management’s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that the actual results of the Company could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in the principal markets of the Company, its consolidated subsidiaries and its affiliates accounted for by the equity-method, and fluctuation of foreign exchange rates, as well as other factors detailed from time to time. The various factors for increases and decreases in profit have been classified in accordance with a method that Honda considers reasonable.

 

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Basic Rationale for Selection of Accounting Standards

The Company adopted IFRS for the Company’s consolidated financial statements from the year ended March 31, 2015 which have been included in the annual securities report (to be submitted to the Financial Services Agency of Japan) and Form 20-F (to be submitted to the U.S. Securities and Exchange Commission), aiming at improving comparability of financial information across international capital markets as well as standardization of financial information and enhancing efficiency of financial reporting of the Company and its consolidated subsidiaries.

 

- 4 -


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[1] Consolidated Statements of Financial Position

March 31, 2019 and 2020

 

     Yen (millions)  
     Mar. 31, 2019     Mar. 31, 2020  

Assets

    

Current assets:

    

Cash and cash equivalents

     2,494,121       2,672,353  

Trade receivables

     793,245       633,909  

Receivables from financial services

     1,951,633       1,878,358  

Other financial assets

     163,274       190,053  

Inventories

     1,586,787       1,560,568  

Other current assets

     358,234       365,769  
  

 

 

   

 

 

 

Total current assets

     7,347,294       7,301,010  
  

 

 

   

 

 

 

Non-current assets:

    

Investments accounted for using the equity method

     713,039       655,475  

Receivables from financial services

     3,453,617       3,282,807  

Other financial assets

     417,149       441,724  

Equipment on operating leases

     4,448,849       4,626,063  

Property, plant and equipment

     2,981,840       3,051,704  

Intangible assets

     744,368       760,434  

Deferred tax assets

     150,318       132,553  

Other non-current assets

     162,648       209,695  
  

 

 

   

 

 

 

Total non-current assets

     13,071,828       13,160,455  
  

 

 

   

 

 

 

Total assets

     20,419,122       20,461,465  
  

 

 

   

 

 

 

Liabilities and Equity

    

Current liabilities:

    

Trade payables

     1,184,882       958,469  

Financing liabilities

     3,188,782       3,248,457  

Accrued expenses

     476,300       449,716  

Other financial liabilities

     132,910       209,065  

Income taxes payable

     49,726       43,759  

Provisions

     348,763       287,175  

Other current liabilities

     599,761       593,447  
  

 

 

   

 

 

 

Total current liabilities

     5,981,124       5,790,088  
  

 

 

   

 

 

 

Non-current liabilities:

    

Financing liabilities

     4,142,338       4,221,229  

Other financial liabilities

     63,689       303,570  

Retirement benefit liabilities

     398,803       578,909  

Provisions

     220,745       238,439  

Deferred tax liabilities

     727,411       698,868  

Other non-current liabilities

     319,222       344,339  
  

 

 

   

 

 

 

Total non-current liabilities

     5,872,208       6,385,354  
  

 

 

   

 

 

 

Total liabilities

     11,853,332       12,175,442  
  

 

 

   

 

 

 

Equity:

    

Common stock

     86,067       86,067  

Capital surplus

     171,460       171,823  

Treasury stock

     (177,827     (273,940

Retained earnings

     7,973,637       8,142,948  

Other components of equity

     214,383       (114,639
  

 

 

   

 

 

 

Equity attributable to owners of the parent

     8,267,720       8,012,259  

Non-controlling interests

     298,070       273,764  
  

 

 

   

 

 

 

Total equity

     8,565,790       8,286,023  
  

 

 

   

 

 

 

Total liabilities and equity

     20,419,122       20,461,465  
  

 

 

   

 

 

 

 

- 5 -


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[2] Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

Consolidated Statements of Income

For the years ended March 31, 2019 and 2020

 

                                           
     Yen (millions)  
     Year ended
Mar. 31, 2019
    Year ended
Mar. 31, 2020
 

Sales revenue

     15,888,617       14,931,009  

Operating costs and expenses:

                                                              

Cost of sales

     (12,580,949     (11,851,659

Selling, general and administrative

     (1,774,393     (1,641,590

Research and development

     (806,905     (804,123
  

 

 

   

 

 

 

Total operating costs and expenses

     (15,162,247     (14,297,372
  

 

 

   

 

 

 

Operating profit

     726,370       633,637  
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     228,827       164,203  

Finance income and finance costs:

    

Interest income

     48,618       49,412  

Interest expense

     (13,217     (24,689

Other, net

     (11,223     (32,645
  

 

 

   

 

 

 

Total finance income and finance costs

     24,178       (7,922
  

 

 

   

 

 

 

Profit before income taxes

     979,375       789,918  

Income tax expense

     (303,089     (279,986
  

 

 

   

 

 

 

Profit for the year

     676,286       509,932  
  

 

 

   

 

 

 

Profit for the year attributable to:

    

Owners of the parent

     610,316       455,746  

Non-controlling interests

     65,970       54,186  
     Yen  

Earnings per share attributable to owners of the parent

    

Basic and diluted

     345.99       260.13  

 

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Consolidated Statements of Comprehensive Income

For the years ended March 31, 2019 and 2020

 

                                           
     Yen (millions)  
     Year ended
Mar. 31, 2019
    Year ended
Mar. 31, 2020
 

Profit for the year

     676,286       509,932  

Other comprehensive income, net of tax:

                                                              

Items that will not be reclassified to profit or loss

    

Remeasurements of defined benefit plans

     (23,745     (102,983

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

     (24,046     (23,361

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

     (2,837     (1,550

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

     228       279  

Exchange differences on translating foreign operations

     95,568       (293,201

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

     (18,847     (30,393
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     26,321       (451,209
  

 

 

   

 

 

 

Comprehensive income for the year

     702,607       58,723  
  

 

 

   

 

 

 

Comprehensive income for the year attributable to:

    

Owners of the parent

     637,609       24,287  

Non-controlling interests

     64,998       34,436  

 

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Consolidated Statements of Income

For the three months ended March 31, 2019 and 2020

 

     Yen (millions)  
     Three months ended
Mar. 31, 2019
    Three months ended
Mar. 31, 2020
 

Sales revenue

     4,049,117       3,458,060  

Operating costs and expenses:

                                                              

Cost of sales

     (3,255,441     (2,761,533

Selling, general and administrative

     (519,892     (477,999

Research and development

     (231,419     (224,145
  

 

 

   

 

 

 

Total operating costs and expenses

     (4,006,752     (3,463,677
  

 

 

   

 

 

 

Operating profit (loss)

     42,365       (5,617
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     59,196       14,472  

Finance income and finance costs:

    

Interest income

     12,446       10,847  

Interest expense

     (3,152     (9,564

Other, net

     269       (6,388
  

 

 

   

 

 

 

Total finance income and finance costs

     9,563       (5,105
  

 

 

   

 

 

 

Profit before income taxes

     111,124       3,750  

Income tax expense

     (115,653     (25,273
  

 

 

   

 

 

 

Profit (loss) for the period

     (4,529     (21,523
  

 

 

   

 

 

 

Profit (loss) for the period attributable to:

    

Owners of the parent

     (13,023     (29,542

Non-controlling interests

     8,494       8,019  
     Yen  

Earnings (loss) per share attributable to owners of the parent

    

Basic and diluted

     (7.40     (17.01

 

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Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2019 and 2020

 

     Yen (millions)  
     Three months ended
Mar. 31, 2019
    Three months ended
Mar. 31, 2020
 

Profit (loss) for the period

     (4,529     (21,523

Other comprehensive income, net of tax:

    

Items that will not be reclassified to profit or loss

                                                              

Remeasurements of defined benefit plans

     (23,745     (102,983

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

     1,651       (26,698

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

     186       (2,254

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

     108       180  

Exchange differences on translating foreign operations

     65,751       (202,593

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

     5,071       (7,062
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     49,022       (341,410
  

 

 

   

 

 

 

Comprehensive income for the period

     44,493       (362,933
  

 

 

   

 

 

 

Comprehensive income for the period attributable to:

    

Owners of the parent

     30,907       (354,380

Non-controlling interests

     13,586       (8,553

 

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[3] Consolidated Statements of Changes in Equity

For the years ended March 31, 2019 and 2020

 

     Yen (millions)  
     Equity attributable to owners of the parent              
     Common
stock
     Capital
surplus
     Treasury
stock
    Retained
earnings
    Other
components
of equity
   
Total
    Non-controlling
interests
    Total
equity
 

Balance as of April 1, 2018

     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

Effect of hyperinflation

             (9,454     14,896       5,442         5,442  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance as of April 1, 2018

     86,067        171,118        (113,271     7,555,045       192,980       7,891,939       300,563       8,192,502  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the year

                  

Profit for the year

             610,316         610,316       65,970       676,286  

Other comprehensive income, net of tax

               27,293       27,293       (972     26,321  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the year

             610,316       27,293       637,609       64,998       702,607  

Reclassification to retained earnings

             5,890       (5,890     —           —    

Transactions with owners and other

                  

Dividends paid

             (194,271       (194,271     (66,010     (260,281

Purchases of treasury stock

           (64,557         (64,557       (64,557

Disposal of treasury stock

           1           1         1  

Share-based payment transactions

        342              342         342  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        342        (64,556     (194,271       (258,485     (66,010     (324,495
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

             (3,343       (3,343     (1,481     (4,824
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2019

     86,067        171,460        (177,827     7,973,637       214,383       8,267,720       298,070       8,565,790  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the year

                  

Profit for the year

             455,746         455,746       54,186       509,932  

Other comprehensive income, net of tax

               (431,459     (431,459     (19,750     (451,209
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the year

             455,746       (431,459     24,287       34,436       58,723  

Reclassification to retained earnings

             (102,437     102,437       —           —    

Transactions with owners and other

                  

Dividends paid

             (196,795       (196,795     (55,693     (252,488

Purchases of treasury stock

           (96,284         (96,284       (96,284

Disposal of treasury stock

           171           171         171  

Share-based payment transactions

        363              363         363  

Equity transactions and others

                   (3,049     (3,049
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

        363        (96,113     (196,795       (292,545     (58,742     (351,287
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

             12,797         12,797         12,797  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2020

     86,067        171,823        (273,940     8,142,948       (114,639     8,012,259       273,764       8,286,023  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

[4] Consolidated Statements of Cash Flows

For the years ended March 31, 2019 and 2020

 

     Yen (millions)  
     Year ended
Mar. 31, 2019
    Year ended
Mar. 31, 2020
 

Cash flows from operating activities:

                                                            

Profit before income taxes

     979,375       789,918  

Depreciation, amortization and impairment losses excluding equipment on operating leases

     721,695       699,877  

Share of profit of investments accounted for using the equity method

     (228,827     (164,203

Finance income and finance costs, net

     (88,608     (47,892

Interest income and interest costs from financial services, net

     (124,076     (130,636

Changes in assets and liabilities

    

Trade receivables

     9,344       132,702  

Inventories

     (60,906     (59,931

Trade payables

     (11,816     (141,159

Accrued expenses

     25,372       (4,529

Provisions and retirement benefit liabilities

     (1,590     118  

Receivables from financial services

     (260,704     103,614  

Equipment on operating leases

     (230,311     (270,677

Other assets and liabilities

     11,045       (20,524

Other, net

     3,706       10,959  

Dividends received

     175,244       185,742  

Interest received

     270,776       288,821  

Interest paid

     (150,162     (162,263

Income taxes paid, net of refunds

     (263,569     (230,522
  

 

 

   

 

 

 

Net cash provided by operating activities

     775,988       979,415  

Cash flows from investing activities:

    

Payments for additions to property, plant and equipment

     (420,768     (370,195

Payments for additions to and internally developed intangible assets

     (187,039     (231,063

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

     20,765       17,638  

Payments for acquisitions of subsidiaries, net of cash and cash equivalents acquired

     —         (3,047

Payments for acquisitions of investments accounted for using the equity method

     (2,401     (14,584

Payments for acquisitions of other financial assets

     (506,431     (282,806

Proceeds from sales and redemptions of other financial assets

     515,670       265,980  

Other, net

     2,649       (1,404
  

 

 

   

 

 

 

Net cash used in investing activities

     (577,555     (619,481

Cash flows from financing activities:

    

Proceeds from short-term financing liabilities

     8,435,249       9,037,608  

Repayments of short-term financing liabilities

     (8,213,698     (9,039,601

Proceeds from long-term financing liabilities

     1,900,257       2,021,173  

Repayments of long-term financing liabilities

     (1,726,097     (1,676,504

Dividends paid to owners of the parent

     (194,271     (196,795

Dividends paid to non-controlling interests

     (66,872     (54,280

Purchases and sales of treasury stock, net

     (64,556     (96,113

Repayments of lease liabilities

     (47,088     (78,659

Other, net

     —         (4,240
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     22,924       (87,411

Effect of exchange rate changes on cash and cash equivalents

     16,276       (94,291
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     237,633       178,232  

Cash and cash equivalents at beginning of year

     2,256,488       2,494,121  
  

 

 

   

 

 

 

Cash and cash equivalents at end of year

     2,494,121       2,672,353  
  

 

 

   

 

 

 

 

- 11 -


Table of Contents

[5] Assumptions for Going Concern

None

 

- 12 -


Table of Contents

[6] Notes to Consolidated Financial Statements

[A] Changes in accounting policies

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; and

 

   

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

In the 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 JPY 272,232 million and total assets, mainly right-of-use assets were recognized approximately in the same amounts in the 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  
  

 

 

 

 

- 13 -


Table of Contents

[B] 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 consolidated 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 note:

 

*

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.

Segment information based on products and services

As of and for the year ended March 31, 2019

 

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

Sales revenue:

                

External customers

     2,100,155        11,072,117       2,365,355        350,990       15,888,617        —         15,888,617   

Intersegment

     —          215,647       14,687        26,266       256,600       (256,600     —    
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2,100,155        11,287,764        2,380,042        377,256       16,145,217       (256,600     15,888,617  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

     291,642        209,694       235,945        (10,911     726,370       —         726,370  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment assets

     1,523,817        7,923,802       10,236,066        328,870       20,012,555       406,567       20,419,122  

Depreciation and amortization

     66,680        603,124       784,683        14,198       1,468,685       —         1,468,685  

Capital expenditures

     74,024        525,419       2,041,735        16,074       2,657,252       —         2,657,252  

 

As of and for the year ended March 31, 2020

 

 

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

Sales revenue:

                

External customers

     2,059,335        9,959,080        2,586,965        325,629       14,931,009        —         14,931,009   

Intersegment

     —          235,558       13,972        25,025       274,555       (274,555     —    
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2,059,335        10,194,638       2,600,937        350,654       15,205,564       (274,555     14,931,009  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

     285,668        153,323       219,704        (25,058     633,637       —         633,637  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment assets

     1,483,888        7,821,499       10,282,136        354,472       19,941,995       519,470       20,461,465  

Depreciation and amortization

     67,512        555,153       823,996        14,742       1,461,403       —         1,461,403  

Capital expenditures

     93,871        498,260       2,248,597        17,611       2,858,339       —         2,858,339  

 

- 14 -


Table of Contents

For the three months ended March 31, 2019

 

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

Sales revenue:

                

External customers

        489,415          2,843,998            619,070          96,634         4,049,117       —           4,049,117   

Intersegment

     —          68,855       3,485        6,426       78,766       (78,766     —    
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     489,415        2,912,853       622,555        103,060       4,127,883        (78,766     4,049,117  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

     44,931        (53,040     59,199        (8,725     42,365       —         42,365  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

For the three months ended March 31, 2020

 

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

Sales revenue:

                

External customers

        473,565          2,267,961            625,013          91,521         3,458,060       —           3,458,060  

Intersegment

     —          70,772       3,346        5,708       79,826       (79,826     —    
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     473,565        2,338,733       628,359        97,229       3,537,886       (79,826     3,458,060  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

     63,486        (75,677     22,943        (16,369     (5,617     —         (5,617
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Explanatory notes:

 

1.

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

 

2.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of March 31, 2019 and 2020 amounted to JPY 682,842 million and JPY 787,022 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

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 year ended March 31, 2019

 

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

Sales revenue:

                   

External customers

     2,394,584       8,526,733        652,335       3,557,338        757,627       15,888,617        —         15,888,617  

Inter-geographic areas

     2,453,729       497,231        275,089       714,901        6,826       3,947,776        (3,947,776     —    
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     4,848,313        9,023,964        927,424       4,272,239        764,453       19,836,393        (3,947,776     15,888,617   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     10       299,750        (6,620     404,220        22,616        719,976        6,394       726,370  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Assets

     4,546,640       11,418,194        694,606       3,024,357        621,259       20,305,056        114,066       20,419,122  

Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets

     2,695,603       4,740,675        65,500       691,211        144,716       8,337,705        —         8,337,705  

As of and for the year ended March 31, 2020

 

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

Sales revenue:

                   

External customers

     2,307,523       8,167,345        561,856       3,207,470        686,815       14,931,009        —         14,931,009  

Inter-geographic areas

     2,115,411       389,474        210,713       652,231        6,825       3,374,654        (3,374,654     —    
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     4,422,934       8,556,819        772,569        3,859,701        693,640        18,305,663        (3,374,654     14,931,009   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     (28,162     305,315        14,996       319,565        37,289       649,003        (15,366     633,637  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Assets

     4,889,920       11,375,801        689,158       2,851,027        518,445       20,324,351        137,114       20,461,465  

Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets

     3,003,416       4,755,072        58,735       658,397        109,046       8,584,666        —         8,584,666  

 

- 15 -


Table of Contents

For the three months ended March 31, 2019

 

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

Sales revenue:

                                          

External customers

     643,905         2,207,263        190,071          819,335        188,543         4,049,117        —           4,049,117  

Inter-geographic areas

     562,434       121,873        70,515       177,751        1,408       933,981        (933,981     —    
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     1,206,339       2,329,136        260,586       997,086        189,951       4,983,098        (933,981     4,049,117   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     (85,486     85,911        (15,202     60,949        (10,129     36,043        6,322       42,365  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

For the three months ended March 31, 2020

 

 

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

Sales revenue:

                                          

External customers

     592,951       1,908,290        135,260          674,688        146,871       3,458,060        —           3,458,060  

Inter-geographic areas

     491,668       103,840        54,251        151,447        1,586        802,792        (802,792     —    
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     1,084,619         2,012,130        189,511       826,135        148,457         4,260,852        (802,792       3,458,060  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     (66,228     24,579        3,992       44,654        1,734       8,731        (14,348     (5,617
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Explanatory notes:

 

1.

Major countries 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.

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

 

3.

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 March 31, 2019 and 2020 amounted to JPY 682,842 million and JPY 787,022 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

[C] Information about per common share

Equity per share attributable to owners of the parent as of March 31, 2019 and 2020 are calculated based on the following information.

 

     2019      2020  

Equity attributable to owners of the parent (millions of yen)

     8,267,720        8,012,259  

The number of shares outstanding at the end of the year (excluding treasury stock) (shares)

     1,759,561,385        1,726,609,786  

Equity per share attributable to owners of the parent (yen)

     4,698.74        4,640.46  

Earnings per share attributable to owners of the parent for the years ended March 31, 2019 and 2020 are calculated based on the following information. There were no significant potentially dilutive common shares outstanding for the years ended March 31, 2019 and 2020.

 

     2019      2020  

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

     610,316        455,746  

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

     1,763,983,221        1,752,006,211  

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

     345.99        260.13  

[D] Significant Subsequent Event

None

 

- 16 -


Table of Contents

[E] Other

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.

Impact to Europe related to changes of the global automobile production network and capability

In February 2019, the Company announced making changes throughout the global automobile production network based on the direction to “optimize production allocation and production capacity on a global basis”. As a part of the changes, the Company announced mainly to begin consultation with associates in the direction toward discontinuing automobile production at its certain subsidiaries in Europe in 2021.

The Company and its certain subsidiaries recognized JPY 68,092 million of the loss including the impairment loss of property, plant and equipment, employee benefits and other expense. Of the total loss and expense, JPY 56,590 million is included in cost of sales and JPY 11,502 million is included in selling, general and administrative in the consolidated statements of income for the year ended March 31, 2019.

 

- 17 -