President Shitara
Explains
the New
Medium-Term
Management Plan and
Long-Term Vision

Results for the First Year of the Medium-Term Management Plan

The first year of the three-year Mid-term Management Plan has fallen short of the targets we set. External factors, including US tariffs, resulted in a downward revision of our full-year earnings forecast announced in the second quarter (August 5). It is becoming a bit of a year of endurance for us. However, we are making steady progress with strategies centered on our core businesses and the focused allocation of investment and management resources. I believe we will be able to demonstrate the results, including new models, during this Medium-Term Management Plan. We hope you will look forward to the remaining two years.

About the Current Fiscal Year

For the first three quarters of fiscal 2025, sales revenue reached 1,910.3 billion yen (97% year-on-year), which was roughly in line with the plan. With an operating income of 112.4 billion yen (56% year-on-year), we are in a situation in which profit is being significantly compressed. It is a state of declining profit due to several factors, including increased investment in development for future growth, the impact of fixed asset impairment in the OLV business, the impact of US tariffs, and the impacts of production cuts caused by defective engine stamping and flooding in Vietnam. The business environment remains challenging, driven by global shifts in the political and financial landscapes as well as the effects of US tariffs. However, the MC business achieved year-on-year increases in both revenue and profit for the third quarter alone. The sales volume for outboard motors is also in recovery mode. While the revised full-year forecast announced in the second quarter remains unchanged, we are already preparing measures for the next fiscal year. In the electrically power-assisted bicycle business, we acquired the e-Kit business unit of the German automotive supplier Brose and established a new company, Yamaha Motor eBike Systems (YMESG), and we are working to scale-up our operations in Europe, the world's largest market for e-Bikes.

Outlook for the Next Fiscal Year and Beyond

For the next fiscal year, we anticipate that the business environment will still remain challenging. We will continue to promote thorough cost management while driving forward with a focused allocation of resources toward activities that support medium- to long‑term growth. By steadily advancing operations in line with our Medium-Term Management Plan and striving to maintain a stable profit base and ensure sound business management, we will continue aiming to be a "strong, robust company that adapts quickly to change," which I have been saying since I took office. On the other hand, we have high expectations for a shift in market trends following interest rate cuts by the FRB.

Reflections on My First Year as President

We have now completed the process of identifying the issues that must be addressed to evolve into a "strong, robust company that adapts quickly to change." Regarding break-even-point management, I have finished providing guidance to the headquarters and top management in each country on how to control it. We have established priority themes for every department, including marketing, R&D, manufacturing, and procurement. We will soon determine who will be in charge under the new system and focus on solving issues from the next fiscal year. We want to accelerate after we complete the run-up period for turning risks into opportunities and leaping forward.

I have heard that Vietnam’s emissions regulations are affecting not only your company but others as well. India is also introducing EVs as part of its environmental commitments. Have there been any changes in the current trends for electrification in Asia? What is the outlook?

President Shitara: There is no doubt that EVs will eventually become the majority, as the final destination for carbon neutrality (CN). However, there are prerequisites for that process. Prices, cost issues. Then, there is the range, charging times, and charging infrastructure. Additionally, adoption will accelerate significantly once support from governments and relevant ministries is fully in place. If even one of these prerequisites lags behind, progress will remain difficult. The regions where these prerequisites are currently met are Shanghai, China, and now Hanoi, Vietnam. In particular, China is supporting lower price ranges, making its models more affordable for consumers. Regarding charging times and charging infrastructure, we will work together with governments to establish schemes. Government subsidies will be provided. Such regions are emerging locally, but whether this will spread globally depends on the country and national policies, so we do not expect growth all at once worldwide. We will roll out our products based on the situation of each country. With this in mind, we are developing products, including platforms. We will assess the circumstances of each country.

Regarding the MC Business, the Marine business maintains high operating income margins. What will you do to address the challenges in the MC business this year and next?

President Shitara: We will take the MC business into high-value-added areas and strengthen our product power through premium segmentation. While "premium" might suggest an immediate jump to a high price range, I would like you to understand it as a strategy to fully refine our pricing advantages and differentiation factors. From my perspective, we are looking at the value share per unit. This means comparing how our price points stack up against competitors for the same volume of units. In certain areas, we already have a value share that is roughly three times higher. In other words, one unit generates the same revenue as three units from a competitor. By expanding this approach globally, we will improve our Return on Sales (ROS). While this may not apply uniformly to all products, we already have regions where our products sell at approximately three times the price of others.

Regarding the US market, the Medium-Term Management Plan mentioned a functional shift. With the ongoing impact of tariffs, is there anything you are considering regarding the measures for this functional shift?

President Shitara: In functional shift to the US, we are paying particular attention to changes in our customers. We want to firmly establish customer-centric marketing. This does not apply just to the US, but given the significant scale of our business there, we have begun with our Marine business by establishing an R&D base in Atlanta to keep a close eye on our customers. We are making significant progress in recruitment there, including the recruitment of talented local students. One of the concepts for our Center of Excellence is to have products, including digital solutions for the future, originate from that base. Ideally, the base will also have monozukuri (skill, technique, and spirit) manufacturing capabilities and mechanisms to further energize marketing, bringing together production, sales, and engineering in one place. The key point of the Center of Excellence is to observe local customers and enhance our planning and development capabilities to decide what products to introduce. While sourcing components domestically, we aim to manufacture solid products. Doing so will enable us to deliver products to local markets with more planning skill than ever before. One example of this is the Helm Master EX Wireless Control System from the US that allows even a 30-foot boat to be maneuvered with a joystick. It is a product that lowers the hurdles for boat operation, enabling anyone to pilot a vessel easily. This is already a proven success, and it has started winning a variety of local research awards.

Helm Master EX Wireless Control System
Received an Innovation Award in the propulsion parts and propellers category from
the National Marine Manufacturers Association (NMMA) and Boating Writers International (BWI) in the US

Regarding hydrogen engines, hydrogen is considered a solution on par with electrification. Since practical applications will take time and infrastructure and regulatory development are areas that cannot be handled by a single company, some people question the allocation of resources to this field. What are your thoughts on this? Also, could you share your target timeline for the practical application of hydrogen?

President Shitara: One of the main challenges with hydrogen is volume. You may have seen the newly developed compact hydrogen tank by Toyota, which is installed in our hydrogen engine scooter. It is significantly smaller and more compact than before, making it much easier to transport. This is one of our areas of focus. If this tank becomes easier to mount, it can be used for motorcycles. This tank is compact, which means it is lighter, so riding would be easier; this would make it easier to adopt and more affordable. The volume of the fuel tank, as the supply source for the motorcycle, is very important in this premise. In the marine domain, however, vessels have ample space onboard, so they are not as bound by volume constraints. One advantage hydrogen has over electrification is that, unlike batteries, hydrogen does not suffer from the risk of suddenly cutting out and making navigation of a vessel impossible. With hydrogen, you can clearly see on the gauge whether you are running low on energy. On the other hand, batteries are affected by temperature. For boats, drifting in open water can be a life-threatening situation, which is a major reason why we are looking at hydrogen. We will carefully assess how the product will actually be used, the environment in which it will operate, and the current stage of development. When the timing aligns with what we believe is appropriate, we will introduce it. We are making steady progress every year, and I believe commercialization may not be far off.