Honda-The Power of Dreams
Consolidated Financial Summary for the Fiscal Year Ended March 31, 2006 & Forecast for the Fiscal Year Ending March 31, 2007
-Achieved All-time Record Performance with Increased Sales and Income in all Business Areas-

TOKYO, Japan, April 26, 2006 – Honda Motor Co., Ltd. announced that in the fiscal year ended March 31, 2006, it achieved an all-time record for consolidated net sales and other operating revenue due to increased sales revenue in all business areas.

Honda also realized an all-time record for consolidated operating income for the fiscal year, due mainly to increased revenues, cost reduction efforts, and the positive effect from the depreciation of the Japanese Yen, as well as the effect of “Daiko-Henjyo” (the return of the substitutional portion of employees’ pension funds to the Japanese government) which accounted for a gain of approximately JPY 138 billion. These factors offset an increase in selling, general and administrative (SG&A) expenses and research and development (R&D) expenses. Honda also realized an all-time record for income before income taxes, equity in income of affiliates, net income, and basic net income per common share for this fiscal year.

The year-end dividend per common share rose by JPY 23 to JPY 60. Combined with the interim dividend of JPY 40, the total dividend to be paid for the entire fiscal year ended March 31, 2006 is JPY 100, an increase of JPY 35 compared to the previous fiscal year.

Results for Fiscal Year Ended March 31, 2006

(*record high) Yen ( billions )
  Year ended
March 31, 2005
Year ended
March 31, 2006
Difference
(% change)
Net sales and other  operating revenue 8,650.1 9,907.9* + 1,257.8 (+14.5)
Operating income 630.9 868.9* + 237.9 (+ 37.7)
Income before income taxes 656.8 814.6* + 157.8 (+ 24.0)
Equity in income of affiliates 96.0 99.6* + 3.5 (+ 3.7)
Net income 486.1 597.0* + 110.8 (+ 22.8)


Basic net income per common share JPY 520.68 JPY 648.67* +JPY 127.99 (+ 24.6)
(Honda’s average rates: JPY 113 = U.S. dollar 1 JPY 138 = Euro 1)

· Consolidated unit sales: All-time record unit sales were realized in the automobile and power product business areas. (The total includes fully finished products made by Honda and its subsidiaries as well as unit sales of fully finished products and parts for local production by affiliates accounted for under the equity method.)

Motorcycles: 10.271 million units (- 2.0%); the decrease was due mainly to lower sales of parts for overseas production bound for affiliated companies in Asia. <Approximately 2.6 million (+1.6 million ) Honda-brand motorcycles manufactured and sold by overseas affiliates accounted for under the equity method, are not included in the unit sales to conform with Generally Accepted Accounting Principles in the U.S. because they do not include any parts supplied by Honda Motor Co., Ltd. and its consolidated subsidiaries.>

Automobiles: 3.391 million units (+ 4.6%); the increase was due to higher sales in overseas markets, mainly in North America. It was the seventh consecutive year of increased sales.

Power Products: 5.876 million units (+ 10.9%); the increase was due primarily to sales growth in North America and Europe. It was the fifth consecutive year of increased sales.

· Consolidated net sales and other operating revenue increased in all business areas and totaled JPY 9,907.9 billion (+14.5%), realizing an all-time record for the sixth consecutive year. 

· Consolidated operating income totaled JPY 868.9 billion (+37.7%), the second consecutive year for an increase as well as an all-time record. The increased revenues, cost reduction effects, positive effect from the depreciation of the Japanese Yen, as well as the effect of the gain from the “Daiko-Henjyo”    (+ JPY 138 billion) offset an increase in selling, general and administrative (SG&A) expenses and research and development (R&D) expenses.

· Income before income taxes increased to JPY 814.6 billion (+24.0%), achieving a fifth consecutive all-time record.

· Equity in income of affiliates totaled JPY 99.6 billion (+3.7%), achieving a sixth consecutive all-time record.

· Consolidated net income was JPY 597.0 billion (+22.8%), achieving a fifth consecutive all-time record.

· Consolidated net sales and other operating revenue for the fourth quarter of the fiscal year totaled JPY 2,833.7 billion (+20.6%). Consolidated operating income for the period was JPY 340.8 billion (+142.8%), consolidated income before income taxes was JPY 334.8 billion (+159.3%), equity in income of affiliates was JPY 22.7 billion (+16.3%), and consolidated net income totaled JPY 219.5 billion (+133.4%). The basic net income per common share was JPY 239.78 (+136.4%). (Consolidated operating income and consolidated income before income taxes reflect the effect of JPY 138 billion in a gain from the “Daiko-Henjyo”, and consolidated net income reflects the effect of net income after tax relevant to the gain from the “Daiko-Henjyo”.)

Consolidated net sales and other operating revenue, operating income, income before income taxes, and net income were all-time record for any quarter, whereas equity in income of affiliates was an all-time record for the fourth fiscal quarter.



Forecast for Fiscal Year Ending March 31, 2007


· Honda aims to achieve a seventh consecutive all-time record for consolidated sales and other operating revenue for the fiscal year ending March 31, 2007, based on the unit sales plans of 10.84 million motorcycles, 3.72 million automobiles, and 5.88 million power products. (Approximately 3.36 million Honda-brand motorcycles manufactured and sold by overseas affiliates accounted for under the equity method, are not included in the sales plan total to conform with Generally Accepted Accounting Principles in the U.S. because they do not include any parts supplied by Honda Motor Co., Ltd. and its consolidated subsidiaries.)

· Honda will carry out its business operations based on the goals described in the following chart with assumption of the average currency exchange rate of JPY 112 = U.S. dollar 1 (average rate for the first half of the fiscal year: JPY 113, latter half of the fiscal year: JPY 110) and JPY 132 = Euro 1 (first half: JPY 135, latter half: JPY 130)

  Yen (billions)
  Year ended
March 31, 2006
Forecast for year
ending March 31, 2007
Difference
(% change)
Net sales and other operating revenue 9,907.9 10,600.0 + 692.0 ( + 7.0 )
Operating income 868.9 750.0 - 118.9 ( - 13.7 )
Income before income taxes 814.6 735.0 - 79.6 ( - 9.8 )
Equity in income of affiliates 99.6 103.0 + 3.3 ( + 3.4)
Net income 597.0 550.0 - 47.0 (- 7.9)


· At the board of directors meeting held on April 26, 2006, Honda resolved a matter of stock split. A 1:2 stock split will be made for shareholders listed or recorded in the final register of shareholders and register of beneficial shareholders as at June 30, 2006. As of July 1, 2006, one share of the Company’s common stock will be split into two.

After the stock split, for the year ending March 31, 2007, Honda plans that the interim cash dividend of JPY 30 per share.  It also projects that the year-end cash dividend will be JPY 30 per share.  As a result, total cash dividends for the year ending March 31, 2007 are expected to be JPY 60 per share.  Had the stock split not been carried out, the dividends would have been equal to JPY 60 per share for both interim and year-end dividends, which would have been an increase of JPY 20 per share for the interim dividend, as a result, an increase of JPY 20 per share for the year, to JPY 120.