Honda 2013 Annual Report Download

Download and view the complete annual report

Please find the complete 2013 Honda annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

Annual Report 2013
Year Ended March 31, 2013
Honda Motor Co., Ltd.

Table of contents

  • Page 1
    Honda Motor Co., Ltd. Annual Report 2013 Year Ended March 31, 2013

  • Page 2
    ... motorcycle manufacturer and one of the leading automakers. With a global network of 369* subsidiaries and 86* affiliates accounted for under the equity method, Honda develops, manufactures and markets a wide variety of products to earn the Company an outstanding reputation from customers worldwide...

  • Page 3
    ...Risk Factors Corporate Governance Board of Directors, Corporate Auditors and Operating Officers Financial Section Investor Relations Information 14 Motorcycle Business 18 Automobile Business 22 Power Product and Other Businesses 23 Financial Services Business 32 63 Honda Corporate Reporting Map...

  • Page 4
    1 The Power of Dreams Dreams inspire us to create innovative products that enhance mobility and benefit society. To meet the particular needs of customers in different regions around the world, we base our sales networks, research and development centers, and manufacturing facilities in each region...

  • Page 5
    2 3 4 5 Honda Motor Co., Ltd. 03

  • Page 6
    ... to Honda Motor Co., Ltd. Cash dividends paid during the period Research and development Total equity Total assets Total Honda Motor Co., Ltd. shareholders' equity Capital expenditures (excluding purchase of operating lease assets) Depreciation (excluding property on operating leases) ¥ 8,936...

  • Page 7
    ... yen Total Assets / Total Honda Motor Co., Ltd. Shareholders' Equity / Total Honda Motor Co., Ltd. Shareholders' Equity per Common Share Yen (billions) 14,000 (Yen) 3,000 Capital Expenditures (Excluding Purchase of Operating Lease Assets) / Depreciation (Excluding Property on Operating Leases) Yen...

  • Page 8
    ... fiscal year ended March 31, 2013. This recovery in the U.S. was underscored by the job market improving, and by increased personal consumption, housing investment, and capital investment. Economic conditions in Europe, on the other hand, continued to stagnate owing to the debt crisis, negative GDP...

  • Page 9
    ... positive effects of new car model introductions. In our power products business operations, sales were steady for engines, generators and certain other products in North America, as well as pumps and certain other products in Asia. Future Initiatives True globalization through structural reforms...

  • Page 10
    ... rapidly. In March 2013, as part of developing new markets to undergird growth, we established Honda's third African motorcycle subsidiary in Kenya. Our first two operating bases are in Nigeria and South Africa. In Kenya, we plan to take advantage of our global proDream Neo (India) curement strength...

  • Page 11
    ... customer needs by adding sedan and utility-type models to the existing Honda range, based on the Brio platform, one of our strategic models for Asia. Our new N series of mini-vehicles has proved popular in Japan. We plan to add another five models to our mini-vehicle lineup by the end of 2015...

  • Page 12
    ... to commercialize HSHS and apply it in smart homes and in the building of smart communities. At Honda, our vision remains to supply people with products that deliver value and utility in daily life, based on the technological expertise that we have cultivated over many years. 10 Annual Report 2013

  • Page 13
    ... Company's capital structure and implementing a flexible capital structure policy. For the fiscal year ended March 2013, Honda set a year-end cash dividend of ¥19 per share, bringing total cash dividends applicable to the fiscal year to ¥76. This annual dividend includes ¥19 per share dividends...

  • Page 14
    ...Japan North Europe Asia Other America Regions Japan North Europe Asia Other America Regions Honda Group Unit Sales Consolidated Unit Sales 2012 2012 2013 2013 *1 The total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity...

  • Page 15
    ...Operating Income (Loss) (right scale) Honda Group Unit Sales / Consolidated Unit Sales (Thousands) 2,604 EU2000i (Generator) 1,572 1,004 314 577 Percentage of Net Sales by Business 2.8% Japan North Europe Asia Other America Regions Honda Group Unit Sales / Consolidated Unit Sales 2012 2013...

  • Page 16
    Review of Operations Motorcycle Business Honda's consolidated unit sales of motorcycles in fiscal year 2013 totaled 9,510 thousand units, an increase of 9.9% from the previous fiscal year, mainly due to higher sales in India, Thailand and certain other countries, despite lower sales in Brazil and ...

  • Page 17
    NC700X (Japan) NORTH AMERICA Total demand for motorcycles and all-terrain vehicles (ATVs) in the United States* during calendar year 2012 increased approximately 2% from the previous year to approximately 678 thousand units, although demand has yet to fully recover. Unit sales growth reflected ...

  • Page 18
    ..., Honda's consolidated unit sales in Europe for fiscal year 2013 decreased 9.6% from the previous fiscal year to 179 thousand units, mainly reflecting the lackluster market as a whole. This was despite increased sales of newly introduced large models NC700X, NC700S and Integra featuring outstanding...

  • Page 19
    ...-wheeled vehicles. * Based on Honda research: this only includes the following eight countries-Thailand, Indonesia, Malaysia, the Philippines, Vietnam, India, Pakistan and China. OTHER REGIONS In Brazil, the principal market within Other Regions, total demand for motorcycles in calendar year 2012...

  • Page 20
    Review of Operations Automobile Business Honda's consolidated unit sales of automobiles in fiscal year 2013 totaled 3,408 thousand units, an increase of 37.3% from the previous fiscal year, due mainly to an increase in unit sales in all regions. Growth in unit sales was supported mainly by ...

  • Page 21
    ..., Honda's consolidated unit sales in North America increased 30.8% from the previous fiscal year to 1,731 thousand units. This was mainly due to the positive impact of the launch of the all-new Accord, as well as strong sales of the Civic, CR-V and other models. In production activities, Honda...

  • Page 22
    .... Honda Malaysia SDN BHD, a consolidated subsidiary in Malaysia, has decided to build a second production line with an annual production capacity of 50 thousand units. Honda Malaysia plans to produce small car models such as the Jazz, as well as hybrid vehicles on the new production line. This new...

  • Page 23
    ... Other Regions (including South America, the Middle East, Africa, Oceania and other areas), consolidated unit sales in fiscal year 2013 increased 47.5% from the previous fiscal year to 298 thousand units. This result was mainly due to the positive impact of the launch of the all-new Civic in Brazil...

  • Page 24
    ... products in Australia. NORTH AMERICA Honda's consolidated unit sales in fiscal year 2013 increased 12.5% from the previous fiscal year to 2,604 thousand units. Although sales of snow blowers and certain other products declined, increased sales of general-purpose engines for OEM use in lawn mowers...

  • Page 25
    Review of Operations Financial Services Business To support the sale of its products, Honda provides retail lending and leasing to customers and wholesale financing to dealers through our finance subsidiaries in Japan, the United States, Canada, the United Kingdom, Germany, Brazil, Thailand and ...

  • Page 26
    ... may affect Honda's pricing of products sold and materials purchased. Accordingly, currency fluctuations have an effect on Honda's results of operations and financial condition, as well as Honda's competitiveness, which will over time affect its results. Since Honda exports many products and...

  • Page 27
    ...in currency exchange and interest rates. Honda is also exposed to the risk that its counterparties to hedging contracts will default on their obligations. Honda manages exposure to counterparty credit risk by limiting the counterparties to major international banks and financial institutions meeting...

  • Page 28
    ...our financing services, including commercial banks and finance and leasing companies. The financial services offered by us also involve credit risk as well as risks relating to lease residual values, cost of capital and access to funding. Competition for customers and/or these risks may affect Honda...

  • Page 29
    6. Risks relating to pension costs and other postretirement benefits Honda has pension plans and provides other post-retirement benefits. The amounts of pension benefits, lump-sum payments and other post-retirement benefits are primarily based on the combination of years of service and compensation....

  • Page 30
    ... its directors, executive officers and corporate auditors reside in Japan. All or substantially all of the Company's assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process...

  • Page 31
    ... entirely of independent directors. A NYSE-listed U.S. company must generally obtain shareholder approval with respect to any equity compensation plan. * For information about Honda's corporate governance practices, please refer to (http://world.honda.com/CSR/governance) Honda Motor Co., Ltd. 29

  • Page 32
    Board of Directors, Corporate Auditors and Operating Officers Chairman, Representative Director President, Chief Executive Officer and Representative Director Executive Vice President, Executive Officer and Representative Director Fumihiko Ike Senior Managing Officer and Director Takanobu Ito ...

  • Page 33
    ...Chief Operating Officer for Regional Operations (Latin America) President and Director of Honda South America Ltda. President and Director of Honda Automoveis do Brazil Ltda. Katsushi Watanabe Executive in Charge of Motorcycle Production for Motorcycle Operations General Manager of Kumamoto Factory...

  • Page 34
    ... 58 59 60 62 Consolidated Balance Sheets Divided Into Non-Financial Services Businesses and Finance Subsidiaries Consolidated Statements of Cash Flows Divided into Non-Financial Services Businesses and Finance Subsidiaries Financial Summary Selected Quarterly Financial Data Annual Report 2013

  • Page 35
    ... the fiscal year ended March 31, 2012, due mainly to increased net sales in Automobile business by recovery from the impact of the Great East Japan Earthquake and the floods in Thailand and positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of...

  • Page 36
    ... Common Share (right) Business Segments Motorcycle Business Honda's consolidated unit sales of motorcycles, all-terrain vehicles (ATVs) totaled 9,510 thousand units, increased by 9.9% from the previous fiscal year, due mainly to an increase in consolidated unit sales in Asia. Revenue from external...

  • Page 37
    ... and positive foreign currency effects, which was partially offset by increased R&D expenses and increased selling, general and administrative expenses. Financial Services Business To support the sale of its products, Honda provides retail lending and leasing to customers and wholesale financing to...

  • Page 38
    ... the new CRF250L on/off-road model for an agile ride across a wide range of riding environments in Japan, North America and Europe. In another significant R&D development, the Motorcycle Business unveiled the UNI-CUB personal mobility device. Featuring a proprietary balance control technology and...

  • Page 39
    ... used household gas canisters. Honda also put the Miimo robotic lawn mower on sale in Europe as part of developing this new market. The product boasts low noise and automatic recharging capabilities. In other R&D developments, a special test house in Saitama City was built with the Honda Smart Home...

  • Page 40
    ... the manufacturing and sale of motorcycles, automobiles and power products. To support this business, it also provides retail financing and automobile leasing services for customers, as well as wholesale financing services for dealers. Honda requires working capital mainly to purchase parts and raw...

  • Page 41
    ...11,309 2,540 - ¥253,317 Contributions to defined benefit pension plans* *1 Honda had commitments for purchases of property, plant and equipment at March 31, 2013. *2 To estimate the schedule of interest payments, the company utilized the balances and average interest rates of borrowings and debts...

  • Page 42
    ... to customers and wholesale financing to dealers primarily to support sales of our products. Honda classifies retail and direct financing lease receivables (consumer finance receivables) derived from those services as finance subsidiariesreceivables. Operating leases are classified as property on...

  • Page 43
    ...loan-to-value ratios, internal and external credit scores, and collateral types. Economic factors such as used vehicle prices, unemployment rates, and consumer debt service burdens are also incorporated when estimating losses. The methodologies and models used to estimate losses on operating leases...

  • Page 44
    ... the end of the lease term. For direct financing leases, our finance subsidiaries in North America purchase insurance to cover a portion of the estimated residual value. We periodically review the estimate of residual values. For vehicle leases accounted for as operating leases, the adjustments to...

  • Page 45
    ..., equity, and pension expense. Fiscal Year 2013 Compared with Fiscal Year 2012 Losses on lease residual values on direct financing leases declined by ¥0.6 billion, or 47%. Incremental deprecation on operating leases increased by ¥6.7 billion, due mainly to declines in used vehicle prices in North...

  • Page 46
    .... Pension expense for fiscal 2013 is affected by March 31, 2012 assumptions. Income Taxes Honda is subject to income tax examinations in many tax jurisdictions because Honda conducts its operations in various regions of the world. We recognize the tax benefit from an uncertain tax position based...

  • Page 47
    ... currencies, also serve to hedge foreign currency exchange risk as well as interest rate risk. The following tables provide information about Honda's financial instruments that were sensitive to changes in interest rates at March 31, 2012 and 2013. For finance receivables and long-term debt, these...

  • Page 48
    ...31 2012 Yen (millions) Expected maturity date Total Fair value Total Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years Thereafter Yen (millions) 2013 Average interest Fair rate value (%) Direct financing leases JPÂ¥ Other Total-Direct financing leases Other finance subsidiaries-receivables JP...

  • Page 49
    ..., and are reported at fair value, with unrealized gains or losses, net of deferred taxes, included in accumulated other comprehensive income (loss) in equity section of the consolidated balance sheets. At March 31, 2012 and 2013, the estimated fair values of marketable equity securities were ¥100...

  • Page 50
    ... advances: Investments in and advances to affiliates Other, including marketable equity securities Total investments and advances Property on operating leases: Vehicles Less accumulated depreciation Net property on operating leases Property, plant and equipment, at cost: Land Buildings Machinery and...

  • Page 51
    ...811,428,430 shares Capital surplus Legal reserves Retained earnings Accumulated other comprehensive income (loss), net Treasury stock, at cost 9,128,871 shares in 2012 and 9,131,140 shares in 2013 Total Honda Motor Co., Ltd. shareholders' equity Noncontrolling interests Total equity Commitments and...

  • Page 52
    Consolidated Statements of Income Years ended March 31, 2012 and 2013 Yen (millions) 2012 2013 Net sales and other operating revenue Operating costs and expenses: Cost of sales Selling, general and administrative Research and development Total operating costs and expenses Operating income Other ...

  • Page 53
    ... Years ended March 31, 2012 and 2013 Yen (millions) 2012 2013 Net income Other comprehensive income (loss), net of tax: Adjustments from foreign currency translation Unrealized gains (losses) on available-for-sale securities, net Unrealized gains (losses) on derivative instruments, net Pension...

  • Page 54
    ... (loss), net earnings Total Honda Motor Co., Ltd. shareholders' equity Common stock Capital surplus Legal reserves Treasury stock Noncontrolling interests Total equity Balance at March 31, 2012 Transfer to legal reserves Dividends paid to Honda Motor Co., Ltd. shareholders Dividends paid to...

  • Page 55
    ... paid Dividends paid to noncontrolling interests Sales (purchases) of treasury stock, net Other, net Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of year...

  • Page 56
    ... the accounting policies used in Honda'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), and relevant parts Automobiles...

  • Page 57
    ... of property on operating leases. 6. Capital expenditures of Financial services business includes ¥683,767 million for the year ended March 31, 2012 and ¥793,118 million for the year ended March 31, 2013, respectively, of purchases of operating lease assets. 7. Previously, Honda used principally...

  • Page 58
    ... geographical information based on the location of the Company and its subsidiaries As of and for the year ended March 31, 2012 Yen (millions) Japan North America Europe Asia Other Regions Total Reconciling Items Consolidated Net sales and other operating revenue: External customers Transfers...

  • Page 59
    ...the year ended March 31, 2013 Yen (millions) Japan North America Europe Asia Other Regions Total Reconciling Items Consolidated Net sales and other operating revenue: External customers Transfers between geographic areas Total Cost of sales, SG&A and R&D expenses Operating income (loss) Assets Long...

  • Page 60
    ...-Financial Services Businesses and Finance Subsidiaries March 31, 2012 and 2013 Yen (millions) 2012 2013 Assets Non-financial services businesses Current Assets: Cash and cash equivalents Trade accounts and notes receivable, net Inventories Other current assets Investments and advances Property...

  • Page 61
    ... (increase) in trade accounts and notes receivable for finance subsidiaries is due to the reclassification of finance subsidiaries-receivables which relate to sales of inventory in the unaudited consolidated statements of cash flows presented above. 3. Regarding non-financial services businesses...

  • Page 62
    ...(excluding property on operating leases) Depreciation of property on operating leases Per common share Net income attributable to Honda Motor Co., Ltd.: Basic Diluted Cash dividends paid during the period Honda Motor Co., Ltd. shareholders' equity Sales progress Sales amounts:*1 Japan Overseas Total...

  • Page 63
    Yen (millions) 2006 2007 2008 2009 2010 2011 2012 2013 ¥ 9,907,996 868,905 829,904 317,189 99,605 (15,287) 597,033 6.0% 71,061 510,385 11,902 ¥...494 4,014 6,071 190,338 ¥ 117 113 ¥ 118 117 ¥ 100 114 ¥ 98 101 ¥ 93 93 ¥ 83 86 ¥ 82 79 ¥ 94 83 Honda Motor Co., Ltd. 61

  • Page 64
    ...31, 2013 Q2 Q3 Q4 Net sales and other operating revenue Operating income Income before income taxes and equity in income of affiliates Net income attributable to Honda Motor Co., Ltd. Basic net income attributable to Honda Motor Co., Ltd. Tokyo Stock Exchange: (TSE) (in yen) High Low New York Stock...

  • Page 65
    Investor Relations Information Honda Motor Co., Ltd. 63

  • Page 66
    ...., Ltd. Company Information Established Lines of Business Fiscal Year-End Independent Registered Public Accounting Firm Web Site September 24, 1948 Motorcycles, Automobiles, Financial Services and Power Products and Others March 31 KPMG AZSA LLC Corporate Web Site: http://www.honda.co.jp IR Web Site...

  • Page 67
    Major Shareholders Number of shares held (thousands) Percentage of total shares outstanding (%) Individual or Organization Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) Meiji Yasuda Life Insurance Company Moxley & Co. LLC Tokio Marine & ...

  • Page 68
    ... Forest Stewardship Council (FSC)-certified paper made of wood from responsibly managed forests. TM This annual report uses vegetable oil inks that include few volatile organic compounds. This annual report was printed using waterless printing, which releases no harmful materials. Printed in Japan