Honda Motor Co., Ltd. (NYSE: HMC) today announced its consolidated financial results for the fiscal second quarter and the first half ended September 30, 2000. Second Quarter Results for the fiscal second quarter ended September 30, 2000 totaled Y58.1 billion ($538 million), a decrease of 8.5% from the same period in 1999. Net income per Common Share, both on a basic and fully diluted basis, for the quarter amounted to Y59.63 ($0.55), compared to Y65.19 for the same period in 1999. Each of Honda's American Depositary Shares represents two Common Shares.

Although unit sales in motorcycles and power products increased during the fiscal second quarter, consolidated net sales and other operating revenue (herein referred to as "revenue") for the quarter amounted to Y1,502.4 billion ($13,912 million), a decrease of 0.9% from the same period in 1999. This decrease in revenue was primarily due to currency translation effects, which had a negative impact on foreign currency-denominated revenue from Honda's overseas subsidiaries translated into yen. Honda estimates that had the exchange rate of yen remained unchanged from the same period in 1999, revenue for the quarter would have increased by approximately 4.3%.

Consolidated operating income for the fiscal second quarter totaled Y97.1 billion ($899 million), a decrease of 7.1% compared to the same period in 1999. The negative impact of the appreciation of the yen together with increase in research and development expenses were major factors for this decrease, which undermined Honda's ongoing cost reduction efforts and the decrease in selling, general and administrative expenses. Consolidated income before income taxes for the quarter totaled Y90.2 billion ($836 million), decreasing 14.3% from the same period in 1999.

With respect to Honda's sales in the fiscal second quarter by business category, motorcycle unit sales increased 25.4% to 1,319,000 units, and revenue increased 15.1%, to Y194.0 billion ($1,797 million). This increase in unit sales was due primarily to higher sales in Asian countries out side of Japan.

Honda's unit sales of automobiles decreased by 1.9% to 606,000 units, and revenue decreased 3.6%, to Y1,207.8 billion ($11,183 million) during the quarter. Unit sales of automobiles increased in Asia and Japan, however, lower sales in Europe were the primary contributors to this decrease in unit sales.

Unit sales of power products totaled 794,000 units, an increase of 2.3% compared to the same period in 1999. Strong sales of Honda's general-purpose engines in Europe and Asia offset the decline in unit sales in North America. Revenue from other businesses, including the power product business and financial services, increased by 6.4% to Y100.5 billion ($931 million).

First Half-Year Results

Honda's consolidated net income for the first six months ended September 30, 2000 totaled Y121.9 billion ($1,129 million), a decrease of 10.6% from the previous year. Net income per Common Share for the fiscal first half, both on a basic and fully diluted basis, amounted to Y125.11 ($1.16), compared to Y139.96 of the corresponding period a year ago.

Unit sales in all of Honda's business categories, namely motorcycles, automobiles and power products, increased and consolidated net sales and other operating revenue (herein referred to as "revenue") for the six months amounted to Y3,051.9 billion ($28,259 million), an increase of 0.6% from last year. Revenue included the effect of currency translation, and Honda estimates that had the exchange rate of the yen remained unchanged from the previous year, revenue for the year would have increased by approximately 8.4%.

Consolidated operating income for the fiscal first half totaled Y201.4 billion ($1,866 million), a decrease of 12.2% compared to the corresponding period last year. Despite an increase in revenue and Honda's ongoing cost reduction efforts, the negative impact of the appreciation of the yen was the major factor for this decrease in operating income.

Consolidated income before income taxes for the fiscal first half totaled Y192.0 billion ($1,778 million), a decrease of 15.2% compared to the previous year.

With respect to Honda's sales for the six-month period by business category, motorcycle unit sales increased 18.6% to 2,545,000 units, and revenue increased 12.9% to Y391.8 billion ($3,629 million). Unit sales in Asian countries such as India, Indonesia and Thailand, as well as in North America increased during the period and offset the decline in unit sales in Japan and Europe.

Honda's unit sales of automobile increased by 4.1% to 1,242,000 units, while revenue decreased 1.0% to Y2,457.2 billion ($22,753 million) for the six-month period. Strong sales of the Odyssey and the Vamos in Japan, higher sales of the Acura TL, CL and the Odyssey in North America, together with recovery of sales in Asian markets were the primary contributors to this increase in unit sales.

Unit sales of power products totaled 1,823,000 units, representing an increase of 3.1% compared to the previous year. Strong sales of Honda's general-purpose engines in Europe and Asia offset the decline in unit sales in North America. Honda's other businesses, including power products and financial services, showed a 1.0% decrease in revenue, amounting to Y202.7 billion ($1,877 million).

Forecasts for fiscal year ending March 31, 2001

In overseas markets, although the economies of Asian countries are expected to continue to recover, Honda foresees consumer spending in the United States to slow and European business conditions to remain severe due to the ongoing depreciation of the euro. It will take some time for the economy in Japan to recover and the business environment will remain severe, in view of tougher sales competition.

In regards to the forecasts of the financial results for fiscal year ending March 31, 2001, Honda projects the consolidated and unconsolidated results as below:

Forecasts for consolidated results
In billions of yen Changes fromof yen FY 2000
Net sales and other operating revenue Y6,220 +2.0%
Income before income taxes 360 -13.5%
Net income 220 -16.2%
Forecasts for unconsolidated results
In billions of Yen Changes from FY 2000
Net sales Y2,950 +1.0%
Ordinary profit 120 -40.4%
Net income 88 -35.0%

These forecasts are based on the assumption that the exchange rates for the yen to the U.S. dollar and the euro for the current fiscal year will average Y106 and Y96, respectively.

Honda projects that the year-end cash dividend will be Y12.00 per share of common stock. Total cash dividends for the term will be Y23.00.