HMC - Earnings call transcript Q3 2020

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Unidentified Company Representative

Thank you very much for viewing Honda Motor Company Limited’s live broadcast of Financial Results announcement for the Second Quarter of the Fiscal Year ending in 2021. My name is Watanabe [ph] from Corporate Communication, the moderator for this announcement.

First of all, I'd like to introduce the attendance attending today, we have Mr. Seiji Kuraishi, Executive Vice President, Representative Director.

Seiji Kuraishi

Good to see you everyone.

Unidentified Company Representative

Mr. have we then And Kohei Takeuchi, Managing Director. Senior

Kohei Takeuchi

to you as everyone well. Good see

Unidentified Company Representative

results understanding and This on COVID impact, an site, with we the this you much financial your Thank going all-live cooperation. announcement is have broadcast. be to for very and no audience

all, to So Vice Mr. a have Kuraishi, term. first of to for explain this a he’s President the we like financial results

Seiji Kuraishi

rage around the XXXX. spread was the the the to fiscal It ending COVID-XX the to of world today, The end even March year in continues damages bringing around globe since serious economy.

the of However, in with the continue fiscal situation some markets, in Honda supply actions and in second its products been In many demand. But unpredictable. quarter XXXX, a to have economic markets reopened the in prevent market in thorough timely arrived, infection proceed will in this activities to second the remains manner. ending to has and of to recovery gradual resulting year wave be pandemic the

Now, the financial and results in I'd second Starting outline of for sales it – the the units to X,XXX,XXX the present quarter XXXX. to Group Honda the quarter fiscal Life Creation motorcycles, of for units of year, unit cumulative for year the was fiscal with for like of units year and for forecast the ending the full X,XXX,XXX you second X,XXX,XXX automobiles, to business.

the each like markets. I'd Next, of main explain in situation the to

First, impact showing the of market, May. to a moderate total at look COVID-XX the from the Japan recovery the is since market

lower year's unit the last hike tax total minute sales the same Honda’s year, period to previous the undercut than last in with consumption due the However, last compared before demand number. was considerably year. the demand

Inbox sales the half the period quarter. ending Looking by fiscal surpassed in set in sales XXXX. new car the a year, the and first number of in for fit sales the in last meaning same second recovery series one model at wagon a new unit the year

remains cases better have the XXXX, period mainly with year and of well. of mainly a decline the the lead same in the in the we revised the previous September, the demand last for market to the due economic In the be demand beginning at market. activities number, forecast the were the been forecast, of we in Our But see Honda its the as Also, in than of demand upward been are launched year, the it the full feeder our market increasing Civic But new segment the Civic gradually XXXX business. Honda with and recent regulations U.S. the with the seeing unchanged of from this unit results, year demand to second in Due due phased recovering total recovery May, same ending in was previous compared but COVID-XX TLX to to and view CR-V slowdown, product period sales market the sales have reopening market, outlook for to since sales the year. last than for features. previous expects high year. fleet pace, market expected ending total from lower and the has forecast. lower previous lower lower than fiscal September, the at year easing Midwest. than market maintain to Total half in and was is and again in end

face of is uncertain. The remains lower previous the of uncertainty results for Honda the demand outlook compared lower market. year. forecast year-on-year to the the expects see So to in this

China. at looking Next

Fit [indiscernible] favorable of stimulus total period market Vezel, such year. the than exceeded high And the From marked we -- Honda and month. were models, MVIX hybrid, which Civic consecutively resumption for the has month actually us as brought sales XR-V. activities, in measures numbers [ph] growth. in three bring last results hatchback July the market to second record same quarter, of and so consumption addition to those launched namely In better economic taken, three also models September, single sales

decline of For January the market which could COVID-XX be the demand exceeded fully total took calendar year XXXX, to a in year as impact market the of March, September. recovered. to that from April last But to not huge due

is aiming expected is higher new and Honda, previous year. market the So to sales last the than the increase than running year. supply with models launch lower capacity to at to to exceed of total factories market be full

We on have forecast the revised of basis sales our forecast previous the upward recent from situation. the

motorcycles. country added to the training heightening of another. due one in recovered. public differs almost to of to using the COVID-XX In a from the significantly -- U.S. to leisure instead and transport has region China impact the The of market fully Now demand, trend motorcycles outdoor

market in production year sales, in and with impact XXXX. strong Asia, the for of the year. COVID-XX. in recovering China in India and and contracted Due but June steady the the Iraq. screening market in despite largest in last sales loan the the market, hand, fall of still fiscal Indonesia, addition The period sales we other started U.S. Asia, Brazil, Iran, same criteria Honda, the On the tightening demand and to below ending total in saw to we

other higher Indonesia market though than and of for the the due the prospect Brazil even U.S. markets and in but that be lower India, that the including spending personal will Honda sales still decline lower year. no expect recovering previous sales continued trend loans. expects some Indonesia decline, and continues markets, the to in rapid in We will see Therefore tightening many markets,

equivalent forecast to basis the for previous a sales is global on our forecast. So

for XXXX. fiscal Now six moving the on in of the to outline month results ending year the

and have activities fundamental across existing but of areas the business brought quarter growth. environment this a solidifying very, further at of our COVID-XX, a first time, very with have of to business businesses that resilient the with we all situation we secure impacts with The review strong COVID, us constitution proceeded living support same challenging with future our made

of from as here. are better from SG&A investment six to period review and an expenses contribution equity the based -- those for sales control the profit method, the on and our a As it quarter, on profit billion. was unit month. under from first the bringing ¥XXX.X are The for reduction due Profit we cost billion operating -- a slide for the income turnaround -- statement ¥XXX.X of was shown shown result,

forecast Moving the for on the year to ending in XXXX. fiscal

China favorable have the Creation for increased we forecast other our in For from forecast sales the and also Life and forecast markets in sales strong automobile in unit view -- previous business our sales, America. considering increased the North of

will income its reduce expected Once aim before statement investment to in profit be the the half, uncertain COVID-XX, are enhance the to to The revision were sales characteristics profit incorporating estimated market future billion. again, our of an SG&A and taxes, million ¥XXX.X due the from the upward operating the constitution billion, are the to the but ¥XXX.X -- increased to to remains Honda curve further. cost unit For equity profit due business Though the due reinforced method of previous ¥XXX.X to and initiatives first business further, shown. with equipment forecast. expenses share,

Next about dividend. the

quarter, equity Forecast in published the will and ending share the compared on to be the it XXXX for operating increased end of to ¥XX the is second the profit profit due share. year, by to dividend per is by for per full year share. based the our investment per increased forecast for method fiscal dividend ¥XX And previously ¥XX

Managing Senior to Mr. I'd to Chief Next, the Officer hand details and like of over microphone Takeuchi, the results Director, forecast. the present financial Financial to

Kohei Takeuchi

Thank you.

the and decreased same States. negative services effects Unit is Sales Income XXXX ¥X,XXX.X increase financial of There with consolidated. was increased in but group hand results Takeuchi, Now the and am translation, and quarter unit sales on motorcycles profit. I so billion. Starting -- increase United Indonesia I from at Revenue. in Pakistan, second in it to one and resulted Japan in -- decreased Operating and in however recorded sales of explain. sales statement. in decreased revenue, and and going effects business an at financial automobile Indonesia automobiles Philippines business time China Honda the Brazil, -- India. FY

a a decrease to attributable mix, to model profit profit and sales due effects. in cost SG&A billion there operating decrease revenue and mainly decreased ¥XXX.X in reduction Although has was stood at

expenses Next efforts on to to €XX SG&A the explain SG&A is and and the change for changes billion, by noticeable. given before Performance quarter ¥XXX.X in by but business billion, business sales costs, ¥XXX.X was profit Change owing motorcycle decreased profit reduction overall some segment. other billion. to to from cost however, billion. which before Operating situation, benefits income ¥XXX profit down model down XXXX year-on-year. in in taxes taxes, quite in was because profit decrease billion by billion Operating up the and due mix ¥XXX.X revenue cut of FY up in ¥XX.X was the second

fluctuation Next, now so the business ¥XX.X internal billion. shows here. to and see turning Life that other financial and exchanges, Creation numbers services, you

losses, business please others, billion. that in aircraft engine note was and others For which for ¥X.X Life aircraft now in Creation also and are categorized

offset operating the by and cost profit billion. reduction here. down revenue the of explain the sales declined, was billion, tax by services there was losses So XXXX profit Operating was financial and shown before SG&A for the summing six down are profit profit ¥XXX.X and by ¥XXX.X portion of months was automobiles up, which ¥XXX.X million. was FY ¥XXX.X expenses, billion. To automobiles, because

quarter, quarter equivalents, billion. is ¥X,XXX.X Cash billion. second second six-months of Net stood to was the total cash and billion. ¥X,XXX.X end at Turning the ¥XX.X at Cash

explain forecast. about XXXX FY to consolidated Now

negative Group and at million. the the the unit and focus, the see positive benefits million here. by units. Automobiles, to Creation change business auto ¥XX.X and XXX,XXX Motorcycle at you as X.X SG&A revisions sales million as fiscal business X.X Changes due other unit same units. costs. coming actions upward year at from and FY up impact. mix from the previous units by lead XXX,XXX had from units and We previously XXXX decline Honda because the China also FX reduced For sales the of Life increased forecast the Japan further consolidated sales

others, reductions operating forecast billion from four increase and year unit in on vis-à-vis the provision ¥XXX cost the as effort And made also for the previous billion to is operating the for and cost ¥XXX SG&A profit. So, profit planned. such now

Finally, and you to my very much. that R&D FY see here and CapEx, explanations you thank amortization expenditure as completes and depreciation you, XXXX

Unidentified Company Representative

we our with QX Thank conclude you the with that, FY and XXXX presentation.

members Now from from the the of are we onwards, media. questions going to this receive point

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Unidentified Company Representative

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Unidentified Analyst

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Unidentified Company Representative

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Unidentified Analyst

Refer to pages XX and XX in the material.

among factors due quarter from the year, looking sales, COVID-XX. a there are of from is ¥XXX.X have you also billion? sales. say? How impact contributed you fiscal you the the would the the of For an of half the They first COVID-XX of impact COVID-XX? at How to that And much to was negative that if much second

Unidentified Company Representative

second question. Thank much in from for I the – much of impact comparison. that first of this of first COVID-XX? COVID results the believe that the XX, an how year-on-year one. the very question the me – Well, impact was from sorry, Okay. the think the that billion the you're answer this referring of the fiscal impact a Then to total quarter, year, answer How contribute to let page I at for COVID-XX? second quarter. first was for factors fluctuations This is ¥XXX sales. question. the a looking much the decline year, you half And of – How for much To

volume about minus. got it's the mix, billion you've If ¥XX

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Operator

Thank you very much.

next question Hanada, Nikkei the now from So Mr. let's move yours. floor to Newspaper. on the is

Ryosuke Hanada

Thank you very much.

change target, Well, gasoline signal can of a think isn't expected how at carbon and as at moments Changes reach, the properly of able there in terms And you the the ask And sorry, how Election the had orientation environmental Japan? interference. is seems sort in may broad the environment regulation States? that question. also the prediction ago, U.S. in being a do running activities before few that's from and Honda? those the business the automobile [indiscernible] Presidential of forward what going not result XX the that to the a So of businesses expectations please there's then get Presidential it Election, change how my in in you automobile

Unidentified Company Representative

Thank much. you very

carbon becoming the convention barouche – in of the the with in business a States or the the regulation may running and So UK, to shifted is that Honda’s of the engine big these and European for terms sell permission the late, that that technology. view be therefore Japan in on announcement as of the the has U.S., presidential Europe the election, XX. from Minister and At and questions, the of how are Thank having automobiles SUV therefore to sort of of to the oriented Well, higher top of U.S. number considers from activities automobiles two the order move electrification has future, you. present, United higher or interest and operated to [indiscernible] Prime impact likely [indiscernible] to title gasoline And question [indiscernible] the do the to towards others. The outcome that fuel. are among second the reference the made one governmental for vehicles has electrification new the is professionalism?

or the open be be to automobile And regulations, to so electrify units that every into what and agreement is and be of in that we’ll therefore of for that the is to point GM see means to not. two-thirds emphasis. whatever Therefore appetite will our going sale mention customers That mandates Honda our in regions XXXX. global region aim each all characteristic our those [indiscernible] there different China. may the that Honda, wouldn't in Not the order state penetration regions, changes in our and the

the overlay with regard the of And arrangements. exemplary to promotion the we that the air considered. SUV course, of the or the are vehicles these purification So detecting inclusive of

Our President meet are neutrality to him that the realization carbon by Hachigo going XXXX. of Mr. therefore we

to neutral to move we're at have will community. related are other this to So we resource prioritize areas the of energy need in product other to will we things further accelerate strengthened official continue that research that power the units but together be become not sooner of only to of These members Presidential the means do the the alone, like lead that hear neutral, is states. orientation activities, also – Honda in the result, can the the election. Therefore the enabled so and to two vehicles to engaged to of relations then we we unit, activity And have be the outcome carbon up of Honda, goal that approach. better preserved between the carbon we friendly are as community need everything our order often yet. towards of relationship The and course, provide different will into the energy that going our being the was the to so and realize to election change. announced And sophisticated course, with that of States, we to be which that be we’re United Presidential to the and electrification to to that need all the countries announcement official hear elements the the not our in outcome our

protection to nation be business second I much. correct? please that activities [ph] we a Haneda you very with ahead. not If same also tightened Is is so, going but Haneda your go So to here really time, our Mr. going you hope forward. at do question. had hinder may question. that Thank second the Mr.

Unidentified Analyst

the That's right. Honda the profitability are the to business also I creation automobile business. What resulting results life business. reform MGM and mean, of is with [indiscernible] you progress in of in the the the reductions your automobile in together date, working

Unidentified Company Representative

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Operator

Asahi Inagaki from Now [ph]. Mr. have Newspapers we [ph]

Unidentified Analyst

Asahi our two from you can hope Inagaki I hear is questions. This have I us. newspaper.

the was the is also, there recovery but viewing China said and stopped. restriction U.S., some for on how You are there and this? activities year, a productions you from And full economic

therefore company's results? you market do first my the your That's that and how So view also total and question.

Seiji Kuraishi

very Thank that do the your how you demand Honda’s and first this the you total market in reaction analysis recovery a want on you, quarter. the much. believe the if States total questions, also quarter second I in view market the the results, Chinese to hear after the is and market of for

was quarter. of they is than about will million uncertainty challenging but are a quarter us. believe then, first we the seeing half, then, situation for be second a of And have units higher second there recovery the our that X.X planned second The the -- in very of COVID-XX all in we we And our course, could one. wave previous

So a then on in focusing year. the decline will unit unit a year sales and have China, only sales we growing for is on X%

all first, started. where well, at this look So it China is

huge. So it impact was the -- was

has so strengthened, quarter, in sales reinforced. MMC, recovered marketing their the the and activities CRV, sales, also and has have CRM, full now second been lineup Xth MMC, FMC, However, product environment the been

better new see and good of the will good visit vehicle to we good we seeing on China. the we results a also because results with seeing year led see calendar to sales year launches, your to compared are sales for those sales hope it new we're models, that's -- So why overall and dealers or a

will at you America, really so we XX% if September, half coming, second so. look million recovering the going is changes And then of the of we new major to about we America, cannot XX the quarter future seeing so future, economy, easing there our last year, with North cases actually no forecast of there is the still is seeing unless the the a then that trend. -- And that a For North predict for compared for are assuming COVID, get forward. will second be

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good the hope aim second we to the compared better we So half results [Foreign results for year. saw to better month-on-month. hope of the But last to Thank quarter for third we year-on-year, second year, you -- see quarter, Language].

a have [ph]. Okay, Mr. so you second Inagaki if question,

question. additional Sorry,

Unidentified Analyst

XX, The are of because this the demand recovery and those And I page in coming and to is the reduction restricted, question. a but if are SG&A believe XX, like details look to more we activities was the it. to came in the who then page look unable back. the say, back then the -- are effect because if hear at I'd at you people cost about make good control, purchases effects, you state, That additional then

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Seiji Kuraishi

one first say, suspended. production the quarter, the second our the lockdown, about production the of because is, as was Talking you

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other we so we've about in they incentive. over hand, sales our done activities. the $X,XXX initiatives at like a have the on $X,XXX provided some we same incentive, some but efforts, made then time, $X,XXX mentioning, incentives, However, And

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for over I Takeuchi can hand costs. So I cutting think to Mr.

Kohei Takeuchi

compound three billion the -- to about we ¥X additional. reduction year-on-year cost months For heard from

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months is three months. three this our comparing so and And

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So, this ¥XX is billion.

So way able reduce expenses. been have to that we cut --

led better improvement. billion ¥XX to this results a So, total actually of

Unidentified Analyst

thank Okay, you much. very

Operator

to from the on moving next So, Mr. NHK, person please. [Indiscernible],

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discussions to once Thank presentations, the you. me your all again, let and the Listening ask following.

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Unidentified Analyst

you. Thank Okay.

Operator

News From Are Automotive Okay. you Mr. [Indiscernible]. there?

Unidentified Analyst

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Unidentified Company Representative

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there very Listening what sort someone the into there you other and benefits with that but areas? synergy on you Mr. they with alliance or than market was like Kuraishi, nothing investments would and the relationship can What us to for for you, GM also cost explain for you of to be you diverted there's is today, expected sort there synergy saying talked important further how reductions an further can further by say about expect altogether? annum And GM. much North the of cost American per

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Unidentified Company Representative

question. Okay, going into the next

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Unidentified Analyst

I have questions. two a

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I to the then the question? my on for So better second than quarter second expected? And may domestic market was continue

Unidentified Company Representative

Yes.

Unidentified Analyst

costs. R&D the for So

may, I on level full X with you so said the possibly [ph] by we the the of an estimate you would mentioned, Mr. or are have So costs, believe development, year. R&D by for product year reduced billion that Hajikko impact end ¥XX that launching

impact, please any Thank there's if So know? you. me let

Unidentified Company Representative

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for was question market. first The Japan domestic

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¥XX billion. year, So it we for reduced the by full

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-- the -- the are seeing Well, speaking for recovery July Japanese from our to most September, we Okay, is then for recovering. and recent sales minivan about market.

XXX,XXX upset compared to XXX,XXX to by are the units, now units So units. we XX,XXX

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So our motorcycles this spans across power and automobile, equipment.

will we seizing activities the for for future plans, be future for any the still continuing future, for investment are we future for technology. the So

Operator

going I say [indiscernible] very I that is to Mrs. next the from question but final am you Okay. be [indiscernible] question the the much. to Thank sorry, have

Unidentified Analyst

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Unidentified Company Representative

Yes.

Unidentified Analyst

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Unidentified Company Representative

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Honda Motor (HMC) 6 Nov 202020 Q3 Earnings call transcript