Yamaha Corporation · TSE:7951
Yamaha — FY2003 Earnings Presentation
43 slides from Yamaha's earnings presentation, May 12, 2003
Slide 1: Presentation of Financial Statements for Fiscal 2003
Presentation of Financial Statements for Fiscal 2003 May 12, 2003 YAMAHA CORPORATION
Slide 2: Financial Summary for the Fiscal Year Ended March 31, 2003
Financial Summary for the Fiscal Year Ended March 31, 2003 Operating income and net income reached new record high levels. Operating income was ¥32.0 billion (previous record: ¥29.6 billion in FY1997) Net income was ¥17.9 billion (previous record: ¥14.0 billion in FY1997) Net sales increased for the
Slide 3: Performance Outline
Performance Outline (Billions of Yen) Increase/ Initial Projection FY2002 FY2003 (announced on (Decrease) March 4, 2003) Net Sales 504.4 524.7 20.3 526.0 Operating Income 11.0 32.0 21.0 27.5 (Operating Income Ratio) (2.1%) (6.1%) Recurring Profit 7.6 33.8 26.2 (Recurring Profit Ratio) (1.5%) (6.4%)
Slide 4: Currency Exchange Rates
Currency Exchange Rates FY2002 FY2003 Impact (Billions of Yen) Net Sales US$ ¥125 ¥122 - ¥2.0 EUR ¥110 ¥121 + ¥4.9 Others + ¥1.6 Total + ¥4.5 Profit US$ ¥124 ¥122 + ¥0.3 EUR ¥107 ¥116 + ¥4.1 Others + ¥0.5 Total + ¥4.9 4
Slide 5: Net Sales by Business Segment
Net Sales by Business Segment (Billions of Yen) (+4.0%) (+3.1%) 524.7 520.2 504.4 Recreation and Others 41.8 (+4.5) 41.8 Electronic Equipment 40.0 and Metal Products 36.6 60.6 (+65.6) 60.6 Lifestyle--Related Products Lifestyle 45.7 46.0 (+0.7) 46.0 AV/IT 95.2 83.7 (-12.1) 82.1 (-13.8) Musical Instru
Slide 6: Breakdown of Operating Income/Loss
Breakdown of Operating Income/Loss Decrease in (Billions of Yen) SG&A Pension Decrease in Expenses Obligations Manufacturing Costs -3.0 +1.1 +11.0 Increase in Net Sales Gain on Foreign +7.0 Exchange 32.0 +4.9 11.0 Operating Income Operating Income for FY2002 for FY2003 6
Slide 7: Operating Income by Business Segment
Operating Income by Business Segment (Billions of Yen) Increase/ Currency Actual FY2002 FY2003 Exchange Increase/ (Decrease) Impact (Decrease) Musical Instruments 4.7 9.8 5.1 3.3 1.8 AV/IT 3.0 3.2 0.2 1.6 (1.4) Lifestyle-Related Products 1.0 0.5 (0.5) (0.5) Electronic Equipment and 4.4 19.3 14.9 14.
Slide 8: FY2003 Overview of Performance by Business Field
FY2003 Overview of Performance by Business Field Improved profitability in core businesses (1) Higher sales and profitability in musical instruments FY2002 FY2003 Ratio of operating income to net sales 1.7% 3.3% (2) Lower sales but improved profitability in AV/IT products Ratio of operating income t
Slide 9: FY2003 Progress in Management Strategies
FY2003 Progress in Management Strategies Musical Instruments Progress in Chinese market strategies —Local holding company began operating on schedule in April 2003 —Piano/guitar factory will begin operating in April 2004 Development of adult clientele in Japan —Opening of “Muse Club Sapporo”, a musi
Slide 10: FY2003 Progress in Management Strategies
FY2003 Progress in Management Strategies AV/IT —Strengthening the product line of new home theater products —Growth in sales of router products for SOHO and small/medium-sized networks —Yamaha Electronics (Suzhou) Co., Ltd. began production on schedule in March 2003 Electronic Equipment —Growth in s
Slide 11: Bolstering the Profit Structure
Bolstering the Profit Structure Restructuring measures Impact on Profitability —Withdrawal from CDR/RW drive business (March 31, 2003) ¥0.7 billion (extraordinary loss) —Closure of Sunza Villa resort facility (June 30, 2003) ¥0.5 billion (extraordinary loss) —Closure of Kiroro golf course (Oct. 31,
Slide 12: Forecast for FY2004
Forecast for FY2004 12
Slide 13: FY2004 Operating Environment (1)
FY2004 Operating Environment (1) Musical Instruments —Growing difficulty of predicting trends in global economy —China's increasing presence as a consumer market and emergence as a manufacturer, particularly in the area of acoustic instruments (pianos, wind instruments, etc.) AV/IT —Structural chang
Slide 14: FY2004 Operating Environment (2)
FY2004 Operating Environment (2) Semiconductors —Growing demand in the United States and Europe due to introduction of polyphonic sound chips for mobile phones Electronic Metal —Continued robustness of copper lead-frame material market Recreation —Continued movement toward lower-priced services and
Slide 15: Principal Business Execution Focus in FY2004
Principal Business Execution Focus in FY2004 Securing Consolidated Profitability Promoting and Strengthening Global Management Increasing the Rigor of Compliance Systems
Slide 16: Forecasts of Business Performance for FY2004
Forecasts of Business Performance for FY2004 (Billions of Yen) FY2004 FY2003 Results FY2004 Forecasts Initial Medium- Increase/ Term 1st Full 1st Full (Decrease) 2nd Half 2nd Half Management Half Year Half Year Plan Goals Net Sales 253.7 271.0 524.7 269.0 278.0 547.0 +4.3% 560.0 Operating Income 32.
Slide 17: Currency Exchange Rates
Currency Exchange Rates FY2003 Results FY2004 Results Impact 1st 2nd Full 1st 2nd Full (Billions of Yen) Half Half Year Half Half Year US$ ¥123 ¥121 ¥122 ¥120 ¥120 ¥120 - ¥1.5 EUR ¥117 ¥125 ¥121 ¥125 ¥125 ¥125 + ¥2.1 Net Sales Others — - ¥0.1 Total + ¥0.5 US$ ¥122 ¥121 ¥122 ¥120 ¥120 ¥120 ¥0.0 EUR ¥
Slide 18: Forecasts of Net Sales by Business Segment
Forecasts of Net Sales by Business Segment (Billions of Yen) 547.0 (+4.3 %) 546.5 (+4.2 %) 524.7 Recreation and Others 41.8 46.0 (+10.0%) 46.0 Electronic Equipment 61.5 (+1.5%) 61.5 and Metal Products 60.6 47.5 (+3.3%) 47.5 Lifestyle--Related Products Lifestyle 46.0 AV/IT 83.7 90.0 (+7.5%) 89.7 (+7.
Slide 19: Forecast Breakdown of Operating Income/Loss
Forecast Breakdown of Operating Income/Loss (Billions of Yen) Decrease in Gross Including expenses of Profit Margin three newly consolidated companies +3.3 -1.1 -4.6 -1.1 +3.5 Decrease in Increase in Manufacturing SG&A Pension Gain on Costs Foreign Expenses Obligations Exchange 32.0 32.0 Operating I
Slide 20: Forecasts of Operating Income by Business Segment
Forecasts of Operating Income by Business Segment (Billions of Yen) Currency Actual FY2003 FY2004 Increase/ Exchange Increase/ Results Forecasts (Decrease) Impact (Decrease) Musical Instruments 9.8 12.0 2.2 2.2 0.0 AV/IT 3.2 3.7 0.5 1.3 (0.8) Lifestyle-Related Products 0.5 0.8 0.3 0.3 Electronic Equ
Slide 21: Inventory
Inventory 2.26 Months 2.01 1.83 Inventory at the end of the Term Average Net Sales per Month 97.7 1.60 (Billions of Yen) 84.3 80.1 33.8 73.1 27.9 24.8 Goods in 6.5 25.6 Process/ Materials 3.7 6.1 12.9 8.6 8.4 4.4 AV/IT Products 6.6 Other Products 44.5 44.1 40.8 Musical 36.5 Instruments FY2001 FY2002
Slide 22: Free Cash Flow
Free Cash Flow (Billions of Yen) 23.2 18.6 11.4 FY2001 FY2002 FY2003 FY2004 (Projected) (14.5) 22
Slide 23: Interest-Bearing Liabilities
Interest-Bearing Liabilities (Billions of Yen) 110.7 Resort Deposits 93.2 40.3 82.8 38.1 36.8 61.4 Long-Term Debt 26.3 (Excluding Cash and Deposits) 70.4 55.1 46.0 35.1 FY2001 FY2002 FY2003 FY2004 (Projected) 23
Slide 24: Measures in Individual Business Fields
Measures in Individual Business Fields
Slide 25: Measures for Musical Instruments
Measures for Musical Instruments Market-Specific Policies Japanese market • Increasing efficiency through operational reforms and enhancing profitability through the reduction of fixed expenses • Implementing promotional and product strategies for developing demand among adults European & U.S. marke
Slide 26: Developing Demand among Adults in Japan
Developing Demand among Adults in Japan Developing a base of music schools for adults • Unistyle Establishing 20 new-concept, suburban-style schools (medium-term goal of establishing 200 schools) • Core 100 Establishing 20 new-concept, urban-style schools specializing in adult education (medium-term
Slide 27: Strategies in the Chinese Market (1)
Strategies in the Chinese Market (1) ?Unifying marketing operations in China under the China-based holding company Yamaha Music & Electronics (China) Co., Ltd. (began operating in April 2003) ?Establishing a piano and guitar factory in Hangzhou—Hangzhou Yamaha Musical Instruments Co., Ltd. (Billions
Slide 28: Strategies in the Chinese Market (2)
Strategies in the Chinese Market (2) Promoting integrated Emphasized measures marketing capabilities and investment administration •Expanding operations by unifying marketing activities capabilities focused primarily Establishing and growing the sales network on musical instruments and •Developing a
Slide 29: Proactive Development of Ringing Melodies Distribution Service
Proactive Development of Ringing Melodies Distribution Service (Thousands of People) Emphasized Measures Number of ringing Domestic: melodies distribution 200 Overseas regular Building websites that primarily target teenagers, augmenting members advertising and promotional activities service Promoti
Slide 30: Net Sales/Operating Income in AV/IT Business
Net Sales/Operating Income in AV/IT Business Market Environment (Billions of Yen) • Market globalization and product digitization and networking • Intensification of competition and industrial reorganization, increasing diffusion of Chinese products and Chinese brands • Expansion of demand for home
Slide 31: Measures in AV/IT Business (1)
Measures in AV/IT Business (1) 1. Implementing strategies for augmenting competitiveness in existing business fields • Overcoming competition in the core business field of home theaters Increasing sales of products the Company is particularly strong in, such as component-type AV amplifiers and recei
Slide 32: Measures in AV/IT Business (2)
Measures in AV/IT Business (2) 2. Implementing strategies for developing business in new growth fields • Developing MusicCAST/AV Station business • Promoting visual product business DPX-1000
Slide 33: Measures in AV/IT Business (3)
Measures in AV/IT Business (3) 3. Implementing strategies for developing business in the Chinese market • Creating stronger sales and marketing systems centered on the new local holding company • Beginning full-scale manufacturing operations at Yamaha Electronics (Suzhou) Co., Ltd. (YES) Net Sales o
Slide 34: Net Sales/Operating Income in Semiconductor Business
Net Sales/Operating Income in Semiconductor Business Although the sales volume of sound chips is expected to rise, because of lower unit prices, net sales are Projected to increase only slightly while profitability decreases. (Billions of Yen) 48.8 46.0 Net Sales Operating Income 26.8 24.5 01/3 02/3
Slide 35: Key Measures in Semiconductor Business
Key Measures in Semiconductor Business Further expanding sound chip sales volume while securing related profitability • Maintaining a high market share with domestic customers and increasing sound chips in overseas models • Strengthening sales in Europe and the United States by using SMAF (Synthetic
Slide 36: Trends in the Global Market for Mobile Phones
Trends in the Global Market for Mobile Phones (Million Units) Renewed trend of growth, with annual sales topping 500 the 400 million unit mark Promotion of replacement purchases due to carriers' provision of new services and the addition of new 400 phone functions Korea-based Samsung rapidly expandi
Slide 37: Overview of the New MA-5 Sound Chip
Overview of the New MA-5 Sound Chip Maximum number of simultaneous notes:64 FM system: 32 notes + Wave Table System : 32 notes Expanding versatility of voices enabling response to future diversification of contents (Example: humanoid voices capable of pronouncing simple words that meet the needs of
Slide 38: Metal Products Business
Metal Products Business Market Environment • Stable demand over the medium-term for semiconductors and metal materials for electronics components • Moves toward materials that offer higher performance and higher quality as well as rising cost pressures from manufacturers of finished products Priorit
Slide 39: Lifestyle-Related Business
Lifestyle-Related Business Market Environment • Continued decline in number of new housing construction starts and expansion of housing renovation market • Companies increasingly seeking to survive by arranging operational and capital alliances Priority Policies • Reducing the break-even point throu
Slide 40: Recreation Business
Recreation Business Market Environment • Continued slack conditions in the domestic economy and lifestyle changes in Japan Priority Policies • Reducing the breakeven point by boosting operating efficiency and otherwise reducing costs • Securing at least two million visitors annually • Regular period
Slide 41: Others
Market Environment Others • Intensifying competition amid continued slack conditions in the domestic economy • Pressure from finished product manufacturers for additional reductions in component prices Priority Policies • Improving the profitability of business in magnesium components for mobile pho
Slide 42: Forward-looking forecasts notice
In this report, the figures forecast for the Company’s future performance have been calculated on the basis of information currently available to YAMAHA and the YAMAHA Group. Forecasts are, therefore, subject to risks and uncertainties. Accordingly, our actual performance may differ greatly from our
Slide 43: YAMAHA - Creating Kando Together
@ YAMAHA CREATING KANDO TOGETHER