Inaugural Message Video from President Hidaka
2018 New Year’s Greetings
Becoming a unique company that continues to achieve dynamic milestones:
Our challenge in the third year of the Medium-term Management Plan
Happy New Year everyone!
My name is Yoshihiro Hidaka, and I have been newly appointed as President and Representative Director of Yamaha Motor. As I looked towards assuming this office on January 1, I have personally felt an increasing sense of nervous tension but also inspiration toward the challenges ahead. For me, it has been a New Year like no other.
It is my passion to work with you and grow Yamaha Motor into a larger and even more unique company. I look forward to working with you to achieve this goal.
In 2017, Yamaha Motor is anticipated to have reached its highest income level ever. I believe that this is the result of all employees being highly cognizant of our medium-term targets and working with a high degree of awareness of them. I am very grateful for all your efforts and application.
2018 is the final year of the current Medium-term Management Plan. Due to circumstances not anticipated when the Plan was formulated, some businesses have diverged significantly from the initial plan; please first focus on achieving the remaining targets in those areas. Once we have done so, this year we will move onto formulating the new long-term vision and the next Medium-term Management Plan. By combining our strengths and abilities, I hope to build the next generation of Yamaha Motor together.
As we begin the New Year, I would like to recap 2017 and look ahead to our initiatives in 2018 by sharing a few themes with you.
Enhancing Brand Value
In order to achieve the corporate management objective of further increasing and enhancing the value of the Yamaha brand, last year we established the Brand Committee, which includes both Japanese and overseas members. The Committee has been working to clarify the frameworks relating to the brand, such as being a Kando* Creating Company, Revs Your Heart, and the unique style of Yamaha: Innovation, Excitement, Confidence, Emotion and Ties, enabling the entire Yamaha Motor Group to work together to visualize brand value. The Committee has also designated the anniversary of the company’s founding as “Brand Day,” and taken a range of internal and external communication initiatives.
In 2018, the Committee will enrich its activities, fulfilling its role to enhance brand value by focusing on making branding activities easier to understand so that each and every Group employee can pursue “the unique style of Yamaha.”
Increasing Sales Scale
In 2017, businesses in ASEAN (except Indonesia) and Brazil, as well as the Marine, Intelligent Machinery, and Smart Power Vehicles businesses increased in scale, the Indian market was flat, and the Indonesian, developed markets motorcycles, and RV businesses decreased in scale. As a result, consolidated net sales are anticipated to have reached 1,630.0 billion yen thanks to an increased sales scale of 100.0 billion yen and foreign exchange effects of 50.0 billion yen on the previous year. The adverse developed markets motorcycles environment is expected to continue in 2018, but we aim for increased scale in the Philippines, India, Marine, and Smart Power Vehicles businesses, scale recovery in Indonesia, and continued healthy sales in the Intelligent Machinery business, leading to further sales growth overall. I ask each business unit to structure their sales activities towards achieving their respective targets.
Increasing Earning Power
In 2017, consolidated operating income is anticipated to have reached at least 140.0 billion yen (an increase of at least 32.0 billion yen on the previous year), its highest level ever, thanks to profitability improvements, increased scale, and a more favorable exchange rate environment. Increasing marginal profit through cost reduction initiatives/restriction of cost increases, pricing strategies, product mix improvements, and increased scale - while also curbing increases in expenses - has led to the operating income ratio reaching a level near the medium-term target of 9%. In 2018, we will aim to reach ROS of at least 9% by increasing investment for growth while continuing to secure stable income.
Increasing Financial Power
In 2017, we made steady improvements to cash flow by controlling working capital and investment, as well as retaining some income as cash.
By making improvements to cash flow over the last two years, we anticipate having reached the targets in the Medium-term Management Plan - ROE of approximately 15%, Equity Ratio of 42.5%, and substantial borrowings (excluding sales finance) of 0 yen or less - one year ahead of schedule. In 2018, we will further promote SCM reform, maintain an appropriate level of working capital, carefully manage the return on investment of existing businesses, and create stable cash flow from the income earned, thus securing capital for growth.
Among the priority items included in the current Medium-term Management Plan are to increase earning power, strengthen the financial platform, generate cash flow, and increase investment for future growth and stock dividends. Over the last two years, we have achieved results regarding earning power and the financial platform over and above the targets. On the other hand, I believe that initiatives for future growth have not yet advanced sufficiently. While maintaining earning power, please take all the initiatives for future growth possible in each of your businesses.
Increasing Product Competitiveness
In each business, we are increasingly launching uniquely-Yamaha products - such as platform models and global models - onto the market. Our medium-term target is for 280 model launches, and we released 80 models in 2016 and 110 models in 2017. However, there have been issues with quality and launch schedules. This year, we will launch the remaining 90 models while thoroughly incorporating QCD.
Costs: Our medium-term target total cost reductions in procurement, manufacturing, and logistics is 60.0 billion yen; in 2016 we achieved 16.6 billion yen, and in 2017 we anticipate having achieved 11.1 billion yen.
This year, we aim to achieve 21.4 billion yen of the remaining 32.3 billion yen. The gap to the medium-term target is therefore over 10.0 billion yen, and the major cause is decreasing unit sales in relation to its medium-term target. Please apply and achieve results from uniquely Yamaha cost reduction methods such as PFCD, theoretical-value-based production, and theoretical-value-based logistics even further - both domestically and overseas, as well as internally and externally to the company.
Quality: Compared to the medium-term target of 0.5%, the rate of customer return expenses is anticipated to have been 0.71% in 2017. This represents an improvement on the 0.90% in 2016, but it still means we are inconveniencing approximately one million customers. In addition, shipment stoppages and delayed launches of new models led to significant lost sales opportunities and increases in inventory. The financial impact of these issues was at least 4.2 billion yen. Quality is the part of our brand value which we want customers to appreciate directly. In 2018, please apply what we have learned from past failures to your work, and further engage in “WATASHI GA YAMAHA” initiatives.
Marketing: As a platform to share the knowledge built up to date by the members of the 3S (Sales, Service, Spare parts) team on a global level, the GMSM (Global Marketing in Sales Meeting) was held in 2015, with 11 companies participating. In 2017, the RMSM (Regional Marketing in Sales Meeting) was held in four regions, and in 2018 we plan to hold the first GMSM with representatives of 20 companies present. Please establish a uniquely-Yamaha style which leads to new successes by thoroughly studying cases of past success and failures.
Pursuing Growth Strategies
2017 was the second year of the Medium-Term Management Plan, and little by little, we are starting to see specific results from the efforts we have made to “plant seeds.”
By applying the proprietary technologies developed from a practical robotics perspective, we were able to begin providing solutions to the medical field with the new CELL HANDLER. In addition, we are conducting commercialization trials of the golf car-based PPM (Public Personal Mobility) autonomous driving system in various regions around Japan. The Yamaha Motor E-VINO is being utilized in the “E-kizuna Project” EV motorcycle rental system underway in Saitama City, by doing so searching for new businesses which are aware of the change from selling products to selling solutions. In each business, I would like us all to clearly anticipate what will have value in the market - even for products or concepts which have just been created or are still in development - and to increase the speed at which we bring products to market.
In 2018, we will exhibit for the first time at the CES (Consumer Electronics Show) held in Las Vegas, showcasing our distinctive technologies such as PPM, MOTOROiD, MOTOBOT, and UMS/drones etc. to the world, and also expanding opportunities for fusion with knowledge from outside the company. We will also promote business development through new methods, such as the utilization of partnerships, venture investment, and M&As.
Organizational and Human Resource Development
We have made organizational changes in January in order to realize these growth strategies.
In particular, to speed up the commercialization of new business, the New Business Development Center and the Technology Center were reorganized, with the new Mobility Technology Center established to take charge of new fields of mobility, and the new Advanced Technology Center established to combine new business planning functions, digital strategy promotion functions, and advanced technology development functions. In addition, the Vehicle & Solution Business Operations was renamed the Solution Business Operations to accelerate the roll out of new business strategies including robotics technology (technology developed through industrial robots and know-how regarding unmanned helicopters). Other changes have also taken place, but what matters here is not simply changing the “package,” rather that all employees thoroughly understand the objectives of these organizational changes, and that the staff concerned engage in their work with a higher level of awareness. The business environment facing us is changing faster than we imagine, becoming more advanced and challenging as it does so. Please engage in your work with the sense of urgency that acting once left behind would be too late.
Organization Vitalization: In order to ensure high-quality communication and increase employees’ ability for self-direction, the coaching program introduced two years ago was last year expanded to 60 new departments. Based on employee attitude surveys, the results of which are beginning to show improvements in communication between managers and subordinates, the program will be expanded to the remaining 60 departments, as well as other areas within the departments where it has already been introduced, furthering its reach as a company-wide initiative.
Personnel Development and Diversity: A total of 132 people have completed the GEP and REP programs to develop next-generation global executives. In addition, global new graduate hires numbered 86 people in 2017, accounting for 10% of regular staff new graduate hires. We believe that diversity makes creating new value easier. In order to further promote diversity, the training for selected personnel - which had previously only been conducted domestically - is from this year being implemented globally, being newly launched as YBS-G. The training system is being further enhanced to roll out a diverse personnel development program.
Opportunities for the advancement of women are also gradually increasing. This year saw the appointment of YMC’s first female overseas company general manager and headquarters general manager. The number of female expatriate staff (including trainees) increased to ten, doubling over the previous year, as we take further initiatives to create a working environment which enables female participation.
Harmony with Stakeholders, Communities/Society, and the Environment
We believe that contributing to society through our business activities is part of our CSR (Corporate Social Responsibility), and we aim to be a company which grows while valuing communication with stakeholders and being in tune with communities/society and the environment. Based on this approach, in 2017 we signed the “United Nations Global Compact,” a global framework to realize sustainable growth in international society, declaring both internally and externally our intention to promote action programs. In 2018, I would like each and every employee to understand this approach and implement it as part of their work initiatives.
In summary, I have tried to provide an overview of the company's current state and future direction from several different perspectives. I hope that 2018 is a year in which we can discuss matters together, foster agreement, and work to share the joy of success which completely fulfills the current Medium-term Management Plan. Let’s also make 2018 a year in which we all bring enthusiasm and energy to our work to create the future Yamaha Motor.
|ROE (Return On Equity):||Ratio of income to equity|
|ROS (Return On Sales):||Ratio of income to net sales|
|PFCD (Platform Cost Down):||Cost reductions achieved through platform development|
|GEP (Global Executive Program):||Program to train company executives at the global level|
|REP (Regional Executive Program):||Program to train company executives in six regions worldwide|