Yamaha Corporation · TSE:7951
Yamaha — Investor Presentation (June 2005)
42 slides from Yamaha's investor presentation, Jun 28, 2005
Slide 1: Briefing on the Musical Instruments Business
YAMAHA CORPORATION Briefing on the Musical Instruments Business Mitsuru Umemura Senior Executive Officer General Manager, Musical Instruments Group Hiroo Okabe Executive Officer Deputy General Manager, Musical Instruments Group June 28, 2005 1
Slide 2: Outline of Today's Presentation
Outline of Today's Presentation I. Progress in Implementation of the YSD50 Management Plan II. Sales Expansion Plan III. Cost Reduction Measures 2
Slide 3: YSD50's Musical Instruments Business Strategy
I. YSD50’s Musical Instruments Business Strategy Growth Revitalizing strategy Expanding the (China and sales of high- high- Sales domestic Commercial value- value-added market products expansion Audio) Building strengths to enable continued generation of profits through major reforms in business str
Slide 4: Medium-term Management Plan
Medium-term Management Plan Progress in Implementation of the Management Plan and Plans Going Forward YSD50 F03/04 F04/05 F05/06 F06/07 3-Year Plan Actual Actual Projection Projection 293.4 302.6 313.0 334.0 40.6 9.2 10.4 21.0 10.5 14.2 21.5 31.0 20.5 3.7 7.3 9.5 YSD50 F04/05 F05/06 F06/07 Operating
Slide 5: II. Sales Expansion Plan
&> YAMAHA ll. Sales Expansion Plan
Slide 6: Total Demand for Musical Instruments (Excluding Professional Audio Market)
Total Demand for Musical Instruments (Excluding Professional Audio Market) Total demand of F04/05 expanded 3.7% from (Billion of yen) the previous fiscal year. 50% The trend toward lower prices is continuing, 800 725.3 732.7 699.1 and, the unit volume of sales increases, demand for high- and med
Slide 7: Sales by Product (Worldwide)
Sales by Product (Worldwide) Other ¥334.0 billion Music School ¥313.0 billion Professioal Audio ¥302.6 billion Equipment ¥293.4 billion Music Production 52.0 Equipment 49.8 String and Percussion 50.5 instruments 49.5 43.3 W ind and Educational 41.3 instruments 40.7 29.8 Home-use Keyboards 40.7 25.4
Slide 8: Sales Plan by Product (Worldwide)
Sales Plan by Product (Worldwide) Billions of Yen Music Instruments Segment: 31.4 (From F04/05 to F06/07) Music Other Professional School Music production audio 103% equipment equipment 106% 1.5 138% 2.6 String and percussion instruments 8.2 Wind and educational 124% instruments 126% 2.5 Home-use Pi
Slide 9: Sales Plan by Geographic Region (Worldwide)
Sales Plan by Geographic Region (Worldwide) (Billions of yen) Others (114%) China (182%) 4.7 Europe North (107%) 5.8 America (116%) 4.2 Japan (105%) 10.0 Musical Instrument Segment 31.4 6.7 (From F04/05 to F06/07) *Figures in parentheses represent changes from F04/05 to F06/07. 9
Slide 10: Sales Plan by Product (Japanese Market)
Sales Plan by Product (Japanese Market) Other ¥147.0 billion Music School ¥140.2 billion ¥136.8 billion Professional Audio Equipment ¥134.4 billion Music Production Equipment String and Percussion instruments W ind and Educational instruments 47.2 Home-use Keyboards 45.9 43.5 Electone 45.4 Pianos 39
Slide 11: Sales Expansion Plan by Product (Japanese Market)
Sales Expansion Plan by Product (Japanese Market) Billions of Yen Music Instruments Other Segment: 6.7 Music 103% (From F04/05 to F06/07) School 1.3 105% Professional Music audio production equipment 1.8 Wind and educational equipment instruments 157% String and Piano Electone Home-use percussion 1.
Slide 12: Growth in the Japanese Market
Growth in the Japanese Market Investment: Business expansion to match customer lifestyles • Develop new business models for music schools and stores through the creation of renewed value Develop new customer groups • Adult market • Musical instrument rental systems Work to expand EL performanc
Slide 13: Sales Plan by Product (North American Market)
Sales Plan by Product (North American Market) ¥74.4 billion ¥70.2 billion ($1=¥110) Other ($1=¥105) ¥64.7 billion ¥64.4 billion ($1=¥113) ($1=¥108) 1.1 0 Music School 2.6 10.9 1.6 2.1 0.1 Professioal Audio 0.1 0.1 9.1 Equipment 7.4 7.5 6.4 Music Production 5.3 Equipment 5.5 5.3 10.1 String and Percu
Slide 14: Sales Expansion Plan by Product (North American Market)
Sales Expansion Plan by Product (North American Market) Billions of Yen Music Instruments Segment: 10.0 (From F04/05 to F06/07) 145% 0% 52% Music (0.1) String and production (1.0) percussion equipment Music instruments 3.4 School Other Wind and 121% educational instruments 126% 1.1 Home-use Professi
Slide 15: "Total Piano" Demand in the United States
"Total Piano" Demand in the United States (Unit Since 2002, the market for piano- basis) type keyboards sold in mass 293K merchandise outlets has expanded. Further growth in demand is forecast. The expansionary trend in demand for digital pianos will continue. As unit prices decline, the greater 213
Slide 16: Yamaha's "Total Piano" Product Policy
Yamaha's "Total Piano" Product Policy Multifunction Price (high) Multifunction, pianos high value added Expand sales of high value added models Traditional with sophisticated pianos design Multifunction digital pianos Instruments to compete with Yamaha will develop products to meet pianos/digital pi
Slide 17: Growth in the North American Market
Growth in the North American Market Expand innovative, high-quality products and services • Introduce innovative, high-quality products: DKV-Mark IV, CLP-F01, Artist Model wind instruments, etc. • Draw on relationships with artists: Yamaha Artist Services Inc. (YASI) • Propose new customer service
Slide 18: Sales Plan by Product (European Market)
Sales Plan by Product (European Market) ¥64.8 billion ¥63.3 billion Other ¥59.1 billion (E1=¥134) (E1=¥127) ¥57.5 billion (E1=¥135) Music School (E1=¥133) 2.1 0.4 2.4 1.3 9.1 0.2 1.3 0.2 9.8 Porfessional Audio 0.2 7.0 7.9 Equipment 4.4 3.5 4.3 Music Production 3.8 7.6 Equipment 6.6 6.8 8.2 String an
Slide 19: Sales Expansion Plan by Product (European Market)
Sales Expansion Plan by Product (European Market) Billions of Yen Music Instruments Segment: 4.2 (From F04/05 to F06/07) Other Professional Music School 185 audio equipment 1.1 124% 100% Music 0 production equipment 1.9 String and percussion instruments 123 Home-use keyboards 0.8 Piano Wind and 121
Slide 20: Growth in the European Market
Growth in the European Market Expand innovative, high-quality products and services • Increase sales of innovative, high-quality products and services: Silent Piano, CLP-F01, medium to high-quality wind instruments, etc. • Draw on relationships with artists: Paris (pianos), London (guitars), Frank
Slide 21: Sales Plan by Product (Chinese Market)
Sales Plan by Product (Chinese Market) ¥12.9 billion Other Music school Professional audio equipm ent ¥8.7 billion 2.4 Music production equipm ent String and percussion 0 . 2 1.3 instrum ents ¥7.1 billion 0 . 3 0 . 3 Wind and educational ¥6.5 billion 0.3 instrum ents Hom e-use ketybords 2.1 1 . 1 0
Slide 22: Sales Expansion Plan by Product (Chinese Market)
Sales Expansion Plan by Product (Chinese Market) Billions of Yen Music Instruments Segment: 5.8 Music Other Wind and Music educational School (From F04/05 to F06/07) String and production instruments percussion equipment 217% -% -% instruments 0 0 Home-use -% 0.7 keyboards 300% 122% 0.3 164% 0.2 Ele
Slide 23: Expand Sales in the Chinese Market
Expand Sales in the Chinese Market Accelerate growth through improvement in the business infrastructure • Improve human resource capabilities (especially of local staff) • Build the YAMAHA brand • Establish and strengthen the sales network • Enhance manufacturing strengths at Hangzhou Yamaha Strat
Slide 24: Other Growth Markets
Other Growth Markets Korea: Expected to grow ¥0.5 billion, from ¥4.0 billion in F04/05 to ¥4.5 billion in F06/07 As demand for pianos recedes, Yamaha will strengthen its brand and artist relations Establish Artist Center Expand the music school business The Gulf States: Expected to grow ¥0
Slide 25: Sales Plan of Professional Audio Equipment
Sales Plan of Professional Audio Equipment ¥29.8billion ¥25.4billion 10% ¥20.2billion ¥21.6billion Commercial 9% 16.6 Audio Market 13.6 Musical 8.8 11.2 Instrument 7% retailers 7% Yamaha’s Share 11.4 11.8 13.2 10.4 F03/04 F04/05 F05/06 F06/07 (Actual) (Actual) (Projection) (Projection) Scale of ta
Slide 26: Sales Expansion Plans of Professional Audio Equipment by Region
Sales Expansion Plans of Professional Audio Equipment by Region Billions of Yen Other China 127% 0.9 Europe 217% 124% 0.7 North America 1.9 145% 3.4 Japan 157% 1.3 +8.2 (From F04/05 to F06/07) *Figures in parentheses represent changes from F04/05 to F06/07. 26
Slide 27: Growth Strategy for the Professional Audio Equipment Market
Growth Strategy for the Professional Audio Equipment Market Make the transition from a "mixer manufacturer" to a "solutions provider" for the professional audio equipment market • Establish a strong competitive position in applications • Become a "one-stop" supplier for offering solutions • Get cl
Slide 28: Acquisition of Steinberg
Acquisition of Steinberg Hardware Software Studio Connections • Seamless technological fusion for musica production software and hardware (YAMAHA's digital mixers and synthesizers + Steinberg's software) • Expand sales in the market for commercial music production software • Enliven the musical prod
Slide 29: Technology Alliance with and Investment in NEXO
Technology Alliance with and Investment in NEXO System solution Line-array Conventional Utility Speaker speaker speaker • Joint development of products for system solutions (YAMAHA digital mixers/amplifiers + NEXO speakers) • Full-scale entry into the commercial speaker business Development of speak
Slide 30: III. Cost Reduction Measures
III. Cost Reduction Measures 30
Slide 31: Musical Instruments Production Network
Musical Instruments Production Network Xiaoshan Xiaoshan (Piano (Piano parts, parts, Wind) Wind) Hangzhou (Pianos, Guitars) Hangzhou (Pianos, Guitars) Guangzhou Guangzhou (Pianos) (Pianos) Kemble & Co. (Pianos) Kemble & Co. (Pianos) Tianjin Tianjin (DMI*) (DMI*) YMP YMP (Wind, (Wind, String) String)
Slide 32: Manufacturing Base Strategy by Product Group of Musical Instruments
Manufacturing Base Strategy by Product Group of Musical Instruments YSD-50 Expanding production innovation as mother factories F04/05 F05/06 F06/07 Group Market Manufacturing Base Strengthen production capability in Japan China Indonesia Japan, China, and Indonesia Electronic Expand Electone product
Slide 33: Establishment of New Bases in China
Establishment of New Bases in China Hangzhou Yamaha Musical Instruments Co.,Ltd. (Established in November 2004) 33
Slide 34: Establishment of New Bases in China (2)
Establishment of New Bases in China (2) Piano production at Hangzhou Yamaha Guitar production at Hangzhou Yamaha 34
Slide 35: Improving Profitability of Musical Instruments and Plans Going Forward
Improving profitability of Musical Instruments and Plans Going Forward Decrease in production costs ¥100 million Cost down YSD 50 Estimated F04/05 F05/06 F06/07 3-Year effects Actual effects Estimated Estimated Compound Effects effects effects effects (F03/04 vs.F06/07) (against previous year) (agai
Slide 36: Reforms in Personnel Composition
Reforms in Personnel Composition Strengthening human resources 9 Recruit personnel with necessary skills 9 Training for core personnel 9 Installing a educational program for manager in the new plant in China Substantial improvement in overhead productivity 9 Production process reform for improving
Slide 37: Reduction in Inventories due to SCM
Reduction in Inventories due to SCM Strict observance of delivery Establish methods of global inventory schedules management ¾Make weekly delivery response ¾ Develop supply system responding to possible orders ¾ Pull inventories of sales companies to the Reduce lead times Head Office ¾Pianos:
Slide 38: Appendix
Appendix & YAMAHA 38
Slide 39: Musical Instrument Sales in the Japanese Market
Musical Instrument Sales in the Japanese Market YAMAHA’s Wholesale Amount (By category, excluding PA) Wholesale Amount (By category, excluding PA) Billions of Yen 120 107.9 106.9 Musical 103.7 56.9 production 104.9 (103%) (96%) (103%) Musical 54.6 (107%) equipment production 53.2 equipment (111%) (9
Slide 40: Musical Instrument Sales in the U.S. Market
Musical Instrument Sales in the U.S. Market YAMAHA’s Wholesale Amount (By category, excluding PA) Wholesale Amount (By category, excluding PA) % Change from the previous year 2500 Wholesale Amount 2,138 Millions of U.S. Dollars 2,103 2,092 (102%) (106%) (101%) 1, 980 Musical production 600 equipment
Slide 41: Musical Instrument Sales in European Market
Musical Instrument Sales in European Market YAMAHA’s Wholesale Amount (By category, excluding PA) Wholesale Amount (By category, excluding PA) % Change from the previous year Wholesale Amount 2000 1,792 1,733 1,756 Millions of Euro (102%) (102%) (101%) 1,692 Musical production equipment 422 String a
Slide 42: Musical Instrument Sales in Chinese Market
Musical Instrument Sales in Chinese Market YAMAHA’s Wholesale Amount (By category, excluding PA) Wholesale Amount (By category, excluding PA) % Change from the previous year Wholesale Amount 4,577 Musical 5,000 production Millions of Yuan 4,245 (108%)equipment (114%) String and percussion 825 instru