President Message

Message from the management of Yamaha Motor

Regarding the FY 2017 First Half-Year Business Results

Dear Employees

We have announced the first half-year business results (January - June) for FY 2017. Figures shown in brackets indicate the increases or decreases on the previous year.

The consolidated management accounts were net sales of 828.1 billion yen (an increase of 49.7 billion yen or 6%), and operating income of 82.2 billion yen (an increase of 16.8 billion yen or 26%). The headquarter unit accounts were net sales of 342.9 billion yen (an increase of 31.5 billion yen or 10%), and operating income of 27.5 billion yen (an increase of 14.8 billion yen or 116%). Foreign currencies in developed markets saw the U.S. dollar trading at 112 yen (similar to the previous fiscal year) and the euro at 122 yen (an appreciation of 3 yen from the previous fiscal year). Currencies of emerging markets such as the Indonesian rupiah and the Brazilian real continued their mostly stable situation.
The above consolidated management accounts represent the highest-ever values for operating income, ordinary income, and income for the half-year. In particular, the previous highest operating income - 74.5 billion yen in 2007 - was achieved in a currency environment of the U.S. dollar trading at 118 yen and the euro at 161 yen, which together with emerging-market exchange rates represented a depreciated the yen worth 74.5 billion yen, meaning that by simple calculation the company has absorbed approximately 40.0 billion yen worth of foreign exchange effects.

I will focus on two segments to highlight the improvement in consolidated operating income.

Firstly, regarding the motorcycle business in emerging markets, increased sales scale and profitability improvements continued in Vietnam, Thailand, and the Philippines, and together with other factors such as further structural reform in Brazil proceeding ahead of schedule, led to operating income of 31.0 billion yen (an increase of 14.5 billion yen or 87%).

Secondly, profitability improvements proceeded in developed markets businesses such as IM, motorcycles, SPV, power products, and finance, but were mitigated by the effect of unrealized income carried over in the marine business and the remaining effects of inventory adjustment in the RV business, leading to operating income of 51.2 billion yen (an increase of 2.4 billion yen or 5%). However, the effect of this unrealized income has been almost completely resolved in the second quarter, and inventory adjustment in the RV business is progressing on schedule.
As developed-market and emerging-market exchange rates were stable, cost reductions through development methods such as for platform and global models and manufacturing methods such as for theoretical-value-based production, the provision of new product value, and product mix and pricing improvements have led to steady and clearly visible progress in profitability improvements for each business. I want us to place great value on this experience and share it with others.
Unfortunately, while customer return expenses have decreased by 3.9 billion yen compared with the previous fiscal year, supply to the market has been delayed by frequent shipment stoppages due to quality issues and delays in production commencement for new models. I would like us to work to deliver products to customers with all of the quality, functionality, delivery date, and price etc. which they expect, while being even more thorough with our “WATASHI GA YAMAHA” initiatives.

We have announced revisions to the initial forecast for the consolidated management accounts, with the new annual forecast being net sales of 1,630.0 billion yen (an increase of 127.2 billion yen or 8%), and operating income of 135.0 billion yen (an increase of 26.4 billion yen or 24%). The preconditions for foreign currencies in developed markets in the second half-year are that the U.S. dollar will trade at 110 yen and the euro at 115 yen. The forecast total dividend is 78 yen, which represents increased dividends for five years running. The company’s internal budget is as per the values announced.

This year is the midpoint of the Medium-Term Management Plan (2016-2018). The status of progress regarding the Plan is outlined using the financial data summarized in the attached file. Please refer to the data as you read on.

The first page
The second page
The third page
The fourth page
The fifth page

The first page covers the business results situation; please use this to get an overall feel for the business. In brief, while net sales are below the target due to foreign exchange effects and some businesses being behind plan, improvements to profitability and financial power are progressing on schedule.

The second page is concerned with the status of progress regarding net sales. In the three years from 2016, our target is to achieve net sales increases of 127.0 billion yen in the developed markets business and 256.0 billion yen in the emerging markets motorcycle business, which, when adjusted for -14.0 billion yen of foreign exchange effects, will mean reaching 2 trillion yen of net sales in 2018. In terms of progress, in the two years until the end of 2017, we forecast that we will achieve net sales increases of 38.0 billion yen in the developed markets business and 110.0 billion yen in the emerging markets motorcycle business, which, with -149.0 billion yen of foreign exchange effects, will mean 1,630.0 billion yen of net sales. In the developed markets business, net sales of motorcycles, marine, and IM etc. are expected to increase within the range planned, but, for RVs, are expected to decrease by being significantly behind plan. In the emerging markets motorcycle business, net sales in Vietnam, Thailand, and the Philippines etc. are expected to increase ahead of plan, whereas in India and Indonesia are expected to increase a little due to being behind plan. In 2018, we will work on recovery particularly in businesses which are behind plan.

The third page covers the status of progress regarding operating income. In the three years from 2016, our target is to achieve operating income increases of 36.0 billion yen in the developed markets business and 26.0 billion yen in the emerging markets motorcycle business, which, when adjusted for -12.0 billion yen of foreign exchange effects, will mean reaching 180.0 billion yen of operating income at a net sales ratio of 9.0% in 2018. In terms of progress, in the two years until the end of 2017, we forecast that we will achieve operating income increases of 7.0 billion yen in the developed markets business and 35.0 billion yen in the emerging markets motorcycle business, which, with -37.0 billion yen of foreign exchange effects, will mean 135.0 billion yen of operating income at a net sales ratio of 8.3%. In the developed markets business, operating income from motorcycles, marine, and IM etc. is expected to increase within the range planned, but decrease from RVs by being significantly behind plan. In the emerging markets motorcycle business, operating income in the ASEAN region is expected to increase ahead of plan, and further structural reform in Brazil is expected to also lead to an increase ahead of plan. In order to achieve an operating income ratio of the 9% level, in 2018 we will continue our profitability improvements initiatives.

The fourth page is concerned with 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). In 2017, the ROE is forecast to be 16.0% (an increase of 3.7 points), exceeding the target of 15%. Breaking down the ROE forecast into three elements, the net income ratio is 5.5% (+1.3 points), the total asset turnover is 1.21 (+0.06 point), while the finance business expands, and equity is 590.0 billion (+55.8 billion yen) exceeding standards prior to the Global Financial Crisis.

The fifth page covers cash flow (the difference between the amount of money earned and the amount used). In 2017, +33.0 billion yen of stable positive cash flow is forecast thanks to effects such as streamlining working capital and regular investment reviews. Moving forward, we will continue with stock dividends and growth investment.

This concludes our business results overview. I would like to ask for your continued efforts to achieve this year’s revised budget and then next year’s Medium-Term Plan, which are within reach. Next year, we plan to deepen our discussions regarding the shape of Yamaha Motor in ten years’ time, and specify scenarios for significant growth 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.”




Hiroyuki Yanagi

IM :Intelligent Machinery
SPV :Smart Power Vehicle
RV :Recreational Vehicle