Honda Motor Co., Ltd. — FY2024 Form 20-F
Period: Fiscal year ended March 31, 2024, compared with FY2023. This is an annual report, not a standalone 2023 Q4 filing; separate Q4 results are not provided in the supplied text. Financial statements are prepared under IFRS and presented in yen.
Business context and results
Honda operates motorcycle, automobile, financial services, and power products and other businesses. Automobiles generated 66% of FY2024 revenue, motorcycles 16%, financial services 16%, and power products and other businesses 2%.
| Metric | FY2024 | FY2023 | Change |
|---|---|---|---|
| Revenue | ¥20,428.8bn | ¥16,907.7bn | +20.8% |
| Operating profit | ¥1,382.0bn | ¥780.8bn | +77.0% |
| Operating margin | 6.8% | 4.6% | +2.1 percentage points |
| Profit before tax | ¥1,642.4bn | ¥879.6bn | +86.7% |
| Profit attributable to parent shareholders | ¥1,107.2bn | ¥651.4bn | +70.0% |
| Net margin | 5.4% | 3.9% | +1.5 percentage points |
| Basic EPS | ¥225.88 | ¥128.01 | +76.5% |
Management attributed improved operating profit mainly to price and cost effects and higher sales, partly offset by increased expenses. Positive currency effects contributed approximately ¥151.1bn to operating profit and ¥937.6bn to reported revenue growth; management’s constant-currency estimates are not IFRS measures.
Segment performance and material changes
- Automobiles: Revenue rose 28.1% to ¥13,567.6bn; operating profit was ¥560.6bn, versus an operating loss of ¥16.6bn in FY2023. Consolidated unit sales increased 19.9% to 2.856m, driven chiefly by North America.
- Motorcycles: Revenue increased 10.7% to ¥3,220.1bn; operating profit rose 13.8% to ¥556.2bn. Consolidated unit sales edged up 0.5% to 12.219m.
- Financial services: Revenue increased 10.0% to ¥3,248.8bn, but operating profit declined 4.2% to ¥274.0bn as expenses rose. Financial-services receivables and operating-lease assets reached ¥13,378.0bn, up 26.0% year over year.
- Power products and other: Revenue fell 13.0% to ¥392.3bn; the segment recorded an operating loss of ¥8.9bn, versus profit of ¥22.8bn. Unit sales declined 32.5% to 3.812m, mainly reflecting weaker North American demand.
Automobile production and sales recovered as semiconductor supply constraints eased. Honda said the semiconductor procurement issue had been resolved by the filing date, though some material and component prices were rising or expected to rise.
Cash flow, balance sheet, debt and liquidity
- Operating cash flow was ¥747.3bn, down from ¥2,129.0bn. The filing cites higher payments for parts and raw materials and increased financial-services receivables, partly offset by increased customer receipts.
- Investing cash outflow was ¥867.3bn, including higher equity-method investment acquisitions. Financing provided ¥918.6bn, mainly reflecting increased financing-liability proceeds.
- Cash and cash equivalents rose to ¥4,954.6bn from ¥3,803.0bn; Honda said cash equaled approximately 2.9 months of revenue and was sufficient for operations.
- Total assets were ¥29,774.2bn and total equity ¥13,005.9bn. Current assets were ¥11,872.6bn and current liabilities ¥8,323.5bn.
- Financing liabilities totaled ¥10,163.6bn, up from ¥7,665.2bn. Honda separately reported ¥863.0bn of liabilities funding non-financial-services operations and ¥9,308.5bn funding financial services. These figures should be interpreted in light of the finance business’s receivables and lease assets.
- Committed credit lines for commercial-paper liquidity were ¥1,461.6bn; total unused committed lines were ¥1,525.3bn. Ratings at March 31, 2024 included Moody’s A3 long-term, S&P A-, and R&I AA.
- FY2024 capital expenditures were ¥2,836.5bn, including ¥2,448.5bn for equipment on operating leases; excluding operating-lease equipment, they were ¥388.0bn. R&D expense was ¥923.6bn.
Outlook, strategy, risks and unusual items
- Honda’s stated objectives include company-wide return on sales of at least 7% in the near-term business-resilience phase, company-wide ROIC above 10% by FY2031, and ¥10tn of investment in capital expenditures and R&D over the ten years beginning FY2022. It targets 2m annual EV production capacity by 2030 and 100% global EV/FCEV sales by 2040. These are targets, not guaranteed outcomes; the filing provides no clear consolidated FY2025 earnings forecast in the supplied text.
- Management plans FY2025 capital expenditures of ¥670bn, excluding equipment on operating leases. It is studying a Canadian EV value chain with estimated total investment of approximately CAD15bn, including partners’ investment; a proposed battery plant would have 36GWh annual capacity and is planned to start operations in 2028.
- Honda declared interim and year-end FY2024 dividends of ¥87 and ¥39 per share, respectively, after a three-for-one stock split; the pre-split annual equivalent was ¥204 per share. Its stated dividend policy aims for a consolidated payout ratio of approximately 30%, while allowing share repurchases.
- Product warranty provisions reached ¥815.2bn, within total provisions of ¥951.7bn. The auditor identified estimation of specific warranty programs as a critical audit matter. Honda also disclosed a ¥69.0bn expected-credit-loss allowance for financial-services receivables and significant estimation uncertainty around U.S. lease-vehicle residual values.
- After fiscal year-end, Honda reported that it found inappropriate certification-test cases involving four-wheel vehicles sold in the past and notified Japan’s transport ministry on May 31, 2024. Honda warned of potential brand, legal and operating consequences. The filing also identifies geopolitical and trade-policy shifts, currency movements, supplier concentration and input costs, EV transition execution, tighter environmental rules, cyber risk, and natural disasters as risks. The January 2024 Noto Peninsula earthquake reduced automobile production at some Japanese factories through effects on a business partner.
- Honda said routine litigation was not expected to materially harm consolidated results, but noted potential additional airbag-inflator recall provisions could arise and that future losses could not be reasonably estimated. The auditor issued unqualified opinions on the IFRS financial statements and internal controls; management also concluded disclosure controls were effective.
Important facts for investors to verify
- Whether FY2024 operating-profit improvement persists after separating foreign-exchange effects, pricing, volume/mix and cost reductions.
- Whether lower operating cash flow reflects temporary growth in finance receivables or a sustained deterioration in cash generation.
- Whether the warranty reserve, recall costs and certification-test matter require further revisions, penalties, or reputational remediation.
- How the growth in finance receivables, expected credit losses, lease residual values and financing liabilities develops as interest rates and used-vehicle values change.
- Whether EV investment, including the planned Canadian value chain, can meet cost, demand, capacity and return targets without weakening liquidity or shareholder distributions.