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.