Basic policy for financial strategyUnder our Medium-Term Management Plan, Yamaha Motor is renewing the challenge of achieving ¥2 trillion in annual net sales while pursuing continued growth of our existing businesses and the development of new businesses. As benchmarks for a stable financial foundation, we are aiming for an operating income margin at the 9% level while maintaining an equity ratio of at least 40%. “Balancing investments for new growth and returns to shareholders, within the range of our cash flow” does not represent a major change in our financial policy. The previous Medium-Term Management Plan also called for “promoting growth strategies,” but even when the financial resources were in place, we were unable to follow through completely in terms of both expenses and investments. This was mainly because we did not sufficiently narrow down the growth areas to pursue, but we did proactively search for and cultivate new areas. In fact, after establishing a venture capital company in Silicon Valley in 2015, each operating division considered many proposals and learned many things, and investments grew.Therefore, as we formulated the current Long-Term Vision, we held discussions at the global level and made our goals clear. Our organization and funds have begun to operate at a global level, so that investments, including for mergers and acquisitions, are carried out quickly. We are allocating financial resources for growth more concretely and more proactively than in the past. We are also strengthening the management base that will be the platform for growth, and pursuing a digital transformation.In terms of the financial resources underlying these initiatives, we have increased our investment budget to an aggregate of ¥70 billion for research and development and ¥140 billion for investments including mergers and acquisitions over three years.With regard to returns to shareholders, we seek to maintain a stable and continuous dividend with a benchmark payout ratio of 30%, and going forward, we will also proactively consider a total return ratio and the indicator known as TSR (total shareholder return). In addition, from the perspective of making efficient use of shareholders’ equity, we are designating return on equity (ROE) as an important management indicator, with a benchmark of maintaining ROE above the cost of capital at roughly 15%.We will also proactively expand the financial services business with a funding strategy of using leverage. The business currently operates primarily in Australia, Brazil, Canada and the United States, and has grown to having an outstanding receivables balance totaling roughly ¥300 billion. Under the current Medium-Term Management Plan, we aim to expand the business to Europe and other regions, and to increase our outstanding receivables balance to roughly ¥450 billion.Message from the Director, Chief General Manager of Corporate Planning & Finance CenterWe will balance increases in investments for new growth and returns to shareholders within the range of our cash flow while maintaining and reinforcing the earning power of our existing businessesTatsumi OkawaDirector, Senior Executive OfficerChief General Manager of Corporate Planning & Finance CenterCash flow investment strategyCash-inCash-inCash-outCash-out2016–20182019–2021Net incomeNet incomeStock dividendsIncrease in borrowingsStock dividendsDepreciationDepreciationCapital expenditureCapital expenditureAccounts receivable in financial servicesWorking capitalWorking capitalIncl.growth expensesGrowth investmentGrowth investmentYamaha Motor Co., Ltd. Integrated Report 201831
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