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Summary of Financial Results for the First Half-Year Ended September 30, 2003 and Forecast for the Fiscal Year Ending March 31, 2004

November 06, 2003

Interim business results

Yamaha Motor attained record net sales and net income for the first half-year ended September 30, 2003


The Company solidified its financial condition with an increase in net income and conversion of convertible bonds.

Yamaha Motor's consolidated net sales for the first half-year ended September 30, 2003 increased 0.8 percent from the same period of the previous year, to 530.0 billion yen. In terms of profit, operating income and recurring profit decreased 9.0 percent, to 37.3 billion yen and 5.4 percent, to 36.2 billion yen, respectively, while net income rose 67.1 percent, to 19.2 billion yen. On the exchange rate front, the yen appreciated by 9 yen, to 119 yen against the U.S. dollar, and depreciated by 13 yen, to 128 yen against the euro, compared with the same period of the previous year.

During the first half-year under review, the Company reduced its inventories of motorcycles, all-terrain vehicles (ATVs) and snowmobiles in North America and adjusted the shipping volumes for these products accordingly, as part of its drive to achieve supply-chain management (SCM) reform.
Nevertheless, net sales grew for the fifth consecutive year, due to expanded sales of motorcycles in Asia and sales gains in the IM (industrial robots) business. Net income also climbed for the second consecutive year. Both net sales and net income registered record highs. Although operating income and recurring profit declined, they were more than 20 percent higher than the original targets. In addition to the increased income, convertible bonds amounting to 36.1 billion yen were converted to stock, reflecting rise in stock prices during the period. This has reduced the interest-bearing debt, while improving the equity ratio, thus significantly strengthening the financial condition of the Company.

A 0.8 percent increase in net sales for the period was attributable to sales growth in the motorcycle business and the "other" product business - including the IM business - which more than offset sales declines in the marine product business and the power product business.
Broken down by business segment, motorcycle sales increased 2.5 percent from the same period of the previous year, to 283.3 billion yen, due to the expansion of sales in Asia and Europe, which exceeded a sales drop in Japan.
Overseas sales expansion in the marine product business segment - led by steady sales growth for environmentally friendly 4-stroke outboard motors - nearly negated the decline in domestic sales, centering on the boat business.
Power product sales dropped 7.8 percent, to 90 billion yen, mainly due to the shipping adjustment initiated for the purpose of reducing the inventories of ATVs and snowmobiles in North America.
Sales in the IM business climbed 42.9 percent, to 15 billion yen, reflecting favorable sales of mainstay surface mounters in China and the rest of Asia.
A look at sales by market shows that sales in Europe and Asia expanded 10.9 percent and 9.2 percent, respectively, from the same period of the previous year, while domestic and North American sales fell 5.9 percent and 6.9 percent, respectively.

Regarding profit, both operating income and recurring profit decreased, due to a decline in income resulting from the shipping adjustment for the North American market, and despite our efforts to curtail selling, general and administrative expenses, as well as cost of sales. However, net income rose 67.1 percent, to 19.2 billion yen, registering a record high. This was mainly attributable to the fact that the Company had amortized the entire amount of goodwill - totaling 9.5 billion yen - as an extraordinary loss during the same period of the previous year.
The number of consolidated subsidiaries stood at 99, the same as at the previous fiscal year-end, while the number of affiliates accounted for by the equity method was 40, an increase of three from the previous fiscal year-end.

Forecast financial results for the full fiscal year

The Company expects to achieve record consolidated net sales, operating income, recurring profit and net income


The Company has revised its forecast for profits upward compared with the original targets, predicting attainment of almost all the final goals set in the medium-term management plan.

The Company forecasts its consolidated business results for fiscal 2004, ending March 31, 2004 as follows: net sales of 1,020 billion yen, operating income of 71 billion yen, recurring profit of 71 billion yen, and net income of 40 billion yen. All these forecasts are record highs, and the profit forecasts represent an upward revision. These figures also significantly exceed the targets set for the second year of the NEXT 50 medium-term management plan. The Company is thus expected to attain almost all the final goals in the plan one year ahead of schedule.

These favorable business results are attributable to groupwide efforts toward improving profitability, as described in the NEXT 50 medium-term management plan. Specifically, progress has been made toward these plan objectives: "creating attractive products," "solidifying the foundation of businesses in China, India and ASEAN countries," "reducing costs by promoting measures such as the system supplier (SyS) system," and "restructuring low profitability
businesses." These efforts are steadily transforming our corporate structure, helping ensure consistent profitability, despite the negative effects of exchange rate fluctuations.
These business performance forecasts are based on the assumption that one U.S. dollar will trade at 116 yen over the period (a 7 yen appreciation of the yen from the same period of the previous year), and that one euro will equal 126 yen (a 10 yen depreciation).

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