President Message

Message from the management of Yamaha Motor

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

Dear Employees

We have announced the business results for the first nine months (January - September).

The consolidated management accounts were net sales of 1,132.8 billion yen (a decrease of 93.4 billion yen from the previous year and 16.0 billion below the revised budget), and operating income of 88.9 billion yen (a decrease of 16.1 billion yen from the previous year and 1.7 billion above the revised budget). The headquarter unit accounts were net sales of 453.7 billion yen (a decrease of 43.0 billion yen from the previous year and 13.1 billion yen below the revised budget), and operating income of 16.1 billion yen (a decrease of 16.9 billion yen from the previous year and 6.9 billion yen below the revised budget). Foreign currencies in developed markets saw a continuation of the appreciating yen, with the U.S. dollar trading at 109 yen and the euro at 121 yen, an appreciation of 12 yen and 14 yen respectively. The currencies of emerging markets such as Indonesia and Brazil continued to depreciate, but showed some settling in the third quarter. The consolidated business results for the year are net sales of 1,500.0 billion yen, operating income of 105.0 billion yen, and a total dividend for the year of 60 yen as announced in August.

I will explain about three factors which led consolidated operating income to decrease by 16.1 billion yen compared with the same period in the previous fiscal year. Firstly, in the emerging markets motorcycle business, consolidated operating income increased by 3.0 billion yen thanks to the effects of decreased sales scale of 6.0 billion yen, profitability improvements of 22.6 billion yen, increased expenses of 0.7 billion yen, and adverse foreign exchange effects of 12.9 billion yen. Next, in the developed markets business, consolidated operating income decreased by 13.9 billion yen due to effects of decreased sales scale of 0.9 billion yen, profitability improvements of 13.9 billion yen, increased expenses of 4.2 billion yen, and adverse foreign exchange effects of 22.7 billion yen.

In addition, growth strategy development expenses increased by 5.2 billion yen.

Amidst dramatic exchange rate fluctuations and demand slumps in some markets, product mix and pricing improvements, cost reductions through development methods such as for platform and global models and manufacturing methods such as for theoretical-value-based production have led to steady progress in profitability improvements for each market.

One of the highest priorities for FY 2016 is initiatives regarding cash flow, and improvements have progressed by 50.7 billion yen compared with the same period in the previous fiscal year (excluding the finance business). The main factors were advances in the reduction of inventories in each market and rationalization of capital expenditure. The Company is pursuing thorough efficiency improvements in inventory held, accounts receivable, and investment etc. so that more cash can be allocated to investment for future growth.

The status of each of our main businesses is as follows. Bracketed figures indicate comparisons to the previous year.

Emerging Markets Motorcycle Business Segment

Sales increased (121% compared to previous year) in the healthy markets of Vietnam, the Philippines, Thailand, and Taiwan; India also showed a healthy market, recording increased sales (135%). Recovery remains delayed in the Indonesian market with a sales decrease (77%); Brazilian and Chinese market slumps also continued with sales decreases (78%). In particular, the increases in market share and profitability in Vietnam, the Philippines, and Malaysia thanks to product strategies, sales network initiatives, and branding etc. have become notable.

Developed Markets Motorcycle Business Segment

The market overall is stable, with retail (101%) showing a similar stability. We are enhancing our unique line-up and increasing our presence in the market. We are also taking further initiatives toward structural reforms, such as the reduction of inventories in each market, and the project on collaboration with another company regarding the development and production of 50cc scooters for the Japanese market.

Marine Products Business Segment

Sales increased (106%) in the North American and European markets as larger engines continued to lead the way, but sales decreased (89%) in other markets. Despite dramatic exchange rate fluctuations and demand slumps in Russia, Brazil, etc., we have maintained a high operating income ratio and are progressing initiatives aimed at becoming a system supplier.

Recreational Vehicles Business Segment

While the North American recreational off-highway vehicle (ROV) market is a little slow, it remains stable with growth (138%) achieved in retail thanks to new product launches in the sports category. However, due to excessive initial sales and production plans, excess inventory has been generated, and we are urgently revising this situation. We are progressing development of the next-generation line-up aimed at major markets, taking initiatives to build marketing strategies which work diligently to levels above and beyond everyone's expectations which clearly convey the Yamaha Motor "GEN" "Play & Sure" "S・EX・Y" ideal to customers.

IM Business Segment

Surface mounter sales decreased (89%) due to the effects of the slump in the Chinese market, however robot sales have increased. We have announced the industry's first and only integrated control model robot system, and are taking initiatives toward the creation of a solution business model to broaden our customer base.

SPV Business Segment

Despite the effects of competitor model offensives, sales of domestically-completed vehicles increased (105%), and sales of OEM products for Europe increased significantly (292%). We are progressing our initiatives toward broadening our customer base in both domestic and overseas markets.

Power Products Business Segment

Sales of golf cars increased (103%), while sales of generators decreased (94%). We have announced a V-Twin general-purpose engine targeted to the full-scale OEM market, and are progressing our initiatives toward broadening our customer base.

Other Products

In the unmanned systems business, we have announced the FAZER R agricultural high-end model with increased payload, and the FAZER-R G2 industrial high-end model aimed at measurement, surveying, and surveillance work etc., progressing our initiatives toward broadening our customer base.

For the pool business segment, sales of pools aimed at schools reached a cumulative total of 6,000 units, and our forecast for this fiscal year is to capture a market share of 52%. The Overseas Market Development Operation Business Unit attended and presented at the Tokyo International Conference on African Development (TICAD) held in Kenya, proposing locally-focused solutions businesses in marine, motorcycles, clean water supply systems, etc.

To all our employees at all Group companies, I would first like to ask for your greatest efforts in achieving this fiscal year's plans. Please then progress creating plans for the next fiscal year with initiatives towards profitability and growth in the medium and long term uppermost in mind.

Recently, we have seen good examples and good experiences as the results of initiatives in development, production, and marketing etc. in a variety of markets. Please familiarize yourselves with these examples and experiences. I believe that there will definitely be hints for your work in learning from the experiences of others. We want each Yamaha staff member to be able to say "WATASHI GA YAMAHA," and try to create new experiences.

Hiroyuki Yanagi