I thank you very much for taking time out of your busy schedule to attend our briefing today. We would now like to start Honda Motor Company Limited's financial results briefing for second quarter of fiscal year to March '26. First of all, allow me to introduce the attendees today. Director, Executive Vice President and Representative Executive Officer, Mr. Noriya Kaihara.

Good to see you.

Director, Managing Executive Officer, Mr. Eiji Fujimura.

Good to see you, everyone.

Operating Executive, Head of Accounting and Finance Unit, Mr. Masao Kawaguchi.

Good to see you, everyone.

Mr. Kaihara will first present the financial results of second quarter ended September 30 of 2025, and forecast of consolidated results for the fiscal year ending in March '26. Then Mr. Fujimura will present the details. Over to you, Mr. Kaihara.

I thank you very much for your continued support for Honda's activities. I would like to present to you the financial results for the second quarter of financial year to March '26. I'd like to start with the highlights of the financial results. Our operating profit for the second quarter of the year to March '26 came to JPY 438.1 billion. Motorcycle operations saw unit sales decline in Vietnam, but global sales trended solidly and strongly, led by Brazil. For results up to second quarter, we've attained a record high unit sales, operating profit and operating margin. In Automobile operations, though there was some positive profit impact due to price revisions, we saw a decline in profit due to impact from tariffs and onetime expenses related to EV. Operating cash flow after R&D adjustment, which indicates the resource available for future investment, came to JPY 1,281.3 billion, on par with the same period last year. The forecast for the consolidated results for the term ending in March '26 is operating profit of JPY 550 billion and profit for the year of JPY 300 billion. We are revising the previous forecast, considering the decline in Automobile unit sales and the reduction in production volume expected as of now due to semiconductor shortage, though we expect profit growth due to yen depreciation. In Motorcycle operations, while we expect declines in unit sales in Vietnam, we hope to recover this in other regions, thus we maintained 21.3 million units. For Automobiles, in addition to lower sales volume, mainly in China and ASEAN, declines due to semiconductor shortage has been taken into consideration for North America. We are revising down from 3.62 million to 3.34 million units. To give you the consolidated results for the second quarter of the year to March '26, Operating profit was JPY 438.1 billion, lower by JPY 304.4 billion compared to the same period last year. Investment earnings due to the equity method were JPY 10.8 billion, higher by JPY 31.6 billion. And the half year profit attributable to the owner of the parent was JPY 311.8 billion, lower by JPY 182.8 billion. Next, I'd like to cover the forecast for the consolidated results for the term ending in March '26. Compared to the previous forecast, our forecast is operating profit of JPY 550 billion, down by JPY 150 billion and the profit for the year attributable to the owner of the parent of JPY 300 billion, down by JPY 120 billion. The exchange rate against the U.S. dollar is assumed at JPY 145 for the full year period. Forecast for the full year dividend for the fiscal year ending March '26 is JPY 70 per share, unchanged from the previously published forecast. Next, Mr. Fujimura will present the details of the results.

Allow me to present the results. The group unit sales during the 6 months to the second quarter were as follows: compared to the same period last year, for Motorcycle operations, though there was a decline in Vietnam with growth mainly in Brazil and the Philippines, it came to 10.763 million units. For Automobile business, it came to 1.68 million units due to declines mainly in China. For Power Products, though there were declines in Asia, Europe led the growth and the total came to 1.699 million units. The consolidated results during the 6 months to the second quarter were as explained earlier. Next, I'd like to present the factor analysis of operating profit for second quarter compared to the same period last year. Operating profit was JPY 438.1 billion, down by JPY 304.4 billion compared to the same period last year. Factors affecting the operating profit were: first, impact from sales was positive by JPY 83.9 billion due to expanding motorcycle unit sales. Selling price and cost factors was an increase of JPY 162.4 billion due to effective price revision. Expenses gave us a negative impact of JPY 26 billion. R&D expenses led to a profit decline of JPY 20.4 billion. Currency effect resulted in a negative impact of JPY 116.2 billion. EV-related and onetime expense led to a negative impact of JPY 223.7 billion and impact from tariffs led to a profit decline of JPY 164.3 billion. Our trial calculation, excluding the EV-related onetime expenses and the tariff impact, comes to operating profit of JPY 836.2 billion (sic) [ JPY 826.2 billion ], on par with the same period last year. Regarding operating profit by business segment, Motorcycles, JPY 368.2 billion; Automobiles, JPY 72 billion of losses; and Financial Services, JPY 143.2 billion profit; and the Power Products…

Thank you very much for your attention. Then we'd like to proceed to the Q&A session. [Operator Instructions]. Okay. The first question, Ms. Ukita from Yomiuri Newspaper.

I hope you can hear my voice.

Yes, we can.

My first question is, so the Motorcycles is operating great. And then for Automobiles, it's JPY 73 billion losses. So I'm sure there are tariffs and semiconductor impact. But I just want to ask for your input or your general comment on your prospects for the future.

Okay. Let me take that question, our overall perception. And then for details, I will ask Mr. Fujimura for some more comments. First of all, so for Motorcycles, we had the best record high results. So we had a decline in Vietnam. But in Brazil and Thailand, we were able to maintain our good profit. For the second half, so for the full year, we expect things to proceed fairly well. So we need to be considering about whether we can cover the potential decline in Vietnam. But I think generally speaking, it should be okay. For Automobiles, so the ICE and HEV gave us some cash so far. Now we need to spend that money into intelligence and hybrid -- sorry, electric vehicles. So we have been doing okay. In North America, we had the HEV good sales revenues. So we believe that the profitability has been increasing -- improving. However, because of the tariff directive and also due to the changes in environmental regulations, so the business environment has been changing dramatically. For tariffs, I think compared to other OEMs, we have a pretty high local procurement ratio in North America. So in that sense, I think the impact should be limited. Still, we have over JPY 300 billion impact. So for the tariffs, actually, in a sense, as Mr. Fujimura mentioned, we consider this as a new normal, which we believe would continue for some time. And while we can maintain the good results in North America, the sales volume in China and Asia has been declining. Particularly in Asia, the profitability in the ICE worsened beyond our expectations. So we would need some fundamental changes in actions for those. So for future actions, what we are thinking of, we need to maintain the build in Asia…

Okay. Ms. Ukita, thank you for your question. This time, we have the JPY 438 billion. So the Automobiles is JPY 73 billion losses. And then for Motorcycles, it's JPY 370 billion positive. So for Motorcycles, it's the best highest record. So those are pretty peculiar numbers that we've got here. But as we've mentioned from the beginning of the term, there's a lot of noise from kind of external factors. So to add a little bit about the JPY 438 billion, we have this impact, this negative of JPY 450 billion. That's the onetime cost. So the JPY 890 billion, that's our normal standardized performance, I'd say. This JPY 450 billion negative, as introduced in the material, we have JPY 160 billion due to tariffs and then the EV provision for losses, we will allocate JPY 250 billion throughout the year. So we have put it in the budget. And then of that, we allocated JPY 225 billion of that into the first half. And then we have the group restructuring. So we have some losses from the transfer of our subsidiary, which is JPY 43 billion. And also in the financial operations and in the U.S. and the U.K., we had some settlement of like JPY 20 billion for litigation. So put them together, it's JPY 890 billion. So we have like JPY 20 billion for financials, but most of this was related to Automobiles. So all of those included, we have this JPY 73 billion losses for Automobiles. So versus the plans, as I mentioned, those noises or the external factors had almost been incorporated. What may have been excluded may have been the financial operations and then also the Asia and China volume decline. Those were worse than our initial anticipation. So for the impact for…

One more question, may I? You said already perhaps about impact by the chips. It's already incorporated in those values, about JPY 150 billion. And in North America, there is this impact in reality. But what is the prospect for the procurement? And do you think the situation will improve or getting worse? Do you have a risk of such? Please tell us?

I will answer the question then. So for the semiconductors, for the customers, suppliers, we are causing the troubles with that. Sorry about it. As we said right at the beginning, it's already reported in the media, a company called Nexperia. The chips from the company has been stopped, suspended. Therefore, we have impact on the procurement. And then we work together with the Tier 1 manufacturers to try to minimize the impact on the production. And as for the 27th of October, in the production plant in North America, we are adjusting the production situation today. So as of now, we have an impact of 110,000 units that's reflected. And then I said JPY 250 billion, but operating profit of JPY 150 billion that is put up in this announcement today. And I heard that shipment has resumed in China now. And we have already started our communications to the suppliers, and we are trying our best so that we can get supplies of those chips as much as we can. And going forward, it is difficult to tell definitively. But as of now, in the week of 21st of November, probably in that week, we wish to resume our production eventually, and we are trying to achieve that now. And as of today, the parts that are coming up now back in the network and then getting better, and we are seeing some signs. However, it is not definitive as of yet. So we are communicating with this very closely, so that we can try to resume and that is the situation today. Thank you.

Thank you. Thank you to Ms. Ukita as well. We'd like to take the next question from Nikkei Newspaper, Mr. Okinaga, please.

This is Okinaga from Nikkei Newspaper. For the impact from Nexperia, I'd like to ask another follow-up question. So why has Honda suffered such a big damage? And then you said that you hope to start production on the week of November 21. But have you considered procuring alternative parts? So do you think that the impact should not go beyond JPY 150 billion?

Okay. First of all, so the reason why we have this much impact is this time, the components -- well, I cannot give you any details about the component, but the components was sourced from one supplier. That was one major factor. And another thing is, in the past, for semiconductors, yes, we have had some impacts such as this. So we have worked together with the supplier to hold the kind of interim inventory or appropriate inventory level. We asked them to hold that. That has happened. However, it was single sourced. And then also in North America, the sales have been going very well that we have been producing almost at full capacity. So in that sense, well, the interim inventory was getting low as well. So because of that, the supplier was impacted. Then promptly that impact led to impact our production as well. For whether we are considering some alternative sourcing, of course, yes, we are considering alternative, let's say, products or off-the-shelf products. So to the extent we are able to find out, yes, we are using them. So at an as early stage as possible, we want to apply whatever we can utilize. So that is why sometime during the week of November 21, we believe we should be able to resume production. So for future supplies in China, if they ever stop shipping shipment again, we will never know the impact. But should that ever happen, if you're asking me, that's going to be another impact. I cannot say for 100% sure, no. But at this point in time, as far as we know, from the intelligence that we have, we should be able to resume operation by the date that I mentioned. That concludes my answer. Thank you very much.

I would ask another question. The reason for your downward revision. So at August, you said JPY 650 billion EV-related onetime expenses. Has this gotten better? And then for sales, in North America, I think is it difficult to raise prices in North America? So that turned out to be negative. So I just want to know the reason. And then you said that you want to bring down the gross profit -- gross losses to 0. So I would like to ask about what you plan to do.

Okay. Thank you very much for the second question. Let me try to answer that. For the EV-related onetime expenses -- sorry, first, the tariffs impact. Against the number that we gave you last time, we have been able to minimize the impact. So therefore, our profitability, it is getting better. And then for the EV impact, we have put in some more amount. So in that sense, the impact has become greater. For the price hikes in North America, initially, for North America, we were assuming that we will be able to raise prices and then we have been prepared for that. However, price hikes, it's nothing we can do easily by ourselves. So we need to evaluate the market situation. What has happened is that in North America, particularly in the U.S., other OEMs incentives have been getting higher. So the actual market selling price has not gone up in real terms. Therefore, of course, we have done the annual price revisions. However, looking at the other companies' status, we found it difficult to raise prices due to the tariffs impact. So we were not quite able to gain that positive impact due to the price hikes that we had anticipated at the very beginning. Unfortunately, we cannot expect that. So for the second half of this year as well, for the price hike, I don't think we can really expect good impacts to come from that at all. That completes my answer.

So I'll explain those numbers in addition. And then last time, JPY 450 billion negative gross tariff impact and then JPY 100 billion recovery, so JPY 350 billion net impact from tariff. And then this time, gross JPY 385 billion. And actually, gross impact is less of JPY 685 billion. And then recovery is about JPY 150 billion, and net impact is about JPY 335 billion. Eventually, that is the net impact. And then the gross impact, JPY 650 billion. Of course, we had an accurate understanding today. But for as much as JPY 500 billion, we have export from Thailand or Asian countries to U.S., and we were concerned about a possible recession and its impact over there. So we incorporated that in our expectation before, but now we released it. And that means we have less of JPY 650 billion from gross. And then we have a net recovery from JPY 1,100 billion to JPY 650 Billion. Actually, in the Automobiles market, it is difficult to revise the prices. So therefore, we need to delete that part for the Automobiles, and that is why we have those numbers.

Thank you very much, Mr. Okinaga. So if you have questions, please tell us 2 questions in sequence. Okay. We'll take the next question from Yasunaga-san from NHK.

This is Yasunaga from NHK. Can you hear my voice?

Yes.

Just one question because others have asked the same questions. In the Automobiles business, China and Asia, you had some declines, you said. But in your company, you are very much struggling with your sales in China. That's the impression. So there was GT. GT's launch timing has been postponed. I'd like to hear about the facts about it. And then what are you going to do? And then where is the difficulty of the market. So I'd like to hear about that.

Okay. Thank you very much, Mr. Yasunaga. For the China market, let me try to answer that question. For Chinese market -- overall market, actually, because of the incentive has been reduced. So the total market has been declining slightly. But basically, it's sideways movement. That's the total market. And then for this time, for Honda, particularly for ICE, well, actually, the price discount has been staying at a high level. So we have been struggling a lot. So in a sense, value for money, we are behind others. We are aware of that. And then for BEV, so for the features, the NOA, navigate on autopilot, that's not provided on our cars. So people consider our cars pricey. And then other companies put in this to put the momentum and then offer it at a lower price. So that is why it's difficult actually. And then that is the situation in China. And then for electric vehicle, as pointed out earlier, the E-Series, the 1, 2 and 3 were in our horizon, but we felt the need to completely review this. So we came up with a GT we had assumed. However, we did have to postpone it in reality. So this we were thinking of next year -- initially, for next fiscal year, sorry. However, we will, for the time being -- I cannot tell you exactly when that's going to be, but we will postpone that. And then from the planning stage as well, we need to consider right from the planning stage how we want to launch this model. So for electric vehicle, this current situation will continue for some time. And then against that kind of business environment, for ICE, we need to make solid sales from those. Fortunately, we have completed depreciation of all the factories. So we need to enforce our business structure in the indirect and then also optimize manpower and then do a more precise sales prediction and then we'll try to make our business more profitable. That is what we are doing right now. And then this is all I can say for now.

Thank you very much, Mr. Yasunaga. Next question from Asahi Shimbun, Mr. Miura, please.

Miura from Asahi Newspaper. I have 2 questions. One, in the Motorcycles business, Vietnam, you had a decline of their businesses. And then they had restrictions on the electrification vehicles. And how much of those impacts did do you incorporate in this statement? And then what is your action against it? And question 2 is about Automobiles, about specifically EVs in China. And you said that you're going to have a radical action. And then what is the reason why you have a struggle in the Chinese market? What do you think is the cause for that?

Mr. Miura, thank you for your question. To start with Vietnam for Motorcycles. In Vietnam, as you know -- well, it is not yet implemented in the market; however, ICE motorcycles now would be regulated, especially in the city area. And then they said that they might apply this new regulation starting middle of the next year or so. However, with that in place, actually, when the announcement was made last summer, people started refraining their buying of the products. And then we were expecting some negative impact on the Vietnamese business. However, in October, we are seeing the business is coming back slightly. And then probably other things that this regulation is still only -- we don't know if that is practically to be applied in Vietnam. So for some time, probably current model of the ICE-based vehicles will suffice. And then, of course, electrification will start sometime later. And then starting this year, we have already launched the 2 ICON e and CUV e, those 2 electrified vehicles over there in Vietnam and the idea is to try to sell more of those EV over there. And in Thailand, we have a plan to start the production of a new EV model. And we are thinking about accelerating the start of this model production. And sometime earlier next year, probably in March, April time next year, we would like to try to bring over those new EVs to Vietnam. So even when they have the new regulations practically in place over there, we can offer the EV vehicles over there. So this time, we are expecting unit volume be a little bit less. However, we have Brazil businesses and Thai businesses quite well. So that will compensate for the situations in Vietnam. So that is our Motorcycles business in Vietnam. China EV, may I?

Please.

So EVs in China, as we said earlier, basically, Ye series, the new products are over there. And looking at the vehicle in comparison to others, for instance, the price range, they are higher, more expensive than the other products; CNY 150,000 for other products, whereas ours CNY 200,000. And our product is not price competitive so much. And also, we have NOA, navigation on autopilot system. It's an automated driving system, basically. The competitors' product have NOA; however, not on our product yet. Therefore, going forward, we will change the models in the future, and we will try to do that earlier. And the moment the local autopilot system could be obtained so that we can add this autopilot system to our products. Doing so, we can strengthen the intelligence of the products and also cost competitiveness, we need to approach, to0. So currently, we are trying to expand the local procurement in China. That way we can improve the competitiveness of the product, and that is what we are trying.

The next question from Toyo Keizai Weekly, Yokoyama-san, please.

This is Yokoyama from Toyo Keizai.

Yes, we can hear you all right.

I have 2 questions as well. The first question, your full year prospects with the impact from semiconductor JPY 150 billion, and then you have JPY 450 billion profit, and then you are thinking of JPY 550 billion. So I guess you do have quite a plan for your profit to suffer in the second half. So can you give me some numbers about what the factors why you see a lower profit for the second half? And my second question is for the profitability in Automobiles business. So right now, for the Automobiles, the ICE IOS, 8% is what you're thinking about for the ICE. For BEV, you're going to have your own battery and then you start from 0 gross profit. But when would it turn into profits? When would it? And also, do you have any additional measures to gain more profits? So I think it might be difficult sensitive whether you're going to get into the profit for the Automobiles this year. So I just want to know.

Okay. First of all, thank you for the question, Yokoyama-san. For the difference between the first half and the second half, of course, we have this JPY 150 billion tariff impact that will continue in the second half as well. But on the onetime expense, we have the BEV provision that was in the first half. So those would offset each other. Well, that's what we expect it to do. And then for the first half and the second half, there will be a negative of JPY 40 billion about the foreign exchange and the rest will be the substantial portion. Maybe it's better to tell you the numbers. We have JPY 440 billion, and it goes down to JPY 110 billion. So JPY 320 billion, that will be the difference between the first and the second half. So let me explain that, first of all. So as I said, with the semiconductor and the onetime expenses, those will offset each other. And then so JPY 320 billion and then we take away JPY 40 billion for the impact and then JPY 290 billion, that would be the actual substance difference. So concerning this difference between first half and second half, as you can imagine, so the expenses and R&D, there is a difference between the first and the second half. I hope you can see that, which is [indiscernible]. And then for quality-related issues based on the sales base, there's a bit of a difference in calculation. But anyway, those are mainly those numbers. Incentives, when it comes to incentive, we have this negative of 110,000 units decline in North America. We don't know how we're going to use this incentive. But going by the original expected volume for North America, we were able to keep the original target. However, maybe we need to increase the incentive a little bit. But now that accounts for the difference between the first half and the second half. We have not really decided -- we need to discuss with American Honda how we're going to make those work actually. Okay. That's all for the numbers.

Okay. And then let me try to answer the rest about the EV, the gross profit for EV. For North America, that's the assumption for the answering my question. So this year, we do have losses. We have JPY 650 billion. We have that. So this includes onetime expenses as well. So next business year, I think we will start from a JPY 400 billion range level, that level. And then from there, of course, we won't have the IRA subsidy. So the business environment is very, very challenging. So because of that, we cannot be pursuing a far larger sales volume. However, we do have good prospects for the supply from GM. So now we will have more and more BEV of our own development. So now we need to think about focus on how to reduce the manufacturing cost for own BEV, and then also, it's important to consider whether we can produce at a very efficient way. And then with those efforts, we need to minimize the losses to the best we can. However, looking at the market, it's very difficult to read how the market would move. So at the very beginning of mass production, of course, the burden of fixed cost will be heavy. So we just need to work on how best we can flexibly produce, reduce cost so as to enhance or improve profitability. If you ask me when, I guess all I can say is that as soon as we can, we want to make it to profit. Thank you.

So the Automobiles business, at this time do you have any disclosure for the expectations, the profit or losses?

So we do not disclose as per product levels. JPY 550 billion, and we have to subtract from that level. So for the Motorcycles, it will be about JPY 600 billion to JPY 700 billion, same as last year; and JPY 300 billion for Finance, like last year. And both together, we would earn JPY 1 trillion. We said that, and then we could actually assume from that. For the Automobiles, we would end up in losses. But for EV, onetime JPY 250 billion; for also chips, onetime JPY 150 billion again. Both together JPY 400 billion negative altogether. Plus this term, we have a tariff impact as well on the top. So the number will be including all those factors. And then as we said before, we need to earn money, revenue based on ICE; and losses coming from the BEV should be controlled better. And not just P&L, we have to look into the spending out of the cash flow. We have to control the time line of spending too. So that is how I'd like to manage.

I do see a lot of hands raised, but due to the time restriction, we'd like to make the next question the last. From TV Tokyo, Ms. Nagaya.

Can you hear me?

Yes, we can hear you.

One question. For this fiscal year's forecast, 3 months ago, you revised upward. But this time, you're revising downward. So when you make the forecast, are you -- I just want to know about the approach, are you being very conservative? The second is your forecast for the unit sales for -- I think you covered a lot of China. But excluding China, for other ASEAN markets, I think there is a bit of a decline. Compared to 3 months ago, we are struggling in Asia so much. What's the reason? What are the factors?

Thank you very much for your question, Ms. Nagaya. So how to put up our plans. So I wouldn't say we are conservative putting together those plans, because usually, the idea is that the transparency is our focus. So whatever we get to know, we try to incorporate in those explanations to give you the explanation. And then tariff issue, for instance, we would have those -- the alleviation of tariff impact and then calculating all those returns, refund, we would have that much of refund included. And then these are the well calculated impacts. And exchange rate, ForEx, for JPY 70 billion plus, we include that too. The chips, that is the extra one, that is a bit of a special one, but JPY 50 billion tariff impact that is included, as we said, and plans are put together based on the principle that it is not always conservative. Please be acknowledged about it. And then the forecast of the unit sales in ASEAN regions, the decline of the unit sales is a bit significant as what you said is quite right, because in ASEAN region, the unit sales, the volume is expected to be down a bit, 750,000 units less. So it is a significant reduction as compared to the first forecast. And then especially Indonesia, Thailand, in those countries, or Malaysia as well. There are the government policies to be looked at also and also the market is a bit shrinking too, because of which we have expected a reduction of the volume in Thailand. The competitors' competition is something that accounts for the situation too. For instance, selling prices, we are losing price competitiveness against the others. And so sales are stagnant, and we need to react and take actions against the situation, especially in ASEAN countries. We need to have radical measures against it. And then from this term -- next term, next year, we do not have a new launch models, big minor change of the city. That's one thing I can share with you. And then the big minor change of the city, the timing of that could be a kind of opportunity to take advantage for us to get back to the ASEAN market. But nevertheless, the ASEAN market is tough. And because of that, we decided to revise our expectations.

And then again, the conservativeness about the volume expectations. It is rather a solid conservative number, I thought. And also you mentioned about the competition of the competitors. Would that include the Chinese supplier, that is always the case. Is that right?

So in terms of the volume of the sales, this is the number that we will commit to achieve. That is how we set up this volume. And about the competitors, of course, the Chinese suppliers, their accounts as well. But in the ASEAN markets, there are emerging Chinese products coming in. And against them, the existing manufacturers are providing more incentives, prices are kind of discounted against Chinese. And then that is making the situation more competitive in terms of the prices. That is the market situation over there. Thank you very much. Thank you, Ms. Nagaya.

Okay. Thank you very much. We would like to close now the financial results briefing. The material is listed on our website. So please refer to it. Thank you very much for your participation.

Thank you very much.