Yamaha Motor Integrated Report 2020

From the Director, Chief General Manager of Corporate Planning & Finance CenterThrough management that places greater emphasis on the balance sheet and capital efficiency, we will restore the earnings power of existing businesses and aim to realize our growth strategies.Review of Fiscal 2019The Company has made balancing within the range of its cash flow investments for new growth and returns to shareholders as its standard financial policy. However, in order to realize our Long-Term Vision of “ART for Human Possibilities” announced at the end of 2018, we are more conscious than ever before of growth-oriented capital allocation.In fiscal 2019, the first year of the current three-year Medium-Term Management Plan, the New Venture Business Development depart-ments as well as various existing businesses worked proactively to explore new fields of business. Up until 2018, we had been unable to use all the funds allocated for strategic growth investments, so we have made progress in this regard. On the other hand, we saw signs of stagnation in some existing businesses that are essential for gener-ating the cash necessary for these growth investments.Free cash flow was a higher ¥19.5 billion, in part due to the effect of stricter inventory management compared with 2018. Nevertheless, we were unable to reduce our inventory levels as initially planned and must therefore carry out more meticulous management of working capital.While ROE was 11.1%, down 1.2 percentage points versus our initial target, this was due to missing our target for net income ratio, one of the components of ROE. In other words, our earn-ings power was weak. In particular, the impacts of the Robotics business and motorcycle business in ASEAN markets—which are generally highly profitable—were significant. Although the pri-mary cause of stagnation in the Robotics business was a worsen-ing of market conditions, it was a decline in competitiveness and operational weaknesses in some regions that became an issue for the motorcycle business in ASEAN markets.Tatsumi OkawaDirector, Senior Executive Officer, Chief General Manager of Corporate Planning & Finance CenterPolicy for Fiscal 2020First and foremost, our priority is responding to the global COVID-19 pandemic. To prepare for uncertainties in the business environ-ment, we will ensure that we have sufficient liquidity on hand. To that end, we decided not to pay an interim dividend in 2020. We will keep a close eye on the recovery of each market while control-ling the implementation of investments and expenses more strictly than usual. However, we will follow a basic policy of equally engag-ing in both offensive and defensive tactics by remaining exhaustive in our assessments of new opportunities that are already beginning to emerge as we move toward a post-COVID-19 world.Based on that policy, we will bolster the earnings power of our existing businesses, which has been an issue since 2019. Specifically, in the motorcycle business for ASEAN markets, we will train particular focus on reinforcing marketing and brand strength and augmenting our logistics capabilities to overcome the weaknesses we have. Furthermore, we will expand to all regions of the ASEAN market and India our premium model segment strategy that is start-ing to take hold in Indonesia. In the Robotics business, we will lever-age the conversion of Yamaha Motor Robotics Holdings Co., Ltd. (YMRH) into a wholly owned subsidiary in order to accelerate struc-tural reforms for unifying the Group and prepare for market recovery.In carrying out our growth strategies, we will narrow down candi-dates for resource allocation by fully utilizing the findings to date from our explorations for new business areas, and then make sound investments of management resources and strive to reap the rewards of those investments. At the same time, we will clearly specify fields for growth for existing businesses in order to develop both fronts.Toward Sustainable Growth30Yamaha Motor Co., Ltd. Integrated Report 2020

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