President Message

Message from the management of Yamaha Motor

Business Results for 2016

Dear Employees

Figures shown in brackets indicate increases and decreases/fluctuation rates on the previous year.

The consolidated management accounts for 2016 were net sales of 1,502.8 billion yen (a decrease of 128.3 billion yen or 7.9%), and operating income of 108.6 billion yen (a decrease of 21.7 billion yen or 16.7%). The headquarter unit accounts were net sales of 615.1 billion yen (a decrease of 43.9 billion yen or 6.7%), and operating income of 25.4 billion yen (a decrease of 9.7 billion yen or 27.6%). The breakdown of the 21.7 billion yen reduction on the previous year's consolidated operating income is as follows: 43.8 billion yen for foreign exchange effects, 11.3 billion yen for increased expenses, and 3.1 billion yen for increased customer return expenses, partially offset by 36.5 billion yen of profitability improvements. The main drivers for the significant foreign exchange effects was the continued appreciation of the yen against the U.S. dollar at 109 yen, and the euro at 120 yen - climbing 12 yen and 14 yen respectively - along with yen appreciation also seen in currencies of emerging markets such as Indonesia, Brazil, and India.

Amidst a year of dramatic exchange rate fluctuations and persistent demand slumps in some markets, by excluding foreign exchange effects, consolidated net sales increased (29.3 billion yen or 1.8%) and consolidated operating income also increased (22.1 billion yen or 16.9%). We have seen the creation of distinctive products with the unique style of Yamaha for markets where customers are increasingly diverse and demanding higher-quality models, greater sales of products in the higher price range, and continued cost reductions from development methods such as platform and global models and manufacturing methods such as theoretical-value-based production. I want you all to place great value on this experience and share it with others.

However, there has been an increase in customer return expenses, which is a major issue to consider. It is important to take on the "WATASHI GA YAMAHA." spirit and respond to problems that arise swiftly and correctly, and it is also important to turn the lessons learned from such failures into company-wide expertise to prevent them from happening again. I therefore ask that you further increase your activities in this area.

The following is an overview of our financial standing: The first area is ROE (ratio of Return On Equity: the ratio of income for the year to the total of capital from shareholders and the amount of surplus accumulated by the company over time) was 12.3% (a decrease 0.3 points). Regarding the three elements of ROE: the net income ratio was 4.2% (+0.5 points), the total asset turnover was 1.15 (down 0.1 point), while the finance business expanded, and equity was 534.2 billion (+43.4 billion yen) exceeding standards prior to the Global Financial Crisis. The second area, cash flow (the difference between the amount of money earned and the amount used) was significantly in the black at +96.6 billion yen (+136.6 billion yen) due to the effects of working capital streamlining, and the effects of regular investment reviews. Moving forward, we will continue to improve the efficiency of our working capital, and prepare for more flexible growth investment.

The forecast for FY2017 was announced as a reflection of recent foreign exchange trends for net sales at 1,600.0 billion yen, and for consolidated operating income at 120.0 billion yen (U.S. dollar at 110 yen, and the euro at 115 yen). I expect that this year will be a continuation of the last with similar market and business environments, however, we can also expect some large fluctuations to occur. We will set a consolidated net sales of 1,542.6 billion yen and an operating income of 102.0 billion yen (U.S. dollar at 100 yen, euro at 110 yen) for the company's initial budget targeting strength building in response to these fluctuations. Regardless of currency trends, please work to keep expenses below the budgeted level, and carry out budget/result management so that consolidated operating income will reach 100 billion yen or more even at 100 yen / 110 yen.

The status of each of our main businesses are as follows. (Operating income ratio is based on management account values)

Motorcycle Business

  • In the ASEAN region (including Taiwan), sales increased (120%) in the healthy markets of Vietnam, Thailand, the Philippines, and Taiwan; whereas in Indonesia, the status quo of waiting for economic recovery continued as sales decreased (78%), with an overall sales decline (96%). Meanwhile, profitability improvements due to the transition to higher-priced products and cost reductions were remarkable, achieving an operating income ratio of 10% and creating a high-profit structure.
  • In India, due to strong market conditions, the sales of scooters increased significantly (132%). Given continued efforts to lower the break-even point, while actively expanding sales, this is expected to become the next profit-contributing business.
  • In Brazil and China, while the economic downturn continues, we are progressing with structural reforms.
  • In developed countries, retail is stable (102%), demonstrating our strong presence in stable markets. Although there was an operating loss due to foreign exchange effects, we are progressing initiatives regarding reductions in distribution inventories, the expansion of finance businesses, and further structural reforms.

Marine Products Business Segment

The outboard motor markets in North America and Europe are in good shape, led by continued sales increases (107%) of larger engines, whereas the WV market remained flat. Although sales and income overall were affected by foreign exchange rates, a high-profit structure was retained with an operating income ratio at 18%. Initiatives are progressing toward the future creation of a system supplier-based business model.

Recreational Vehicles Business Segment

The North American recreational off-highway vehicle (ROV) market remains stable with significant retail growth (136%). However, an operating loss was experienced due to a sudden brake being placed on this sector's excessive production and sales plans, as well as the impact of foreign exchange effects. We will address this by finishing the adjustments to production and sales plans quickly, and launching a new platform models onto the market.

IM Business Segment

Surface mounter sales decreased due to the effects of the slump in the Chinese market, however robot sales have increased. Overall, the creation of a high-profit structure progresses, with the operating income ratio reaching 17%. A next-generation solution business to broaden the customer base is being built through high-speed multi-function surface mounters and the industry's first and only integrated control robot systems.

SPV Business Segment

For electrically power assisted bicycles, both Japanese domestic and European markets were strong with sales increases on a drive-unit basis (126%) which turned into a business model with sales of over 30.0 billion yen and an operating income ratio of 16%. The customer base continues to expand in global markets. EV will also continue to progress the company-wide technology strategy.

Power Products Business Segment

Sales of golf cars increased (104%), while sales of generators decreased (94%). We will expand our customer base by introducing quiet golf car models, market releases of full-fledged V-twin general purpose engines for OEM markets, and the acquisition of the U.S. business from Subaru (Fuji Heavy Industries), etc.

CS (Customer Service) Business Segment

Our roll-out of time commitment services (30-minute service guarantee) in emerging markets is progressing, with the introduction already complete in 1,470 stores, and preparations underway for the next 260 stores to follow. In developed markets, the roll-out of a system to be used for marketing and product development is underway based on customer vehicle maintenance information being obtained and analyzed from the sales stores. We have started the operation of lifetime information in 187 stores in the U.S., and 165 stored in Europe. Using the point of contact with customers, we are working to create value with the unique style of Yamaha.

AM, Overseas Market Development Operations, Unmanned Systems, Pool Business Segment

Unit sales in the AM business have decreased due to the effects of trend changes in the U.S. We are carrying out production preparation for engine sales expansion. For overseas market development operations, motorcycle sales in Africa have decreased due to the effects of lower crude oil prices and weaker currencies, however we have seen a healthy trend in outboard motors. In terms of the unmanned systems business, in addition to a FAA aviation permit in the U.S., we have obtained a pesticide spraying permit for the State of California, and our preparations for business in the Californian winery market are underway. In the pool business, we have increased our market share to 52.3% (+ 2.5%) while promoting cost reduction.

Our first goal for this year remains to reach our targets, and then progress with our initiatives toward significant growth in the medium- to long-term through achieving dynamic milestones. In this process, let's make a company that talks about, thinks about, and continues to work through achieving "The unique style of Yamaha." We want each and every Yamaha staff member to work toward delivering "The unique style of Yamaha" to our customers across the globe.

Hiroyuki Yanagi

RV :Recreational Vehicle
IM :Intelligent Machinery
SPV :Smart Power Vehicle
OEM :Original Equipment Manufacturer
AM :Automotive
UMS :Unmanned System