President's Message 2009

Forging ahead amid worldwide economic turmoil

Last year, the world economy plunged into a once-in-century recession. In the first half of the year, crude oil prices rose sharply, in turn increasing gasoline and raw material prices. In the last half, the financial crisis triggered by the subprime debacle in the United States spread across Europe in an instant, then rippled across the world as a full-blown global credit crunch. Volatility in stock and currency markets caused extreme fluctuations that had little to do with underlying economic fundamentals and made the global economy nearly impossible to forecast. In addition, the yen appreciated rapidly, pouring more pressure on the business environment.

In February 2008, Yamaha Motor announced a management roadmap based on its “Frontier 2020” long-term vision, together with a new medium-term management plan and specific numerical targets. However, the economic crisis grew beyond anything we could have anticipated, compelling us to revise our business plan. Like so many companies hit hard by the economic nosedive, we are now challenged to maximize our core capabilities just to survive.

Our business results for the fiscal year ended December 31, 2008 indicate that profitability from our mainstay businesses — including motorcycles, marine products and recreational vehicles in North America and Europe — deteriorated significantly, as high gasoline prices and the economic slowdown decreased sales. Meanwhile, motorcycle sales in Indonesia, Thailand and other ASEAN nations, China, and Latin America were the major contributors to company profits. However, economic trends now suggest a rapid decrease in demand due to a developing credit crunch and rising interest rates, even in Brazil and Vietnam, where these trends had been favorable until very recently. Indonesia has been a core profit center, but here too, the effects of the economic contagion are beginning to show up. Meanwhile, our industrial robot business, including surface mounters, has plummeted in China, Taiwan and other Asian nations, another reflection of the global economic slowdown.

These negative factors show no sign of abating, suggesting demand trends will remain unfavorable for the foreseeable future. At this juncture, every business domain and market is difficult to read.

Focusing on profits and extensive cost-cutting

In view of the extremely severe economic conditions, we must concentrate on two priorities this year: maximizing profits, and undergoing extensive cost-cutting. Some may think these are too obvious to mention, but in the current economic climate, I believe we have to get back to basics and work to streamline our entire corporate structure.

To this end, we will make every effort to sell one more unit today than we did yesterday by capitalizing on our expertise and ingenuity.

On the expenditure side, we must eliminate any expense that is not absolutely necessary. We have to be sure of the objective and cost-effectiveness of every expenditure, focusing on minimizing costs for those items that are necessary.

Turning challenges into opportunity

Our business performance had improved significantly for several years in a row, aided by such positive factors as global market expansion and favorable currency exchange trends. However, subtracting these factors, our true earning power showed no improvement in real terms after peaking in 2004. Thus, we still have issues to resolve. These include improving cost competitiveness, especially in development, manufacturing and procurement; increasing sales efficiency; and reducing expenditures in our corporate sectors. All of us must recognize the seriousness of these problems.

However, looking at the situation from another angle, I believe that this adversity can be turned into great business opportunity. Whenever the overall economy expands steadily, towering profits can hide a company’s weaknesses in their shadows. During an economic downturn, however, companies’ true capabilities come to light, showing the differences between competitors much more clearly. Thus, a recession can represent a chance to solidify our corporate foundation. Many of the business policies that we will introduce this year will require us to endure hardships, the flip side of previous policies that capitalized on the economic upswing. There is not time to dwell on the change of direction. We have to pivot immediately. In light of the economic realities we face, we must act quickly to implement as many innovative policies as we can, as quickly as we can.

While the need to embark on significant reforms is obvious in an era of rapid change, some very important things remain the same. We need to be sincere and honest in our business dealings with customer-oriented viewpoint, and remain true to our compliance efforts to date. With the right attitude, we can rebuild our foundation and recover profitability, all while winning greater trust from the customers and communities we serve.

Yamaha Motor is characterized by our spirit of challenge and vibrant corporate culture, which empower us to act boldly in overcoming difficulties. We have proven that with effort, anything is possible. Powered by our belief that “we can make it if we try,” we are committed to moving forward steadily to success.