President Message

Message from the management of Yamaha Motor

Regarding Business Results for the First Quarter of FY 2016
President, Chief Executive Officer and Representative Director Hiroyuki Yanagi

Dear Employees

We have announced the business results for the first quarter (January - March).

The consolidated management accounts were net sales of 382.9 billion yen (a decrease of 6.8 billion yen from the previous year and 25.0 billion below budget), and operating income of 32.3 billion yen (a decrease of 4.3 billion yen from the previous year and 1.8 billion yen above budget). The HQ unit accounts were net sales of 166.9 billion yen (a decrease of 14.2 billion yen from the previous year and 7.2 billion yen below budget), and operating income of 8.1 billion yen (a decrease of 8.3 billion yen from the previous year and 4.7 billion yen below budget). The currency rates for the year saw the US dollar trade at 115 yen (an appreciation of 4 yen) and the euro at 127 yen (an appreciation of 7 yen). Furthermore, with regards to the yearly consolidated business results forecast, there have been no changes to February's announced forecast (net sales of 1,700.0 billion yen and operating income of 120.0 billion yen).

Because the effect of the appreciating yen from the start of the year has been significant, the situations for developed markets and emerging markets will be discussed separately (data is published values) With regards to developed markets, although slight profitability improvements have been made, operating income has been affected by the appreciating yen, and decreased by 3.9 billion yen from the previous year. The situations of the major business segments are as follows.

Motorcycle Business

Sales and income decreased due to the appreciating yen and a decrease in unit sales caused by the effect of the launch timing of new products (concentrated in the first quarter last year and in the second half this year) and planned reductions in distribution inventories in the U.S. market.

Marine Products Business

As sales of large outboard motors continued to increase, there was an increase in sales, but the effects of the appreciating yen etc. led to a decrease in income.

Recreational Vehicles Business

The increase in sales of recreational off-highway vehicle (ROV) products in North America led to increases in sales and income.

IM Business

A decrease in unit sales of surface mounters and an increase in the unit sales of robots saw increased sales and decreased income overall.

SPV Business

Increased unit sales of domestically completed vehicles and export of drive units to Europe saw increased sales and increased income.

As the yen is forecast to continue appreciating from the second quarter onwards, we request the support of all business departments to increase net sales, control expenses, etc.

Increased sales scale and profitability improvements are progressing in the emerging markets motorcycle business segment, and the absorption of emerging markets' currency deprecations and temporary costs (principally regarding quality complaints) saw a 0.4 billion yen operating income decrease compared with the previous year. Further unit sales growth in India, Vietnam, and the Philippines, etc. saw the end of the unit sales decline, with 1.114 million units sold (an increase of 31,000 units from the previous year). In addition, increased sales of products in the higher price range in ASEAN markets, platform cost reductions, and global models significantly improved profitability.

As the effect of currency depreciations in Indonesia, Brazil, etc. is forecast to decrease from the second quarter onwards, initiatives to further increase sales scale and improve profitability in each market are requested.

Quality issues such as shipment stoppages and market complaints are significant first quarter aspects to contemplate. The origin of these issues is found in "not performing the necessary evaluations and work," "not noticing any changes in specific markets and products," and "not understanding customer usage circumstances." Firstly, all departments should understand and engage in the "I am Yamaha." initiative. Furthermore, while it is important to respond to the problems that arise swiftly and correctly, it is also important to turn the experience learned from such failures into company-wide expertise. At present, the structure for this is believed to be insufficient.

Throughout the world, companies that do not learn from experiences of failure have seen the faith placed in them lost, which has become a serious social problem. We would like to make the effort to convert various negative experiences into positive expertise to become a better company capable of high-quality work. We want each Yamaha staff member to become capable of saying "I am Yamaha," and deliver high-quality work and products to customers across the globe.

Hiroyuki Yanagi