Thank you for taking time to join us today. We will now begin the announcement of Honda Motor Co., Ltd. fiscal first quarter, ending June 30th, 2026, financial results. First, the executives in attendance. Masao Kawaguchi, Executive Officer and CFO.
This is Kawaguchi. How do you do?
Sumihiro Takahashi, Operating Executive, Head of Accounting and Finance Unit.
This is Takahashi speaking. How do you do? Kawaguchi will outline the fiscal first quarter's financial results and FY 2027 financial forecast, followed by Takahashi giving the details. Mr. Kawaguchi, please.
At the outset, I would like to express my heartfelt sympathies to all those affected by the earthquake that hit Kumamoto on July 28th, and their families. I also sincerely pray for the swift recovery and reconstruction of the affected areas. This slide shows the operating status of our major production sites after the 2026 Kumamoto earthquake.
Regarding Kumamoto Factory, production is suspended from the evening of July 28th to August 7th for nine days, and recovery efforts are underway. Thanks to these efforts, operations have been partially resumed today. We will continue to work towards full-scale operations. Regarding our automobile production sites, there have been parts shortages resulting from damage sustained by some suppliers. At Saitama factory, operations will be suspended for a total of six days until August 19th, including the summer break, and at Suzuka factory, operations will be suspended from August 6th, tomorrow, to the 19th. In total, five days, including the summer break. We will monitor developments and decide when to resume production and will announce at the appropriate timing. Next, fiscal results for the first quarter of the fiscal year ending March 31st, 2027. Operating profit for the first quarter was a record high JPY 530.7 billion.
No EV-related losses were posted in this first quarter. Motorcycle business, all-time high quarterly operating profit and operating profit margin were achieved, driven by strong global sales, particularly in India and Brazil. Automobile business. Despite struggle in China, unit sales steadily increased, mainly in North America, resulting in operating profit of JPY 192.1 billion and an operating margin of 5.0%. Regarding consolidated business forecast for the fiscal year ending March 31st, 2027, we revised the exchange rate assumption to JPY 155 per US dollar. Operating profit has been revised upward by JPY 150 billion to JPY 650 billion. Uncertainty in the beliefs calls for careful risk assessment regarding unit sales, material costs, and other factors. Therefore, these assumptions remain unchanged from the previous forecast. EV-related losses have also been revised to reflect the updated currency assumption.
Excluding EV-related losses, adjusted operating profit is projected at JPY 1.17 trillion, up JPY 170 billion from the previous forecast. Next, financial foundation and shareholder returns. As of the end of the first quarter, net cash of non-financial services business stood at JPY 3.3 trillion. We continue to maintain a substantial net cash position and a strong financial profile. Regarding shareholder returns, the forecast for the annual dividend for the fiscal year ending March 31st, 2027, remains unchanged from the previous forecast at JPY 70 per share. While targeting DOE 3%, we will strive to provide stable and sustainable dividends. Now, the details of the financial results will be given by Mr. Takahashi.
Next, I will explain the financial results. At first, the first quarter total group unit sales year on year was motorcycle sales increased, mainly in Asia and other regions, in particular Brazil, to 5,663,000 units. Automobile sales decreased to 786,000 units, led by lower sales in Asia, particularly China. Power product sales decreased, mainly in North America, to 752,000 units. Next, the Q1 consolidated financial results year-on-year. Operating profit increased by JPY 286.5 billion to JPY 530.7 billion. Equity method investment profit increased by JPY 18.4 billion to JPY 22.6 billion. Quarterly profit attributable to owners of the parent company increased by JPY 254.2 billion to JPY 450.9 billion.
Next, I'll explain factors behind changes in adjusted operating profit, excluding EV-related losses year-on-year. Adjusted operating profit was JPY 530.7 billion, up by JPY 164.5 billion year-on-year. Sales impact was negative by JPY 6.1 billion because of incremental incentives despite a unit sales increase. Price and cost impact, negative by JPY 3.3 billion, due to the impact of the soaring material cost. Expenses impact, positive by JPY 6.7 billion. R&D impact is -JPY 1.7 billion . Foreign currency impact, positive by JPY 90.8 billion, and the tariff impact was positive by JPY 78.1 billion. Regarding our operating profit by business segments.
In motorcycle business, operating profit was JPY 233.9 billion, marking the highest ever operating profit and its margin of the quarter. In automobile business, operating profit was JPY 192.1 billion. Financial services business made JPY 105.8 billion. Power products and other businesses ended in a JPY 1.1 billion operating losses. For motorcycle businesses, we achieved a JPY 233.9 billion operating profit, up by JPY 44.9 billion year-on-year. Regarding factors for the changes, sales impact was positive by JPY 20.6 billion due to incremental unit sales, mainly in India and Brazil. Price and cost impact, negative by JPY 2.1 billion, due to the impact of soaring material cost. Expenses impact, positive by JPY 1.5 billion. R&D impact, -JPY 2 billion . Foreign currency impact, positive by JPY 28.5 billion.
The tariff impact was negative by JPY 1.6 billion. For automobile business, we achieved a JPY 192.1 billion adjusted operating profit, up by JPY 99.7 billion year-on-year. Regarding factors for the changes, sales impact was negative by JPY 38.6 billion due to incremental sales incentives. Price and cost impact, negative by JPY 1.9 billion due to the impact of soaring material costs. Expenses impact are positive by JPY 5.6 billion. R&D impact, JPY 800 million positive. Foreign currency impact, positive by JPY 52.2 billion. The tariff impact was positive by JPY 81.6 billion. Regarding cash flow situations, free cash flows of our non-financial services businesses was JPY 128.3 billion. Net cash at the end of the period was JPY 3,331.8 billion. Operating cash flows after R&D adjustment was JPY 737.1 billion. Let me move on to the consolidated financial forecast for the financial year ending in March 2027.
We will keep the unit sales of the group the same as the previous forecast, which will be motorcycles, 22.8 million units, automobiles are 3.39 million units, and the power products are 3.65 million units. With regard to the consolidated financial forecast of the financial year ending March 2027, operating profit will be JPY 650 billion, up by JPY 150 billion over the previous guidance. Profit for the year attributable to owners of the parent will be JPY 400 billion, up by JPY 140 billion. Adjusted operating profit will be JPY 1.17 trillion, up by JPY 170 billion.
Assumption foreign currency will be JPY 155 per dollar throughout the year. Regarding factors for changes in expected operating profit as compared to the previous forecast, adjusted operating profit will increase by JPY 170 billion because of the Forex assumption modified to JPY 155 per dollar. Regarding the factors behind the difference of our forecasted operating profit from the results of the previous term.
Adjusted operating profit will increase by JPY 130.6 billion year- on- year, for which sales impact will be positive by JPY 266.7 billion due to increase of the unit sales of the motorcycles and automobiles. Price and cost impact will be negative by JPY 313 billion due to the impact of our soaring material costs affected by Middle East and so on. Although the cost reduction and the price revisions will work positively for the profit. Expenses impact, negative by JPY 8 billion. R&D impact, +JPY 10 billion .
Foreign currency impact will be positive by JPY 28 billion, reflecting the updated assumptions, and the tariff impact will be positive by JPY 147 billion. Forecast of our capital expenditures, depreciation and amortization, and R&D spending for FYE March 2027 will be as expected as in the table. CapEx will reflect additional investments and so on, for the acquisition of the factory buildings of a joint battery manufacturing company with LG Energy Solution in the U.S. Last but not least, regarding dividends, annual dividends for FYE March 2027 will be no different from the previous guidance, keeping JPY 70 per share. That is all. Thank you very much for your attention.
Thank you for your listening. Now, we would like to proceed to the question and answer session. Please link to the Zoom that we have provided you with. In the interest of time, we ask you to limit your questions to two per person. When you ask a question, please turn on your camera and microphone. Those who have questions, please use the Raise Hand button. Please. The first question is from Asahi Shimbun Newspaper, Miura-san, please.
This is Miura from Asahi Shimbun. Thank you for the explanation. I have two questions. First, about the EV-related losses. In the first quarter, it is not factored in, but what is the reason? Also, throughout the year, it has increased to JPY 520 billion. But aside from the foreign exchange, are there other factors that affect this result? That's the first question.
May I answer now? Can you ask your second question too?
Yes, the second question. It is related to automobile market. I do understand that you have continuing tough difficulty in China, but can you explain the details? Also, for the full year, I think the forecast is lower than expected, yet you have not revised your forecast for the full year sales. Also, in July, I think you have entered into extension of maintenance contract.
Thank you for the question. About the first question about the EV-related losses, allow me to answer that question first about the EV-related losses. As you know, North America EV strategy has changed, and as a result, in March, we made the announcement that maximum JPY 2.5 trillion losses will be posted. This is what we announced.
In the previous year, of which already JPY 1.3 trillion has been included, and for this fiscal year, at the outset of this fiscal year, when we made the announcement, we were saying JPY 500 billion. But the breakdown is, most of it is the compensation to our suppliers. About our suppliers and the negotiation that we are having vis-à-vis compensation, currently, we have just started communication with the suppliers, and we cannot say at this point in time how much compensation will be required. That is the current status. Therefore, in this first quarter, it is not the case that we can include this in our numbers. So that is the current situation. However, through the various communications, the premise that we set out at the beginning of the fiscal year is not being impacted. So that is understanding.
Therefore, this time in our forecast, again, we have maintained the JPY 500 billion that we have originally forecast. With the Forex impact, it has been revised to JPY 520 billion. Most of our suppliers are in North America, so there is a big Forex impact, and therefore, the Forex impact has been reflected this time in our forecast. The second question about automotive. Your sound was cut off. You were asking about China, is that correct? Yes. It is about China. In the forecast, I think you are forecasting 500,000. But looking at the actual sales, I think this is lower than expected. So what is your outlook? Also, excuse me, about an extension of the joint venture in July. I can explain.
About China, first of all, overall, the market itself, the macroeconomics is very weak, and therefore, the overall market is not good. In addition to that, this is due to the oil price increase, I believe. But the breakdown is that ICE, hybrid, these, including EV, NEVs, new energy vehicles, are seeing the numbers grow at this cost of ICE and hybrid. So I think that as a result of the oil price increase, this transition is increasing. In the first quarter, just looking at China's ICE and hybrid, compared to last year, I think that the market has shrunk by about 40%. So Honda has been selling mainly ICE and hybrid, and that is the reason why we are seeing this impact. In addition to that, Honda, we are at the transition point of a model change.
This first quarter, the retail unit is slightly more than 80,000. It is about 50% less than last fiscal year, first quarter. As you pointed out, at the outset of this fiscal year, we were saying 480,000 for the whole year. So 80,000+ is judging from what we said at the outset of this fiscal year behind schedule. One of the reasons for this is because, as Miura-san has asked, GAC. We were originally planning to have the contract terminated in 2028, and amongst the Chinese companies, including the dealers, they were thinking that in 2028, the contract will not be extended. I think there were quite a few who were worried that the joint venture agreement would not be extended, and that was one of the reasons why we saw the sales growth low.
As for this contract, we knew that it would expire in 2028. Therefore, our current joint venture partner, GAC, we have talked with them about future strategy, trying to make a comeback recovery using local resources, and also looking into how we should run the joint venture. We have had in-depth discussion with our partner, and as a result, we have looked into how we can see a recovery in the Chinese market. We have an idea as to what strategy needs to be taken. There were quite a few customers and dealers who were worried, but now we have reached this agreement to extend the contract. That is the reason why we wanted to make this announcement early on, and we were early to extend the contract. That was the reason. That was the situation. Thank you.
Thank you for that.
Thank you very much, Mr. Miura. Next question from Nihon Keizai Shimbun Newspaper. Mr. Mukano, please.
Mukano speaking. Can you hear me? Yes. Thank you. I have two questions. First one, the sales in China. Going forward, sales might stay low. Do you plan to have additional restructuring or closing out of the plants, for instance? In the May update, you mentioned about the Chinese platform or the EV supplies and so on. What is your purpose today, and what is your prospect about the upcoming progress in this regard? There is question two, the collaboration negotiation is going on with Nissan, and could you update me about current status? For Honda, what is the meaning of this collaboration with Nissan for Honda?
Thank you for your question. Question one, about China. If the market still stays sour, what would happen? That is the question. Until now, as Honda, we tried to adapt to the Chinese market by having a drastic and speedy adjustment of the production situations. For instance, ICE, we had a 1.5 million car, the capacity before, but we had lots of collaborations for the production adjustments with the two joint venture companies with a high speed. In this term, in June, for the Guangzhou GAC, we decided to stop the line for China. Therefore, we had a capacity of less than 1.5 million cars. ICE and hybrid, we now have a 700+ capacity today. That is the current status of the production capacity.
As for the fixed cost, of course, the capacity is also supported by the indirect cost laborers and so on, and we need to streamline the sales force as well. We have made a lot of progresses in all of those areas. As I said before, currently, Chinese ICE and hybrid market is shrinking, and that is more rapidly, drastically progressing with the shrinkage of the market. Therefore, we do not have the specific measure as yet at the moment, but we will watch out the market situations, and we will keep discussing about the situations with the partner company.
Another thing about China, the utilization of the local suppliers. If you look at the Chinese market, SDVs and advanced technologies developed very fast, and also we can commonize the parts with the suppliers over there, which makes them competitive. The cars, which make the customers in China feel valuable about the cars, that is quite successful over there in their parts.
In order for us to deliver the cars to their satisfaction, it is important, critical, to make a good use of the local suppliers for us. For ICE, the local suppliers can be utilized better. For the next full model change, we are having very good discussions with the suppliers for the next model change. If we can complete those plans we have on the table, we will be able to provide a competitive product for China. For the EVs, we will have more discussions with the partner company and try to utilize their platform, and discussions are evolving at the moment. So we will take advantage of them so that we can improve the lineup of the Chinese market to adapt to the market. This way, we can try to improve the competitiveness of the products for them.
Once we are successful there, it will take another year or so before we become truly successful in reality. Until now, we have to be working very hard. Those initiatives we have at the moment are going on track. The second question is about alliance with Nissan. In 2024 already, even before the possible integration of the companies, we were talking about a possible collaboration, partnership, and SDVs, and we were already talking about possible joint programs, SDV, joint development, batteries, and exchange or sharing of the vehicle platforms. The management integration has been abandoned, unfortunately. Even that, we revisited the electrification efforts. In that backdrop, SDV's importance still is there.
In each of those areas, we would like to work together with Nissan so that we can take advantage of the volume we have from each other. I think this is a very good strategy for both of us. At the moment, we do not have any specific bank I can share. Of course, things go very fast out there. We will try and work harder so that we can give you some input sometime soon. Of course, we like to take advantage of the volume we have and theirs as well, so that we can deliver the valuable product for the markets.
Thank you very much.
Thank you very much, Mr. Mukano. The next question is from Yomiuri Shimbun Newspaper. Mr. Ukita, please.
This is Ukita speaking. Can you hear me? Yes. Thank you. Thank you very much for this opportunity. About the financial results, you say that you have an all-time high profit. What is your impression? I think the foreign exchange impact is large, but the reason for the increase in unit sales. About Kumamoto earthquake, I think the impact is being prolonged. All automobile manufacturers are being impacted. I think that you are targeting for a recovery soon. Can you talk about what would happen if the suspension were to be prolonged? About the first quarter, how we see the numbers.
Yes, we have an all-time high. JPY 530 billion, this is a very powerful number, operating profit. Compared to our plan, though we have not disclosed this, against that plan, it exceeds our original anticipation. For the first quarter, to begin with, in the case of Honda, the development cost and SG&A. It seems to be that it concentrates in the second half, and the numbers tend to be higher in the first quarter. In addition to that, I think the foreign exchange impact. Currently, there has been a joint U.S. and Japan intervention, but there has been a fluctuation. The first quarter, the yen was weaker than we expected. Also, the raw material cost. This again, compared to initial estimate.
From the beginning of this year, we have been seeing that the steel prices and other raw material costs were going up. There was that impact, and the Middle East outlook is uncertain. We were anticipating that there would be inflation. Therefore, in the beginning, we were thinking that there will be a JPY 360 billion cost increase, so this was factored in. In the first quarter, in April/May, there were increase in raw material costs. In June, it started to settle down, and therefore, compared to what we were assuming, expecting, it did not go up as much as we had thought.
Also, the unit sales, as you said, the motorcycle business did well, plus automobile too. As I said, China, we did struggle, but in North America especially, we saw that unit sales increased significantly. The gasoline prices are high now, so the market and customers are trying to switch to low fuel consumption hybrid vehicles. This was an advantage. In April/May, our share increased to more than 10% for the first time in five years.
This also has contributed to the high operating profit in the first quarter. Going forward, the Middle East impact will be seen in various areas, and it is hard for us to predict what will happen. Therefore, do you think that this is as much as we can do? There is no one-time factor. I say, we have to look at what the automobile sales will be like in the United States. July was good, but we have to carefully monitor what will be happening in the U.S. market. About the motorcycle unit sales, India. Last year, the GST, this tax, was cut, and therefore, the market was strong. This is still continuing now. We are thinking that we wanted to increase the numbers more, but because of the production capacity and others, India, we are increasing the capacity.
I think we should be trying to increase it more. Thanks to India as well as Brazil, the economy is stable, and thanks to that, we have increased our motorcycle production capacity in Brazil too. These were the contributors. Now, the second question about Kumamoto earthquake. If I may repeat, I would like to express my sympathy to those who have been affected by the mega earthquake. Our motorcycle plant is in Kumamoto. The impact of the earthquake there. At the time of the earthquake, the sprinkler reacted, and so the plant was soaked in water, and we are trying to recover now. As for the equipment, so far, we don't see that there has been any major damage done to the equipment. Currently, within the plant, they are making the confirmation with safety first. Where we can restart, we are restarting.
As soon as possible, we would like to fully restart operations. About automobiles, in Saitama and Suzuka factories. Unfortunately, our suppliers have been hit by the earthquake, and we are communicating with them right now. Every day, the situation is changing, so we are keeping in close communication to understand when production can restart. There will be a summer break next week. We were originally planning for this summer break. Up until that point in time, we have decided to suspend production, and after the summer break, for about two days, or three days rather, we will suspend operation. During the summer break, up until the 19th, I think we will be getting a lot of information, and based on that, we would like to make the judgment. Thank you.
Thank you very much, Ukita-san.
Thank you.
Thank you. Next, from Kyodo News, Koshikawa-san, please.
Koshikawa-san, are you there? Thank you. Can you hear me? Koshika speaking. Thank you for explanation. Kumamoto earthquake, its impact, could you elaborate a little bit more about it? Saitama, Suzuka plants and your subsidiary auto body had a plan to stop. Specifically, what kind of parts or components affected by that? And the suppliers? How many suppliers have been affected, causing some troubles for the supplies? Other automotive companies, several probably starting up again on the 6th of the month, and then there are some time differences on lives you choose and what is ICR situation for you. Could you elaborate on that please?
Thank you for your question. Further information about it, right, and automotive plants and auto body as well several parts components. We are at the moment checking on the situation. Damper is one of the loose major products affected at the moment. And group company. They had have a chance near the education and I heard that they had a quite a bigger damage on that, and I’m just sure that they’re focusing on the recovery, and we’re searching with each other trying to find out when data will start again. And of course they were very had distracting to restart. And the moment we reduce the kind of difficult that you get precisely inflammation. Same story for us more, but there was not very had on that, and as far as we know at the moment as well.
Even if, until now, we decided that we should stop for a while until the recovery could come and. Situation changes everyday.
And is there any update we will let you know. Thank you very much.
Thank you for the question. This is Sumihiro speaking. Can you hear me? Yes. Thank you. I would like to answer that. Mr. Kawaguchi said that North America is doing well and page seven about the factors intervention to the operating profit.
Well, I'm using that the product says plus. But about incentives. You said that incentives are increasing so I think there must be offset that incentives there are many in North America. I believe hybrid is shown, but I think it might be the incentives that increasing because of committed the competitive market. Can you explain this about the North America. One plus the second question is about the domestic situation. So, let's exhale. There's also doing well and purpose.
You are trying to increase the field but what are the factors scheduling increase, and what is the outlook at the same time? Plus everyone is asking about the Kumamoto and earthquake. I think this happened an impact on sales at this point in time. Can you estimate how much impact will have on unit sales and what you plan to do to recover.
Thank you for the question. About North America, you said the gasoline price, sorry, and therefore the customers wanting to purchase hybrid and even gasoline ICE vehicle, I think that because a few economy is very good, models are popular. About incentives compared to last year for the months themselves are major models change. This is originally planned but from the whole coach of last fiscal year, we have included increased incentives because of the competition with the competitors, and therefore we have tried to compete in terms of sales. Well, this is the incentives as planned.
Well, that fiscal year we had issues of tariffs and there was a special demand coming where people were rushing in but before the tariffs were introduced. So compare to the first fiscal year where you might say you can not see the misty of it but just looking at the first quarter alone.
Even if you look at just the first quarter, you will see, and also from the share perspective and incentive perspective, I think that we have had a very solid result in this first quarter. Going forward, I think that competitors will intensify competition. I think we will try to bring down the incentives as much as possible. Looking at the July actual numbers, I think we are progressing well. The rest is up to the gasoline price. I think the customer's preference will be impacted by half the gasoline prices hover. That is something that we have to look into. About Japan, registered cars, I think that we have exceeded the previous year. Looking at the market, it's about 107% increase year- on- year, and we are saying 108%. I think the market average was 107, whereas we are 108. Registered cars, especially super one.
This model has been very popular amongst our customers. Of course, there was partially the subsidy that has to explain, but it's equipped with boost mode, and it's very Honda-like. The fans appreciate the EV because of its Honda identity. The Vezel, Step WGN, and Freed, these core models , too. We have carried out sales promotions, and this has been very effective. Thanks to that, we have seen this growth in the domestic market. What about the outlook? This fiscal year, I think that we will carry out model change, which will be appealing to our customers, and therefore, we want to grow sales through these new models. But the BYD Racco is a big topic, and if you look at the details, I think the Chinese have been very conscious about the preference of Japanese customers.
Price-wise, also, it's very strategic, and it is a threat. But looking at it from a different perspective, the Japanese EV market is only about 2%. EV is not that popular. With this new EV player, so to say, it might be that this would have a positive impact on the market. Honda, also, we want to try to introduce different EV models to the Japanese market, and therefore, we want to try to build up the EV market here in Japan. Thank you. About the earthquake impact, how about that? Yes, to be very honest, we don't know how much impact it will have on our unit sales at this point in time. That's our honest position. But I don't think that there will be such a big impact.
But at this point in time, I cannot give you any numbers as to how much impact it will have. Thank you.
Thank you, Mr. Fukui. Next question from Toyo Keizai, Mr. Yamada, please.
Yamada from Toyo Keizai. Thank you for your presentation. Motorcycles, very good. You talked about India, Brazil. They are utilizing the full capacity of the plant, I heard. As for the plans, your unit sales plans is kept unchanged. Is this something you anticipated from the beginning, or is that because of some other reasons behind, such as the scheduling and so on? Not in confidence, for instance. Another question is EV-related losses. In the quarter one, you do not have a full inclusion because of the supplier negotiations still going on. Can we expect some of those losses to be put up in the second quarter onward, or little by little in the second half and onward? What is your plan to handle those losses?
Thank you for your question. Second question will be addressed by Takahashi-san. Motorcycles, the unit sales is really good. Quarter 1, it is better than our immediate plans, our plans at the moment. For the second half, at this moment, we do not have major concerns or anything. Maybe one thing could be the regulations in Vietnam. Since last year, we were talking about the restrictions of those riding of the motorcycles in some areas. However, they have a stepwise approach. Therefore, it is not causing a serious effect on that. The Middle East, no one knows at the moment as to what is the impact to be for the global economy. We have to monitor what is going on, including our motorcycle businesses, we will watch carefully what is going on to update the plans for unit sales. EVs? Okay.
EV-related losses, we announced that in March, and from April, we have many negotiations with them. Talking about what kind of losses are expected from now, and we are still in the middle of the negotiations with them. In the first quarter period, the negotiation went on continually, so we were not able to put it up in the book. Then we had lots of conversation with many suppliers, and then we will have more information. Once we get more confidence in those impact by that, we will be able to put them up as we go. So much of the first half, so much of the second half, and so on. Those will be calculated and factored in into those financial results, stepwise approach as we go. Please understand how we do.
Thank you very much for your explanation.
Thank you, Mr. Yamada.
The next question, please. NHK, Taruno-san, please.
This is Taruno from NHK. Thank you. Can you hear me? Yes, thank you. I also have a question in relation to the Kumamoto earthquake. From the 19th onwards, you say that you will make a judgment looking at the situation. Are you going to look into alternative sourcing, or is it up to As you know that you will make the judgment? You say that you do not know at what point in time the recovery can take place. Am I correct in understanding that that is the current situation? About the other questions about the Forex. I think one of the major reasons for this good result is the currency. I believe that the impact is about JPY 10 billion per one yen fluctuation. Over the past 10 years, it has been going down. The yen is weak, and this is a positive for you.
What is your thinking towards the foreign exchange? If it's a weaker JPY, is it an advantage for you, or is that not necessarily the case? Can you explain? Thank you. About the Kumamoto impact, we are saying we'll resume on the 19th for automotive. As we said, at minimum, we have Tier 1, Tier 2, Tier 3 suppliers who have been affected. We do not know, at this point in time, what the situation will be. We do not have 100% understanding of what the current status is. As far as the information that we have at hand, we believe that at least until the 19th, we should suspend production. That is our current status. If the case where we will have a drastic plan to source alternatively, we have to talk with our suppliers about that.
At this point in time, we cannot say that it will be necessary to source from alternative sources or not. Unfortunately, we cannot say anything definitive. Despite this mega earthquake, everyone is making every effort to try to recover. We also want to keep in close communication with the people there. That is the only thing that we can do at this point in time. About the currency impact, about the sensitivity. In principle, we try to produce where the demand is. Like others, Honda, we are not exporting that much from Japan to the U.S. That is the system that we have. Meanwhile, we have a large profit in the U.S. When we convert this back into Japanese yen on our financial statements, we do see that the numbers are large.
Taking all these things into consideration, we think the sensitivity is between JPY 10 billion to JPY 12 billion per JPY. We say that EV-related losses . We have a lot of American suppliers and payment to these suppliers, because the U.S. denominated compensation will mean that weaker JPY will be a disadvantage for currency, especially in Asia and also motorcycles, Brazil. When we are doing this, it's a different market. For example, from India, we are exporting to different destinations. I think also that also has an impact. We cannot simply say that once the JPY moves from one JPY, then we have a JPY 10 billion impact. It's not as simple as that. There are areas which are good and other areas that are bad. We can offset.
This is what we think is necessary to meet these fluctuations in the currency. That is all.
Thank you. That was very easy to understand.
Thank you, Taruno-san. Unfortunately, because of the time constraints, our next question is going to be the last one. Nikkei Automotive, Tsuchiya-san, please.
Nikkei xTech, Tsuchiya speaking. Can you hear me? Yes. Thank you. Semiconductor supplies DRAM memory, GM and Ford Motor Company have a long-term supply agreement. Recently, AI provides a lot of demands for the memories and so on, but are there risks for the soaring prices or supply risks? Are there any impact on your businesses, and what is your countermeasures in the future for the semiconductors? Thank you for your question. As you said, right now, DRAM and NAND memories. As you know, the cars have meters, ADAS, ECU, display audios, which require semiconductors. Cars will be more intelligent going forward and will need more semiconductors going forward.
As you mentioned, needs for the memories, actually, the needs from the data centers and other businesses are very strong, therefore it is tight. Memory suppliers are trying hard as well to try to keep the good balance of the supply. Probably after the year 2027, the efforts will be more effective in terms of the supplies. For Honda, we try to get a stable procurement based on the various initiatives. For instance, for the automobile legacy memories, let's say, we are quite positive about those legacy type memories, and we would have more dealing with those suppliers of the semiconductor of the legacy ones. We would go for the long-term agreement, where possible. We have many initiatives that are trying to get hold on those semiconductor.
I cannot give you the details at the moment, however, Honda has a good hands with measures to get the supplies. I do not have any problems. We don't have any problems about the procurement of that. However, the cost is soaring, getting more expensive. Because of the supply-demand situation, the memory prices are going up. Right from the beginning of the financial year, we gave you the forecast. We already factored in the additional JPY 20 billion-JPY 30 billion cost increase because of the supply of the semiconductors, and we already know that. Thank you.
Thank you, Mr. Tsuchiya. With this, we would like to conclude our briefing session. As for the materials that we've used, they are posted on our website for you to refer to. Once again, we thank you for your participation.