Yamaha Motor Integrated Report 2020

We will overcome the challenging external environment and aim to create prosperity and happiness for people while working in harmony with society and the environment.Overview of Fiscal 2019In fiscal 2019, ended December 31, 2019—the first year of our current three-year Medium-Term Management Plan set to conclude in fiscal 2021, net sales increased in the Marine Products and Financial Services businesses but fell in the Land Mobility and Robotics businesses (excluding the impact of M&As), resulting in an overall net sales decline. Despite an improvement in profitability thanks to 1) structural reforms and heightened operational efficiency at factories producing developed market motorcycles in Europe and our headquarters, and 2) more premium-segment motorcycle models in Indonesia, operating income also contracted over-all due to the aforementioned decrease in net sales in the Robotics business and other segments, an increase in expenses for implementing growth strategies, the impact of foreign currency exchange rates, and other factors. Our Medium-Term Management Plan was rolled out look-ing to achieve earnings by securing and improving the prof-itability of existing businesses and then making investments and embarking on challenges for future growth. However, balancing these differing goals has proved difficult. Excluding the expenses for strategic growth and the impact of foreign currency exchange rates, we were able to secure earnings on a par with the previous fiscal year for the former, but were unable to achieve the results we wanted. However, we succeeded in sowing various seeds for the latter. The Medium-Term Management Plan’s policies are to further advance the growth strategies we have pursued thus far and allocate the management resources to accelerate them. However, we currently have not been able to raise the performance of our existing businesses to the extent neces-sary to facilitate this. With our results for fiscal 2019, expenses for corporate growth and reinforcing our business platforms proved to be a burden and the increase in expenses greatly exceeded the rise in marginal profit.Looking at individual businesses, we saw an improvement in earnings with developed market motorcycles in the Land Mobility business from greater unit sales in Europe and the accompanying increase in marginal profit at our headquar-ters. However, profits declined in the emerging market motorcycle business due to falling unit sales in Vietnam, Taiwan, and India stemming from the market and competi-tor environment, and the impact of issues with logistical operations in the Philippines. In addition, during the current Medium-Term Management Plan, we will move toward implementing specific measures for structural reform in the developed market motorcycle business, an issue present since the Lehman Brothers bankruptcy triggered the 2008 global financial crisis.In the Marine Products business, the shift toward large outboard motors continues and while net sales proceeded broadly in line with our expectations, profits fell due to the heavy impact of foreign currency exchange rates. In the Robotics business, sales increased due to the estab-lishment of Yamaha Motor Robotics Holdings Co., Ltd. (YMRH) through the business integration of Yamaha Motor, SHINKAWA LTD., and APIC YAMADA CORPORATION in February 2019, but lasting stagnant market conditions from U.S.–China trade friction led to a significant decrease in profits. Furthermore, in April 2020 we converted YMRH into a wholly owned subsidiary. Going forward, Yamaha Motor will expedite post-merger integration (PMI) and raise YMRH’s management speed to create a more integrated manage-ment channel with the Company from which to improve the Robotics business’ profitability as a whole. 11Yamaha Motor Co., Ltd. Integrated Report 2020

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