Honda Motor Co., Ltd. (NYSE:HMC) Q3 2024 Earnings Call Transcript

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So we’ll continue to see that impact in the fourth quarter. Annually, as I showed you in the full year forecast, the cost, in fact, it’s about JPY 430 billion plus, of which JPY 360 billion, this is a full year, and it’s the impact of the pricing. Meanwhile, the cost part, well, the material cost, yes, it is declining. But once the declining pace slows down, then in the fourth quarter, we have incorporated that slowdown. The plus impact will compare to last fiscal year and will come down. Meanwhile the cost — we think that the labor cost increase, the wage increase will continue to have an impact cost. The plus, nine months, is about JPY 80 billion I said. But for the full year, it will be slightly less. The cost, the supplier, we are consulting with the suppliers and sharing information and carrying out our activities.

That is all. Thank you.

Unidentified Analyst: Thank you very much [indiscernible].

Unidentified Company Representative: Today, we didn’t get this question, but I would like to appeal one point. If you have time, although, the time is already finished, however, if you could stay on, please stay with us. So, in terms of the summary of the financial status, I didn’t say it because it would be too long. But now, the thing is that why motorcycle businesses are so strong, that is the frequently asked question recently. And we would like the media people to understand that fully. Maybe you can write an article that for your own writing and then if you have time, please let me state this. Before the COVDI-19 in 2019, we had 220 million unit sales globally. Now, we have 188 billion units in the plans, this term, but back in 2019, our OP was at JPY 290 billion, 14% ROS.

Now, we have 500 million businesses. And the RP per unit is about JPY 20,000 to JPY 40,000, the profit per one unit of the motorcycle. And then we have a near 40% global share. In some countries, we have 80% market share of the motorcycles. And then, we have such a sales commercial power. And we have a well-trusted brand power that is fruit of the cumulative efforts of my predecessors. And then since 2010, we had a mega module platform as strategy in place powertrains, frames. We had a model — or we had a commonality initiative across the models, across the regions. Because of that, we improved our profit structures and we had also improved more contact with the customers with many more models available to them. And now in South America, in Europe, we have a high-profit businesses, which is a good positive thing for us.

Therefore, we used to be profiting from Asia, but now 60% Asia, the rest are from the rest of the regions, which includes 20% in Brazil, 20% from Europe. That could be the kind of split across the world. And then, of course, the volatility can be seen in some countries with regions. However, the 20% ROS, of course, if we can sustain that level, ROS could be another story. However, I should say that we have established a structure to be robust against the volatility changes. And such efforts — successful efforts in the last 20 years have fruited this way. And then the next 20 years of motorcycle businesses, going forward, our technology power to create attractive models with the cost containment, commercial values, financial power. So when everything is in place, passing the automobile area, BEV is shrinking the ICE businesses in China.

However, in motorcycle, the growth is still expected, ICE motorcycle will grow. Batteries will be add-on. And battery EVs will be an add on to that. Therefore, this business is still growing business. And battery EV and know-how ahead of others, and we have a manufacturing capital in place, and we have those efforts in our automobile. And we can get a synergy from automobile to the motorcycle business areas, which can grow, thanks to the synergy, I think. Therefore, I just wanted to say that we have the motorcycle businesses, like the one I described. Thank you for your time. I said 20% in Europe, but 20%, including the developed countries, including Europe, that includes U.S., Japan as well. So, that’s the precise term. So, please understand our motorcycle businesses precisely.

Thank you very much. Now, we can conclude our press conference. And our financial statements are available on our website, and thank you very much indeed for your participation. Thank you

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