Honda Motor Co., Ltd.
- Honda Motor Co., Ltd. is a manufacturer of motorcycles, automobiles, and power products established on September 24, 1948 in Japan.
- Honda’s business segments are the Motorcycle business operations, Automobile business operations, Financial services business operations, and Life creation and other businesses operations.
- In Q3, FY2023, the company has reported sales revenue of ¥4,438.19 billion, compared to ¥3,688.78 billion in sales during the same quarter a year earlier. Profit for the periods are ¥265.13 billion and ¥207.60 billion, respectively.
- Honda’s consolidated sales revenue for the financial year ended March 31, 2022, increased by ¥1,382.1 billion, or 10.5%, to ¥14,552.6 billion from the fiscal year ended March 31, 2021. Profit for the year increased by ¥65.2 billion, or 9.4%, to ¥760.7 billion from the previous fiscal year.
- In financial year 2022, Honda reported 15%, 63%, 19% and 3% sales from the segments, respectively. The company has presence in Japan, North America, Europe, Asia, and other regions. Sales percentages region-wise reported are 13%, 52%, 4%, 26%, and 5%, respectively.
Brief Company Overview
Honda Motor Co., Ltd. (TYO:7267; NYSE:HMC) is a manufacturer of motorcycles, automobiles, and power products established on September 24, 1948 in Japan. It was established as a successor to an unincorporated enterprise established by the founder Soichiro Honda in 1946. The initial purpose of the company was to manufacture motors for motorized bicycles.
Honda’s business segments are the Motorcycle business operations, Automobile business operations, Financial services business operations, and Life creation and other businesses operations. In financial year 2022, Honda reported 15%, 63%, 19% and 3% sales from the segments, respectively. The company has presence in Japan, North America, Europe, Asia, and other regions. Sales percentages region-wise reported are 13%, 52%, 4%, 26%, and 5%, respectively.
As of March 31, 2022, Honda had 204,035 full-time employees, including 138,796 local nationals employed in its overseas operations. The company has 339 consolidated subsidiaries across the world plus 67 equity-method affiliated companies. Honda has 1,811.43 million shares issued of common stock. The company sold 27.30 million units of products for the fiscal year ended March 31, 2022. Of this, 17.02 million units are motorcycles, 4.07 million units are automobiles and 6.20 million units are power products.
Honda’s shares have traded on the Tokyo Stock Exchange (TSE) since its shares were first listed on the TSE in 1957 with the symbol "7267". Since February 11, 1977, American Depositary Shares (each representing one share of Common Stock and evidenced by American Depositary Receipts (ADRs)) have been listed and traded on the New York Stock Exchange (the NYSE) under the symbol “HMC”, having been traded on the over-the-counter markets in the United States since 1962.
- Honda announced in January, 2023 that it will make organizational changes which will take effect from April 2023. The changes will involve creation of electrification business development, reorganization of regional operations and reorganization of corporate functions.
- Honda resolved in a Board meeting held on February 10, 2023 that it will purchase back 25,000,000 shares (1.5% of total float) from Tokyo Stock Exchange starting on February 13, 2023 and ending on April 30, 2023. Maximum acquisition amount would be 70.00 billion yen.
- Honda will set up a new division to catch up in the EV race. The new division is to be operational from April 1, 2023.
Q3 FY2023 Highlights
During the third quarter of financial year 2023, the company has reported sales revenue of ¥4,438.19 billion, compared to ¥3,688.78 billion in sales during the same quarter a year earlier. Operating profit of the company has been ¥280.49 billion and ¥229.45 billion, for the quarters, respectively. Profit for the periods are ¥265.13 billion and ¥207.60 billion, respectively. Earnings per share (EPS) reported during the quarter is ¥144.49, compared to ¥112.42 for the same quarter a year earlier.
Annual Performance Highlights
Honda’s consolidated sales revenue for the financial year ended March 31, 2022, increased by ¥1,382.1 billion, or 10.5%, to ¥14,552.6 billion from the fiscal year ended March 31, 2021, due mainly to increased sales revenue in Motorcycle business and Financial services 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 ¥671.7 billion, or 5.1%.
Operating profit increased by ¥211.0 billion, or 32.0%, to ¥871.2 billion from the previous fiscal year, due mainly to an increase in profit attributable to sales impacts as well as positive foreign currency effects, which was partially offset by a decrease in profit attributable to price and cost impacts. Profit before income taxes increased by ¥156.1 billion, or 17.1%, to ¥1,070.1 billion from the previous fiscal year. Profit for the year increased by ¥65.2 billion, or 9.4%, to ¥760.7 billion from the previous fiscal year. Earnings per share (EPS) of the company for the financial year 2022 is ¥411.09, up from ¥380.75 a year earlier.
Honda has reported current assets of ¥3,674.93 billion of cash and cash equivalents at the end of financial year 2022, increased from ¥2,758.02 billion a year earlier. Total current assets is reported ¥8,841.42 billion, up from ¥7,579.09 billion. Total non-current assets reported on March 31, 2022 is ¥15,131.73 billion, as compared to ¥21,921.03 billion a year earlier. Total current liabilities of the company is ¥6,004.40 billion, compared to ¥5,715.46 billion a year earlier.
Net cash provided by operating activities during 2022 is ¥1,679.62 billion, compared to ¥1,072.38 billion a year earlier. Net cash used in investing activities for the years are ¥376.05 billion and ¥796.88 billion, respectively. And net cash used in financing activities are ¥615.72 billion and ¥283.98 billion for the years, respectively.
Honda’s business segments are the Motorcycle business operations, Automobile business operations, Financial services business operations, and Life creation and other businesses operations.
In 1949, Honda began mass production of motorcycles with the Dream D-Type, followed by other models such as the Benly and the Cub F-Type. By 1957, Honda became the top Japanese manufacturer in terms motorcycle production volume.
Honda produces a wide range of motorcycles, with engine displacement ranging from the 50cc class to the 1800cc class. Honda’s motorcycle lineup uses internal combustion engine of air- or water-cooled, and in single, two, four or six-cylinder configurations. Honda also has electric vehicles in its lineup. Honda’s motorcycle lineup consists of sports, business and commuter models. Honda also produces a range of off-road vehicles, including all-terrain vehicles (ATVs) and side-by-sides (SxS).
In Motorcycle business, the company made capital expenditures of ¥36,754 million in the fiscal year ended March 31, 2022. Funds were allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities The company has generated ¥2,185.2 billion revenue from this segment in FY2022 ending March 31, compared to ¥1,787.2 billion in FY2021.
Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs), and side-by-sides (SxS) in fiscal year 2022 totaled 10,721 thousand units, increased by 4.5% from the previous fiscal year, due mainly to an increase in consolidated unit sales primarily in Brazil and the United States, which offset a decrease in consolidated unit sales primarily in India
Honda started Automobile business operations in 1963 with the T360 mini truck and the S500 small sports car models. Honda subsequently launched a series of mass-production models including the CIVIC in 1972 and the ACCORD in 1976, which established a base for its Automobile business. In 1969, production of the mini vehicles N600 and TN600 began in Taiwan using component parts sets. In 1982, Honda became the first Japanese automaker to begin local automobile production in the United States (with the ACCORD model) and later conducted local development and expanded production activities to include light truck models. In 1986, the Acura Brand was established and an exclusive sales network was launched in the United States. Honda’s vehicles use gasoline engines of three, four or six-cylinder configurations, gasoline-electric hybrid systems and gasoline-electric plug-in hybrid systems. Honda also offers other alternative fuel-powered vehicles such as battery electric vehicles, fuel cell vehicles, and flexible fuel vehicles.
In Financial services business, capital expenditures excluding equipment on operating leases amounted to ¥340 million in the fiscal year ended March 31, 2022, while capital expenditures for equipment on operating leases were ¥ 2,026,098 million. The company has generated ¥9,147.4 billion revenue from this segment in FY2022 ending March 31, compared to ¥8,567.2 billion in FY2021.
Honda’s consolidated unit sales of automobiles in fiscal year 2022 totaled 2,424 thousand units, decreased by 7.4% from the previous fiscal year, due mainly to a decrease in consolidated unit sales primarily in the United States.
Financial Services Business
Honda offers financial services to their customers and dealers through finance subsidiaries in countries including in Japan, the United States, Germany, Brazil, and Thailand. The purpose is the provide sales support for their products. The services of these subsidiaries include retail lending, leasing to customers and other financial services, such as wholesale financing to dealers.
In Financial services business, capital expenditures excluding equipment on operating leases amounted to ¥340 million in the fiscal year ended March 31, 2022, while capital expenditures for equipment on operating leases were ¥ 2,026,098 million. Operating profit from this segment decreased by ¥23.9 billion, or 6.7%, to ¥333.0 billion from the previous fiscal year, due mainly to difference in the amount of the allowance for credit losses.
Life Creation and Other Businesses
Honda’s Power product business began in 1953 with the introduction of the model H, its first general purpose engine. Since then, Honda has manufactured a variety of power products including general purpose engines, lawn mowers, generators, water pumps, brush cutters, tillers, outboard marine engines and snow blowers. In 2019, Honda had renamed Power product business to Life creation business. This renaming represented Honda’s intention to evolve Power product business as a function to create new value for “mobility” and “daily lives”. In 2022, Life creation business has been renamed Power product business. In Other businesses, Honda began deliveries of the HondaJet aircraft in December 2015.
Honda’s consolidated unit sales of power products totaled 6,200 thousand units, increased by 10.3% from the previous fiscal year, due mainly to an increase in consolidated unit sales in all regions. Operating loss from this segment was ¥9.4 billion, an improvement of ¥2.1 billion from the previous fiscal year, due mainly to an increase in profit attributable to sales impacts, which was partially offset by increased expenses. In addition, operating loss of aircraft and aircraft engines included in Life creation and other businesses was ¥33.7 billion, an increase of ¥1.4 billion from the previous fiscal year.
Major brands of the company under each business segment are listed herein.
- Gold Wing Tour
- CBR1000RR-R Fireblade
- CRF1100L Africa Twin
- Super Cub C125
- BENLY e
- FIT (Jazz)
- Civic Si Sedan
- Civic Hatchback
- Civic Type R
- VEZEL (HR-V)
- Engine (GXE1.0H)
- Generator (EU18i)
- Miimo Robotic Lawn Mower
- Water Pump (WB20XT)
History of Honda Motor Co., Ltd. started with the idea of installing an auxiliary engine to the bicycles. In 1946, when the most common mode of transportation was the bicycle. On encountering the former Imperial Army’s generator engines to power wireless radios, Soichiro Honda developed the concept of using these engines as auxiliary power for bicycles. Modifying the 500 or so engines, Honda had produced and sold bicycles with auxiliary engines. The new bicycle was an instant hit, with orders coming in and stocks running out, so Honda decided to develop and original engine. In 1947, the A-Type engine, emblazoned with Honda’s name for the very first time, was completed.
Honda Motor Co., Ltd. was incorporated in 1948 with 34 employees and 1 million yen capital. Honda started as a bicycle auxiliary engine manufacturer in a small factory in Hamamatsu.
|1948||Honda Motor Co., Ltd. incorporated.|
|1953||The H-Type farming engine ushers in a new era.|
|1954||Declared entry in the Isle of Man TT races despite troubled times. Five years later, Honda enters its first race.|
|1958||Super Cub, a friendly and convenient scooter, goes on sale.|
The F150 tiller goes on sale. The company expands into North America by establishing its first overseas subsidiary Honda Motor Co., Inc. in Los Angeles.
|1960||To freely concentrate on research and development, Honda R & D Co., Ltd. is established.|
|1961||Honda gets first Isle of Man TT race victory as it dominates the top 5 spots in the 125cc and 250cc classes.|
|1962||Honda begins its first overseas production in Belgium.|
|1963||Honda forays into automobile production by releasing the T360 mini-truck, followed by the S500 sports car.|
|1964||Honda appears in Formal 1 racing for the first time with Japan's first Formula 1 machine The RA271 at German Grand Prix.|
|1972||U.S. Clean Air Act is enacted in 1970 which is termed as the most stringent emission regulations at the time. Honda becomes the first manufacturer in the world to fully comply with it by announcing its low-emission CVCC engine.|
|1981||Honda released the first car navigation system, Honda Electro Gyrocator that displayed the current location on a map.|
|1982||Honda becomes the first Japanese manufacturer to produce vehicles in North America.|
|1986||Honda begins research of compact aircraft and aircraft jet engines.|
|2002||Honda releases FCX, which became the first vehicle to receive U.S. government certification as a fuel cell vehicle, and went on lease-sale in the U.S. and Japan.|
|2012||Honda's power products reach 100 million accumulated production milestone.|
|2014||Honda's motorcycles reaches 300 million accumulated production milestone.|
|2015||Honda wins 700th World Grand Prix race. HondaJet achieves United States Federal Aviation Administration (FAA) type certification, and delivery to customers begins in the same year.|
|2016||Honda's worldwide cumulative automobile production reaches 100 million milestone.|
|2017||Honda celebrates 100 million-unit global production milestone for Super Cub series.|
|2020||Honda launched new electric vehicle "Honda e".|
|2021||World-first level 3 Autonomous Honda Legend goes on sale.|