Honda 2007 Annual Report Download - page 57

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In fiscal year 2006, operating income and income before
income taxes, minority interest and equity in income of affiliates
were impacted by the posting of a ¥138.0 billion gain on the
return of the substitutional portion of the Employees Pension
Funds (hereafter, “gain on return”) to the Japanese govern-
ment, which also affected income after tax.
Review of Operations
Motorcycle Business
Unit sales of Honda motorcycles, all-terrain vehicles (ATVs)
and personal watercraft (PWC) in fiscal 2007 amounted to
10,369,000 units, an increase of 1.0%, from the previous
fiscal year. Unit sales in Japan were 337,000 units, a decrease
of 8.4%. Overseas unit sales in the motorcycle totaled
10,032,000 units, an increase of 1.3%, due mainly to an
increase in unit sales in Other regions, especially in Latin
America. Revenue from unaffiliated customers increased
11.8%, to ¥1,370.6 billion, from the previous fiscal year, due
mainly to increased unit sales and the positive impact of cur-
rency translation effects. Operating income decreased 11.7 %,
to ¥100.6 billion, from the previous fiscal year, due mainly to
increased SG&A expenses, higher R&D expenses and the gain
on return which was recorded in the fiscal year ended March
31, 2006, offsetting the positive impact of increased profit
attributable to higher revenue and positive currency effects.
The operating margin was 7.3%.
Unit Sales
Thousands
Years ended March 31 2006 2007 % change
Japan 368 337 (8.4)%
North America 615 503 (18.2)
Europe 353 329 (6.8)
Asia 7,907 7,895 (0.2)
Other Regions 1,028 1,305 26.9
Total 10,271 10,369 1.0%
Net Sales
Yen (millions)
Years ended March 31 2006 2007 % change
Japan ¥0,099,009 ¥0,101,753 2.8%
North America 349,741 308,293 (11.9)
Europe 208,092 219,773 5.6
Asia 324,026 383,389 18.3
Other Regions 244,944 357,409 45.9
Total ¥1,225,812 ¥1,370,617 11.8%
Japan
In Japan, total demand for motorcycles in fiscal year 2007, was
approximately 730,000 units, down from the previous year.
Demand increased for second-class motor-driven cycles
(51cc–125cc) and small-size two-wheeled motor vehicles (over
251cc), but fell for first-class motor-driven cycles (up to 50cc)
and mini-size two-wheeled motor vehicles (126cc–250cc).
To meet increasingly diverse customer needs, we strength-
ened the Honda Dream Shop and other parts of our sales net-
work, and strove to develop even more appealing motorcycles.
Nevertheless, unit sales of motorcycles fell 8.4% in fiscal year
2007, to 337,000 units.
We adopted advanced technologies from specialized racing
motorcycles in small-size two-wheeled motor vehicles, and
sales of the fun-to-ride and maneuverable CBR1000RR super
sports model were favorable, but sales of the CB1300 Super
Bol d’Or decreased. In mini-size two-wheeled motor vehicles,
sales of the Hornet, a naked sports model with refined and
exciting styling, were strong. On the other hand, Forza sales
declined. Sales of first- and second-class motor-driven cycles,
such as the Today and the Duo, decreased.
North America
Looking at calendar year 2006, demand in the United States
for motorcycles, ATVs and personal watercraft came roughly
equal to the previous year’s demand. Demand for road bikes
grew, but demand for ATVs—particularly utility ATVs—declined.
Of this number, Honda motorcycle sales fell 18.2%, to
503,000 units, in fiscal year 2007. Sales of the CBR1000RR, a
super sports model, and our new off-road model, the
CRF150R, were strong, but higher interest rates and economic
uncertainty impacted demand for leisure products. Particularly
affected by this impact were sales of off road-models, mainly
Enduro*1 models such as CRF50F and CRF70F, which
dropped 15.1%, to 282,000 units.
As one of our safety initiatives, we launched the world’s first
mass-market motorcycle with an airbag system, the Gold Wing
touring bike, in the United States and Canada.
Although sales of the FourTrax Rancher series of utility
ATVs, which underwent a full model change in December
2006, were strong, total unit sales of ATVs and personal water-
craft came to 221,000 units in fiscal year 2007, down 21.9%.
*1 Enduro
A motor sport involving long races on relatively flat off-road courses and
lasting between two and 12 hours
2,500
5,000
10,000
12,500
7,500
8,080 978
1,370
10,369
9,206
996
1,097
1,225
0
300
600
1,200
1,500
900
0
03 04 05 06 07 03 04 05 06 07
10,482 10,271
Unit Sales
Years ended March 31
(Thousands)
Net Sales
Years ended March 31
Yen (billions)
Japan
North America
Europe
Asia
Other Regions
Japan
North America
Europe
Asia
Other Regions