Honda Motor Co., Ltd. Reports Consolidated Financial Results for the Fiscal First Quarter Ended June 30, 2005

Honda Motor Co., Ltd. Reports Consolidated Financial Results for
the Fiscal First Quarter Ended June 30, 2005 


TOKYO, July 27  /PRNewswire-FirstCall/ -- Honda Motor Co., Ltd. today announced
its consolidated financial results for the fiscal first quarter ended June 30,
2005.

First Quarter Results

Honda's consolidated net income for the fiscal first quarter ended June 30,
2005 totaled JPY 110.6 billion (USD 1,000 million), a decrease of 3.1% from the
corresponding period in 2004.  Basic net income per Common Share for the quarter
amounted to JPY 119.75 (USD 1.08), compared to JPY 121.65.  Two of Honda's
American Depositary Shares represent one Common Share.

Consolidated net sales and other operating revenue (herein referred to as
"revenue") for the quarter amounted to JPY 2,264.5 billion (USD 20,472
million), an increase of 9.2% over the corresponding period in 2004.  Revenue
was negatively affected by currency translations, which were translations of
foreign currency denominated revenue from Honda's overseas subsidiaries into
yen.  Honda estimates that if the exchange rate of yen had remained unchanged
from that in the corresponding period in 2004, revenue for the quarter would
have increased by approximately 9.5%.

Consolidated operating income for the fiscal first quarter totaled JPY 170.3
billion (USD 1,540 million), an increase of 6.5% compared to the corresponding
period in 2004.  This increase in operating income was primarily due to
increased profit from higher revenue and continuing cost reduction effects,
which offset the negative impacts of increased selling, general and
administrative (SG&A) expenses and research and development (R&D) expenses.

Equity in income of affiliates, which is mainly attributable to Asian
affiliates accounted for under the equity method, for the quarter amounted to
JPY 21.1 billion (USD 191 million), an increase of 12.3% from the corresponding
period in 2004.

Consolidated income before income taxes for the quarter totaled JPY 144.3
billion (USD 1,305 million), a decrease of 17.1% from the corresponding period
in 2004.

Business segment

With respect to Honda's sales in the fiscal first quarter by business category,
motorcycle unit sales totaled 2,581 thousand units, which was the same level as
the corresponding period in 2004.  Of them, unit sales in Japan decreased 2.1%
to 95 thousand units, and overseas unit sales was 2,486 thousand units, almost
the same level as the corresponding period of last year, due mainly to
decreased unit sales in North America and Other regions, offsetting the
increased unit sales in Europe, such as Spain, and in Asia, such as an
increased unit sales of parts for local production at affiliates in Indonesia. 
Revenue from sales to unaffiliated customers decreased 4.0%, to JPY 263.1
billion (USD 2,379 million), due mainly to decreased unit sales, offsetting the
positive currency translation impacts of the appreciation of the Canadian dollar
and the Euro.  Operating income decreased by 40.0% to JPY 10.3 billion (USD 93
million), due mainly to decreased profit from lower revenue, and increased R&D
expenses, which offset the positive impacts of the appreciation of the Canadian
dollar and the Euro, and ongoing cost reduction effects.

In all regions, Japan, North America, Europe, Asia and Other regions, Honda's
unit sales of automobiles increased by 8.8% from the corresponding period in
2004 to 840 thousand units.  In Japan, unit sales of automobiles increased 8.4%
to 167 thousand units.  Strong sales of minivan models, such as the fully model
changed Step Wagon and the Airwave, newly introduced in April, are the major
contributing factors to the increase. Overseas unit sales increased 8.9% to 673
thousand units.  Continued strong sales in the U.S. as a result of the
attractive vehicle models, such as Honda's brand-new sports utility truck, the
Ridgeline, and continued favorable sales of the Pilot, the Odyssey, and the
Acura RL, and increased unit sales in Indonesia and India contributed to the
increase.  Revenue from sales to unaffiliated customers increased 11.5%, to JPY
1,845.9 billion (USD 16,687 million) during the quarter, due to increased unit
sales, offsetting the negative currency translation effects caused by the
depreciation of the U.S. dollar.  Operating income increased 15.1% to JPY 133.1
billion (USD 1,204 million) due mainly to increased profit from higher revenue
and ongoing cost reduction effects, which offset the negative impacts of the
increased sales incentive in North America and increased SG&A and R&D expenses.

Revenue from sales to unaffiliated customers in financial services increased
17.4% to JPY 68.7 billion (USD 622 million), due to the growth of the
automobile business in North America.  Operating income decreased 10.8% to JPY
19.8 billion (USD 179 million), due primarily to increased funding costs.

Unit sales of power products in Japan totaled 121 thousand units, an increase
of 2.5%.  Overseas unit sales was 1,361 thousand units, increased by 7.2% and
total unit sales of power products were 1,482 thousand units, up by 6.8 % from
corresponding period in 2004. Increased unit sales of general- purpose engines
in North America and Asia, generators in North America and push lawnmowers in
North America and Europe are the major contributing factors to this increase.  
Revenue from sales to unaffiliated customers in power product and other
businesses increased by 1.6% to JPY 86.6 billion (USD 783 million), due mainly
to increased unit sales of power products, offsetting the negative impacts of
the decreased revenue in other business.  Operating income increased 45.0% to
JPY 7.0 billion (USD 64 million), due mainly to increased profit from higher
revenue in power product business, offsetting the negative impacts of increased
SG&A expenses.

Geographical Segment

With respect to Honda's sales for the first quarter by geographical segment, in
Japan, revenue for exports and domestic sales was JPY 1,060.4 billion (USD 9,586
million), up by 10.7% compared to the corresponding period in 2004, due
primarily to increased unit sales for both exports and domestic sales in
automobile business.  Operating income in Japan was JPY 47.2 billion (USD 427
million), up by 43.3%, due primarily to an increased profit from higher revenue
and ongoing cost reduction effects, which offset the negative impacts of the
increases in SG&A and R&D expenses.

In North America, revenue increased by 10.0% from the corresponding period of
the previous year to JPY 1,248.5 billion (USD 11,287 million), due mainly to
the increased unit sales in automobile and power product businesses, offsetting
the negative currency translation impacts of the depreciation of the U.S. dollar
and decreased unit sales in motorcycle business.  Operating income in North
America decreased by 9.8% to JPY 72.7 billion (USD 658 million) from the
corresponding period of the previous year, due primarily to the increased sales
incentive and SG&A, decreased revenue in motorcycle business and, the negative
currency effects caused by the depreciation of the U.S. dollar, which offset
the positive impacts of increased profit from higher revenue in automobile
business and ongoing cost reduction effects.

In Europe, revenue for the quarter increased by 8.3% to JPY 297.3 billion (USD
2,688 million) compared to the corresponding period of the previous year, due
primarily to the positive currency translation effects caused by the
appreciation of the Euro and the Pound, and the increased unit sales in
automobile business.  Operating income in Europe decreased by 14.8% to JPY 12.7
billion (USD 115 million), due mainly to increased SG&A expenses and the change
in model mix in motorcycle business, offsetting the positive impacts of the
appreciation of the Euro and the Pound and an increased profit from higher
revenue.

In Asia, revenue increased by 14.0% to JPY 231.5 billion (USD 2,093 million)
from the corresponding period of the previous year, due mainly to the increases
in unit sales in the motorcycle and automobile businesses, which offset the
negative currency translation effects.  Operating income decreased by 3.3% to
JPY 19.1 billion (USD 173 million) from the corresponding period of the
previous year, due mainly to the negative currency effects and an increase in
SG&A expenses, offsetting the positive impacts of the increased profit from
higher revenue and cost reduction effects.  In Asia, in addition to
subsidiaries, many affiliates accounted for under the equity method manufacture
and sell Honda-brand products. Operating income does not include income from
these affiliates.  Income from these affiliates is recorded as equity in income
of affiliates and reflected in net income.

In Other regions, revenue for the first quarter increased by 14.1% to JPY 116.9
billion (USD 1,057 million) compared to the corresponding period of the previous
year.  The positive currency translation effects and the increased unit sales in
automobile business were the major contributing factors to the increase in
revenue.  Operating income increased by 56.7% from the corresponding period of
the previous year to JPY 13.6 billion (USD 123 million), due mainly to
increased profit from higher revenue in automobile business and the change of
sales price, offsetting the negative impacts of SG&A expenses.

Consolidated Statements of Cash Flows for the Fiscal First Quarter

Cash and cash equivalents at the end of the first quarter (the period from
April 1, 2005 to June 30, 2005), decreased by JPY 47.9 billion (USD 434
million) from March 31, 2005 to JPY 725.5 billion (USD 6,559 million).  The
reasons for the increase or decrease for each cash flow activity is as follows;

Cash flows from operating activities

Net cash provided by operating activities amounted to JPY 100.4 billion (USD
908 million) for the quarter ended June 30, 2005, due to an increase from net
income and a decrease in trade accounts and notes receivable, which offset a
decrease in trade accounts and notes payable.  Cash inflows from operating
activities decreased by JPY 22.5 billion (USD 204 million) compared with the
corresponding period of the previous year.

Cash flows from investing activities

Net cash used in investing activities amounted to JPY 179.1 billion (USD 1,619
million), which was mainly due to the capital expenditures and an acquisitions
of finance subsidiaries-receivables.  Cash outflows from investing activities
increased by JPY 119.4 billion (USD 1,080 million) compared with the
corresponding period of the previous year.

Cash flows from financing activities

Net cash provided by financing activities amounted to JPY 23.0 billion (USD 208
million), which arose due to proceeds from the issuance of long-term debt.  Cash
flows from financing activities increased by JPY 160.0 billion (USD 1,447
million) compared with the corresponding period of the previous year.

Forecasts for the fiscal year ending March 31, 2006

In regard to the forecasts of the financial results for the fiscal first half
ending September 30, 2005 and fiscal year ending March 31, 2006, Honda projects
consolidated and unconsolidated results to be as shown below:

As stipulated in the Japanese Welfare Pension Insurance Law, the "Honda
Employees' Pension Fund "(confederated welfare pension fund, the "Fund"), of
which the Company is a member, has obtained approval from the Japanese Ministry
of Health, Labor and Welfare for exemption from benefits obligations related to
past employee services with respect to the substitutional portion of the Fund
on July 1, 2005. The following paragraphs illustrate how the transfer of the
benefit obligation of the substitutional portion of the Fund is reflected to
consolidated and unconsolidated financial results.

With respect to the forecast of the Company's consolidated financial position
and results of operation for the year ending March 31, 2006, the effect of the
transfer of the benefit obligation of the substitutional portion of the
Employees' Pension Fund to the Japanese government is not reflected in
accordance with the applicable U.S. regulations. According to the regulations,
the difference between the fair value of the obligation and the assets to be
transferred to the government, which should be disclosed as a subsidy, will be
determined upon completion of the transfer to the government of the
substitutional portion of the benefit obligation and related plan assets. At
this moment, the date of such transfer and its effect have not yet been
determined.

With respect to the forecast of the Company's unconsolidated financial position
and results of operation for the year ending March 31, 2006, the Company will
recognize a JPY 91.5 billion gain on the transfer of the benefit obligation of
the substitutional portion of the Fund to the Japanese government as an
extraordinary gain in accordance with the Japanese accounting standards.

  Consolidated financial forecasts

  First half ending September 30, 2005
                                          Yen (billions)       Changes from
                                                                     FY2005

  Net sales and other operating revenue           4,630               +11.1%
  Operating income                                  335                +0.6%
  Income before income taxes                        305               -10.2%
  Net income                                        234                -3.1%

  Fiscal year ending March 31, 2006
                                          Yen (billions)       Changes from
                                                                     FY2005

  Net sales and other operating revenue           9,430                +9.0%
  Operating income                                  665                +5.4%
  Income before income taxes                        620                -5.6%
  Net income                                        470                -3.3%

  Unconsolidated financial forecasts

  First half ending September 30, 2005
                                          Yen (billions)       Changes from
                                                                     FY2005

  Net sales                                       1,805                +8.9%
  Operating income                                  104               +57.5%
  Ordinary income                                   155               +85.5%
  Net income                                        175              +242.2%

  Fiscal year ending March 31, 2006
                                          Yen (billions)       Changes from
                                                                     FY2005

  Net sales                                       3,690                +5.8%
  Operating income                                  172               +16.6%
  Ordinary income                                   266               +25.9%
  Net income                                        262               +81.3%



These forecasts are based on the assumption that the average exchange rates for
the yen to the U.S. dollar and the Euro for the second half of the year ending
March 31, 2006 will be JPY 105 and JPY 130, respectively, and for the full year
ending March 31, 2006, JPY 106 and JPY 132, respectively.

This announcement contains forward-looking statements within the meaning of
Section 21E of the U.S. Securities Exchange Act of 1934. Honda's actual results
could materially differ from those contained in these forward-looking statements
as a result of numerous factors outside of Honda's control. Such factors include
general economic conditions in Honda's principal markets, and foreign exchange
rates between the Japanese yen and other major currencies, as well as other
factors detailed from time to time in Honda's reports filed with the U.S.
Securities and Exchange Commission. 

DATASOURCE: Honda Motor Co., Ltd.



CONTACT:  Tetsuo Oshima of Honda Motor Co., Ltd., [phone] x.16

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