Thank you for sparing your time to join us here at the Honda Motor Company FY 2022 First Quarter Financial Results press conference. We'd now like to officially begin the conference. My name is Okamoto from Corporate Communications. I'll be serving as the Moderator. Allow me to introduce to you the executives represented. Director, Executive Vice President, Seiji Kuraishi. How do you do? I'm Kuraishi. Director, Senior Managing Director, Kohei Takeuchi. I'm Takeuchi. How do you do? I'd like to call on Mr. Kuraishi to present the first quarter financial results, please. Let me explain the first quarter results of the FY 2022, as well as the summary of the full-year outlook. First, regarding the unit sales of Honda Group in the first quarter of FY 2022, the volume sales outperformed year-on-year in all business segments due to the recovery of the demands from last year, which had a large impact by COVID-19 pandemic. As a result, for motorcycle businesses, 3.879 million units sold, automobile businesses, 998,000 units, and Life Creation businesses, 1.708 million units were sold. I'll explain about the main market situations next. The total market in Japan has outperformed the same period last year because the demands recovered from last year's decline due to the COVID-19 pandemic. Honda, too, had an impact by semiconductor supply shortage and so on. However, we outperformed last year's unit net sales with the effective launch of the new Vezel launched in April. N-series had reached 3 million cumulative unit sales in Japan since its launch. The total market in FY 2022 still remains uncertain going forward due to concerns about resurging COVID-19. Honda revised the forecast from last time. Taking advantage of the new Vezel and new model Civic that will be launched in this autumn, we will aim to maximize the unit sales. The total market in the U.S. has surpassed the levels same period last year, thanks to increasing vaccinations for COVID-19 and effective economic stimulus measures which greatly have recovered demands. Light truck models propelled all business of Honda, which have updated the monthly sales record in three months consecutively, exceeding the market growth. New model Civic, launched in June, is receiving favorable acceptance by customers. We expect the total market by FY 2022 to keep a solid demand. However, impact of semiconductor supply shortage and so on still will remain. Honda has revised the last forecast. We will endeavor to minimize the impact of a supply shortage of the chips and to catch up with the production. The total market in China has seen the demands recovery owing to the effective measures for economic stimulation by the government. The market underperformed year-on-year due to the impact of the semiconductor supply shortage and so on. In spite of such supply shortage of chips, Honda achieved better than the marketed growth with incremental sales of XR-V and so on. Regarding the total market by calendar year 2022, we expect the demand to stay steady with the residual impact of semiconductor shortages. Honda has revised the last forecast. We will plan to expand unit sales by new model launch and EV lineup improvements with a Breeze PHEV premiered in Auto Shanghai in April. Moving on to the motorcycle business. The total market has outperformed year-on-year with once dropped demands due to the COVID-19 now are up, recovered. Honda has performed better year-on-year in all of the markets. However, in India and in Malaysia, we suspended the production activities for a while because of the resurging pandemic. Speaking of the total market of FY 2022, because of the COVID-19 infections rising up again, mainly in Asia, the future is uncertain. Honda have revised the last forecast mainly for India. Next, a summary of the financial results of the first quarter FY 2022. Despite impact by supply shortage of semiconductors, soaring raw material prices and so on, as compared to the significant impact by the COVID-19 in the same period last year, our unit sales increased. As initiatives we have pursued to solidify the existing businesses being effective, the operating profit has increased by JPY 356.9 billion to mark 243.2 billion. The profit for the period attributable to the owners of the parent for the first quarter increased by JPY 303.3 billion, hitting 222.5 billion, with incremental investment profit from the equity-based affiliates. The slide shows the sales units as well as the P&Ls. Next, with regard to the FY 2022 outlook, we plan to increase both sales revenues and the profits over FY 2021 results based on the increase in sales units and effective initiatives to solidify existing business and so on. From the last year forecast, unit sales are revised, reflecting the latest semiconductor supply plans, in addition to the impact of a COVID-19 resurgence, mainly in Asia. Those impacts will be absorbed by additional suppression of SG&As, cost reduction effects, and so on, and we revised the operating profit guidance to add JPY 120 billion to hit 780 billion. Regarding the profit for the period attributable to the owners of the parent, with incremental operating profit and so on, we revised the guidance to add JPY 80 billion to hit JPY 670 billion. The slide shows the unit sales and P&Ls. Speaking of the dividends and the share buybacks. Annual dividends for FY 2022 stays the same as we announced last time. In the Board of Directors meeting convened today, we made a decision for share buybacks. For the purpose of improved capital efficiency, execution of the flexible capital strategies and so on, we plan to buy back our common stocks up to 18 million shares or the maximum sum of JPY 70 billion of the acquisition prices for the acquisition period between August 5th and December 31st of 2021. Next, Mr. Takeuchi will present to you the details of the results. Let me begin. First, the FY 2022 first quarter three-month financial results. Regarding Honda Group unit sales, motorcycles increased in Indonesia, India, amongst others. Automobiles dropped in China while increased in the U.S. Life Creation increased in the U.S. The next income statement. Due to increase across the board in all business segments, sales revenue increased from the same quarter last year to JPY 3,583.8 billion. Operating profit was JPY 243.2 billion due to increased sales revenue and model mix. Share of profit of investments accounted for using the equity method was JPY 55.9 billion due to profit increase in Japan and Indonesia. Next is a change in profit before income taxes. Profit before income taxes in the first quarter was JPY 311.3 billion, up JPY 384.7 billion from the same quarter last year. Due to profit increase attributable to increased sales revenue and model mix, as well as currency effect, operating profit reached JPY 243.2 billion, up JPY 356.9 billion from the same quarter last year. Moving on to results by business segment. Motorcycle Business. Due to increase in profit attributable to increased sales revenue and model mix, operating profit reached JPY 80.6 billion. Next, Automobile and Financial Services for Automobile. Both combined, operating profit is estimated to be JPY 159.2 billion. Automobile Business, due to profit increase attributable to increased sales revenue and model mix, operating profit was JPY 70.6 billion. Financial Services Business, due to increase in used vehicle prices amongst others, operating profit reached JPY 92.2 billion. Life Creation Business and others, operating loss was JPY 300 million, of which aircraft and aircraft engines operating loss was JPY 8.3 billion. Next is cash flows in the non-financial services in FY 2022 first quarter. Due to temporary increase in inventory, cash flow was JPY -99.5 billion. Cash and cash equivalents at the end of the first quarter was JPY 2,297.8 billion. Moving on to FY 2022 consolidated financial forecast. First, Honda Group unit sales. Motorcycles, due to the resurge in COVID-19 infection in mainly Asia, we are forecasting unit sales to be 17.4 million units. Automobiles, given the resurge in COVID-19 infection, we reviewed our semiconductor supply plan, and the FY 2022 forecast is now 4,850,000 units. Life Creation, mainly expected to increase by 400,000 units in Europe and North America. Our revised forecast is 6.3 million units. Next, FY 2022 consolidated financial forecast is as shown. Change in profit before tax. Profit before tax is JPY 1 trillion, up 85.8 billion from last fiscal year. Operating profit, despite the provision for credit losses and SG&A increase, thanks to profit increase attributable to increased sales revenue and model mix, operating profit is up JPY 119.7 billion. Share of profit of investments accounted for using the equity method due to TOB of three related companies in the last fiscal year, resulting in a one-time impact of JPY 56.8 billion, profit is down 52.7 billion. Compared to the forecast announced last May, despite profit drop attributable to declining unit sales, which is resulting in change in sales revenue and model mix, and due to further cost reduction, cost control efforts, and currency effects, profit before tax is forecast to be up JPY 130 billion. Lastly, FY 2022 forecast capital expenditure, depreciation, and R&D is as shown. This concludes my presentation. Thank you. Thank you very much for your attention. Now I'd like to move on to the questions and answers part of the session today. We have already announced the Zoom invitations for those in the media. Because of the interest of time, please limit your questions to two questions per person, please. Thank you for your cooperation. Please press the raise a hand button on the Zoom assistant, please, if you have questions. First question from NHK, Mr. Tsuboi, please. Mr. Tsuboi? Hello, can you hear me? Yes. Tsuboi from NHK. Thank you very much for your presentation today. I have two questions. One is, semiconductor shortages, plus in Southeast Asian countries, the pandemic is resurging again. That's a concern. After the second quarter onwards, what is your perspective of the regular production plans? Second question, until when do you think the shortage of the semiconductor and components problems continue? In the long run, what is your perspective on those shortage of the parts, components, and semiconductors? Thank you for your question. After the second quarter onwards, our prospect is, for instance, based on the first quarter results in the market, thanks to the vaccination progress and also the government economic stimulus measures. Thanks to those things, apart from some areas or regions, and of course, the impact by the COVID-19 last year was quite significant. Basically, the sales itself has grown quite significantly. The market is good. The semiconductor situation going forward and the COVID-19 still unclear, uncertain going forward in both terms. However, the sales is going to stay steady going forward. That's our prospect. In terms of those parts' influence or impact, in the beginning of the fiscal year, when we had an announcement, we talked about our focus of the FY2022. With the unclear semiconductor supplies, we had thought that there could be an impact on the 100,000 unit production. In the second half, we said that we will try to catch up with the production as much as we can, looking at the situations, in order to minimize the impact on the production. When we put together our budget, we didn't include the impact by the semiconductor shortages. We stayed our unit sales perspective to be 5 million instead at that time, in the beginning of the year. Globally, we tried to minimize them. In the first quarter period, the situation is contained within our expectations. However, Renesas recovery is a little bit slow, and also, in Asia, lockdown of the cities are going on. Because of that, based on the latest business situations, we put up those full-year forecasts. The latest one now is down revised to 4.85 million units, 150,000 less. And of course, the VOIs, the variants of concerns, and semiconductor shortages, there are many factors impacting on the businesses going forward. Still uncertain, I should say. However, we will watch out the market situations, and we will try to hit better than the last year unit sales this year. In order to have stable parts supplies, we are speaking to the several companies and suppliers and sites so that we can get supplies from more than one places. Also, we will try to keep appropriate level of the stocks, inventories, for different parts or components so that the impact on the production is minimized. In the long run, we need to harmonize those parts and components and generalize the use of those parts and more stable supplies by multiple suppliers. Of course, we cannot avoid impact by the lockdown. As of now, in Asian countries, There are some lockdown situations for the pandemic in several places. Because of that, the production is squeezed. In other words, we can use--d ivert those components and parts which are not needed in those lockdown sites to other countries like China or Japan. This way, we can adjust the production situations globally. This way, we can try to minimize the impact on the manufacturing stages. Thank you very much for your question. Thank you. Thank you. The next question, please. Next is from The Yomiuri Shimbun. Mr. Katagiri, please. Mr. Katagiri, you are muted, I think. I'm Katagiri from The Yomiuri Shimbun Newspaper. Can you hear me? Thank you. I have two questions. First, for this quarter, China compared to the United States, the domestic unit sales seems to be low. Is this due to the shortage of semiconductors, or are there any other reasons for this? Can you give an explanation for the reason? The second, about the forecast. About the motorcycle unit sales, it's down, and yet your profit forecast is up. Sir, can you explain this? The cost reduction effort, I think that you're expecting more effect. Can you explain what specific effects you are anticipating for this cost reduction effort? Mr. Katagiri, thank you very much. First, about the domestic sales. The domestic sales, the economic activities are recovering, and the demand, compared to last year when we had the severe impact of the pandemic, I think it is recovering to what we were seeing before the pandemic. Meanwhile, talking about Honda, due to the shortage of semiconductors, there's a drop in production volume. Especially for us in the global market, in our global business, we are allocating our semiconductors here in Japan. The April, May impact for us was big. Other companies, the April, May impact was not that big. Because of this, for the first quarter, especially, Honda appears to be low in volume. In July, other companies are starting to suffer from the shortage and therefore, the new Vezel, mainly, and the N-series, the demand is very strong. We believe that in the second half, once the supply of semiconductors recover, we can achieve the unit sales equal to other competitors and much better than last year. About the forecast and the reason why we are forecasting a drop in unit sales, as I've already explained, [Non-English content] in our budget, originally, we did not include the impact of the semiconductor shortage. But this time, due to a number of new factors, we had to review the unit sales, especially in the second half, we were planning to offset and recover, but from the second quarter onwards. We believe that there will be greater impact than we expected in terms of the unit sales. Depending on the region, we have to produce over capacity, and therefore, we believe that it's difficult to recover by the end of this fiscal year, and this has been factored in this time. As for the motorcycles, I think it's mostly India. But again, in the first quarter, including the lockdown due to the spread of the coronavirus infection, there was a drop. Now in July, India, the pandemic situation has improved significantly. Currently, though there was a drop, we are expecting to increase sales, and that is what we're forecasting for now. The cost reduction effect? Yes, Mr. Takeuchi will respond. Cost reduction. Well, it covers a lot of things, but from two, three years ago as a company, we have been trying to reduce costs in all areas possible in daily production activities. So, we have tried to make efficient our production. In the first quarter also, we have seen an improvement, and therefore, we will continue to have this impact of the cost reduction going into the second quarter and after. I think it's an accumulation of small efforts that we are seeing a big result. Thank you. What specifically are you doing to reduce the cost? Which costs are going down? About the unit sales, I believe that the unit sales is expected to drop, but the profit and sales revenue is expected to increase a s for the cost reduction? According to our current cost structure, we are purchasing about 80% of components from outside, and 20% is made in-house. We want to make efficient the production, and therefore, we are examining what needs to be changed, and also how we can reduce our cost to produce the same number of units. We are looking into the cycle time, how to reduce the cycle time, and the man-hours, et cetera. It's accumulation of all these small efforts that we are seeing a reduction in our cost. Thank you. Thank you very much, Mr. Katagiri. Next, one from Nikkei Shimbun, Mr. Abe, please. Abe from Nikkei Shimbun. Thank you. So as semiconductor shortage. So, impact on the unit sales is as much as 150,000. However, operating profit and also the sales revenues, how much impact are you getting on those two, sales and operating profit, because of the semiconductor shortage? I know that the future is uncertain in that regard still. By the end of this fiscal year, what is your prospect of negative impact by the shortage of the semiconductor? How much impact would you think for that? Also, the raw materials cost increase, including the semiconductors, its impact, how much impact do you expect for this fiscal year? Any countermeasures for that, please? Thank you for the question. The expectation of the semiconductor shortage impact 4.85 million units that we announced this year actually is the number based on the adjustment with the semiconductor suppliers as of now. That is the number that we adjusted and now understand that this will be as many as we can, of course, do with the semiconductors. Of course, for the COVID-19 end, it is not controllable, therefore, we cannot say much in the end. However, as I said, the global production adjustment will be done so that we will keep our target of a 4.85 million unit production for the year. I'll talk about its impact on the sales revenue for the automobiles. JPY 150,000, that's the impact. Out of which, JPY 90,000 impacted on the OP. The rest, that includes JPY 60,000 for China. Volume mix area, that is including those impact, our expectation is at 400. That's the impact on that. In the beginning of the fiscal year, as compared to the last one, the raw materials, such as the precious metals, are soaring and prices going up. About JPY 250 billion cost increase now is included in the expectations for this year for the raw materials cost increase. Precious metal increase of the prices actually are a little slower than the total situation of that. Aluminum, steels, platinum, there is expected cost increase of those. Offsetting with that, it is JPY 250 billion upwards change will be expected for that. Thank you. Nikkan Jidosha Shimbun. Mr. Mizutori, please. Mr. Mizutori? Yes. Mizutori from Nikkan Jidosha Shimbun. Yes, thank you. I have two questions. First, about the U.S. Incentives are going down, and I think this is resulting in better results. In the first quarter and the FY 2022, do you have any specific numbers about the incentive? About China, in the first quarter, I think that the retail volume unit sales is increasing, but yesterday, the Wuhan factory operation was suspended. Well, in Asia, you are seeing this, but what [inaudible] outlook for just China only for this fiscal year? Let me respond in regards to your question regarding China. About China, Well, we are seeing that the new models are being introduced, and we believe overall as a market, the business will be better than last fiscal year. The results will be better than last year. As I said, because of the components shortage and also the various uncertainty related to this industry, we have to pay attention to these developments. As for Honda, there is this impact of the semiconductor shortage. The new models and also strengthening our lineup of EVs and others, we think that because our brand and also our models have been well received, and I think that in the first quarter, it has been record high. We want to enhance the strength of our brand and also expand the lineup of our EV cars, and Honda Connect will be evolved so that we will be providing products which are filled with fun features. As for Wuhan, from August 3rd, the factory has suspended operation. This is because of the development area where our factory is located, there was a cluster at a supplier there, and therefore, we had to suspend the operation. We are consulting with the local government at Wuhan, and we don't think that this will continue for a long time. As for our impact, already, we have the shortage of semiconductors. We have to adjust the production even without this. Well, we don't know how long this situation will continue, but we believe that in principle, the impact will not be that big. We are targeting towards sales more than last year, so our target remains the same. About the incentive, please? Yes, allow me to explain about the incentive. Well, yes, in the first quarter, the incentive on a cash basis. Well, in Autodata, it includes the dealers' incentives. Looking at the incentives as we define it in the first quarter, I think it was much lower than the previous year. Therefore, I think it's very low, the incentives, but still, the incentives towards the inventory, because of the accounting, they have to adjust the inventory and also keep down the incentives. Therefore, this fiscal year, the outlook compared to last year, I think the incentive is about 10% lower than the previous year. Thank you. Next question. Asahi Shimbun Newspaper, Mr. Kamiyama, please. Kamiyama from The Asahi Shimbun. Can you hear me? Yes. Please. Two questions. One is semiconductor shortage. As was being touched upon, in the first quarter, how many units of the production was impacted by the semiconductor shortage in the first quarter? You may not be able to tell, but how long would that situation continue? That's question one. Second question, in the Southeast Asian countries' lockdown, maybe it was an impact. What is going on at the dealers, distributors over there? What is going on because of the lockdown in Southeast Asian countries? The impact on the production, the first quarter, about 170,000-180,000 units of production impacted by the semiconductor supply shortage in the first quarter. Until when will that continue? We will try to catch up in the second half this year. We have reduced 150,000 in the first place. In the second quarter, we thought the impact would be resolved by the second quarter at first. However, because of the pandemic in the Asian countries and also dealers there, plus productions lost in some places, and those impact is actually being carried over to the second quarter. In the second half, in principle, I believe we can catch up with that. We can recover that in the second quarter. Impact of the lockdown in Southeast Asian countries, at the moment, larger impact are seen in Indonesia, in Thailand, and in Vietnam, and in Malaysia. Dealers, of course, have different situations in different areas. I wouldn't say all of the dealer distribution activities are stopped. That is really variable from one place to another. Basically, those dealers are still active by selling the products as usual. Thank you. Next question, please. Automotive News. Mr. Hans, please. Hi. Can you hear me? [Non-English content]. Thank you. [Non-English Content]. Can I speak in English? Thank you very. Yes, please. I'm wondering if you can tell us a little bit about the inventory situation in the U.S. It must be very tight. The numbers say it's very tight compared to last year. How is that impacting incentives? Are you able to lower incentives because you have such low inventory? What adjustments are you making to make sure that you can get more cars to dealers to increase those inventory levels? In other words, how are you trying to boost inventories in new ways? [Non-English content]. First of all, the inventory situation. For the industry on the whole, the inventory level is quite low. Regarding Honda as well, because of the shortage of components, mainly semiconductors, there's impact on their production. And, in regards of Honda, the industry average is 25 days. Honda is currently 23 days, I understand. Therefore, compared to the normal situation, there is a very low level of inventory. Given this tight inventory situation, the cars which are due to be delivered to the dealers, we are trying to increase the inventories cycle and make it faster so that we can deliver more. The U.S., the people, they buy it, and they take home the car with them on that very day, so we need to deliver these new cars to the dealers as early as possible. Through digitization and other efficiency measures, and we have been doing this in the past as well, but using these new methods, we want to try to adjust the inventory. In regards to the U.S., thinking about the business style there, unless there is an inventory at the dealers, it will be very tough situation, though normally we would try to reduce the inventory. Including the online sales, we have to think about how we can try to sell despite tight inventory. About the incentives, well, to begin with, Honda, our incentive is low. The average of the industry is JPY 2,700 and our average is JPY 2,100. In regards to Honda, I do not think that there has been such a significant drop in incentives. Depending on the product, there are some differences. Thank you. Thank you. Next question. Weekly Toyo Keizai, Mr. Yokoyama, please. Toyo Keizai, Yokoyama, can you hear me? Yes. Thank you. I have two questions. One is about your mobile businesses operating profit. In the first quarter, 3.1%. Last year, full year basis, it was 1%, therefore it is improvement. What are the factors behind for that improvement? Question two is about European businesses. European Commission said that by 2030, the hybrid, those cars of those types are banned. What's the plan for that? Swindon plant is being closed. What is your positioning of European businesses, per se, and if you have any plans for the European businesses going forward, please share with me. Okay, the operating profit for automobiles, as you said earlier, last year operating profit margin, that was 3.1% at Honda, and pretty high now because of the North American markets and other areas where there are more numbers of units volume sold. There were negative impact as well because of the soaring raw materials, and also the cost reduction efforts, and also the commercial value of the vehicles. That also is impacting and also, I think, mainly it is because of the unit sales, the volume number going up, and that is impacting on that number. Plus the cost reduction efforts being fruitful finally. As for the European businesses, electrification businesses. In Europe, by 2022, we would like to make main products 100% electrified, and that is our plan and our activities now. When we say EVs, that includes HEV as well. Because of the announcement recently, actually we need to look into the specific in contents of that now, specifically with regard to what they want to do with the environmental issues. In 2050, we are trying to achieve carbon neutrality. In response to their announcement recently, we'd like to accelerate our electrification activities for our products. Thank you. Thank you very much. Next question will be the last question. Last question is The Nikkan Kogyo Shimbun, Egami-san. Mr. Egami? Ms. Egami, excuse me. Yes. My name is Egami from The Nikkan Kogyo Shimbun. Can you hear me? Yes. Well, you have been talking about the semiconductor shortage and also the lockdown and the pandemic spread in Southeast Asia. In the mid to long run, you have been making various efforts like cost reduction and supply chain review. Do you have any plans that you can disclose for the mid to long term? The second question, about capital investment. You say that there is no major change, but due to the external environmental changes, is there anything that you might change in terms of the substance of capital investment? Though the amount is the same? About the supply chain. As I earlier mentioned, in the long run, in order to have a stable supply, stable procurement, we need to have more sources of semiconductors and consider how we should be holding our inventory. There are a number of things that we are currently studying. The supply chain review needs to be done, I think, as a result of all these factors. About the capital investment? Yes. The capital investment. Well, it does include a number of things, and there are the renewal of existing equipment and new equipment, and the external environment has been changing, although the amount remains the same. If we have to accelerate our electrification efforts, I think what we'll be investing in will change. Currently, we have nothing that we can announce here today. Thank you. Thank you very much. This concludes our session for the first quarter financial results for 2022. The resource is available on the website. Thank you very much, and thank you very much indeed, again, for your participation.