Honda 2015 Annual Report Download - page 25

Financial Section: Financial Review
In the fiscal year ended March 31, 2015, we changed the basis of the accounting
principles used to prepare our consolidated financial statements from U.S. GAAP
to IFRS. Accordingly, the consolidated financial statements of the Company in this
Annual Report have been prepared in accordance with IFRS, as issued by IASB.
Operating and Financial Review
Sales Revenue
Honda’s consolidated sales revenue for the fiscal year ended March 31, 2015,
increased by ¥822.0 billion, or 6.6%, to ¥13,328.0 billion from the fiscal year
ended March 31, 2014, due mainly to increased sales revenue in the Motorcycle
business operations as well as positive foreign currency translation effects. Honda
estimates that by applying Japanese yen exchange rates of the previous fiscal
year to the current fiscal year, sales revenue for the year would have increased by
approximately ¥67.3 billion, or 0.5%, compared to the increase as reported of
¥822.0 billion, which includes positive foreign currency translation effects.
Operating Costs and Expenses
Operating costs and expenses increased by ¥975.2 billion, or 8.3%, to ¥12,657.4
billion from the previous fiscal year. Cost of sales increased by ¥740.2 billion, or
7.7%, to ¥10,330.7 billion from the previous fiscal year, due mainly to an increase
in costs attributable to increased consolidated unit sales in the Motorcycle business,
and negative foreign currency effects. Selling, general and administrative expenses
increased by ¥227.2 billion, or 15.2%, to ¥1,720.5 billion from the previous fiscal
year, due mainly to increased product warranty expenses. Product warranty
expenses include expenses related to airbag inflators. Research and development
expenses increased by ¥7.7 billion, or 1.3%, to ¥606.1 billion from the previous
fiscal year.
Operating Profit
Operating profit decreased by ¥153.2 billion, or 18.6%, to ¥670.6 billion from the
previous fiscal year, due mainly to an increase in selling, general and administrative
expenses including product warranty expenses, which was partially offset by
continuing cost reduction as well as positive foreign currency translation effects.
Honda estimates that by excluding positive foreign currency effects of approxi-
mately ¥80.5 billion, operating profit would have decreased by approximately
¥233.7 billion.
(With respect to the discussion above of the changes, management identified
factors and used what it believes to be a reasonable method to analyze the
respective changes in such factors. Management analyzed changes in these
factors at the levels of the Company and its material consolidated subsidiaries.
“Foreign currency effects” consist of “translation adjustments,” which come from
the translation of the currency of foreign subsidiaries’ financial statements into
Japanese yen, and “foreign currency adjustments,” which result from foreign-
currency-denominated sales. With respect to “foreign currency adjustments,”
management analyzed foreign currency adjustments primarily related to the
following currencies: U.S. dollar, Euro, Japanese yen and others at the level of
the Company and its material consolidated subsidiaries.)
Profit before Income Taxes
Profit before income taxes decreased by ¥127.6 billion, or 13.7%, to ¥806.2
billion. The main factors behind this decrease, except factors relating to operating
profit, are as follows:
Share of profit of investments accounted for using the equity method had a
negative impact of ¥34.8 billion, due mainly to a recognition of impairment loss on
certain investments in affiliates and a decrease in profit attributable to decreased
sales revenue at affiliates and joint ventures in Asia.
Finance income and finance costs had a positive impact of ¥60.4 billion, due
mainly to an increase in gains on foreign exchange.
Income Tax Expense
Income tax expense decreased by ¥22.8 billion, or 8.5%, to ¥245.1 billion from
the previous fiscal year. The average effective tax rate increased 1.7 percentage
points to 30.4% from the previous fiscal year.
Profit for the Year
Profit for the year decreased by ¥104.8 billion, or 15.7%, to ¥561.0 billion from the
previous fiscal year.
Yen (billions)
Sales Revenue
* From fiscal 2011 to 2013, the above was
named “Net Sales and Other Operating
Revenue” and stated in accordance with
U.S. GAAP.
Fiscal years ended March 31
5,000
10,000
15,000
011 12 13 14 15
U.S. GAAP IFRS
Honda Motor Co., Ltd. Annual Report 2015 24
6 Financial Section
1 The Power of Dreams
2 Financial Highlights
3 To Our Shareholders
4 Review of Operations
5 Corporate Governance
7
Investor Relations
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