Honda Motor Co., Ltd. (HMC) F4Q12 Earnings Call April 27, 2012 12:00 AM ET Presentation Unidentified Company Representative
The European market experienced a sharp slowdown due to the heightened risk of instability in the financial markets in certain member countries and a subsequent widespread rise in unemployment, which has dampened consumer spending. Asia was led by steady growth in China and India, which served as a driver for recovery in surrounding countries in the region, despite wariness over the European financial crisis.Japan’s weak economic situation remained unchanged. There was a jump in equipment investment, which contributed to a slight overall improvement for the quarter, but other economic factors remained largely unchanged and unemployment edged upwards. During the quarter, the automobile industry experienced strong demand in the U.S., Japan and Russia. China results were flat compared to the year before and Europe dipped sharply lower. Motorcycle demand in the industry was strong in Asia and Africa, but lower in South America and Europe. We would now like to review the financial summary for the fourth quarter, which ended on March 31, 2012. Please refer to slide four. Honda realized a major recovery in automobile production and sales, predominantly in North America and Japan. Motorcycle sales set a new record for a quarter, and the contribution from stable financial services operations led to higher revenue and operating income compared to the same period last year. With respect to sales, due to increased sales in Asia and other regions including South America, motorcycle unit sales totaled 3,456,000 units, up 17.8% compared to the same period last year, setting a record high for any quarter. Regarding the Automobile segment, sales in Asia and countries in the other regions categories, were impacted the most by the flooding in Thailand and recorded declines. Both Japan and North America posted extremely robust sales increases, leading to a total of 988,000 units, an increase of 14.9% compared to the fourth quarter of last year. Power product unit sales declined in Europe and Japan but increases in North America and Asia resulted in a total of 2,010,000 units, up 15.1% from the previous year.
Revenue totaled ¥2,405 billion, a rise of 8.7%, due mainly to increased revenue from motorcycle and automobile operations, despite the negative impact from currency fluctuations. Operating income amounted to ¥111.9 billion, an increase of 142.3% compared to the same period last year. This was mainly due to changes in business composition and the model mix, which resulted from higher revenues as well as a reduction in SG&A costs, despite an increase in R&D costs and negative currency fluctuations.Income before taxes totaled ¥93.0 billion. Equity in income of affiliates totaled ¥33.2 billion, an increase of 33.1% from the same period last year. Net income attributable to Honda Motor totaled ¥71.5 billion, an increase of 60.7% compared to the same period last year. EPS was ¥39.72, which represents a ¥15 increase from the same period last year. With respect to FOREX during the period, the Japanese yen appreciated against the U.S. dollar and the euro. The average yen exchange rate was ¥80 to the U.S. dollar, ¥2 higher than the same period last year. The euro average was ¥104 per euro, ¥9 higher than the same period last year. Please refer to the next slide. Next, I would like to summarize unit sales over the past 12 months. Motorcycle operations realized sales of 12,559,000 units, an increase of 9.7% compared to the previous fiscal year. Automobile sales totaled 3,137,000 units, a decrease of 10.7%. Power product operations had sales of 5,819,000 units, a 5.6% increase. Read the rest of this transcript for free on seekingalpha.com