Integrated Report 2021(For the year ended December 31, 2020)

From the Director in Charge of Corporate Planning and Financial AffairsWe will support the continuation and development of our businesses by promoting our growth strategies while fortifying our financial health. Review of Fiscal 2020In the first half of fiscal 2020, we were plunged into a crisis the likes of which we have never experienced, as demand vanished on a global scale due to the lockdowns instituted in countries around the world in response to the global COVID-19 pandemic. As a result, our operating income plummeted to ¥19.1 billion in the first six months of fiscal 2020, and this downturn in performance prompted us to take emergency measures to procure the funds necessary to secure on-hand liquidity and implement exhaustive cost-cutting measures. However, outdoor recre-ation and personal mobility demand surged back mainly in developed countries as lockdowns were lifted in the second half of the fiscal year, leading to an operating income of ¥62.6 billion over the final six months. I believe these results show how Yamaha Motor’s core value of helping families enjoy outdoor leisure on land or water matched per-fectly with the demand among customers spurred by the restrictions on activities away from home. As a result, our operating income for the full fiscal year fell to ¥81.7 billion, but my evaluation is that our experience with this adversity demonstrated the resilience of the Company’s diverse and globe-spanning business portfolio.At the same time, the year’s developments did shed light on issues to address. We were unable to accurately predict the spike in demand, which meant our efforts to resume and boost production fell behind, and we are still unable to provide the supply needed to meet customer demand. This experience has made it painfully clear that demand predic-tions based purely on historical performance are insufficient. Yamaha Motor will therefore bring greater use of digital transformation method-ologies to its demand projections, such as utilizing alternative data and big data.Meanwhile, the Company practiced careful selection and concentra-tion of its resources to narrow down targets for investment and R&D for future growth, continuing both to reinforce our core businesses as well as prepare for entries into new business domains.As a result, free cash flow was a positive ¥66.5 billion, due in part to lower inventory and the curbing of investments, and return on equity was 7.5%.Tatsumi OkawaDirector and Managing Executive OfficerPolicies and Forecasts for Fiscal 2021In fiscal 2021, we anticipate the continuation of strong outdoor recre-ation demand in developed markets and for emerging markets to also begin seeing a recovery in demand. This outlook is prefaced, however, on the assumption that global-scale lockdowns will not be implemented in response to the emergence and spread of COVID-19 variants. We also project semiconductor demand to remain high. Accordingly, the operat-ing environment has the potential to be quite beneficial for Yamaha Motor’s core Land Mobility, Marine Products, and Robotics businesses. Blessed with this favorable market and operating environment, I believe Yamaha Motor can make another upward step in its evolution if we are able to fully ingrain the exhaustive cost-cutting measures and inventory controls instituted in response to the COVID-19 pandemic. I will touch on this matter again later.Moreover, we plan to transition from crisis response mode back to normal operations in conjunction with the market recovery in fiscal 2021. This transition will entail returning to our basic financial policy of striking a balance between investments for new growth and returns to shareholders within the range of our cash flows. Based on this policy, we will strive to bolster the earnings power of existing businesses, make investments for future growth, and develop digital foundations while maintaining a balance with shareholder returns.In regard to shareholder returns, the Company’s dividend payout ratio benchmark is 30% and we emphasize making consistent and ongoing dividend payments. In fiscal 2021, we aim to live up to shareholder expectations by returning to pre-COVID-19 levels and making our dividend total for the year ¥90 per share. Furthermore, we are currently reviewing the possibility of revising our dividend payout ratio target in our discussions for formulating the new Medium-Term Management Plan, and explanations on these policies will be provided when the plan is announced.30Toward Sustainable GrowthYamaha Motor Co., Ltd. Integrated Report 2021

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