Honda Motor Q4 2025 Earnings Call Transcript

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Provided by Quartr
May 13, 2025
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Moderator

Director, Managing Executive Officer, Eiji Fujimura. This is Fujimura. Thank you.

Moderator

Mr. Mibei will give a summary of the financial results, followed by Mr. Kaihara's explanation of results of the fiscal year ended March 2025 and 2026 as well as shareholders' return. Mibe Plasan, please. Thank you for your continued understanding of Honda's business activities.

Moderator

The financial results for the fiscal year ended or FYE March 2025 and the outlook for FYE March 2026 are as follows. First summary of the financial results. Operating profit for the FYE March 2021 was 1,213,400,000,000.0 yen In the fourth quarter of the same fiscal year, we changed the accounting method for automobile product warranty provisions. This onetime expense, excluded operating profit, was JPY 1,341,000,000,000.000. Motorcycle business saw strong unit sales globally, achieving record highs in unit sales, operating profit and operating profit margin.

Moderator

Automobile business saw a decline in unit sales mainly in China and ASEAN and was impacted by increased North American incentives for EVs. However, hybrid EV sales expanded. Operating cash flow after R and D adjustments, which represents the source of future investment, remained as high as last fiscal year, reaching 2,800,000,000,000.0 yen On consolidated financial results for FYE March 2026, the impact of tariff policies is huge, combined with frequent revisions, making it difficult to formulate an outlook. However, reflecting the full twelve month impact as well as recovery measures, we have set the minimum levels of operating profit at JPY 500,000,000,000 and net profit at JPY $250,000,000,000. Motorcycle business plans to sell 21,300,000 units, an increase year on year.

Moderator

Automobile business, despite significant tariff impact, hybrid EV sales will be boosted mainly in North America. Moving forward, the impact of tariff policies will be carefully assessed, recovery measures enhanced while aiming for increased operating profit. Regarding shareholder returns, at today's Board of Directors meeting, a dividend policy change was decided. To improve capital efficiency and ensure stable shareholder dividends despite uncertainties, we will switch from the conventional payout ratio to DOE. Annual dividend will increase 2 yen from 68 yen to 70 yen per share.

Moderator

Next, motorcycle and automobile business initiatives that support a stable revenue base. The motorcycle business is world one in market share with annual sales of over 20,000,000 units. Sharing platforms and powertrains, combined with skill of merit of dominant unit sales, allows for a low cost structure that surpasses other companies and thereby realize profit expansion. In automobile business, the hybrid electric vehicle system costs have been reduced while enhancing marketability. The current model of profitability is 1.5x the previous model.

Moderator

Unit sales have expanded globally, in particular, North America. In the latter half of this decade, we plan to introduce next generation HEV models to evolve performance and cost efficiency. Next, initiatives for enhancing corporate value. Last fiscal year, at this meeting, I explained our efforts to enhance corporate value in the past, present and future. Regarding past capital optimization efforts, the prospect is in sight as a result of last December's decision to repurchase one point one trillion yen of our shares.

Moderator

Meanwhile, looking at the present and future, the automotive industry environment has changed dramatically, requiring more than ever flexible response. Regarding automobile profitability, we will secure stable revenue through increased unit sales of hybrid EVs with better profitability, especially in North America, plus solid business foundation of our motorcycle and financial business. Looking ahead, the electric vehicle market growth has slowed down more than expected. We reviewed trade timing of our comprehensive value change project in Canada and decided to postpone our large scale investments. Details of the electrification strategy trajectory change will be explained in our business update on May 20.

Moderator

Despite the continued uncertainty in business environment, Hyundai will maintain stable management through a resilient business portfolio by flexibly revising strategies according to market conditions, thereby enhancing corporate value. Next, Mr. Kaihara will give details of the financial results.

Moderator

I will explain the results of the fiscal year ending March 2025, the outlook for FY March 2026 and shareholder returns. First, regarding the group sales volume for FY March 25. For Motorcycle businesses, 20,572,000 units sold mainly due to increase in Asia year on year. For automobile businesses, 3,716,000 units sold with the decline of volume in Asia or mainly in China. And for power products businesses, 3,700,000 units sold with the decline mainly in Europe.

Moderator

Next, regarding the consolidated financial results for FY March '5. Starting from the FY March 2025, we changed the method of measuring product warranty provisions to allocate for the sales of major automotive production sites so that they are measured comprehensively at the time of the sale. While this will result in a onetime expense for FY March 2025, it will allow us to limit the impact of product warranty expenses on earnings volatility from the fiscal year this fiscal year onward. Such onetime impact has been reflected on the operating profit of the fiscal year, which marked 1,213,400,000,000 That was 168,400,000,000.0 yen short of the previous period. Equity in earnings of affiliates was 900,000,000 yen down by 109,800,000,000.0 yen mainly due to the decline in sales volume in China.

Moderator

Net profit attributable to the owner of the parent decreased by 271,300,000,000.0 yen totaling 8 and 35,800,000,000.0 yen As Mr. Mibbe explained in the beginning, the results, excluding the impact of the change in product warranty estimates in our public businesses, are shown on the right hand side of the slide. Next, regarding factors of ups and downs of operating profit for the FYE March twenty twenty five year on year, operating profit was 1,341,000,000,000.000 yen down by 40,800,000,000.0 year on year before reflecting the impact of the change in product guarantee estimates for the automobiles. The factors behind have been JPY 2 and 33,600,000,000.0 decline in profit due to sales impact, increase of $525,000,000,000 yen in profit due to price and cost impact, 85,000,000,000 decline in profit due to miscellaneous expenses, yen 153,500,000,000.0 yen decline in profit due to research and development expenses and 93,600,000,000.0 yen decline in profit due to the ForEx impact. Regarding the operating profit by business segment.

Moderator

For Motorcycle businesses, operating profit was at 663,400,000,000.0 yen automobile businesses, 2 and 43,800,000,000.0 financial services businesses, 315,600,000,000.0 and the PowerProtects and Other businesses, 9,400,000,000.0 operating losses. Regarding the factors of ups and downs for motorcycle business performance, the operating profit marked the record highest of 663,400,000,000.0 yen up by 107,200,000,000.0 yen year on year. With factors behind, particularly of the sales impact, additional 48,100,000,000.0 yen was made mainly due sales volume increase. For price and cost impact, additional 175,300,000,000.0 yen was made due to improved product value and effective pricing in response to the inflationary impact caused by the depreciating currencies in emerging markets, yen 20,100,000,000.0 decline in profit due to miscellaneous expenses, a 21,500,000,000.0 yen decline in profit due to research and development expenses and 74,600,000,000.0 yen decline in profit due to foreign currency. Regarding factors of automobile businesses, operating profit before reflecting the impact of change of the estimates, Profit declined by JPY 189,100,000,000.0 year on year, resulting in JPY 371,500,000,000.0.

Moderator

Sales impact. Profit declined by JPY 3 and 33,700,000,000.0 due to sales volume reduction and the increase of incentives to boost EV sales. For pricecost impact, profit increased by 3 and 36,500,000,000.0 yen due to pricing effects that commensurate with improved product values. Expenses, profit declined by 38,200,000,000.0 yen For research and development expenses, profit declined by 127.1 yen 1 hundred and 20 7 billion yen mainly due to increased resources allocated mainly to EV. Currency exchanges, profit declined by 26,700,000,000.0 yen Regarding the cash flow situations, for FY March 2025, the free cash flow of the operating companies, excluding the financial services businesses, was 665,800,000,000.0 yen Net cash balance at the end of the period was 3,215,700,000,000.0 yen And finally, operating cash flow post R and D adjustment was 2,806,600,000,000.0 yen and the consolidated earnings forecast for the fiscal year ending March 2026.

Moderator

Regarding the group's sales volume year on year, for the segment businesses, 21,300,000 units are expected, reflecting the increase in Asia. For the group businesses, JPY 3,620,000,000.00 units expected to reflect the decrease mainly in Asia. And the power products, 3,670,000 units expected, reflecting the decrease mainly in North America. Regarding the consolidated earnings outlook for the FY March 26, operating profit is projected to be 500,000,000,000 yen and the net profit attributable to owner of the parent company is $250,000,000,000 yen ForEx assumption is set at 135 yen for U. S.

Moderator

Dollar throughout the year. Regarding factors behind expected operating profit year on year, the operating profit is expected to be 1,402,000,000.000 yen excluding the impact of exchange rate and tariffs, which is to maintain the same level as previous fiscal year. ForEx impact, yen $452,000,000,000 decline in profit is expected at dissipating depreciating currencies of the emerging markets to U. S. Dollar, and the impact of the time is still being examined.

Moderator

However, the potential impact, to the best of the knowledge as of now, are incorporated in the forecast. Air Force to mitigate the impact of the tariffs is projected to be 200,000,000 And to explain the factors behind apple to apple comparison to year on year, Due to sales impact, profit will go up by 156,100,000,000.0 yen with sales volume increase of motorcycles and automobiles in North America. Regarding pricecost impact, profit will be up by $250,000,000,000 yen due to price commensurate with improved product values. Expenses decreased by 219,100,000,000.0 yen reducing profit. Research and development expenses, it will increase by 126,000,000,000 yen decreasing the profit.

Moderator

Forecast of the cash capital investment, depreciation, research and development spending, FY '26 is in the slide. Regarding shareholder returns, Honda positions returning value back to shareholders as a top management priority. Starting FY March 26, we will change our dividend policy and we'll introduce DOE as a return indicator. We will strive for we will strive to pay out aiming 40%. Despite the business environment being uncertain, we will realize a more stable and continuous returns.

Moderator

For FY March 25, the year end dividend is determined at 34 yen per share and annual dividend at 68.68 yen per share. And for FYE March 26, expected dividend is to be 70 yen per share, up by 2 yen from the year before. Regarding the share buyback of 1,100,000,000,000.0 yen that we made a decision on, on December '4, we have acquired the equivalent of about 5 and 89,500,000,000.0 yen worth of the shares as of the 04/30/2020 That concludes my explanation. Thank you very much for your attention.

Moderator

Thank you very much for your listening. And now we would like to proceed to Q and A. Please use the Zoom link that has been provided to you beforehand. In the interest of time, please limit your questions to two per person. Those of you have questions, please indicate so with the raise hand button, first question?

Moderator

Is Okinaga from Nikkei. You. USMC, about the tariff. For the time being, there were to be exception, but you have added on $650,000,000,000 yen So what is the reason for this? And what is the breakdown?

Moderator

Can you explain? That's the first question. And the second question about the postponement in Canada, can you explain about the reason for that? Well, first, about the tariff. Yes, we have estimated JPY $650,000,000,000, but finished cars and components included.

Moderator

The tariff is very complicated, And the calculation that we have done and the basis for this calculation, I think you've seen this, but for the finished cars, from Canada to United States, also from Mexico to U. S. And from Japan to The United States for the different tariff conditions that needed to be taken into consideration, and the result is shown on the right hand side. And also about the components, well, USMCA, if it's within the USMCA, the components are exempt, but there's from Tier one, Tier two to Tier three components. And therefore, we need to have the country of origin certification, and this is not fixed yet.

Moderator

So 25% is being included because we have yet to obtain a certificate. So this included is $250,000,000,000 And the motorcycle business is written under. There is an impact, so it's a JPY 30,600,000,000.0 impact. And Power Products, again, about 24,300,000,000.0. So all added, it comes to $650,000,000,000 yen Well, this is the minimum at the bottom.

Moderator

And we well, I think the tariff impact will continue to change as time goes by, and we have to think about these major changes taking place. Well, in the middle, we talk about the automobile parts here in the middle here. And there are parts which are exempt from the tariff, but the amount and volume has not yet to be looked into. So it's included, 25%. And this is said to be $220,000,000,000 yen So these are the amounts that we have calculated.

Moderator

But if we scrutinize and come up with the details, there will be a number of components which will be exempt from the terms. So against that 500,000,000,000 yen how much can be added on is something that we have to look into. So this the operating profit of 500,000,000,000 yen and this is the bottom, the minimum. And so please understand this number to be that way. And how we are going to respond to these tariffs, that included, It's we want to make a recovery from this 500,000,000,000 yen Now to the specifics of how we will be responding, well, up until March, Canada, Mexico exports.

Moderator

We want to promote this and build up the inventory in The United States. And we have been taking such measures up until that time. And in the short run, internally, we want to reduce our costs, thoroughly reduce our costs. And in addition to that, the allocation of the finished products, we want to optimize. So this has been reported in the newspaper.

Moderator

The Civic five door hybrid, which is being produced in Yori, there are other components. So up until June, September, they'll be produced in Japan. But then after, we'll be transferred to Indiana. And HCM, the Canada CRV for The United States, ELP will be producing instead in The United States. So we are thinking about the production allocation, optimizing the allocation where possible.

Moderator

And also for the dealers and suppliers, stakeholders, we are co creating so as to minimize the impact of tariffs. And about the prices, we have to observe what competitors are doing and think about the revision range and which models for which we will revise our prices. So we want to be careful and carefully observe what is happening. In the midterm, if the tariff measures are to be in place for a long time, then we will have to increase our production capacity in The United States. We've already begun studies on this.

Moderator

And first, we have to think about the CapEx. Well, in The United States, well, they have a two shift, but maybe we can increase to three shift production and also operating over the weekend. There is room to increase the production capacity in United States, and we are trying to look into what will happen as a result of that. And then after will be the CapEx, capital expenditure. But at any rate, we have to secure workers and to think about the impact on the supply chain because it will be huge.

Moderator

We want to observe what is happening and at the appropriate timing and think what needs to be done. We want to be prudent in such efforts in dealing with tariff measures. About the Canada case, Well, last year, on April 25, we have made the announcement and the EV, the 240,000 battery, 36 gigawatt per hour and also the POSCO future and Asahi Kase, the joint venture. So Canadian dollar of $15,000,000,000 worth of investment, and it was planned to be start operation in 2028. We did make that announcement back then.

Moderator

This was thinking that BB demand would increase in the future, and we have to think about the upstream resources and the downstream service. And we wanted to enhance our Canada value chain so as to create the electrification business in the future. But as you know, in North America, the EV market growth is slowing down. And so as of now, we think that we should postpone for at least twenty two years. This has been decided.

Moderator

USMCA. We are thinking that this will not change USMCA. If the conditions were to change, at that point in time, we have to revisit this. As for the specifics, what happens after two years and the starting time of the project, you have to observe what is happening and ultimately make the decision. We are consulting with the Canadian government and Ontario province.

Moderator

And as for this postponement, we have already received their consent. That is all from me. Anything to add? Well, yes. We have provided some additional information, and we have included the premises for the tariff calculation estimation.

Moderator

Well, we have looked at others' competitors' information that have been disclosed. And I think the condition setting is quite different company by company. And so are wondering how we should be looking at this. And so we've included this summary. Well, the Japanese companies over the past week or so have been announcing different things, including or not including certain factors at GM and Ford, for example.

Moderator

They've disclosed the information. And looking at what they're doing, they well, it's a nine month impact because they closed the books in December at GM. So they're looking at JPY 4,000, JPY 5 thousand billion 9 month impact. And so annually, it will come to JPY 500,000,000,000. Of the JPY $650,000,000,000, as Mibet has said, we have Motorcycle business excluding, it's about 500,000,000,000 So it's more or less so I think they are 900,000,000,000 whereas we are 500,000,000,000 And Ford also, they have a high ratio of U.

Moderator

S. Production. And so likewise, if you calculate in terms of twelve months, it's JPY $450,000,000,000. So it's close to our number. In Japan, the analysts calculating the net impact, it's about 300,000,000,000 yen But we are $450,000,000,000 yen So they're saying that ours is high, the impact, but we are high by 150,000,000,000 yen versus because the Motorcycle BP and also the Components tariff impact.

Moderator

As we've explained, well, USMCA, whether we can comply or not on the components level is not clear to us. We have to look into the details. And therefore, we had conservative in terms of including this. And from Mexico, of the imports from Mexico, there's Prologue, the battery EV from GM, and this is also included. So I think that this is the reason for this difference.

Moderator

So JPY $450,000,000,000 appears to be quite big, but I think compared to other OEMs or the media analysts, Though there is a slight gap, I think we are more or less thinking about the same image. So we've added a summary of our estimation assumptions for your reference. UNIDENTIFIED REPRESENTATIVE:]

Moderator

next question, IOMeii newspaper, Mr. Narahashi, please. From Yumei Uri newspaper company. Can you hear me? Thank you.

Moderator

I have two questions. One, as Mr. Fujimar said earlier, competitors estimate or not estimate the impact by the tariff. However, you decided to disclose your estimates in details. What is your intention by doing that?

Moderator

And second question is about your relationship to Nissan. You had or they had well, those talks were broken up because of business situations over there, but they have announced to make recovery plans, and it is difficult for them to survive being alone. However, what is the relationship with GoldReport? Would that be the collaborative relationship or any business integration talks, be back again? So let's start with your tariff by Mr.

Moderator

Fujimura and Nissan for myself. So thank you very much for your question. So we decided to disclose our assumption because the ForEx and business the economic environment, sir, many uncertainties in those areas. But despite that, we decided that it will be the guideline like this because this is something we should do as a business company. And there are areas which is very, very uncertain.

Moderator

And still, we decided to look into the situation as far as we could assess. And of course, the interpretation of the taxation law is difficult to, and we had our own interpretation with the help of the American Honda representative too and estimated impact on the yearly annual business. We decided to assess that and share that with people outside. And even with the in the company, we could have a better understanding of the potential impact internally in the short term, midterm, long term, we could come up with a kind of mitigation measures. And then there are things we could do internally as a mitigation or things we can collaborate with the supplier or we could look for the way to speak to the authority, the politics, politics, for instance.

Moderator

And there can be those potential mitigation measures that we could think of and then put them on the table. And then it is a big negative impact, really. And that would give negative impressions in a way to you. However, this is the worst case scenario then. We can then try to find out what we could do going forward.

Moderator

I'm not sure if I answered your question. However, this is what we have in mind in disclosing such estimate to you. So 500,000,000,000, that's the year's sister amount. And in order to make it kind of more reasonably accepted number, we decided to share with you those tables with you to understand better about it. And then with the Nissan, as of the February 13, I would be disclosed to you about our decision not to go forward and there is no further progress after that.

Moderator

And besides, we had the strategic partnership MOU that was entered in August year, which include Mitsubishi Automotive. And we continue to work on that to try to maximize the collaboration efforts, anticipating the joint research for the next generation platforms and the or commonized platforms and the environmental circulation, energy resources and so on. And those areas are being assessed as well once again in greater details. And also, today, we are in a very different environment too, including a tariff situation too. And we are thinking about further collaboration potential in the new environments.

Moderator

And again, the business integration talks will not be on the table for more while going forward. However, we need to try to maximize the benefit out of the collaborative efforts besides and we'd like to go on with this strategic partnership so that we can find out new directions for the growth of the businesses so that we can gain the competitiveness to lead the industry going forward, and we will make progress in that regard. So that is all for Nissan. Thank you much. Thank

Moderator

Thank you very much, Mr. Narahashi. And next question is from Asaki Shimbun, newspaper. Nishiyama, please. I have two questions.

Moderator

The first question, for the next fiscal year, your outlook, well, you've given the explanation. But overall, well, I think the profit is quite going to be dropped or declined. But what is your view on this, Mr. Mibbe? And you said that you're going to take various measures to make a recovery.

Moderator

Can you talk about the specifics? And secondly, about the unit sales outlook, well, you I think well, the motorcycle was a positive, but there will be a drop in demand due to the Trump tariffs. So what about incentives? So I think that there is a race for incentives. So what are the measures that you're going to take?

Moderator

Well, you said that you don't want to add this on to the prices, but still, but I think you have to compare yourself to the competitors. But what are your thoughts on this? About your first question about outlook. Well, looking at the previous fiscal year, well, I talked about the new provision, the comprehensive warranty provision and also the EV provision with GM. We have about 1,100,000,000,000.0 yen operating profit.

Moderator

So I think it is more or less online, the automobile. So there is a drop of 43,000,000 units and including the 21,000 in The United States. So we think that we can ensure this much profit. And also, and so the Motorcycle six sixty and Power Products three ten, so we are generating a 1,000,000,000,000 profit. For the automobile, it's a little less than JPY 400,000,000,000.

Moderator

But for BEV, the gross profit is minus 200,000,000,000 yen and R and D is minus 400,000,000,000 So BEV is minus 600,000,000,000 And ICE, including hybrid, is about 1,000,000,000,000 yen profit. So it is such a business. And automobile ICE and motorcycle and financial services, we will earn profit there and continue investment for electrification plus the investors' return. And we have tried to balance this. And this was the case in the previous fiscal year.

Moderator

And now about the 102 key, as I said, we are looking at 135 yen against the dollar. This is quite conservative, but still 135 yen So it's about $450,000,000,000 negative from 150,000,000,000 yen And also, there is the recovery of 200,000,000,000 And so net is $450,000,000,000 yen And altogether, well, there are this is based on the information that we have locally. But as Mr. Fujimonen has said, the USMCA compliant parts are zero as of now. And we think that there will be less of an impact as a result of this.

Moderator

In the first quarter, I think that we can enhance the precision of our calculation. And with the recovery measures, we want to try to reduce the impact. And so well, it's just if about the currency and tariff impact. Had we not had this, I think it will be more than our previous fiscal year. We do have the capability to generate the same operating profit.

Moderator

So how we exclude and recover from the impact of the tariff policies and to what extent we can do this will determine how much an improvement we will see for this fiscal year. And about this fiscal year, of the JPY 500,000,000,000, well, the BEP market is cooled down, and there's a onetime loss possibility. Accounting wise, this could become a discussion. So well, we have 200,000,000,000 yen factored in for that. So that included the 500,000,000,000 yen is thought to be the bottom.

Moderator

And how we can add on to that and improve will be the challenge for our business for this fiscal year. About The U. S. Market and so the impact of the tariff policies and demand. Well, as of May 20, we will give you a business update, and we'll report out the details at that time.

Moderator

But EV market growth is slowing down, and we have to shift our plan to a certain extent. So put it another way, hybrid, which is our strength. I think we can increase to what extent our production. Our hybrid right now does have product competitiveness to what extent. Incentive wise, hybrid was less than $1,000 So that is the level of our so we want to expand our hybrid so as to in North America, including United States, compete.

Moderator

We think that we can compete there. And so from '25 to '30, the automobile business, including preparing for bed, We want to control well and think about the resources to inject so that from the period from 2025 to 02/1930, it will be a transitional period, which will be very challenging, but we think our automotive business can expand. That is our current thinking. That's all for me. Anything else?

Moderator

No?

Moderator

Okay.

Moderator

Yes, Sunte? Yes. Well, just to add to the North America explanation. Well, at the end of last fiscal year, the passport M and CLX, we had rather fresh new models in place, and it's being well received. So of that, plus, as Mr.

Moderator

Bime has said, the hybrid Accord, Civic, CR V, well, these models are still receiving a lot of high appraisal from our customers. And I think we can compete in the marketplace with these models. As of now, North America market on the whole, Well, I think just like last fiscal year, we think the market size will be more or less the same, but we have to think about the impact of the tariff policies on the total demand. As Mr. Bimei has said, so we have to adapt flexibly to the changes that take place and support sales.

Moderator

That is all. Thank you.

Moderator

You, Mr. Nishiyama. Next question. Mr. Yokoema, please.

Moderator

Yukoema from Toyotase. Can you hear me? Hello? Two questions, please. First one is, you talked about, Mr.

Moderator

Mibei, about the years from 'twenty five through 02/1930, and the tariff impact will continue on, not just this year but next fiscal year. And I was like 8%, ten % right for the IOS. And apparently, this year, you have a one off onetime transgender amount. What is your target profitability in mind? You said that investment in Canada is to be suspended by Mr.

Moderator

Trump. He's focusing on the tariff. In the future, there will be the talk about the environment as well. But how much efforts would you like to make for the battery EVs? And would you like to revisit your targets going forward for 02/1930 or 'forty?

Moderator

And I'd like you to give us your thoughts for the mid long term span. And the second question is about human resources issue. In April, Mr. Aoyama, the Executive Vice President, retired due to inappropriate conduct. And Mr.

Moderator

Aoyama had a very broad area to be looking after. And then this year, he has been gone. And how would you like to address the loss of him? And of course, Kairosan is here in the West Sun have been promoted. And how would you like to address the changes of those human resources?

Moderator

So Mr. Mora san is going to explain the first part and then the rest I will for myself by myself. Thank you very much, Mr. Yukoema. It is a difficult question in a way because in the business of update, we would be able to give you some ideas about it.

Moderator

However, at high level for the band, we are going to delay the resources to invest. And from 2025 to '40, for the carbon neutrality targets, we need to have the battery EVs be prepared in terms of the number of the models or the volume to be appropriate. We will continue to prepare for that. That will be of the level of certain level of the efforts for the gross margin and R and D efforts and so on. But as for the gross margin, up until the 02/1930, I shouldn't say too much because we anticipate a business update opportunity next round, but we are going to have new technology based battery EVs, lots of prospective ones.

Moderator

And then the question is how much profitable it can be going forward. And then also, we have made investments for the battery factories so far. And there are some negative areas that we could accept as well from that too. But the battery reach, how much of a profit we can take, that's one thing. And then as I said earlier, ICE models, with the current ForEx of JPY 150, the ICE model can give us JPY 130 revenue.

Moderator

And the COFREX is going to change. However, we are going to continue and have to reduce, of course, of the ICE models going forward. And then besides, I'd like to make the BEVs a bit more competitive with the next generation models be added. And will keep getting profit from ICE whilst doing that effort. And ROIC, ideally, should be achieved to be greater than the financial cost.

Moderator

10% ROIC target is no change, and we need to have the 7% to 8% ROCE to achieve that. And then it is not just really for the 2026, '20 '7 and so on, but from 2025 through 02/1930, we will manage those indicators this way. And then BEV's efforts and ABS CV target for 02/1940, your question is about our targets for that. And then in Trump's administration, there are environment measures and regulations have been kind of retracted with the SEC two and so on. However, though it is not finalized, they probably would revisit them quite substantially.

Moderator

And then the plans we have, especially with regard to the volume, would not be the area that we would have to persist to going forward. However, for carbon neutrality, the BEVs could be the optimal solution to achieve it. That's the starting idea. And Honda have announced the Zero Series EVs earlier, and we would like to push forward the plans as we had our plant already. Of course, the volume may be a little bit down.

Moderator

In terms of the production volume, the number of the models may be a little bit less than we were anticipating, but we need to continue on our efforts launching those products to stay competitive. And those products have to evolve by themselves based on the competitions in the market. We need to allow that. And the bevs will be, of course, be available from our company continually. We will continue to do that.

Moderator

But in the next five years, the U. S. Market would have a slower progress of the EV use. And then from 02/1930 onward, maybe we can accelerate our actions for the environment. But still, the final goal still stands, that is the carbon neutrality 02/1950.

Moderator

And then how we get there, what route we get there, we need to assess that once again, but our carbon neutrality target in 02/1950 must stand. And then we have to again reassess the situations to be in 02/1940. And we anticipate people would drive the cars for ten years. And then in 2014, we need to make the carbon neutrality kind of vehicles available. And I wouldn't say that we are visiting them substantially, but we need to look into the scenario from 02/1930 to 02/1940 given the environment in this period.

Moderator

And by 02/1930, I can say that electrification strategy need to be revisited. And as for Mr. Aoyama, he has resigned from his position. And the I really feel that we like to extend our deep apology to Replinker people such as customers, suppliers, shareholders and our colleagues, all the stakeholders. And then Mr.

Moderator

Kaihara is going to cover as the Air Executive Vice President. And Mr. Inoue is going to be the Head of the Automobile Business Division, and he is going to look into the operations of that area. And each business domain is actually supported by the leading persons. And I'm very sure that those human allocation will be good enough to keep going in a good way.

Moderator

Thank you, Mr. Yokoema.

Moderator

Are there any other questions? My name is Minami Souwa. I'm a substitute for Mr. Yui. I have a question to Mr.

Moderator

Mibei, the President. But yesterday, The U. S.-China have decided to reduce significantly tariff. U. S.

Moderator

Or Japan negotiations, what are your expectations, if any, towards those negotiations? For about The U. S.-Japan negotiations, I mean, it's still ongoing. On our part, we want to see that there is global free trade because this will be the best for our business. In the case of Honda, we are not exporting from Japan to U.

Moderator

S. In such a large volume, so there is little impact there. But USMCA, well, we have the policy of to produce where the demand exists. And therefore, based on this policy, we have been doing a global business. But in Mexico, Canada and United States, that is the USMCA.

Moderator

Based on this agreement, we are looking at this North America as one single market and build a supply chain in North America, including these three countries. And about The U. S. And Japan tariff negotiations, not just limited to United States. USMCA is the basis of our business.

Moderator

And therefore, we want USMCA to be in place so that we can do business in a free environment, not just Mexico and Canada, but also for the American auto industry. I think this is the best answer, best solution. So for us, we want to see that the free trade environment can be rebuilt, and we want to approach the government and others so that this will be realized. In the past, we've been doing this, but we will continue to work to try to make this happen. That is all.

Analysts
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Earnings Conference Call
Honda Motor Q4 2025
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