Direction of Our New Financial StrategyFor our budget for growth strategies in the current Medium-Term Management Plan, we had apportioned ¥70.0 billion for research and development expenses and ¥140.0 billion for investments, including M&As. However, the COVID-19 pandemic has made securing these funds difficult. Nevertheless, as our policy and general direction of allocating cash earned through existing busi-nesses toward new business fields will remain unchanged, we must develop and implement a financial strategy that places greater emphasis on cash flow and the balance sheet in each business.As new metrics for this strategy, we introduced the cash con-version cycle (CCC) and a simplified return on invested capital (ROIC) calculation as important key performance indicators (KPIs). We commenced full-fledged CCC-based monitoring from 2019, and approaches focusing on cash flow generation are already becoming widespread among business segment and regional management. While ROIC is primarily utilized as an indicator for companywide portfolio management, we will be applying it to each business to increase capital efficiency.Through these initiatives, I would like to change to a manage-ment style that puts together a balance sheet under a clear financial strategy, rather than a style that is the result of the balance sheet.Increasing Corporate ValueYamaha Motor is a multi-industry conglomerate under a single brand. However, we have never demonstrated an awareness that we are a conglomerate or adequately put into practice accurate portfolio management for maximizing the value of that position. We are currently moving forward with the implementation of portfolio management centered on growth (compound annual growth rate (CAGR)) and capital efficiency (ROIC). As a key agenda item for the Board of Directors, not just those in charge of business execution, we will clearly define the direction to take for each business.For example, under conditions like that of the COVID-19 pan-demic, our diversity as a conglomerate should prove invaluable and there have in fact been many instances of specific businesses or regions rescuing us when we have encountered a variety of crises. I am convinced that strengthening our portfolio manage-ment will enable us to further exercise our strength of diversity. Seeing the pandemic as a prime opportunity to review our portfo-lio, we will promote a dynamic portfolio strategy and continue creating new value unique to Yamaha Motor and thus achieve operations as a conglomerate premium.Turning to shareholder returns, we will do our utmost to promptly restore business conditions to normal and review the dividend payout ratio, which has traditionally been an indicator for shareholder returns, or introduce new guidelines for the total return ratio and other facets.Approach to Portfolio ManagementBusinesses with stable foundationsGrowth and investment businessesCompanywide weighted average cost of capital (WACC)Rate of increase in net sales(Compound average growth rate)Business FBusiness E0–10–10Simple ROIC(After-tax operating profit / Invested capital under operating division control)Businesses to be restructuredBusiness ABusiness BNew BusinessNew BusinessBusiness DBusiness C31Yamaha Motor Co., Ltd. Integrated Report 2020
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