Yamaha Corporation · TSE:7951
Yamaha — Corporate Update (July 2006)
39 slides from Yamaha's corporate update, Jul 10, 2006
Slide 1: Briefing on the Musical Instruments Business
YAMAHA CORPORATION Briefing on the Musical Instruments Business Mitsuru Umemura Managing Director Hiroo Okabe Director July 10, 2006 1
Slide 2: Outline of Today's Presentation
Outline of Today’s Presentation I. Outline of performance in the fiscal year ended March 31, 2006 (FY2006.3) and projections for FY2007.3 II. Progress in implementing the YSD50 Medium-term Business Plan and post-YSD50 measures 2
Slide 3: I. Outline of performance in FY2006.3 and projections for FY2007.3
I. Outline of performance in the fiscal year ended March 31, 2006 (FY2006.3) and projections for FY2007.3 3
Slide 4: Outline of Performance in FY2006.3
Outline of Performance in FY2006.3 Net Sales Operating Income 314.1 Billions of yen 293.4 302.6 43.3 (+0.7) Other 42.6 41.9 4.8 (+0.5) Content 4.3 4.1 4.1 3.6 (+0.5) English schools 3.5 41.7 40.7 (+1.0) Music schools 40.7 18.1 (+0.3) String & percussion 17.8 instruments 17.4 41.0 43.6 (+2.6) Wind &
Slide 5: Forecast for FY2007.3
Forecast for FY2007.3 Net Sales Operating Income 325.0 Billions of yen 302.6 314.1 44.9 (+1.6) Other 43.3 42.6 4.4 (-0.4) 4.8 4.3 Content 4.3 4.1 (+0.2) English schools 3.6 43.0 (+1.3) 41.7 Music schools 40.7 19.3 (+1.2) String & percussion 18.1 instruments 17.8 43.6 44.2 (+0.6) Wind & educational 4
Slide 6: Forecast for FY2007.3
Forecast for FY2007.3 Sales: +¥10.9 billion year-on-year • Continue launching high added-value products such as artist model wind instruments • Respond to polarization of demand. Speed up capacity to compete with low-priced products made in countries such as China and recapture share in the moderate
Slide 7: Worldwide Sales Growth by Product
Worldwide Sales Growth by Product Billions of yen Change from previous year Sales by Product String & English Content Other percussion Music schools schools Wind & instruments educational 1.6 0.2 -0.4 instruments 1.3 Professional audio equipment 1.2 0.6 Electronic 3.6 instruments 325.0 Pianos Electo
Slide 8: Worldwide Sales Growth by Region
Worldwide Sales Growth by Region Billions of yen Change from previous year Sales by Region Other China 2.6 Europe 1.7 North America 2.6 325.0 Japan 7.0 -3.0 314.1 +¥10.9 billion FY2006.3 FY2007.3 actual projection 8
Slide 9: Breakdown of Operating Income
Breakdown of Operating Income Billions of yen Change from previous year Operating Income Unrealized SG&A Decrease in profit on expenses manufacturing inventory cost Gross profit 1.1 from sales -0.5 1.4 Impact of exchange rates 2.2 0.7 19.0 14.1 +¥4.9 billion FY2006.3 FY2007.3 actual projection 9
Slide 10: II. Progress in implementing the YSD50 Medium-term Business Plan and post-YSD50 measures
II. Progress in implementing the YSD50 Medium- term Business Plan and post-YSD50 measures 10
Slide 11: Medium-term Business Plan
Medium-term Business Plan Progress in implementation of the medium-term business plan and projections for FY2007.3 (Billions of yen) YSD50 FY2004.3 FY2005.3 FY2006.3 FY2007.3 3-year plan actual actual actual projection Net sales 293.4 302.6 314.1 325.0 Increase 31.6 9.2 * 11.5 10.9 Operating income
Slide 12: Breakdown of Improvement in Income
Breakdown of Improvement in Income Progress in increasing income and projections for FY2007.3 (Billions of yen) YSD50 FY2005.3 FY2006.3 FY2007.3 Operating income 3-year plan actual actual projection Growth in sales/ 3.2 2.6 -1.4 2.0 improvement in gross margins SG&A 0.0 -1.7 0.5 1.2 Reforms in 1.8 1
Slide 13: Progress in Implementing YSD50
Progress in Implementing YSD50 Growth in Sales/Improvement in Gross Margins • Markets are changing faster than anticipated with the rise of Chinese manufacturers, emergence of lower-priced products, and expansion of mass sales channels. Sales are well below initial projections, especially for large
Slide 14: Worldwide Sales Growth by Product: YSD50 vs. New Projections for FY2007.3
Worldwide Sales Growth by Product: YSD50 vs. New Projections for FY2007.3 The gap between YSD50 targets and new projection for FY2007.3 YSD50 340 Sales by Product in 334.0 billion yen 330 FY2007.3 320 new projection for FY2007.3 325.0 billion yen 310 300 293.4 billion yen Billions of yen 290 FY2004.
Slide 15: Worldwide Sales Growth by Region: YSD50 vs. New Projections for FY2007.3
Worldwide Sales Growth by Region: YSD50 vs. New Projections for FY2007.3 The gap between YSD50 targets and new projection for FY2007.3 Sales by Region in FY2007.3 Japan Billions of yen -13.2 Europe China North Other 334.0 America 1.9 -2.3 1.7 2.9 325.0 -¥9.0 billion new projection for YSD50 FY2007.3
Slide 16: Sales Growth in the Japanese Market
Sales Growth in the Japanese Market Significant revision of sales plans for keyboard instruments and guitars • Marketing efforts appealed to young people with the aim of increasing the number of Electone players, but could not generate extra sales. • Unit sales of acoustic pianos declined. Plans t
Slide 17: Sales Growth in the Japanese Market
Sales Growth in the Japanese Market The gap between YSD50 targets and new projection for FY2007.3 150 Sales by Product in YSD50 FY2007.3 145 147.0 billion yen YSD50 140 Pianos 135 134.4 billion yen new projection for FY2007.3 133.8 billion yen -3.0 Electones Professional 130 audio FY2004.3 FY2005.3
Slide 18: Sales Growth in the North American Market
Sales Growth in the North American Market Revise sales plans for acoustic pianos and guitars – aim for recovery through launch of new products • Noticeable market shift toward large musical instrument stores and mass sales channels – respond with new products • Proportion of low-priced pianos sold
Slide 19: Sales Growth in the North American Market
Sales Growth in the North American Market The gap between YSD50 targets and new projection for FY2007.3 Sales by Product in 80 YSD50 FY2007.3 74.4 billion yen 75 70 new projection for FY 2007.3 72.8 billion yen 65 64.7 billion yen (After adjustment for impact of exchange rates) 60 FY2004.3 FY2005.3
Slide 20: Sales Growth in the European Market
Sales Growth in the European Market Fierce competition in wind instrument sales due to rise of Chinese manufactures and expansion of house brands – revise product and sales plans • Planning to compete through launch of YAMAHA brand products made in our manufacturing plants in China and Indonesia
Slide 21: Sales Growth in the European Market
Sales Growth in the European Market The gap between YSD50 targets and new projection for FY2007.3 Sales by Product in 70 YSD50 FY2007.3 65 63.3 billion yen 60 new projection for FY2007.3 61.8 billion yen 55 57.5 billion yen (After adjustment for impact of exchange rates) 50 FY2004.3 FY2005.3 FY2006.
Slide 22: Sales Growth in the Chinese Market
Sales Growth in the Chinese Market Initial projections revised downward, aiming for sales of ¥10 billion in FY2007.3 • Although sales are below initial projections, infrastructure is steadily being improved • FY2004.3 sales: ¥6.5 billion; FY2006.3 sales ¥8.9 billion; FY2007.3 projected sales: ¥10.
Slide 23: Sales Growth in the Chinese Market
Sales Growth in the Chinese Market The gap between YSD50 targets and new projection for FY2007.3 Sales by Product in 20 FY2007.3 YSD50 15 12.9 billion yen 10 new projection for FY2007.3 9.9 billion yen 5 6.5 billion yen (After adjustment for impact of exchange rates) 0 Billions of yen FY2004.3 FY200
Slide 24: Sales Growth in Other Markets
Sales Growth in Other Markets YSD50 targets vs. new sales projections for FY2007.3 Korea: ¥5.6 billion -> ¥6.0 billion; + ¥0.4 billion (150% of FY2004.3 sales) • As total demand for pianos declines, expand market share by strengthening brand and artist relations • Established Yamaha Artist Service
Slide 25: Sales Growth in the Professional Audio Equipment Market
Sales Growth in the Professional Audio Equipment Market Sales in line with initial plan • Sales growing in line with initial plan, from ¥20.2 billion in FY2004.3 to ¥29.7 billion (projected) in FY2007.3 • Establishment of infrastructure such as support centers is progressing steadily • Will contin
Slide 26: Sales Growth in Professional Audio Equipment
Sales Growth in Professional Audio Equipment The gap between YSD50 targets and new projection for FY2007.3 YSD50 30 Sales by Region in 29.8 billion yen new projection for FY2007.3 FY2007.3 29.7 billion yen 25 20.2 billion yen 20 FY2004.3 FY2005.3 FY2006.3 FY2007.3 -0.7 0.5 0.7 -0.6 Japan North Europ
Slide 27: Musical Instruments Production Network
Musical Instruments Production Network Black: Yamaha wholly-owned Blue: Joint venture Xiaoshan Xiaoshan (Piano (Piano parts, parts, wind) wind) Hangzhou Hangzhou (Pianos, (Pianos, guitars) guitars) Guangzhou (Pianos) Guangzhou (Pianos) Tianjin Tianjin (DMI*) (DMI*) Kemble Hamamatsu Hamamatsu (Grand
Slide 28: Manufacturing Reforms/Manufacturing Base Strategy
Manufacturing Reforms/ Manufacturing Base Strategy Progress with manufacturing reforms/manufacturing base strategy • No change in overall strategy: core bases in Japan, China and Indonesia • Infrastructure at these bases to be improved from FY2006.3 to FY2007.3 • Steady implementation of reforms b
Slide 29: Manufacturing Reforms/Manufacturing Base Strategy
Manufacturing Reforms/ Manufacturing Base Strategy Leading production innovation as YSD50 “mother factories” FY2005.3 FY2006.3 FY2007.3 Group Manufacturing Base Strengthen production capability in Japan China Indonesia Japan, China and Indonesia ○ ○ ○ Selection and concentration Enhance production E
Slide 30: Cost Reductions in Manufacturing: Results and Projections
Cost Reductions in Manufacturing: Results and Projections Cost Reductions Unit：billions of yen FY2005.3 FY2006.3 FY2006.3 FY2007.3 FY2007.3 Cost reductions projected Cost reductions in YSD50 actual Initial actual projected projected reductions projections reductions reductions cumulative (FY2004.3 v
Slide 31: Post-YSD50 Measures
Post-YSD50 Measures While continuing to follow the fundamental strategy set out in the YSD50 medium-term business plan, specific strategies will be revised taking account of changes in the business environment and delays in achieving results from measures taken. • Development of high added-value pro
Slide 32: Post-YSD50 Measures
Post-YSD50 Measures Development of high added-value products • Strengthen cooperative efforts with artists, emphasize originality to appeal to customers • Enhance specs of moderate-price products, develop new functions • Make optimum use of entire Company’s development resources Web strategy • P
Slide 33: Post-YSD50 Measures
Post-YSD50 Measures Manufacturing reform/manufacturing base strategy • Firmly establish “Quality No.1” mentality • Differentiate from competitors through strengths in production technology – manufacture core products in Yamaha factories [1] Produce high added-value products in Japan - Japanese pla
Slide 34: Appendix
Appendix @ YAMAHA 34
Slide 35: Musical Instrument Sales in the Japanese Market
Musical Instrument Sales in the Japanese Market Wholesale Amount Yamaha’s (By category, excluding professional audio equipment) Wholesale Amount (By category, excluding professional audio equipment) % Change from the previous year 120 108.4 104.1 101.5 Billions of yen (96%) (98%) 100 60 53.7 Wind in
Slide 36: Musical Instrument Sales in the North American Market
Musical Instrument Sales in the North American Market Wholesale Amount Yamaha’s (By category, excluding professional audio equipment) Wholesale Amount (By category, excluding professional audio equipment) 302.6 304.9 % Change from (107%) (101%) the previous year Billions of yen 282.5 300 Wind instru
Slide 37: Musical Instrument Sales in the European Market
Musical Instrument Sales in the European Market Yamaha’s Wholesale Amount (By category, excluding professional audio equipment) Wholesale Amount 258.5 (By category, excluding professional audio equipment) 252.1 (103%) 248.8 (101%) % Change from Billions of yen the previous year 250 Wind instruments
Slide 38: Musical Instrument Sales in the Chinese Market
Musical Instrument Sales in the Chinese Market Wholesale Amount Yamaha’s (By category, excluding professional audio equipment) Wholesale Amount (By category, excluding professional audio equipment) % Change from 75 68.6 (109%) the previous year 63.2 Billions of yen (114%) Wind instruments 9.1 10 Str
Slide 39: Forward-looking statements 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, actual performance may differ greatly from our pre