Interview with The President

Solid Start Toward Achievement of Medium-Term Management Plan Targets

Hiroyuki Yanagi President, Chief Executive Officer and Representative Director, Yamaha Motor Co., Ltd.

The following interview provides an overview of the Group’s
overall business results for 2013, the first year under
the Medium-Term Management Plan (MTP), along with a review
of the year and initiatives going forward for individual businesses,
and an explanation of the Group’s management targets for 2014.

In the following interview, the President addresses these key issues:


Please give us an overview of Yamaha Motor’s business results for fiscal 2013,
the first year under the Medium-Term Management Plan.

We achieved sales growth in all businesses.

Looking at the global economy in 2013, the United States posted a significant recovery and there were major expectations for a recovery in Japan as well. However, European economies remained sluggish and growth appeared to stall in emerging markets in Asia and Central and South America. Against this backdrop, the Yamaha Motor Group made a comprehensive effort to achieve sustainable growth in terms of business scale, financial strength, and corporate strength as outlined in the Medium-Term Management Plan (MTP), which sets fiscal 2015 Group targets of ¥1,600.0 billion in net sales and ¥80.0 billion in operating income (for an operating income margin of 5%).

In fiscal 2013, the Group recorded a 16.8% increase in net sales, to ¥1,410.5 billion. Net sales rose in all business segments, on increased unit sales of motorcycles in Indonesia and India and outboard motors in North America, coupled with the impact of yen depreciation.

Operating income totaled ¥55.1 billion, a ¥36.5 billion increase from fiscal 2012. This reflected improved earnings in the marine products business and cost reductions in the motorcycle business in emerging markets, as well as yen depreciation. Ordinary income and net income rose significantly, with a ¥32.8 billion increase in ordinary income, to ¥60.1 billion, and a ¥36.6 billion increase in net income, to ¥44.1 billion, which included the additional recording of deferred tax assets at overseas subsidiaries.

Our financial position remained stable, with a net debt-equity (D/E) ratio of 0.7 times, unchanged from the end of the previous year, and a 1.5 percentage point improvement in the shareholders’ equity ratio, to 33.5%.

Sales and Operating Income by Business Segment

2013: Operating income: motorcycles bottoming out, large improvements in marine products

2014: Increases in sales and income for all business segments

Sales and Operating Income by Business Segment

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In addition to strengthening our motorcycle product lineup, we are launching unique, cost-competitive new products in Asia for global markets.


What initiatives are the motorcycle business pursuing in developed markets?

We are working to further enhance our product lineup.


Yamaha’s motorcycle shipments in developed markets had been declining since the global financial crisis, but turned around in 2013 to a 6% increase from the previous year, to 370 thousand units. New product launches included the new 950cc BOLT cruiser in North America, the new 850cc, three-cylinder MT-09 sports bike in Europe, and the Majesty S, our first 155cc sports commuter in Japan, and all three of these models recorded solid sales.

In addition to this solid progress under the MTP, which emphasizes new product development and enhanced product strength, there was a positive effect from yen depreciation, and I am pleased with our improved earnings.

Looking ahead to 2014, we expect the size of the market to be flat with 2013 in Europe, and to grow in Japan and North America, and are forecasting an 11% increase in Yamaha Motor’s shipments, to 410 thousand units.

We will strengthen our product lineup in 2014 by continuing to proactively release new models like the MT-07 from 2013, highlighting their high performance, light weight, low fuel consumption, and superior design.

Motorcycle Business: Developed Markets

2013: Yamaha sales at 370,000 units/106%. Decline bottoms out, recovery in progress
Japan: 115%; North America: 99% (first half); 118% (second half)
Europe: 89% (first half); 113% (second half)

2014: Overall demand increases in Japan and North America. In Europe, figures are similar to last year. Yamaha forecasts sales of 410,000 units/111%

Motorcycle Business: Developed Markets

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What about the motorcycle business in emerging markets?

We are working to expand our business, focusing on India and Indonesia.


With slowing economies and fiscal tightening, the lull in emerging economies’ motorcycle markets continued in 2013. Nevertheless, we enhanced our product competitiveness with new model launches, and sales grew in all markets with the exceptions of Thailand and Vietnam, which were affected by economic slowdowns. The growth was led by solid scooter sales in India, and sales in Indonesia, which is experiencing a recovery in demand. Cost reductions and yen depreciation also contributed to improved earnings.

In terms of sales, we beefed up promotional events, including large-scale test-drive events in Indonesia and India. We also strove to provide even greater value-added solutions, we added to our sales network, and we pursued marketing activities that aim to create a “Yamaha world.” On the production side, we moved forward with preparations for the start-up of a new factory in Chennai, India (scheduled for October 2014).

By market, initiatives for 2014 will include strengthening our position in the scooter category in India with additional launches of new models, including the CYGNUS α, and creating demand by introducing new models in the deluxe category. With the new factory in Chennai scheduled to commence operations in October 2014, we will work to cultivate markets and customers and expand sales from cities to the countryside.

In Indonesia, where demand is recovering, we will strengthen our position in the sports category by launching the R15 in addition to the GT125, to offer new value.

For the entire ASEAN region, we will also release global models and develop new platform models featuring next-generation engines. We plan to release the R25 superbike that you can ride every day, and the TRICITY, which offers both a lightweight, sporty drive as well as a feeling of stability. These models will offer unique features in terms of being high performance and lightweight with low fuel consumption, combined with a superior design and cost performance, and we will strive to cultivate new customers by promoting these models beyond Asia to the rest of the world.

Motorcycle Business: Indian Market

2013: Overall demand recoveres after 3Q, 14.34 million units/104%
Yamaha sales is set at 650,000 units; domestic:133%; export:136%

2014: Forecast of overall demand at 15 million units, with Yamaha sales forecast at 830,000 units/127%

Motorcycle Business: Indian Market

Motorcycle Business: Indonesian Market

2013: Overall demand turns upward after down-payment restriction, with sales of 7.74 million units/110%. Yamaha sales also increases, with sales of 2.49 million units/103%

2014: Forecast of overall demand at 7.8 million units, with Yamaha sales forecast of 2.6 million units/104%

Motorcycle Business: Indonesian Market

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We are aiming for further revenue and profit growth in marine products, building on  improved earnings in 2013.


What initiatives are being pursued in marine products?

We are working to further increase earnings.


New model launches in 2013 included the F200F and F150C large outboard motors, as well as the Helm Master outboard motor control system jointly developed with Volvo Penta. With strong demand for these types of large models in North America, sales grew. The previous year’s solid sales of personal watercraft continued as well, and the domestic boat business benefited from an invigorated market and the weaker yen. Earnings showed a significant improvement as a result, and the marine products business once again achieved profitability.

In 2014, we will accelerate our new product launches for outboard motors in developed markets, and reduce costs by moving production of small outboard motors from France to Thailand, optimizing the geographic location of manufacturing. In China, we aim to enter the fishing boat market and have a new local factory scheduled to start production, and are targeting further sales and profit growth based on an integrated marine products growth strategy.

Marine Products Business

2013: Profitability and revenue improve, with notable gains in the operating income ratio. Sales of outboard motors in North America increase due to new product launches (200 H.P. models, etc.)

2014: Aiming for further increases in sales and income

Marine Products Business

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What are your activities in other businesses?

Earnings are improving as we introduce new products and win new customers.

Recreational vehicle business

In 2013, Yamaha Motor introduced a new type of recreational off-highway vehicle (ROV), the three-person VIKING. With this start, we intend to revitalize our powerful lineup through continuous launches of new products over the next five years.

In snowmobiles, sales in Russia increased and business efficiency improved through tie-ups with other companies in North America, and the new SR VIPER, produced under an OEM* arrangement, also contributed to increased sales. Going forward, we plan to revitalize our strong product lineup with products that offer high performance and reliability.

These efforts will expand our customer base, thereby establishing a stable earnings structure for the business.

* OEM: original equipment manufacturing

Smart Power vehicle business

In the area of electrically power assisted bicycles (PAS), Yamaha Motor released a new model in 2013 that was an industry first with triple sensors, and this combined with activities to attract a broader range of customers led to a large increase in units sold in Japan. We also developed the lightweight, compact E-Kit drive system for the European market, and are expanding our business tie-ups with overseas manufacturers to lay the groundwork for future sales growth.

In 2014, we will continue to release models with improved functionality and ease of use in Japan, and expand our network of partners in Europe.

Recreational Vehicles Business

2013: Yamaha reaches sales of 89,000 units/91%, an increase in sales of 127%

  • ROV: Work towards rebuilding a strengthened lineup by continued product introductions
    over the next 5 years
  • Snowmobiles: New product introduction through OEMs, sales increase in Russian market

2014: Yamaha forecasts sales of 96,000 units/108%, increase in sales of 116%

Recreational Vehicles Business

SPV Business (PAS)

2013: Yamaha sales of 230,000 units/122%

  • Domestic: Introduction of a triple sensor, new demand development
  • Europe: Business tie-ups with 3 to 4 companies
    (with several more expected), expansion preparations in progress

2014: Yamaha forecasts sales of 280,000 units/121%

SPV Business (PAS)

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What progress was made in the area of management reforms during 2013?

We moved forward with global business restructuring and cost reductions.

The MTP identifies both increasing earnings strength and expansion of the business scale as equally important issues, and we are building on the work begun under the previous MTP to restructure our developed markets business. We have consolidated and realigned our domestic production structure to eight factories and 16 units as of the end of 2013, from 12 factories and 25 units at the end of 2009. We have also made progress in restructuring our business organization in Europe.

In terms of cost reductions, our target for the three years from fiscal 2013 under the MTP is for ¥90.0 billion. We are working toward this goal with market-specific design at our integrated development centers in ASEAN and India, and at the same time we have reduced procurement costs for platform parts. As part of our strategy to build strategic partnerships, we have set up a joint venture with KYB Corporation for the development and production of suspensions. We will continue to pursue proactive cost reductions in 2014.

Cost Reduction Strategies: “Change Global Manufacturing”

Cost Reduction Strategies: “Change Global Manufacturing”

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What is your long-term strategy?

We want to provide a growing world of personal mobility.


The Yamaha Motor Group is pursuing new business segments by introducing new concepts in personal mobility. The exploration of a growing world of personal mobility has led to an expansion of technologies and customers from two wheels to three and to four, and we are positioning this as one part of our long-term development strategy for new businesses.

In 2013, we developed the leaning multi-wheel TRICITY concept three-wheeled commuter, and we are working toward a 2014 market launch. Further building on the multi-wheel concept, we are researching and developing the small four-wheeled MOTIV, which we exhibited at the Tokyo Motor Show.

Going forward, we will pursue original and innovative concepts, technologies that achieve superior performance and functionality, and design that expresses refined dynamism, incorporating Yamaha’s unique engineering, manufacturing, and marketing, to vastly expand the world of personal mobility.

Cost Reduction Strategies: “Expand Global Procurement and Supply”

Cost Reduction Strategies: “Expand Global Procurement and Supply”

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What are your management targets for fiscal 2014, relative to the achievement of the MTP?

We are aiming for an operating income margin of 5% one year earlier than planned.


The current MTP covering the three years from fiscal 2013 through fiscal 2015 sets fiscal 2015 targets of consolidated net sales of ¥1,600.0 billion and an operating income margin of 5% (operating income of ¥80.0 billion), along with expanding the Group’s business scale and enhancing its financial strength and corporate strength.

The current operating environment includes a continuing trend of yen depreciation relative to developed market currencies, but also concerns of a delayed economic recovery in Europe, and economic slowdowns and weaker currencies in emerging markets. In fiscal 2014, the second year under the MTP, we will address these changes in the operating environment and supplement our business strategies with a close eye on the economic situation and product demand in each market, as we work to achieve the MTP’s targets ahead of schedule.

We are forecasting an increase in consolidated net sales in fiscal 2014, from aggressive new product launches in motorcycles, marine products, and power products. We are also projecting profit growth, with sales growth and cost reductions more than absorbing increased outlays for the future in the form of R&D expenses and selling expenses.

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Would you give us more detail with regard to returns to shareholders?

We will maintain stable returns to shareholders, based on an increase in net income per share.

Yamaha Motor’s management places a priority on increasing benefits to stakeholders, and operates businesses around the world from a global perspective in an effort to increase corporate value. In terms of the dividend, we strive to maintain a minimum payout ratio of 20% of consolidated net income while maintaining a balance between proactive investments for growth with returns to shareholders and the repayment of borrowings, as part of a comprehensive judgment that also takes into account business results, retained earnings, and other management issues. Management also looks at ROE (return on equity) and ROA (return on assets) as important indicators for maintaining a balance between proactive investments for growth and stable earnings with returns to shareholders—the most important aspects of our financial strategy.

We intend to maintain stable returns to shareholders going forward.

2013 Dividend and 2014 Consolidated Results Forecast

2013: Paid annual dividend of 26 yen per share (payout ratio: 20%)

2014: Forecasting net sales of 1.5 trillion yen, with operating income of 75 billion yen and annual dividend of 26 yen
Reinforce business strategy and build on achievement of MTP

2013 Dividend / 2014 Forecast Consolidated Results

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Do you have any message for stakeholders?

We will continue to raise Yamaha Motor’s profile around the world with unique engineering, manufacturing, and marketing.

The growth in the Yamaha Motor Group’s fiscal 2013 business results reflects our continued pursuit of management reform, and the entire Group working together toward the achievement of the MTP. I still believe, however, that the sustainable growth that these efforts will produce is just beginning.

The global “Revs your Heart” brand message that we announced with the launch of the current MTP represents our strong determination to use uniquely Yamaha concepts to continue to provide value and Kando that exceed customers’ expectations.

The Yamaha Motor Group will continue to pursue sustainable growth in terms of business scale, financial strength, and corporate strength by acting with speed and a spirit of challenge and persistence, to raise Yamaha Motor’s profile as a company with unique engineering, manufacturing, and marketing. I ask for the continued support of our stakeholders in this endeavor.

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