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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
We would like to begin our fiscal year 2019 second quarter results presentation. We would like to first review the financial summary for the first half of fiscal year 2019. Operating profit was JPY 513.8 billion, achieving an increase by 21.7% compared to the same period last year. Despite the negative impact of ForEx effects, the increases in motorcycle sales in Asia, the effects of the cost reduction efforts and the reverse effect from the loss related to the litigation settlement in previous fiscal year have contributed to the rise in the operating profit. Profit for the period attributable to owners of the parent was JPY 455.1 billion, an increase of 19.3% compared to the same period last year. I would now like to review Honda's business results for 6 months in some major markets around the world.
In Japan, automobile sales totaled 346,000 units, a 4% increase compared to the same period last year. Cumulative sales of the N-BOX series model for the 6-month period reached the 117,000 units, with the N-BOX successfully becoming the best-selling model in Japan for the first half of fiscal year 2019. In August, the new CR-V was launched, and the total initial number of orders received in 1 month after the launch surpassed 5,000 units. In the U.S., light truck sales came to 459,000 units, an increase by 7.6% compared to the same period last year, thanks to the rise in sales of the Pilot and other models. The Civic has been the top-selling model in its segment for 22 months in a row as of September 2018.
With the restoration from the flooding damage underway, the Celaya plant in Mexico has already restarted production and full production is planned to begin in mid-November 2018. In China, the Civic has rewritten monthly unit sales records for 3 months in a row from July 2018, and its cumulative sales for the 6-month period came to 111,000 units, an increase by 25.1% compared to the same period a year ago.
In September 2018, the new Crider was launched. In October 2018, introduction of the new Inspire was announced. We will now take a look at Asian countries that are the main markets for motorcycles.
In India, motorcycle sales totaled 3,296,000 units, marking an increase by 4.8% compared to the same period last year. In October 2018, Honda in India announced a plan to increase motorcycle production capacity. With the construction of a new production line, annual production capacity will increase by 600,000 units, reaching a cumulative annual total of 7 million units by 2020. In Vietnam, Thailand and Indonesia, the new PCX Hybrid model was launched. This is the world's first mass production motorcycle model equipped with a hybrid system. I would now like to touch on some of our most recent news topics.
In October 2018, Honda reached an agreement with Cruise and General Motors to work on jointly developing shared autonomous vehicles. Creating consistently customer-oriented designs and product packages and fully utilizing advanced interior and exterior design technologies are some of Honda's strengths, and we aim to draw on them to develop attractive, purpose-built autonomous vehicles for ride-sharing services. In the first half of 2018, the HondaJet was the most delivered aircraft in its class. In August 2018, the deliveries of the HondaJet Elite started. And in September 2018, the HondaJet and the HondaJet Elite received type certification in India, first type certification received in Asian countries. In September 2018, Honda was selected for the second consecutive year as a component of the Dow Jones Sustainability World Index, which serves as one of the key benchmarks for socially responsible investing.
Regarding the profit and loss situation on a cumulative basis for the 6-month period, the company achieved the following results: Sales revenue totaled JPY 7,865.8 billion. Operating profit amounted to JPY 513.8 billion. The share of profit of investments accounted for using the equity method was JPY 118.2 billion. Profit for the period attributable to owners of the parent totaled JPY 455.1 billion. We will now take a look at our financial forecast for fiscal year 2019 on a consolidated basis. By incorporating the increase in revenue associated with volume and model mix and the effects of ForEx fluctuations, we have revised our consolidated results forecasts from our previous announcement as follows: We now expect sales revenue of JPY 15,800 billion. We plan on an operating profit of JPY 790 billion, an increase by JPY 80 billion compared to the previous forecast by incorporating the increase in unit sales for motorcycle operations; a rise in profit, thanks to progress in the initiatives for improving business characteristics in each business operation; and the effects of ForEx fluctuations. We expect the share of profit of investments accounted for using the equity method to be JPY 215 billion. Regarding profit for the year attributable to owners of the parent, we are aiming for JPY 675 billion. The exchange rate set for calculating these projections was JPY 110 to USD 1 for the second half of the year. The average full year exchange rate was also set at JPY 110 to USD 1.
For dividends, as a result of an increase in the operating profit and other factors, the annual dividend for fiscal year 2019 is expected to increase from our previously announced expectation by JPY 3 per share of common stock to JPY 111 per share. The dividend for the second quarter is JPY 28 per share of common stock. We will now provide detailed explanations on the financial results and outlook.
I will first review the Honda Group's unit sales for the second quarter.
In Motorcycle business operations, group unit sales totaled 5,315,000 units. In Automobile business operations, group unit sales totaled 1,246,000 units. In Power Product business operations, group unit sales totaled 1,262,000 units. Regarding the profit and loss situation, thanks to increases in the revenue in Financial services and Motorcycle business operations, sales revenue rose to a total of JPY 3,841.7 billion, an increase by 1.7% compared to the same period a year ago. Operating profit amounted to JPY 214.4 billion, an increase of 40.2% compared to the same period last year, primarily due to an increase in revenue associated with volume and model mix and the reverse effect from the loss related to the litigation settlement in the previous fiscal year, among other factors. The operating margin was 5.6%. The share of profit of investments accounted for using the equity method was JPY 63.9 billion. Profit before income taxes totaled JPY 283 billion. Profit for the period attributable to owners of the parent totaled JPY 210.7 billion, an increase by 21.1% compared to the same period a year earlier. Regarding Honda Group unit sales for each segment, Motorcycle sales totaled 5,315,000 units, a 1.5% increase compared to the same period last year, thanks mainly to a rise in sales in Indonesia and Vietnam, among other countries. Regarding Automobile business operations, despite the positive effects of launching the N-VAN and an increase in sales of the N-BOX in Japan, a drop in sales in North America, due to effects of the flooding in Mexico and a decline in sales of the CRV in China, resulted in a total of 1,246,000 units, a 3.6% decrease compared to the same period last year. In Power Product business operations, an increase in the sales of engines installed on construction equipment in Japan and Europe and other factors led to a total of 1,262,000 units, an increase by 0.3% compared to the same period a year earlier. Cumulative Honda Group unit sales for the 6-month period is as shown.
Regarding sales revenue for the fiscal second quarter, increases in the Financial services and Motorcycle business operations contributed to a total sales revenue of JPY 3,841.7 billion. Cumulative sales revenue for the first fiscal 6 months is as shown. I would now like to provide explanations on the increase and decrease factors that impacted profit before income taxes for the quarter. Profit before income taxes totaled JPY 283 billion, an increase by JPY 40.4 billion compared to the same period a year earlier. Operating profit totaled JPY 214.4 billion. When excluding ForEx effects and the reverse effect from the loss related to the litigation settlement in the previous fiscal year, the operating profit rose by JPY 44.4 billion compared to the same period a year earlier. Despite negative effects from the flooding in Mexico and the rise in raw material prices, this result was primarily due to an increase in unit sales in Motorcycle business operations and steady growth in Financial services business operations. A decrease in the share of profit of investments accounted for using the equity method led to a negative impact of JPY 18.3 billion. Finance income and finance costs resulted in a negative impact of JPY 2.7 billion. Regarding the profit before income taxes on a cumulative basis for the 6-month period, an increase in revenue associated with volume and model mix and other factors led to a total profit before income taxes of JPY 641.3 billion, an increase by JPY 63.6 billion compared to the same period last year. I would now like to discuss results for each business area. In Motorcycle business operations, an increase in volume and the model mix as well as other factors led to an operating profit of JPY 85 billion, a 24.1% increase compared to the same period a year earlier. In Automobile business operations, the impact of the reverse effect from the loss related to the litigation settlement in previous fiscal year and other factors contributed to an operating profit of JPY 69.8 billion, an increase by 78% compared to the same period last year. As for the operating profit for Power Product and other business operations, a decrease in expenses involving the other businesses and other factors led to a total profit of JPY 400 million, an increase by JPY 2.4 billion compared to the same period a year ago. The operating loss for aircraft and aircraft engine business operations, which are included in the Power Product and other businesses segment, came to JPY 9.3 billion, an improvement of JPY 4.3 billion compared to the same period last year. In Financial services business operations, the operating profit totaled JPY 59.1 billion, an increase by 25.3% compared to the same period a year ago, due mainly to an increase in profits associated with higher operating lease revenues. Shown here are the cumulative results over the 6-month period for each business area. We would now like to review Honda's business results for the second quarter by geographical segment.
In Japan, despite the rise in revenue related to volume and model mix, among other factors, an increase in SG&A expenses and other factors led to an operating profit of JPY 27.4 billion, a decrease by 20.2% compared to the same period a year earlier. In North America, despite the effects of flooding in Mexico and other negative factors, the fact that the legal settlement for a class action lawsuit was included in the results for the same period a year ago and other factors led to the operating profit of JPY 53.4 billion, an increase by JPY 54.1 billion compared to the same period last year.
For Europe, despite effects of cost reduction initiatives and other factors, the negative effects of ForEx fluctuations, among other factors, resulted in an operating profit of JPY 0.2 billion, a decline by JPY 2.2 billion compared to the same period a year earlier. In Asia, the positive effects of cost reduction initiatives, an increase in revenue associated with volume and model mix and other factors resulted in an operating profit of JPY 127.5 billion, a 15.7% increase compared to the same period last year. In other regions, which include South America, the Middle East, Africa, Oceania and other areas, despite an increase in revenue related to volume and product mix, among other factors, the negative effects of ForEx fluctuations and other factors resulted in an operating profit of JPY 7.9 billion, a decrease by 33.4% compared to the same period a year ago. Shown here are the cumulative business results for the 6-month period by geographical segment. The share of profit of investments accounted for using the equity method came to JPY 63.9 billion for the quarter, a 22.3% decrease compared to the same period last year, mainly due to the reversal of an impairment loss which was recorded in the same period last year, among other factors.
Consolidated capital expenditures for the 6-month period amounted to JPY 176.5 billion, a decrease of JPY 27.7 billion compared to the same period a year ago. We would now like to discuss Honda's consolidated results forecast for fiscal year 2019.
Incorporating the most recent sales trends, combined total units for the Honda Group sales were unchanged compared to the outlook announced previously.
Projected unit sales are 20,850,000 units for Motorcycle business operations, 5,285,000 units for Automobile business operations and 6,345,000 units for Power Product business operations. The consolidated unit sales forecast for each business segment is as shown here. The consolidated full year earnings forecast, which we explained earlier, is as shown here. The increase and decrease factors for this consolidated fiscal year forecast as compared to the results of the previous fiscal year are as follows: Operating profit, minus JPY 43.5 billion; share of profit of investments accounted for using the equity method, minus JPY 32.6 billion; finance income and finance costs, minus JPY 28.7 billion.
Regarding actual business performance derived by rearranging the order of the increase and decrease factors that impacted operating profit, if the real-term currency effects and temporary influences due to fluctuations in material prices are excluded, a real-term increase of JPY 169.5 billion is projected. Compared to our previous financial forecasts for the current fiscal year, after incorporating the increase in profit due to improvements in business characteristics and the positive effects of ForEx fluctuations, among other factors, an increase in operating profit by JPY 80 billion is expected. Finally, our projected capital expenditures, depreciation and R&D expenditures for fiscal year 2019 are as shown here. This concludes our financial results presentation. Thank you very much for your continued interest in Honda's activities.
Now we'd like to start our Q&A session. When you have a question, please raise your hand. A microphone will be brought to you, and please state your name and your affiliation before you ask a question. Please start.
I am from Nikkei newspaper. I am [ Okada ]. I have an impression that you had very good results. And factors related to the upward revision, I'd like to know about more details. And on -- in your PowerPoint material, Page 36, you talk about revenue, model mix, et cetera. Is it -- could you give us more details? And then also, next to that is a cost reduction and the change of the company standing, and I'd like to know more details. And ForEx impact of the JPY 32 billion, so my -- negative impact could be there from the emerging country currencies. However now, it looks like a positive impact. And could you elaborate on how it happened? And one thing, if we say that there is one risk factor for Honda, that is the sales in China has not recovered yet that much. And any forecast for the future or any countermeasure you're going to take? Please let us know.
So first, about the factors for the upward revision, Mr. Takeuchi?
Yes, so let me talk about overall picture, and then the details will be covered later. In the first half, motorcycles in Indonesia, India and Vietnam, sales volume went up. And thanks to that, group sales went up by 730,000 and in total, 11.6 million units. And in automobile in North America, depending on the demand, we changed the production allocations and sales of light truck increased due to our effort. And group sales, as a result, even though there were some negative impact from the suspension of the products in New Mexico, but the total unit was 2.551 million and operating profit of JPY 513.8 billion, which was close to last year and went up by JPY 90.7 billion, ForEx and then also the class action effect excluded and improved by the JPY 100.2 billion. And then also, expected motorcycle sales improvement and then also some improvement of the structure and then also ForEx impact were factored in, and then we revised up by JPY 80 billion in total. And the details?
So as Mr. Kuraishi said, and let me cover more details. The ForEx impact was about JPY 30 billion. That is mostly from the U.S. dollar. The emerging country currencies, as you know, Argentina currency has been weak a little bit, but it is possible for us to increase pricing in that country. And so -- but most impact is from the U.S. dollar, JPY 30 billion. And model and mix -- revenue and model mix difference, and as was explained, due to the volume increase of motorcycle, that profit increased, too. And the Financial services business was positive due to the -- some change in the residual value. The profitability improved a little bit. And then also, the long-term effort for the cost reduction, now we are getting some actual fruits from that.
About the China market situation in 2018, first quarter, overall China market maintained higher number than last year. However, at the beginning of the year, 3% increase growth was expected, but -- towards that. In total, the passenger car, 17 million units sale, that was lower than the original expectation. However, including the GDP, the growth ratio is 6.8%, which is close to the originally planned GDP by the Chinese government. So recently, there are -- were some actions taken by the United States, and that affected a little bit in the second quarter, and the market has slowed down slightly. However, now we are going toward the Christmas high sales season. And still, overall market, compared with last year, the plus 3%, and total volume would be around 30 million units. For Honda 2018 actuals, affected by dilution issue, first quarter, 965,000 units, which was 93% of same period last year, but that is almost in line with our plan. And at the beginning of the year, there was a temporary impact from the dilution for CR-V, but the new Crider and new Inspire new models to be launched in the near future. Crider, we already started selling, and they were very well received. And CR-V dilution impact, it took more time than we thought, however, September, October, and we got the order over 15,000 units. And April, new Accord. And September, new Crider. And October, new Inspire announced. And by enhancing the new model launching, as Honda, we'd like to achieve the same level of sales as last year, and we believe that -- firmly believe that it will be possible to achieve.
Next question, please.
[ Morika ] from Toyo Keizai. I have 2 questions. One, this is my usual question. You have up revised your expectations now, but based on the results of the first half, it feels like you have modest expectations for the second half. You're aiming the same level in China, too, and you are seeing the results of the cost reduction now. You might have to up revise expectations again after the second half, I believe. I know that expenditures might be concentrated in the second half, but a JPY 790 billion expectation, what is the rationale behind it?
So let's talk about the gaps between the first and second half. As full year expectation, JPY 790 billion; and JPY 513.8 billion in the first half and the second, JPY 376.2 billion. The gap between the 2 is JPY 240 billion. As you said, R&D and SG&A expenditures are usually generated differently in the second and first half because we have more events in the second half, and development may focus on the next summer. We have more development in the second half, and we have to get as much as JPY 150 billion. Usually, this is not that big. However, this time, we have plans that is concentrating in the second half. Other than that, we have more units out in the second half. We have some unclarity as yet. We said we had a plus effect of the residual values in the finance areas. We stay conservative, trying to estimate the second car values, that is also impacting on the second half numbers and the incentives planned for the second half as well. CR-V is well taken up in the second half, whereas we need to address RAV4. Altogether, we have a gap of JPY 240 billion at the moment.
And this is another question. The other day, you talked about alliances with our -- GM Cruise. And I have additional question to you about your alliances and you invest in the GM Cruise with quite a lot of money. And I think it is rather rare to see the alliances will have that much of investment to be done over 12 years. And what is the meaning of the investment in this scheme? And there was a Softbank and Toyota Motors announcement the other day. And apart from that, your company has a deep relationship with Softbank as well. You have collaboration as well. Do you have other collaboration opportunities with Softbank? And how do you take the alliance by others?
Speaking of the alliance with GM, we have a basic purpose. One is Honda has a vision to achieve early about 0 accident and 0 emission of CO2, and this is one of the steps for that. And also, in the North American market, the unmanned ride-share business is expected, and we can enter in that business. And in North America, we can expect the benefit for the ZEV credit. We have 3 expectations in the alliances, and we've discussed within ourselves, and we decided that it is quite possible to have those large investments paid back. So we made a decision. In terms of Softbank, for the businesses around the unmanned ride-share, we decided to work with GM Cruise. So as Honda, we would like to collaborate with others, and we also concentrate our business efforts in the areas where we are good at, differentiating the -- and whenever we find a very good vision for the customers and where we offer new values for the customer or to achieve the new visions, we are willing to collaborate together. But we have an exclusive contract with GM Cruise, and apart from that, we have alliance programs with Softbank already.
I am from Asahi Shimbun newspaper. I am [ Takahashi ]. Regarding the financial announcement on Page 22, SG&A and some decreased profit and factor and you say that the quality-related costs. And can you elaborate on that? And then also, the next question is not directly related to your financial results, but the new NAFTA. So with the part procurement ratio within the region to be changed, new NAFTA or the -- I mean, the USMCA, the part procurement ratio change, how do you perceive that change?
The first, about the Page 22, the 3 months period year-on-year, right? And under the SG&A, that includes the quality-related cost. One type is the standard type of claim. When we sell cars to customers, there is the expected claim cost. And there's another type, which is special type of claims for recall campaign or like product updates, a little bit different from the standard type of claims, but it's a special type of claim. These 2, both of them, are included under the quality-related costs. Compared with last year's number, this year, we are seeing, as announced, that we are seeing the higher quality-related costs. And there were special meaning, special types of claims, but there were one large-scale this time that was posted.
About NAFTA, in North America, there are 3 countries, and the scheme or framework was maintained. And hearing that, we, honestly speaking, we were relieved to hear that. But compared with the original regulations in NAFTA, in particular for the automobile, the rules of origin, so the new rules are much more stricter than the conventional NAFTA regulations. But in any case, so we are not required to achieve these immediately right after the start, but we are given for a 5-year period. Now we are going to review the details. But as Honda, in the future, we are not planning to change the current scheme. But based on the requirement we are given, we'd like to look for the way to how we can exercise our strength.
Kawaguchi from Yomiuri Shimbun newspaper. A question about trade, about the U.K. So we don't know how the Brexit will end up in March, but in terms of the plant in the U.K., well, some companies say that they will have to stop the production there. But what is your prospect?
So speaking of the Brexit, at the moment, post-Brexit tax system and trade conditions are not clear at the moment. So therefore, we need to keep watching out what's going to happen as of now. So at the moment, we do not have an idea to drastically change the current scheme.
[ Igarashi ] from Asahi Shimbun newspaper. Speaking of the NAFTA, the earlier question, in the future, future production in Mexico might be transferred to Japan, but do you have any plans in relation to NAFTA? Speaking of the U.S.-China trade frictions, how do you see the situation today? What is your perspective in the mid- and long-term perspective?
Speaking of the NAFTA, as I said earlier, as of now, we are not going to change the current scheme or would not change the supply at the moment due to the change of the NAFTA now. We will keep thinking for the best allocations globally. However, we would not change the allocation programs due to NAFTA. Speaking of the U.S.-China situations, so at the moment, in China, our basic stance is to produce the product in the market where the consumption exists. That has been our operations style for long. Therefore, in China, we sell the product, which are almost 100% manufactured in China. We have some units of Acura. However, the volume is small, therefore, it would not have an impact on overall situation. And from China to the U.S., there is no big impact for Automobile business, but for motorcycles and power generators, actually, those products are sent over to the U.S. However, we do not see the impact on that business. We will consider its impact in detail going forward. But basically, we have a concept which is to produce the product in the area or market where the demand exists. Therefore, this would not cause a big impact on businesses. However, for each area, we might see the impact, therefore, we would look for the best solution for each of that.
I'm Okamura from Automotive News. About the North America, a little bit off the track from the financial announcement, there are, like China, the CR-V issues are surfacing in America. To resolve these CR-V issues, what kind of amount you are estimating to resolve this issue in total? And there's some articles saying that Honda's countermeasures are kind of behind schedule. And how long would it take? And is there -- do you have any time frame to finish everything?
Well, as of today, as China, so this issue happens -- occurs in the cold region, in -- mainly in northern region, that are seeing the engine oil level increasing in CR-V. But unlike China, the customers basically are just seeing the caution indicated, and this does not stop the engine itself. So therefore, we take actions or measures based on the request from customers so far. And from now on, also, depending on the situation, we would like to deal with this issue. But so far, we have not seen big volume of cars which had that problem. But in any case, we'd like to take very quick -- quickly take action in order not to negatively affect our customers. Then about the cost and expense-related quality, we are not -- we can't disclose the details of each.
This is going to be the last question.
Nihon Keizai Shimbun newspaper. My name is [ Furukawa ]. I have 2 questions. You have resumed your operations in Mexico. And earlier, you said that you were going to deliver the production in the month of November. Have you accelerated the restart time? The other question is that in North America, as sedan market is dropping as compared to the total market, and petrol prices are going up. And you have been making the tremendous effort to sell Accord and Insight Hybrid. However, are you getting the momentum of those?
Speaking of the Mexico, as I said earlier, we are aiming to restart full-scale production in the middle of November, and we have actually -- we started our production in -- on the 23rd of October. And the reasons behind are as follows. When we first looked at the damage at the line, we thought it would take longer time to recover. However, cleaning technology have advanced as compared to the situation in Thailand. Therefore, for many of the parts of facilities, we didn't have to replace. We simply cleaned and washed and repaired for the resumption of the operations. And then we, in result, spent JPY 10 billion less for the repair and resumption of the production. And then as planned, we will be able to start the full-scale operations in the middle of November. Speaking of Hybrid, we have launched a 2-motor Hybrid Accord. Customers appreciate the model very much, and we are making good sales of the product as planned. However, well, although we achieved the volume as expected, however, it would be difficult to go more than that, not because of the Hybrid support, but because of the gasoline prices, light truck market, that comprise 70% of the total market in the space today. However, many customers or increasing number of the customers wish to have the Hybrid models, specifically in the state of California. There are benefit of owning Hybrid models, and we have launched Insight, and we are making the sales as planned.
Thank you very much. This is the end of the Q&A session.