Yamaha Corporation · TSE:7951
Yamaha — FY2005 Earnings Presentation
39 slides from Yamaha's earnings presentation, May 2, 2005
Slide 1: Analyst and Investor Briefing on the Fiscal Year Ended March 31, 2005
Analyst and Investor Briefing on the Fiscal Year Ended March 31, 2005 (April 1, 2004 to March 31, 2005) May 2, 2005 YAMAHA CORPORATION
Slide 2: Fiscal 2005 Results Summary
Fiscal 2005 Results Summary ¾Sales and profits declined year to year Musical Instruments segment: Sales and profits rose three consecutive years z Sales: ¥293.4 billion → ¥302.6 billion z Operating income: ¥10.5 billion → ¥14.2 billion Electronic Equipment & Metal Products: Semiconductor unit pr
Slide 3: Performance in FY2005
Performance in FY2005 ¾ Sales and income were lower than the previous year. Operating income is approximately the same as the medium-term plan. （Billions of Yen） FY2004 FY2005 Increase/ Previous Medium-term Projections Results Results (Decrease) (Feb. 10) Plan Net Sales 539.5 534.1 (5.4) 541.0 550.0
Slide 4: Net Sales and Operating Income by Business Segment in FY2005
Net Sales and Operating Income by Business Segment in FY2005 Net Sales Operating Income （Billions of Yen） Recreation & 539.5 534.1 （－1.0%)550.0 Others Lifestyle- 46.2 41.9 （－9.3) 46.0 Related Products 44.8 42.8 (－4.5) 46.0 Electronic 45.1 Equipment 76.9 69.0 (－10.3) 67.0 1.5 and Metal Products 35.7
Slide 5: Musical Instruments
Musical Instruments 4Q Overview FY2005 Overview z Actual sales in local currency terms rose 7.0% z Actual sales increased 4.2% YoY YoY. z Domestic sales rose YoY for first time in a long while, thanks 0.4% above previous projections in local to the high-performance Electone “STAGEA”; music school cu
Slide 6: AV/IT
AV/IT 4Q Overview FY2005 Overview z Home theater market slumped rapidly in Europe z Sales and profits declined YoY; sales undershot and US starting in autumn, 4Q sales plummeted target for first year of medium-term plan by more 19.0% from the same period of the previous than ¥10 billion year; sales
Slide 7: Electronic Equipment and Metal Products
Electronic Equipment and Metal Products 4Q Overview FY2005 Overview z Results largely matched forecasts, but sales z Sales and profits declined YoY. and profits fell substantially from the same period of the previous year. z Results were above targets of medium-term plan in 1H, but were largely on t
Slide 8: Lifestyle-Related Products
Lifestyle-Related Products 4Q Overview FY2005 Overview z 4Q sales were in line with the same period of z Sales and profits decreased YoY. FY2004 and the previous projections. Operating loss was flat YoY. z Construction starts held steady, but prices moved lower and competition intensified; maintaini
Slide 9: Recreation
Recreation 4Q Overview FY2005 Overview z Revenues were below the previous year and z As a result of declining customer numbers, under previous projections. revenues plunged 9.0% from the previous year. z Compared with the same period of the pervious z Streamlining failed to offset falling gross prof
Slide 10: Others
Others 4Q Overview FY2005 Overview z Profits increased sharply YoY as production z Segment sales were down overall from the previous yields rose for magnesium components used in year, but operating income moved into black as mobile phones, automobile interior wood earnings from components & metallic
Slide 11: Evaluation for first fiscal year of YSD50 plan in fiscal 2005
Evaluation for first fiscal year of “YSD50” plan in fiscal 2005 z Unfortunately, sales and operating income failed to reach goals for first year of YSD50 plan in fiscal 2005 z Some progress seen from introduction of new value-added and creative products; introduced outside technology through acquisi
Slide 12: Basic policies of YSD50 medium-term plan
Basic policies of YSD50 medium-term plan Achieving Achieving sustained sustained development development and and stable stable high high earnings earnings Creating Creating and and Development Development Innovative, Innovative, High-Quality High-Quality Products Products and and Business Business E
Slide 13: Achieving sustained development and stable high earnings
Achieving sustained development and stable high earnings Enhance business profitability Invigorating Japanese market ¾ Developing profitable product lines with high competitive ¾ STAGEA proving popular edge (Mark IV, ChicagoTp, RX-V1500/2500, RTX1500) ¾ YAMAHA music school students turning highe
Slide 14: Creating and Developing Innovative, High-Quality Products and Business
Creating and Development Innovative, High-Quality Products and Business Developing original technologies Introducing Innovative design ¾ Disklavier Mark IV ¾ CLP-F01 Incorporating the AEM sound source developed originally A newly designed electronic piano by YAMAHA ¾ STAGEA The first musical ins
Slide 15: Emphasizing Corporate Social Responsibility (CSR)
Emphasizing Corporate Social Responsibility (CSR) Contributing to community development by promoting music education ¾ Promoting artists who have attended YAMAHA music school Environmental initiatives ¾ Promoting policies for total elimination of emissions at plants Offering venues for musical
Slide 16: Position in fiscal 2006
Position in fiscal 2006 z Recognize fiscal year as crucial phase for reaching ¥50 billion goal for operating income in fiscal 2007 z Strengthening profit capabilities in musical instrument segment is key theme z Toward this end, establishing sales network in China following delays, reducing costs, a
Slide 17: Forecasts of Business Performance in FY2006
Forecasts of Business Performance in FY2006 ¾ Forecasting lagging sales and profits compared with medium-term plan, due partially to late policy initiatives, but targeting sales and profit growth YoY, with operating income reaching ¥50 billion in fiscal 2007 FY2005 FY2006 Increase/ Medium-term Resul
Slide 18: Forecasts of Net Sales and Operating Income by Business Segment in FY2006
Forecasts of Net Sales and Operating Income by Business Segment in FY2006 Net Sales Operating Income 565.0 （Billions of Yen） Recreation & 546.0 (+2.2%) 534.1 Others 49.0 41.9 44.0 (+5.0) Lifestyle- Related 41.5 (-3.0) 47.0 Products 42.8 Electronic (-15.2) 59.0 40.0 58.5 35.7 37.0 Recreation & Equipm
Slide 19: Musical Instruments
Musical Instruments • Uncertainties persist despite some positive signs in the market • Emergence of Chinese-made products in European, US, and Chinese markets; switch to low-priced instruments under way • Steadily promotion six core strategies for attaining operating income of ¥30 billion in fiscal
Slide 20: AV/IT
AV/IT • Home theater markets turning sluggish in Europe and US; competition intensifying and prices declining further • In Japan, home theater infrastructure taking shape as large-screen, thin-panel TVs gain widespread use • Sales of digital sound projectors increasing • Maintaining and strengthenin
Slide 21: Electronic Equipment and Metal Products
Electronic Equipment and Metal Products • Forecasting 5-10% growth in global mobile phone market in 2005 • Competition becoming fiercer between manufacturers as phones add more high-performance features and prices fall, intensified pressure for cost reduction of parts suppliers • Expecting recovery
Slide 22: Lifestyle-Related Products
Lifestyle-Related Products • Stepping up activities in remodeling market as growth in new housing starts turn weaker • Turning profitable at operating level during fiscal year and building a business model for the medium term • Steadily promoting a string of structural reform measures, including sel
Slide 23: Recreation
Recreation • Polarization between low-cost recreational facilities and genuine high-end facilities • Declining depreciation charges and sharply improving earnings as sales rise Goal to turn a profit and record operating income in fiscal 2007 • Aims to attract and retain customers through differentia
Slide 24: Others
Others • In components businesses, ongoing pressure for cost-cutting from full-product assembly makers • Golf products facing stiffer competition as market shrinks • Taping into new customers and bolstering production capabilities in automobile interior wood component business • Maintaining producti
Slide 25: Inventories
Inventories ¾Inventory assets were up YoY at the end of fiscal 2005, especially in the musical instrument and AV areas ¾Targeting reductions in inventories at the end of fiscal 2006 through SCM （Billions of Yen） 80.1 78.4 72.1 69.4 Goods in Process/ 24.8 26.9 Materials 25.0 23.7 Other Products 6.1 0
Slide 26: Capital Expenditure/Depreciation/R&D Expenses
Capital Expenditure/Depreciation/ R&D Expenses Capital Expenditure/Depreciation （Billions of Yen） 24.0 22.7 21.2 (19.0) (19.9) (17.6) (17.5) 5.6 16.9 5.3 Others 4.9 Electronic 3.1 5.0 4.8 4.4 Equipment and 3.4 1.1 1.7 Metal Products 1.8 1.6 AV/IT 11.9 10.1 11.3 Musical 8.8 Instruments FY2003 FY2004
Slide 27: Interest-Bearing Liabilities (Actual Balance)
Interest-Bearing Liabilities (Actual Balance) ¾ Achieved goal of YSD50 plan to completely eliminate interest-bearing debt two years ahead of schedule Free Cash Flows 39.5 （Billions of Yen） 26.7 11.4 3.6 FY2003 FY2004 FY2005 FY2006 (Projection) Interest-Bearing Liabilities 46.0 Convertible bonds 24.3
Slide 28: Balance Sheet Summary
Balance Sheet Summary (Billions of Yen) As of March 31, As of March 31, As of March 31, As of March 31, 2003 2004 2005 2006 (Projection) Cash and Bank Deposits 44.5 32.1 51.2 30.1 Accounts and Notes Receivable 79.1 78.7 71.6 85.8 Inventories 80.1 72.1 78.4 69.4 Other Current Assets 17.4 18.8 24.4 25
Slide 29: Appendix
Appendix
Slide 30: Performance in the Fourth Quarter of FY2005
Performance in the Forth Quarter of FY2005 ¾ Net sales was ¥6.9 billion lower than the previous projections (issued February 10), principally in the AV business. Operating income is approximately the same as the previous outlook. （Billions of Yen） FY2004 FY2005 Increase/ Previous (decrease) Projecti
Slide 31: Non-Operating Income (Loss)/Extraordinary Income (Loss)
Non-Operating Income (Loss) /Extraordinary Income (Loss) FY2006 FY2004 FY2005 (Projections) Non-Operating Income （Billions of Yen） Equity method income 10.4 9.1 11.0 Net financial income (1.0) (0.3) (0.6) Other (3.5) (3.2) (4.9) Total + 5.9 + 5.6 + 5.5 z Social welfare for prior years (After adoptin
Slide 32: 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） 120 107.9 103.7 104.9 (103%) (96%) 100 60 53.4 52.2 (109%) (98%) Wind instruments Wind instruments 80 50 49.0 String and String and per
Slide 33: 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 Wholesale Amount 1,888 1,908 （Millions of U.S. Dollars） 2000 1,883 (100%) (101%) 494 Wind instruments 464 (106%) 500 (104%) 4
Slide 34: Musical Instrument Sales in the European Market
Musical Instrument Sales in the European Market YAMAHA’s Wholesale Amount (By category, excluding PA) Wholesale Amount (By category, excluding PA) % Change from the previous year Wholesale Amount 2000 （Millions of Euro） 1,658 1,698 (102%) 1,659 (100%) 500 Wind instruments 400 1500 382 377 (106%) 400
Slide 35: Scale of Global Market for Home Theater Products
Scale of Global Market for Home Theater Products (Home theater systems + AV amplifiers/receivers) <Home theater systems > <AV amplifiers/receivers> z Market is growing, but leveling off; expecting unit sales to rise 8% z Total worldwide market is contracting YoY in fiscal 2006 and prices to continue
Slide 36: Yamaha's AV Market Share
YAMAHA’s AV Market Share 〈Japan〉 Home theater systems: AV amplifiers： Share of Total Sales Amount （GfKJ） Share of Total Sales Amount （GfKJ） 20% 40% 30% 10% 39% 20% 14% 14% 14% 35% 33% 29% 11% 10% 23% 10% 0% 0% ’01 ’02 ’03 ’04 ’05 (Jan.-Mar.) ’01 ’02 ’03 ’04 ’05 (Jan.-Mar.) 〈U.S.〉 Home theater system
Slide 37: Sales breakdown
Sales breakdown （Billions of Yen） Electronic Equipment and Metal AV/IT Products FY2004 FY2005 FY2006 FY2004 FY2005 FY2006 (Actual) (Actual) (Projection) (Actual) (Actual) (Projection) AV 71.9 70.6 80.3 Semicon- 64.0 56.7 45.8 ductors Routers 6.4 7.1 8.7 Electronic 12.9 12.3 12.7 Metals Total 78.3 77
Slide 38: Forecasts of Sales by Business Segment in the First Quarter of FY2006
Forecasts of Sales by Business Segment in the First Quarter of FY2006 Recreation & 132.9 （Billions of Yen） Others 10.1 125.8 (-5.3) 126.4 (-4.9%) Lifestyle 9.5 (-5.9) 9.5 -Related 10.4 Products 10.2 (-1.9) 10.2 Electronic 21.2 Equipment and 13.6 (-35.8) 13.6 Metal Products (+0.6) AV/IT 17.7 17.6 (-0
Slide 39: Cautionary note on forecast figures
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