Yamaha Corporation · TSE:7951
Yamaha — FY2004 Earnings Presentation
41 slides from Yamaha's earnings presentation, May 7, 2004
Slide 1: Analyst and Investor Briefing on the Fiscal Year Ended March 31, 2004
Analyst and Investor Briefing on the Fiscal Year Ended March 31, 2004 (April 1, 2003 to March 31, 2004) May 7, 2004 YAMAHA CORPORATION
Slide 2: Overview of Performance in the Fiscal Year
Overview of Performance in the Fiscal Year ¾ The FY2004 was the last year of the Kando Creation 21 medium-term business plan. Regarding the plan's performance targets, the target for net sales was not attained, but the targets for profitability were greatly exceeded. T New record-high levels of oper
Slide 3: Performance in the Fiscal Year
Performance in the Fiscal Year ¾Year-on-year increases in both sales and profit (Billions of Yen) FY2003 FY2004 Increase 9/2/2004 Projections 4Q Results Net Sales 524.7 539.5 +14.8 542.0 124.2 Operating Income (Operating Income Ratio) 32.0 45.1 +13.1 45.5 0 (6.1 %) (8.4 %) Recurring Profit (Recurrin
Slide 4: Breakdown of Operating Income/Loss
Breakdown of Operating Income/Loss Decrease in Increase in Manufactur- SG&A ing Costs Expenses (Billions of Yen) Increase in Gross Profit Gain on Foreign Exchange 45.1 FY2003 FY2004 Operating Income Operating Income
Slide 5: Operating Income by Business Segment in the Fiscal Year
Operating Income by Business Segment in the Fiscal Year (Billions of Yen) Currency Actual 9/2/2004 Increase/ FY2003 FY2004 Exchange Increase/ Projections (Decrease) Impact (Decrease) Musical Instruments 9.8 10.5 +0.7 +2.3 (1.6) 12.0 AV/IT 3.2 4.4 +1.2 +2.7 (1.5) 4.0 Lifestyle-Related Products 0.5 1.
Slide 6: Musical Instruments
Musical Instruments 4Q Overview FY2004 Overview • Real net sales were 3.7% below the projection. • Real growth of 0.9% achieved in net sales. • Inventory levels were reduced in line with the • Smooth sales expansion in North America projection. and Europe (real growth of 5%) • The strategic initial
Slide 7: AV/IT
AV/IT 4Q Overview FY2004 Overview • Real net sales were 4.5% below the • Real net sales decreased 7.2%; projection. however, if the effect of discontinuing business in CD/R-RW drives were • Router and online karaoke sales excluded, real sales grew 1.7%. continued to grow smoothly • Withdrawal from C
Slide 8: Lifestyle-Related Products
Lifestyle-Related Products 4Q Overview FY2004 Overview • Real net sales were in line with the • Although sales decreased, projection. Profitability improved owing manufacturing cost reductions and to such factors as manufacturing unit other factors greatly improved cost reductions. profitability. •
Slide 9: Electronic Equipment and Metal Products
Electronic Equipment and Metal Products 4Q Overview FY2004 Overview • Operations in semiconductors and • In semiconductors, sales of LSI sound electronic metals remained strong chips for mobile phones remained during the 4Q. strong, particularly in China and Korea. • Electronic metals became profita
Slide 10: Recreation
Recreation 4Q Overview FY2004 Overview • “Kiroro” resort revenues were • Sales decreased, reflecting the closure below projection due to of “Sunza Villa” and a continued insufficiency of snowfall. downtrend in unit prices. • Other facilities generally recorded • The decline in sales led to a drop in
Slide 11: Others
Others 4Q Overview FY2004 Overview • Sales were approximately in line with • Sales surged 25% owing to a rise in the the projection. production of automobile interior components and magnesium components for mobile phones. • Spending decreased considerably • Manufacturing yields for magnesium compone
Slide 12: Other Priority Measures
Other Priority Measures T Continuing to Boost Profitability through Business Restructuring ӍInvar materials manufacturing operations discontinued on schedule in July 2003 ӍClosure of “Sunza Villa” in June 2003 ӍClosure of “Kiroro” golf course in October 2003 ӍLiquidation of France-based subsidiary Y
Slide 13: Forecasts of Business Performance in FY2005
Forecasts of Business Performance in FY2005 ¾FY2005 is the first year of the new medium-term business plan, “YSD50,” which sets management goals to be attained in FY2007. FY2005 is a period for establishing the fundamental capabilities needed to attain those goals. Overview z Establishing a profit s
Slide 14: Forecasts of Business Performance in FY2005
Forecasts of Business Performance in FY2005 Full Year 1Q (Billions of Yen) FY2004 FY2005 Increase/ FY2004 FY2005 Increase/ Results Forecasts (Decrease) Results Forecasts (Decrease) Net Sales 539.5 553.0 +2.5% 126.1 134.3 +6.5% Operating 45.1 37.5 11.8 Income (16.9)% 11.9 +0.8% (Operating Income Rati
Slide 15: Forecasts of Net Sales by Business Segment
Forecasts of Net Sales by Business Segment (Billions of Yen) Full Year 539.5 553.0 (+2.5%) 560.5 (+3.9%) Recreation & 43.5 (-5.6) 43.5 134.3 (+6.5%)137.6 (+9.1%) Others 46.1 126.1 10.0 (-9.9) 10.0 Electronic 76.0 (-1.2) 76.0 11.1 Equipment and Metal Products 76.9 20.2 (+19.5) 20.2 Lifestyle-Related
Slide 16: Breakdown of Operating Income
Breakdown of Operating Income Loss on (Billions of Yen) Decrease in Foreign Manufactur- Exchange Decrease ing Costs in Gross 0.6 (0.6) Profit (4.6) Increase in SG&A Expenses (3.0) 45.1 37.5 FY2004 FY2005 Operating Income Operating Income (Projection)
Slide 17: Forecasts of Operating Income by Business Segment
Forecasts of Operating Income by Business Segment (Billions of Yen) Full Year 1Q Increase/ FY2004 FY2005 FY2005 Increase/ FY2004 (Projections) (Projections) (Decrease) (Decrease) Musical (0.4) Instruments 10.5 14.0 +3.5 5.5 5.1 AV/IT 4.4 4.0 (0.4) 0.2 0.4 +0.2 Lifestyle-Related Products 1.5 1.5 0.0
Slide 18: Musical Instruments
Musical Instruments Market Environment • Despite some positive trends, predicting future trends in the global economy remains difficult • Emergence of Chinese manufacturers in North American and Chinese markets (Billions of Yen) 292.6 293.4 301.5 284.9 286.9 Sales Music schools, etc. Operating Incom
Slide 19: Measures for Musical Instruments (1)
Measures for Musical Instruments (1) 1. Increasing products’ added value by strengthening capabilities for planning/development and marketing z Developing high-value-added products —Leveraging technological seeds to offer customers new products that afford greater enjoyment and are even better to pl
Slide 20: Measures for Musical Instruments (2)
Measures for Musical Instruments (2) 3. Expanding operations in Chinese markets z Unifying and strengthening marketing operations under holding company Yamaha Music & Electronics (China) Co., Ltd. (YMEC) —Creating and expanding the Yamaha Model Shops’ network of comprehensive Yamaha musical instrume
Slide 21: Measures for Musical Instruments (3)
Measures for Musical Instruments (3) 5. Promoting Manufacturing Reforms z Shifting from individual reform programs for each business department to a comprehensive manufacturing optimization program for all musical instrument operations, thereby eliciting synergistic benefits —Toyota Production Syste
Slide 22: AV/IT
AV/IT Market Environment • Increasing use of digital and networking technologies • Expanding market for integrated HTiB/DVD systems and decreasing prices • Shrinking of audio component product market, with particular shrinking of the market for middle range/high-end products (Billions of Yen) 100.2
Slide 23: Key Measures for AV/IT
Key Measures for AV/IT 1. Promoting strategies for boosting competitiveness in existing businesses z Expanding home theater operations —Leveraging YAMAHA's core competencies to create distinctive products —Responding to changes in demand —Developing AV receivers, speakers, and systems that harmonize
Slide 24: Electronic Equipment and Metal Products
Electronic Equipment and Metal Products ¾Maintaining a prudent course in business plans in light of the difficulty of predicting FY2005 trends in semiconductor operations. (Billions of Yen) 76.9 76.0 60.6 Sales 43.2 36.6 Operating Income 30.0 19.3 18.5 6.6 4.3 FY2001 FY2002 FY2003 FY2004 FY2005 (Pro
Slide 25: Semiconductors
Semiconductors Market Environment • The number of mobile phones sold worldwide during 2004 is expected to surpass 550 million (projection by market survey company), and the market appears set for further expansion • Particular expansion is projected for emerging markets, while European and North Ame
Slide 26: Electronic Metal Products
Electronic Metal Products Market Environment • Increasing demand related to digital home appliances has expanded the markets for semiconductors and electronic components. Priority Policies • Augmenting profitability by increasing facility utilization rates and improving production yields of flawless
Slide 27: Lifestyle-Related Products
Lifestyle-Related Products Market Environment • The industry is increasingly proactive in addressing renovation-related demand Priority Policies • Strengthening renovation-related operations • Expanding market share by offering highly differentiated products (distinctive functions and materials) • B
Slide 28: Recreation
Recreation Market Environment • Despite some positive developments in the domestic economy, the trends of falling prices and growing desire for authentic cultural experiences are expected to continue. Priority Policies • Expanding the clientele through a differentiation strategy involving emphases o
Slide 29: Others
Others Market Environment • Component operations will continue to face cost-reduction pressures from makers of finished products • Competition in the golf product market is intensifying as the market shrinks. Priority Policies • Expanding the customer base for magnesium components for mobile phones
Slide 30: Inventories
Inventories ¾Inventory levels at the end of FY2004 were reduced according to plan ¾Plans call for further reducing inventory levels by the end of FY2005 84.3 (Billions of Yen) 80.1 72.1 Goods in 27.9 68.1 Process/ 24.8 Materials 25.0 Other Products 3.7 23.5 6.1 AV/IT Products 8.6 1.4 8.4 1.7 8.2 6.4
Slide 31: Interest-Bearing Liabilities (Actual Balance)
Interest-Bearing Liabilities (Actual Balance) (Billions of Yen) 39.5 Free Cash Flows 18.6 21.1 11.4 FY2002 FY2003 FY2004 FY2005 (Projected) Interest-Bearing Liabilities 55.0 46.0 Convertible bonds 24.3 24.3 Long- and short-term 30.7 borrowings, less 21.7 16.8 cash and deposits 3.1 As of March, As of
Slide 32: Appendix
Appendix
Slide 33: Domestic Musical Instrument Market
Domestic Musical Instrument Market Wholesale Price Basis (Billions of Yen) Wholesale Sales Market By YAMAHA’s Wholesale Sales, Category, excluding PA excluding PA 120 114.0 107.6 108.4 (94%) (101%) 100 Wind Instruments 60 54.0 80 53.3 50.4 (107%) Wind String & (95%) Instruments Percussion 50 String
Slide 34: Musical Instrument Market in the U.S.
Musical Instrument Market in the U.S. Wholesale Price Basis (Billions of Yen) Wholesale Sales Market By YAMAHA’s Wholesale Sales, Category, excluding PA excluding PA 1,893 1,894 2000 1,906 (99%) (100%) Wind Instruments 470 500 450 (104%) 1500 (108%) 418 Wind String & 400 Instruments Percussion Strin
Slide 35: Musical Instrument Market in Europe
Musical Instrument Market in Europe Wholesale Price Basis (Billions of Yen) Wholesale Sales Market By YAMAHA’s Wholesale Sales, Category, excluding PA excluding PA 1,430 1,446 1500 1,438 (99%) (101%) Wind 500 Instruments 395 374 (106%) 1000 400 372 (101%) String & Wind Percussion Instruments 300 Str
Slide 36: Scale of Global Market for Home Theater Products
Scale of Global Market for Home Theater Products (Million Units) (Home theater systems + amplifiers/receivers) <Home theater systems > <Amplifiers/receivers> Others Japan Europe Others North Japan America Europe North America 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 (Projections) (Projectio
Slide 37: YAMAHA's AV Amplifier Market Share
YAMAHA’s AV Amplifier Market Share ѸJapanѹ ѹ Home theater systems : Amplifiers: Share of Total Sales Volume (GfKJ) Share of Total Sales Volume (GfKJ) 20% 40% 30% 10% 37 39 39 20% 31 33 14 11 10 10% 0% 0% 2001 2002 2003 2000 2001 2002 2003 2004 (Jan) ѸU.S.ѹ ѹ Home theater systems: 40% Amplifiers: Sha
Slide 38: Non-Operating Income (Loss)/Extraordinary Income (Loss)
Non-Operating Income (Loss)/Extraordinary Income (Loss) (Billions of Yen) FY2005 FY2003 FY2004 (Projections) Non-Operating Income Equity method income 7.6 10.4 7.0 Net financial expenses (1.4) (1.0) (0.6) Other (4.4) (3.5) (3.9) Total + 1.8 + 5.9 +2.5 Extraordinary Income •Gain on return of •Social
Slide 39: Capital Investments/Depreciation and Amortization/R&D Expenses
Capital Investments/ Depreciation and Amortization/R&D Expenses Capital Investments/ Depreciation (Billions of Yen) 25.1 and Amortization (18.7) 21.2 4.3 (21.3) 16.6 16.9 (17.6) 4.9 (17.5) 5.4 Others 3.8 3.1 4.4 Electronic Equipment and Metals 1.9 3.4 Musical 15.4 10.9 10.4 11.9 Instruments/AV/IT FY
Slide 40: 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, 2002 2003 2004 2005 Cash and Bank Deposits 41.1 44.5 32.1 28.9 Accounts and Notes Receivable 71.8 79.1 78.7 79.0 Inventories 84.3 80.1 72.1 68.1 Other Current Assets 13.9 17.4 18.8 18.7 Fixed Asse
Slide 41: Forward-looking figures 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