Yamaha Corporation · TSE:7951
Yamaha — Investor Presentation (February 2004)
38 slides from Yamaha's investor presentation, Feb 10, 2004
Slide 1: Medium-Term Business Plan Briefing
April 2004 to March 2007 Medium-Term Business Plan Briefing February 10, 2004 YAMAHA CORPORATION
Slide 2: Perception of operating environment
Perception of operating environment Business risks increasing Shifts in market composition/technology, escalating competition and growing compliance risks Moving toward knowledge value-based society Key to competition is brand creation and converting technical expertise, know-how, and other knowledg
Slide 3: Basic stance of medium-term plan
Basic stance of medium-term plan Stable generation of high earnings Aiming to realize business structure capable of sustainable development YSD is acronym for YAMAHA Sustainable Development 50 represents target of ¥50bn in earnings and zero net debt The factors crucial to sustainable development are
Slide 4: Three main policies of the plan
Three main policies of the plan Sustainable/stable Sustainable/stable high-profit high-profit earnings earnings structure structure Innovative Innovative and and high-quality high-quality product product development/ development/ business business creation creation Corporate Corporate social social
Slide 5: Targets for fiscal year ending March 2007
Targets for fiscal year ending March 2007 Exchange rates (¥110/$ and ¥127/€) Consolidated Operating Income ¥50bn Net Income ¥34bn ROE 10% FCF (3-year) ¥60bn Net debt Zero Inventories 2.9 months Consolidated sales ¥590bn
Slide 6: Sustainable/stable high-profit earnings structure
Sustainable/stable high-profit earnings structure
Slide 7: Establishment of sustainable/stable high-profit earnings structure
Establishment of sustainable/stable high-profit earnings structure 1) Musical instruments: Operating income of ¥30bn 2) Other core businesses: Stabilize earnings bases 3) Make all existing business units profitable 4) Reduce total costs by cutting procurement expenses, revamping manufacturing proces
Slide 8: Musical Instruments
Musical Instruments 1) Strengthen planning/development and marketing capabilities to increase added value of products 2) Seek growth in professional audio equipment business and Chinese market while revitalizing Japanese market 3) Revamp manufacturing processes
Slide 9: Development of high value-added products
1) Strengthen planning/development and marketing capabilities to increase added value of products Development of high value-added products Leverage technology seeds to provide customers with fun, easy-to-use instruments Strengthen development of mid- and high-end models Custom Custom ZZ series serie
Slide 10: Meeting the needs of artists and specialists
Meeting the needs of artists and specialists Information from global bases Local entity website links Division website links Yamaha Yamaha artist artist service service NY office image) NY office image) Artist videos Introduction Introduction of of new new artist artist relations relations website w
Slide 11: Growth in professional audio equipment
2) Seek growth in professional audio equipment business and Chinese market while revitalizing Japanese market Growth in professional audio equipment business (150%) Realize system solutions based on mixers Focus on small- and medium-sized SR (live sound) equipment market Strengthen marketing systems
Slide 12: Expand sales in Chinese market
Expand sales in Chinese market Strengthen sales network and marketing systems Enhance YAMAHA brand by emphasizing YAMAHA quality and proactively accommodating the needs of music conservatories and artists Make preparations for establishing YAMAHA music schools Enhance production base by establishing
Slide 13: Revitalization of Japanese market
Revitalization of Japanese market Revise sales method in Japanese business Bolster investment in dissemination/sales points (¥10bn over three years) Launch “STAGEA” and expand Electone fans unistyle unistyle Core Core 100 100
Slide 14: Revamp manufacturing processes
3) Revamp manufacturing processes Reform YAMAHA production concepts and construct optimal mechanisms for manufacturing musical instruments Deploy Toyota Production System (TPS) and Total Production Management (TPM) on all fronts Reduce inventories and employ SCM Reassess production bases Reposition
Slide 15: Content and Media
Content and Media Expand overseas ringing melodies distribution service FY2007 Sales target of ¥720mn Develop new businesses by leveraging portal sites “Melocha” comprehensive site for mobile phone users (4mn subscribers) Music portal site “Music e-Club” (2.2mn visitors/month, YOM* membership 0.3mn)
Slide 16: Strengthen the home theater business
AV/IT Strengthen the home theater business Promote product differentiation Differentiate YAMAHA products by employing its strength in “sound” Match designs to needs in thin-screen TV era Better position YAMAHA brand of speakers Further improve QCD and produce various products in variable lots Implem
Slide 17: Expand router business for enterprise/SOHO solutions
Expand router business for enterprise/SOHO solutions Specialize in SOHO/enterprise solutions revolving around VPN/VoIP Enhance/expand high-speed, multi-function routers Propose solutions to integrate voice & data Establish solutions business process Establish integrated customer response system enco
Slide 18: Sustain worldwide share of mobile phone sound source chip business
Semiconductors Sustain worldwide share of mobile phone sound source chip business Further pursue SMAF in global market Expand content support for all countries/regions Pursue sustainable development/market entry for new products Propose differentiated solutions using sophisticated products Respond t
Slide 19: Expand in areas outside of mobile phone sound source business
Expand in areas outside of mobile phone sound source business Amusement field (sound source, video) Audio field (automotive, digital amps) Telecommunications field (IPv6-related products) Sensor field (terrestrial magnetic, other)
Slide 20: Electronic Metals
Electronic Metals Lower breakeven point Ensure that production systems are optimized for each given industry Expand copper-related production capacity by converting former Invar facility Promote TPM to sustain improvement in QCD Cultivate and expand copper-related connector business Tap new markets
Slide 21: Lifestyle-Related Products
Lifestyle-Related Products Establish business model for remodeling operations business Pursue market strategy of developing close ties with home builders and at the regional level by setting up showrooms and targeting end users Complement sales and resources of alliance partner AWL Further lower bre
Slide 22: Recreation
Recreation Become undisputed leader in specific regions and/or fields Advance unique experience proposals based on coexistence with nature and amusement, hospitality, and food specific to particular regions Provide facilities that offer unparalleled enjoyment of sound and music Kiroro Kiroro Haimuru
Slide 23: Others
Others Golf products Heighten brand presence with New “inpres” series Automobile interior components Increase competitiveness by reducing costs through the retooling of manufacturing processes Cultivate new customers. . .overseas makers, new manufacturing methods/new designs Metallic molds and facto
Slide 24: Innovative and high-quality product development/business creation
Innovative and high-quality product development/ business creation
Slide 25: Innovative and high-quality product development/business creation
Innovative and high-quality product development/ business creation 1) Propose new forms of amusement 2) Continually deploy a comprehensive media strategy 3) Create new businesses underpinned by our core competence in sound 4) Strengthen technology as a development base/energize corporate culture
Slide 26: Propose new forms of amusement
Propose new forms of amusement Expanding demand for use in network connections and simple music performances Example of Recommended Use: Wireless LAN Connection Full-time Wireless Router or Internet Connection Access Point ADSL/Optical Cable/CATV Modem AN ss L on e cti rel Wi onne C Wireless LAN USB
Slide 27: Comprehensive media strategy—a new phase
Comprehensive media strategy—a new phase Create new businesses that interlock our hardware, software, and content Content (MIDI, electronic sheet music, audio, video, etc.) Hardware Third-party content Content accumulation Musical instruments Distribution media YAMAHA Group content PCs I. Expand and
Slide 28: Create new businesses based on our core competence in sound
Create new businesses based on our core competence in sound Aiming to grow and establish new businesses and position our brand as a “sound specialist” that mines and combines the sounds that comprise music and that manipulates human voices and environmental sounds Amid shift to networked systems, de
Slide 29: Corporate social responsibility/CSR-focused management
Corporate social responsibility/ CSR-focused management
Slide 30: Corporate social responsibility/CSR-focused management
Corporate social responsibility/CSR-focused management 1) Compliance with laws and regulations 2) Environmental preservation 3) Safety and health 4) Disclosure 5) Harmony with society/culture
Slide 31: Environmental preservation
Environmental preservation RoHS response (green procurement and environment-friendly design) Complete response by FY2005 Zero emissions Achieve targets at YAMAHA parent plants by 2005 year-end Reduce emissions of compounds subject to PRTR Reduce FY2006 volume by 20% compared with FY2002 level Reduce
Slide 32: Medium-term business plan targets
Medium-term business plan targets
Slide 33: Sales targets
Sales targets (Billions of Yen) Aiming for solid sales growth 590.0 565.0 550.0 542.0 524.7 FY2003 FY2004 FY2005 FY2006 FY2007 (Actual) (Forecast) (Mid-term plan)
Slide 34: Operating income targets
Operating income targets Achieve record-high earnings in FY2007 (Billions of Yen) 50.0 45.5 40.0 36.5 32.0 FY2003 FY2004 FY2005 FY2006 FY2007 (Actual) (Forecast) (Mid-term plan)
Slide 35: Inventory targets
Inventory targets Reduce FY2007 inventories by 20% compared with level in FY2003 80.1 (Billions of Yen) 71.5 71.9 72.0 72.7 FY2003 FY2004 FY2005 FY2006 FY2007 (Fiscal year-end inventory amount) (Actual) (Forecast) (Mid-term plan)
Slide 36: Capital investment targets
Capital investment targets In FY2005, invest aggressively in sales bases and plant/equipment (Billions of Yen) 25.6 22.4 19.5 18.8 18.7 18.2 16.917.6 18.0 18.0 Capital Investments Depreciation FY2003 FY2004 FY2005 FY2006 FY2007 (Actual) (Forecast) (Mid-term plan)
Slide 37: Headcount targets
Headcount targets Reduce Japanese headcount; Increase headcount overseas, mainly in China (people) 24,086 23,970 24,170 24,340 23,563 11,676 12,162 12,080 12,400 12,720 Overseas 11,887 11,924 11,890 11,770 11,620 Japan FY2003 FY2004 FY2005 FY2006 FY2007 (Actual) (Forecast) (Mid-term plan)
Slide 38: 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, our actual performance may differ greatly from our