Yamaha Corporation · TSE:7951
Yamaha — H1 FY2003 Earnings Presentation
51 slides from Yamaha's earnings presentation, Nov 18, 2002
Slide 1: Presentation of Interim Financial Statements for Fiscal 2003
Presentation of Interim Financial Statements for Fiscal 2003 November 18, 2002 YAMAHA CORPORATION
Slide 2: Performance Outline
Performance Outline (Billions of Yen) Initial First Half First Half Increase/ Projection of FY2002 of FY2003 (Decrease) (announced on Sept. 19, 2002) Net Sales 248.7 253.7 5.0 255.0 Operating Income 7.7 13.1 5.4 12.0 Operating Income Ratio (%) 3.1% 5.2% Recurring Profit 7.5 14.2 6.7 Recurring Profit
Slide 3: Currency Exchange Rate
Currency Exchange Rate (Billions of Yen) First Half First Half of FY2002 of FY2003 Impact Net Sales US$ ¥122 ¥123 + ¥0.4 EUR ¥108 ¥117 + ¥2.1 Others + ¥1.2 Total + ¥3.7 Profit US$ ¥122 ¥122 + ¥0.1 EUR ¥106 ¥115 + ¥2.4 Others + ¥0.3 Total + ¥2.8 3
Slide 4: Net Sales by Business Segment
Net Sales by Business Segment (Billions of Yen) 248.7 253.7 (+2.0 %) 250.0 (+0.5%) Recreation and Others 20.4 20.6 (+1.0%) 20.6 Electronic Equipment 18.4 24.9 (+35.3%) and Metal Products 24.9 Lifestyle-Related Products 23.8 23.6 (-0.8%) 23.6 41.5 38.5 (-7.2%) 37.4 (-9.9%) AV/IT 144.6 146.2 (+1.1%) 1
Slide 5: Breakdown of Operating Income/Loss
Breakdown of Operating Income/Loss Decrease in Manufacturing (Billions of Yen) Costs 0.4 Increase in Decrease (1.5) Net Sales 2.7 in SG&A Expenses Pension Gain on Foreign [+1.3] Obligations Exchange 1.0 2.8 13.1 7.7 Operating Income for the Operating Income for the First Half of FY2002 First Half of
Slide 6: Operating Income by Business Segment
Operating Income by Business Segment (Billions of Yen) First Half First Half Increase/ Currency Actual Exchange Increase/ of FY2002 of FY2003 (Decrease) Impact (Decrease) Musical Instruments 3.8 6.0 2.2 1.9 0.3 AV/IT 1.2 1.0 (0.2) 0.9 (1.1) Lifestyle-Related Products 1.0 0.5 (0.5) (0.5) Electronic E
Slide 7: Financial Summary for the Interim Period Ended September 30, 2002
Financial Summary for the Interim Period Ended September 30, 2002 - Net sales and operating income increased compared with the previous interim term. (1) Improved profitability in musical instruments business a) Raised operating income to net sales while making steady progress in reducing inventorie
Slide 8: Musical Instruments: Improvements in Profitability
<Musical Instruments> Improvements in Profitability Operating Income Inventories (Finished Products) Operating Income (%) Inventories Turnover to Net Sales 4.1 (Months) 2.23 1.91 2.6 (Billions of Yen) Inventories (Billions of Yen) Operating Income 6.0 53.7 46.6 3.8 First Half First Half First Half F
Slide 9: Semiconductors: Increase in Net Sales and Operating Income
<Semiconductors> Increase in Net Sales and Operating Income Net Sales Operating Income 130% (Billions of Yen) 180% First Half First Half First Half First Half of FY2002 of FY2003 of FY2002 of FY2003 9
Slide 10: Progress in Reduction of Inventories
Progress in Reduction of Inventories 2.52 2.20 2.14 Months Inventories at the end of the Term Average Net Sales per Month 104.5 (Billions of Yen) 92.2 90.7 29.6 Goods in 29.1 26.8 Process/ 5.2 Materials 16.0 4.8 Other Products 7.9 12.5 AV/IT Products 11.1 Musical 53.7 46.6 Instruments 44.1 First Hal
Slide 11: Operating Environment in the Second Half of FY2003
Operating Environment in the Second Half of FY2003 Musical Instruments - Continuing stagnation in Japanese market - Uncertainties regarding future U.S. economy at year-end - Growth in Chinese market expected AV/IT - Competition in home theater market should increase - Change in CD-R/RW market struct
Slide 12: Forecasts of Results for FY2003
Forecasts of Results for FY2003 (Billions of Yen) FY2002 Results FY2003 Forecasts Increase/ (Decrease) 1st Half 2nd Half Full Year 1st Half 2nd Half Full Year Ratio Net Sales 248.7 255.7 504.4 253.7 276.3 530.0 5.1% 11.0 24.5 Operating Income 7.7 3.3 [2.1%] 13.1 11.4 [4.6%] 122.7% 7.5 0.1 7.6 14.2 1
Slide 13: Currency Exchange Rate
Currency Exchange Rate (Billions of Yen) FY2002 Results FY2003 Forecasts 1st Half 2nd Half Full Year 1st Half 2nd Half Full Year Impact Net Net Sales Sales US$ ¥122 ¥128 ¥125 ¥123 ¥120 ¥121 - ¥2.8 EUR ¥108 ¥113 ¥110 ¥117 ¥115 ¥116 + ¥2.6 Others — + ¥0.8 Total + ¥0.6 Profit Profit US$ ¥122 ¥127 ¥124
Slide 14: Forecasts of Net Sales by Business Segment
Forecasts of Net Sales by Business Segment (Billions of Yen) 530.0 (+5.1%) 529.4 (+5.0%) 504.4 Recreation and Others 41.9 (+4.8%) 41.9 40.0 Electronic Equipment 52.7 (+44.0%) 52.7 and Metal Products 36.6 Lifestyle-Related Products 45.7 46.6 (+2.0%) 46.6 91.3 (-4.1%) 91.1 (-4.3%) AV/IT 95.2 Musical I
Slide 15: Forecasts of Breakdown of Operating Income/Loss
Forecasts of Breakdown of Operating Income/Loss Decrease in (Billions of Yen) Manufacturing Pension Costs Obligations (3.0) 9.1 Increase in Sales Gain on Foreign Exchange 3.2 24.5 4.2 11.0 Operating Income Operating Income for FY2002 for FY2003 15
Slide 16: Forecasts of Operating Income by Business Segment
Forecasts of Operating Income by Business Segment (Billions of Yen) Currency Actual FY2002 FY2003 Increase/ Exchange Increase/ Results Forecasts (Decrease) Impact (Decrease) Musical Instruments 4.7 9.8 5.1 2.5 2.6 AV/IT 3.0 3.5 0.5 1.7 (1.2) Lifestyle-Related Products 1.0 0.9 (0.1) (0.1) Electronic
Slide 17: Inventories
Inventories 2.26 2.01 1.76 Months 1.81 Inventories at the end of the Term Average Net Sales per Month 97.7 (Billions of Yen) 84.3 77.4 33.8 80.0 Goods in 27.9 Process/ 27.3 29.7 Materials 6.5 3.7 Other Products 4.1 12.9 8.6 4.8 9.1 6.9 AV/IT Products 44.5 44.1 38.6 Musical 36.9 Instruments FY2000 FY
Slide 18: Free Cash Flow
Free Cash Flow (Billions of Yen) 23.4 18.6 5.5 FY2001 FY2000 FY2002 FY2003 (Forecast) (14.5) 18
Slide 19: Interest-Bearing Liabilities
Interest-Bearing Liabilities Interest-Bearing Liabilities (Billions of Yen) 70.4 62.7 Employee Savings 8.3 55.1 24.3 52.9 Convertible 24.3 (54.4) 24.3 Bonds 24.3 46.1 Long-Term Debt (Excluding Cash 30.1 30.8 28.6 and Deposits FY2000 FY2001 FY2002 FY2003 (Forecast) Resort Deposits 41.1 40.3 38.1 36.9
Slide 20: Priority Policies for the Second Half of FY2003 (1)
Priority Policies for the Second Half of FY2003 (1) Enhance profitability in Core Business segment and implement measures for future growth Musical Instruments - Structure operating bases in promising Chinese market - Restore Japanese market by developing adult-oriented business - Cultivate music pr
Slide 21: Priority Policies for the Second Half of FY2003 (2)
Priority Policies for the Second Half of FY2003 (2) Enhance profitability in Lifestyle-Related and Leisure segment Secure stable growth and enhance profitability in Electronic Parts and Materials Business segment using our innovative technologies - Accelerate growth and enhance profitability in Mg-m
Slide 22: Chinese Market Policies
Chinese Market Policies Promote unified marketing system through the newly established holding company Yamaha Music & Electronics (China) Co., Ltd. Yamaha Music & Trends in Market for Musical Beijing Electronics (China) Instruments in China Co., Ltd. (Billions of Yen) Tianjin Operation begins in Apr
Slide 23: Stimulate Japanese Market Targeting Adults
Stimulate Japanese Market Targeting Adults ~ Developing market targeting adults in response to decline in younger students ~ Expand business base of music schools for adults Number of < Three-year plan > Students (Thousands) - Increase number of schools for adults only 170 currently 52 100 - Increas
Slide 24: Cultivate Music Production Market
Cultivate Music Production Market Net Sales (Billions of Yen) Recent introduction of new products Synthesizers 31.5 PAs < Digital Mixers, etc. > 27.4 26.2 AW16G 24.3 AW2816 AW4416 PM1D DM2000 O2R96 2000 2001 2002 < Synthesizers > Motif S-90 FY2000 FY2001 FY2002 FY2003 (Forecast) Strengthen sales org
Slide 25: Aggressive Development of Overseas Ringer Melody Distribution Service
Aggressive Development of Overseas Ringer Melody Distribution Service Priority Policies No. of Subscribers for Ringer Melody Distribution Service Japan: Promote development of unique and (Thousands) differentiated products in content 200 business Japan (Music Box Site, Otohon Site) 100 Overseas 100
Slide 26: Promoting '#1 in Home Theaters' Strategy
Promoting ‘#1 in Home Theaters’ Strategy - Expand market boundaries by developing new distribution channels (visual distribution channel, hyper/super channel) in response to new demands - Retrieve top share in medium/high-class (over $700) AV receivers and amplifiers > Market share in U.S.: currentl
Slide 27: Preparation for Revitalization of IT Business
Preparation for Revitalization of IT Business CDR-RW - Provide differentiated products - Develop DVD+RW products for PCs Routers - Strengthen total solution business targeting SOHO and small and medium- sized companies Net Sales 19.2 20.2 (Billions of Yen) 13.2 1st 2nd 11.3 Half 9.2 Half 5.4 FY2001
Slide 28: Expansion of Semiconductors Centered on Mobile Phone Sound Chips
Expansion of Semiconductors Centered on Mobile Phone Sound Chips Priority Policies - Expansion of mobile phone sound chips business > Maintain current level of market share in Japan > Further expand in China and South Korea and enter U.S. and Europe > Raise supply of products (Billions of Yen) Net S
Slide 29: Trends in Global Mobile Phone Market
Trends in Global Mobile Phone Market No. of Annual Mobile Phones Sales 500 (Millions) - Signs of secondary growth with annual sales of almost 400 million 400 - Promote sales with introduction of new services at mobile phone retailers and high-quality functions 300 - Chinese market shows remarkable g
Slide 30: Mobile Phone Chips Market Conditions
Mobile Phone Chips Market Conditions No. of Mobile Annual Sales (Millions of Phones Held mobile Market Conditions phones) (Millions) - Mobile phone market is saturated Japan 70 40 - Most mobile phones have over 32-note polyphony sound chips South - Mobile phone market is saturated 30 15 - Most mobil
Slide 31: Strength in Yamaha's Sound Chips
Strength in Yamaha’s Sound Chips Success in providing SMAF solutions in JAPAN - Package providing sound chip, SMAF, authoring tool, and content was favored by telecommunication companies and mobile phone makers FM sound chips highly praised - FM sound chips allow a versatility of voice with higher f
Slide 32: Metal Products Business
Metal Products Business Priority Policies - By improving manufacturing output, gain profit in invar materials business - Maintain sound supply of lead frame materials Net Sales Operating Income 17.2 2nd Half (Billions of Yen) 1st Half FY2003 11.9 9.2 (Forecast) FY2002 0.3 6.6 (0.9) (0.6) (1.1) (0.3)
Slide 33: Lifestyle-Related Business
Lifestyle-Related Business Priority Policies - Lower the break-even point for income through cost reduction in product development, distribution and assembly. - Smooth take off of business alliance. Net Sales Operating Income 45.7 46.6 (Billions of Yen) 2nd Half 21.9 23.0 1st Half 1.0 0 0.9 0.4 23.8
Slide 34: Entered Business Alliance in Lifestyle-Related Business
Entered Business Alliance in Lifestyle-Related Business ~ Tie-Up with Air Water Living Inc. ~ Goal - Strengthen system bathrooms business and organization to respond to growing demand in the home refurbishing area by synergistically combining both companies’ strengths Outline - Business tie-up for m
Slide 35: Recreation Business
Recreation Business Priority Policies - Use management subsidiaries to increase profitability and improve cash flow status - Maintain customer visitation rate of two million visits per year (Billions of Yen) Net Sales Operating Income 21.6 21.6 2nd Half 1st Half FY2003 10.8 FY2002 (Forecast) 11.3 (0
Slide 36: Others
Others Priority Policies - Strengthen system for increasing the production of Mg-molded parts for mobile phones and ensure profit - In interior automotive components and fittings, reduce manufacturing costs and expand customer base. Net Sales Operating Income (Billions of Yen) 20.3 2nd Half 18.4 1st
Slide 37: Compliance Management
Compliance Management Implemented compliance management system that promotes aggressive measures that promote adherence to corporate ethics and the law, to ensure that YAMAHA fulfills commitment to stakeholders as stated in its conduct guidelines. Establishment of Compliance Standards - Established
Slide 38: Environment Activities
Environment Activities 1. ISO 14001 Certification Objective - To promote YAMAHA Group’s environmental activities - To implement an environmental management system throughout the Group Acquisition Status - YAMAHA CORPORATION already obtained in March 2001 - Plans to obtain at all its domestic and ove
Slide 39: Supplementary Materials
Supplementary Materials 39
Slide 40: Net Sales by Region
Net Sales by Region (Billions of Yen) 248.7 253.7 (+2.0%) 250.0 (+0.5%) Other Regions 23.5 21.3 (-9.4%) 20.5 (-12.8 %) 33.9 35.6 (+5.0%) 32.9 (-2.9%) Europe 43.0 44.6 (+3.7%) 44.4 (+3.3%) North America 148.3 152.2 (+2.7%) 152.2 Japan First Half of First Half of First Half of FY2002 FY2003 FY2003 Aft
Slide 41: Operating Income by Region
Operating Income by Region (Billions of Yen) Currency Actual First Half First Half Increase/ Exchange Increase/ of FY2002 of FY2003 (Decrease) Impact (Decrease) Japan 7.1 11.3 4.2 2.7 1.5 North America 1.3 2.1 0.8 0.0 0.8 Europe (0.3) 1.0 1.3 0.1 1.2 Other Regions 1.9 1.4 (0.5) (0.5) Elimination (2.
Slide 42: Non-Operating Income/Expenses
Non-Operating Income/Expenses (Billions of Yen) First Half First Half Increase/ of FY2002 of FY2003 (Decrease) Equity in Earnings of Unconsolidated Subsidiaries and Affiliates 2.3 3.5 1.2 Financial Gains/Losses (1.0) (0.7) 0.3 Other Non-Operating Income/Expenses (1.5) (1.7) (0.2) TOTAL (0.2) 1.1 1.3
Slide 43: Other Profit / Losses
Other Profit / Losses (Billions of Yen) First Half First Half Increase/ of FY2002 of FY2003 (Decrease) Gains/Losses on Sale of Fixed Assets (0.4) (0.5) (0.1) Gains/Losses on Sale of Investment Securities 1.2 (1.6) (2.8) Others (0.1) 0.1 0.2 TOTAL 0.7 (2.0) (2.7) 43
Slide 44: Forecasts of Net Sales by Region
Forecasts of Net Sales by Region (Billions of Yen) 530.0 (+5.1%) 529.4 (+5.0%) 504.4 47.5 47.9 (+0.8%) 47.8 (+0.6%) Other region 82.8 (+12.8%) 79.5 (+8.3%) Europe 73.4 North America 93.5 96.1 (+2.8%) 98.9 (+5.8%) 290.0 303.2 (+4.6%) 303.2 Japan FY2002 FY2003 FY2003 (Forecast) After translation adjus
Slide 45: Forecasts of Operating Income by Region
Forecasts of Operating Income by Region (Billions of Yen) Currency Actual FY2002 FY2003 Increase/ Exchange Increase/ Results Forecasts (Decrease) Impact (Decrease) Japan 3.2 13.6 10.4 4.1 6.3 North America 3.4 4.8 1.4 0.0 1.4 Europe 0.6 2.4 1.8 0.1 1.7 Other Regions 3.7 3.7 0.0 0.0 Elimination 0.1 (
Slide 46: Number of Employees
Number of Employees 23,020* 23,560** 21,599 22,277 9,034 9,952 11,174 11,620 Overseas 12,565 12,325 11,846 11,940 Japan As of March As of March As of March As of March 31, 2000 31, 2001 31, 2002 31, 2003 (Forecast) * Including 1,027 employees added due to expanded scope of consolidation. ** Includin
Slide 47: Capital Investments/Depreciation and Amortization
Capital Investments/ Depreciation and Amortization (Billions of Yen) 28.6 Capital 18.5 17.3 18.7 18.0 18.7 16.6 Investments 14.8 Depreciation and Amortization FY2000 FY2001 FY2002 FY2003 (Forecast) 47
Slide 48: R&D Expenses
R&D Expenses (Billions of Yen) 22.5 22.5 23.0 21.2 6.2 Electronic 6.9 5.0 5.9 Equipment, etc. 5.0 5.1 5.3 AV/IT 5.0 Musical 10.6 11.2 11.5 11.5 Instruments FY2000 FY2001 FY2002 FY2003 (Forecast) 48
Slide 49: Balance Sheets
Balance Sheets (Billions of Yen) As of Sept. As of March As of Sept. As of March 31, 2003 30, 2001 31, 2002 30, 2002 (Forecast) Cash and Bank Deposits 38.2 41.1 40.3 40.0 Accounts and Notes Receivable 79.6 71.8 81.4 75.7 Inventories 104.5 84.3 90.7 80.0 Other Current Assets 15.7 13.9 15.3 15.2 Fixed
Slide 50: Forecast figures cautionary note
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 51: Yamaha - Creating Kando Together
@ YAMAHA CREATING KANDO TOGETHER