Summary of Business Results for the First Half of the Fiscal Year Ending December 31, 2009

Consolidated business results

Yamaha Motor Co., Ltd. (the "Company") has released its consolidated business results for the first half of the fiscal year ending December 31, 2009. During the first half-year under review, demand for leisure products declined, mainly in developed countries, amid the global recession. In this harsh environment, net sales decreased 33.3 percent from the same period of the previous fiscal year, to 579.4 billion yen. With regard to profits, the Company recorded an operating loss of 33.8 billion yen, representing a decrease in operating income of 80.5 billion yen from the same period of the previous fiscal year; and an ordinary loss of 36.9 billion yen, a decrease in ordinary income of 88.1 billion yen. The losses were mainly attributable to reduced sales, coupled with decreased marginal profit resulting from a series of production cutbacks, designed to significantly reduce market stocks (distributors' stocks and Group inventories) during the period. This adjustment was a response to maintain proper production volume for fiscal 2010. Decreased profit more than offset the positive impact of extensive efforts to reduce overall expenses, the Urgent Cost Reduction Project, and a rollback of depreciation expenses in line with the reduction of capital expenditures. Net loss amounted to 74.7 billion yen, a decrease in net income of 100.6 billion yen, reflecting a reversal of deferred tax assets due to the lowered business performance.

On the foreign exchange front, the average purchasing value of the yen during the period under review appreciated by nine yen from same period of the previous fiscal year against the U.S. dollar, to 96 yen, and by 34 yen against the euro, to 127 yen.

Broken down by business segment, motorcycle sales fell 27.0 percent from the same period of the previous fiscal year, to 410.0 billion yen. In Asia (excluding Japan), unit sales of motorcycles decreased only slightly; however the sales amount dropped 21.6 percent to 205.7 billion yen, due to the negative impact of the stronger yen. Motorcycle sales in North America and Europe dropped 23.8 percent and 36.4 percent, respectively, reflecting sluggish demand, coupled with the negative impact of the stronger yen.

Marine product sales declined 41.9 percent, to 83.2 billion yen, due mainly to reduced outboard motor sales in North America and Europe, as well as the negative impact of the stronger yen.

Power product sales dropped 51.3 percent, to 47.5 billion yen. This was attributable to decreased sales of all-terrain vehicles in the United States, along with the negative impact of the stronger yen.

Sales in the "other products" segment fell 41.8 percent, to 38.7 billion yen, due mainly to sluggish sales of automobile engines and surface mounters.

Due to the stronger yen -- coupled with the negative impact of production cutbacks to reduce market stocks -- the Company registered an operating loss of 2.0 billion yen in the motorcycle segment, representing a decrease in operating income of 31.2 billion yen from the same period of the previous fiscal year; an operating loss of 9.8 billion yen in the marine product segment, a decrease of 20.7 billion yen; an operating loss of 20.1 billion yen in the power product segment, a decrease of 23.3 billion yen; and an operating loss of 2.0 billion yen in the "other products" segment, a decrease of 5.4 billion yen.

Positive factors affecting operating income include a drop in selling, general and administrative expenses totaling 30.8 billion yen from the same period of the previous fiscal year; a fall in research and development expenses totaling 9.5 billion yen; cost cuts in raw materials totaling 5.4 billion yen; cost reductions in procurement operations totaling 3.5 billion yen; and a decrease in depreciation expenses totaling 0.3 billion yen. However, these were more than offset by such negative factors as a decrease in gross profit totaling 44.8 billion yen due to reduced net sales; the impact of exchange translation totaling 43.5 billion yen; and the impact of a change in the product mix reflecting production cutbacks in Japan and related factors totaling 41.7 billion yen. As a result, the Company registered an operating loss for the first half of fiscal 2009.

The number of consolidated subsidiaries at the end of the first half of fiscal 2009 decreased by five from the end of the previous fiscal year, to 108, while the number of companies accounted for by the equity method remained the same, at 33.

Note:

Effective from the fiscal year ending December 31, 2009, the Company's quarterly consolidated financial statements are prepared in accordance with the Rules for Quarterly Financial Reporting. Therefore, the figures used in comparing results for the current and previous first half-year are presented only as reference in this release.

Downward revision of the forecast results for the full fiscal year

The Company has revised downward its forecast consolidated business results for the fiscal year ending December 31, 2009. The revisions to the forecast, originally announced February 12, 2009, reflect the following figures: 1,100 billion yen in net sales, a decrease of 150 billion yen from the previous forecast; 87 billion yen in operating loss, an increase of 57 billion yen; 86 billion yen in ordinary loss, an increase of 57 billion yen; and 182 billion yen in net loss, an increase of 140 billion yen.

Main reasons for the revision

Although motorcycles sales in Asia have been robust, demand for the Yamaha Motor Group's mainstay products -- motorcycles, marine products and power products -- has been sluggish in Europe and the United States, with no sign of recovery in sight. Consequently, the Yamaha Motor Group's consolidated sales have declined, compared with the figures for the same period of the previous fiscal year. In addition, the yen is persistently strong against the U.S. dollar. These negative factors have created very harsh business conditions for the Yamaha Motor Group.

Against this backdrop, during the second half of fiscal 2009, the Company will pursue group-wide countermeasures designed to return the Yamaha Motor Group to profitability on an operating income basis in the fiscal year ending December 31, 2010.

In fiscal 2009, the Company projects a decrease of 45.0 billion yen in marginal profit resulting from production cutbacks in Japan, which are intended to reduce market stocks (distributors' stocks and inventories) in Europe and the United States. The stock adjustment is a response to an increase in marginal profit due to the restoration of production volume in Japan for fiscal 2010. The Company will post an additional expense for stock sales promotion in Europe and the United States to its previous projection, totaling 6.0 billion yen.

Meanwhile, the Company will continue promoting the thoroughgoing cost reduction programs it started at the beginning of fiscal 2009, including additional targets for urgent expense cutbacks. It will also seek to generate free cash flows by further reducing market stocks in Europe and the United States.

In the effort to improve profitability by reducing fixed costs, the Company plans to post an expenditure for business structural reforms, including an impairment loss on its manufacturing equipment and facilities, amounting to 48 billion yen, as a temporary expense for fiscal 2009. The Company also recorded deferred income taxes amounting to 29.8 billion yen for the first half of fiscal 2009. This figure arises from a reversal of deferred tax assets and other factors.

Consequent to these developments, the Company has revised its forecast consolidated business results for the fiscal year ending December 31, 2009 downward substantially from the original forecasts announced in February 2009.

The revised forecast is based on the assumption that one U.S. dollar and one euro will equal 90 yen and 130 yen, respectively, during the second half of fiscal 2009.

Yamaha Motor's motorcycle business in emerging countries is steadily expanding, bolstering sales and profits for the entire Company, although it has been affected by the current global recession. By contrast, the profitability of three mainstay businesses -- motorcycles, outboard motors and all-terrain vehicles -- in developed countries has declined dramatically. This reflects the sharp drop in demand since last year, the negative impact of the stronger yen, and the rapid growth in fixed costs and other expenses during the previous sales expansion phase. Thus, management conditions surrounding the Company remain harsh.

The current business environment notwithstanding, the Company seeks to return to profitability on a consolidated operating income basis in fiscal 2010 and achieve a consolidated operating income margin of 5% in fiscal 2012. To this end, the Company will take a two-track approach to return operations in developed countries to profitability, pursuing both short- and medium-term measures.

Amidst challenges in a severe business environment in developed countries -- an environment that has worsened far beyond the Company's expectations, it established the Developed Countries Business Reform Project Team. Formed this August, the Project Team is charged with quickly and powerfully improving profitability in developed countries.

Returning to Profitability in Fiscal 2010 and Achieving a Margin of 5% in Fiscal 2012 (Consolidated Operating Income Basis)

1.

In a bid to return to profitability on a consolidated operating income basis in fiscal 2010, the Company will improve businesses in developed countries and the motorcycle business in emerging countries with the following short-term measures:

2.

To achieve a consolidated operating income margin of 5% in fiscal 2012, the Company will improve businesses in developed countries, the motorcycle business in emerging countries, and other businesses with the following medium-term measures:

Specific measures for Returning to Profitability on a Consolidated Operating Income Basis in Fiscal 2010

In order to implement the profitability reform package outlined above, the Company will post an expense totaling 48 billion yen in fiscal 2009, of which 41 billion yen is for an impairment loss on manufacturing equipment and facilities resulting from the integration of Japanese factories; and 7 billion yen is allocated for personnel measures.

The reform package, in turn, is expected to reduce fixed costs including depreciation expenses and personnel costs by 23 billion yen, and cut other costs and expenses by 37 billion yen, for total savings of 60 billion yen in fiscal 2010.

Developing environment-responsive technologies and deploying them in developed country businesses and the motorcycle segment in emerging country businesses

The Company launched the Engine Development Project in October 2008. Working across business sectors, the Project is developing more fuel-efficient engines with lower emissions. The Company aims to achieve the industry-leading engine performance.

The first model featuring these leading-edge environmental technologies is scheduled for release this month. The Company is set to introduce Taiwan-made scooters incorporating a newly developed fuel injection system, which improves fuel efficiency by about 20% compared with conventional Yamaha models. This innovative fuel injection will gradually be deployed in models in other markets. The Company is also developing a small commuter vehicle engine offering 50% greater fuel efficiency than current versions.

Furthermore, the Company is working to apply these environmental technologies to its outboard motors, while strengthening development of next-generation electric motorcycle and other mobility technologies.

Developed Countries Business Reform Project Team

Amid the global recession, the Company has been working to reform the profit structure of businesses in developed countries -- and the motorcycle business in emerging countries -- since October 2008. The reform drive involves independent projects across business segments launched on the individual initiative of the development, manufacturing and procurement sectors. All of these focus on reducing costs, promoting manufacturing reform and enhancing engine technologies, and encompass a variety of specific measures.

Nevertheless, the business environment in developed countries is severe, and has worsened far beyond the Company's projections. To deal with these challenges, the Company formed the Developed Countries Business Reform Project Team this August. The Project Team is pursuing fast-acting, powerful measures to return businesses to profitability in developed countries.

It is comprised of the President and members including Directors and Executive Officers of relevant sectors -- development, manufacturing, sales, procurement, human resources development, finance & accounting and corporate planning.

The Project Team aims to return the Company to profitability on a consolidated basis in fiscal 2010 by steadily improving the profit structure in developed country businesses, while working to restore their consolidated operating income in fiscal 2011.