- Upward revision to forecast of fiscal consolidated operating income and net income -
TOKYO, Japan, January 31, 2011 - Honda Motor Co., Ltd. announced its consolidated financial results for the fiscal third quarter and the fiscal nine months ended December 31, 2010.
Despite the unfavorable currency effects due to the appreciation of the Japanese yen and a decrease in automobile sales in Japan, consolidated operating income for the fiscal third quarter (October 1, 2010 through December 31, 2010) was 125.6 billion yen primarily due to the recovery of automobile sales in North America and the expansion of motorcycle business in Asia.
Consolidated operating profit for the fiscal nine months (April 1, 2010 through December 31, 2010) considerably increased compared to the same period last year, primarily due to increased profit in automobile business in Japan, North America and Asia as well as motorcycle business in Asia, offsetting the unfavorable currency effects due to the Japanese yen appreciation. Equity in income of affiliates, including profit from joint ventures in China, also substantially increased compared to the same period last year.
Honda made an upward revision to the forecast for consolidated operating income for FY11 (fiscal year ending March 31, 2011) from the previous 500 billion yen to 620 billion yen. This upward revision was based on the forecast for an increase in profit due to the expansion of motorcycle business in Asia and South America, improved model mix in North America, continuing cost reduction efforts, and increased profit from financial services business. The forecast for net income*1 was also revised upward from the previous 500 billion yen to 530 billion yen due to the forecasted increase in equity in income of affiliates mainly in Asia in addition to an increase in operating income.
The overstatements of trade accounts and notes receivable, inventories, net sales, and cost of sales in the previously issued consolidated financial statements, in relation to "inventory management trading"*5 activities in which a domestic subsidiary of the Company was involved were found. The Company recorded the related cumulative loss amounted to approximately 14.1 billion yen, which incurred in prior fiscal years, as selling, general and administrative expenses in the Company's consolidated statements of income for the nine months ended December 31, 2010, not by retrospectively adjusting the prior year financial statements. As a result, operating income for the nine months ended December 31, 2010 decreased by approximately 14.1 billion yen. The Company also adjusted net sales amounted to approximately 9.8 billion yen and related operating expenses overstated in the Company's consolidated statements of income for the six months ended September 30, 2010, in the Company's consolidated statements of income for the three months ended December 31, 2010. As a result, operating income for the three months ended December 31, 2010 decreased by approximately 14.4 billion yen, including the above cumulative loss incurred in prior fiscal years. Honda believes that these out-of-period adjustments are immaterial to the Company's consolidated financial statements or results of operations as of and for the three months and nine months ended December 31, 2010 as well as prior periods.