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Yamaha Motor Co., Ltd. (the "Company") has formulated its new medium-term management plan, encompassing management policies and goals, structural reforms, growth strategies, and the numerical targets the Company seeks to attain during the three-year period from 2010 through 2012. |
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The new plan envisions the Yamaha Motor Group as an excellent engineering and manufacturing enterprise with a prominent presence in the global market. It calls for the Company to get back to basics, redoubling its commitment to product development and a bottom-up approach. During the new medium term, the Company will make all-out efforts to implement structural reforms, build a foundation to enable profitability, and lay the groundwork for future growth. |
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In terms of its targets for the period, the Company seeks to return to profitability on a consolidated income basis in fiscal 2010, and achieve a consolidated operating income margin of 5% in fiscal 2012 -- the final year of the new plan. |
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Management Policies and Goals |
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The plan is designed to attain its objectives in two phases. Phase I (through 2010) puts an emphasis on accelerating the Company's structural reforms, reducing the break-even-point production volume, and working to build a profitable structure. In Phase II (2011 through 2012), the Company will lay the groundwork for future growth and take action toward realizing it. |
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In its roadmap toward these objectives, the Company has developed three management policies, centered on promoting businesses in developed and emerging nations, and laying the groundwork for future growth. The Company also identified goals for its mainstay businesses, including reforming the profitability structure. This means creating a management foundation that enables the Company to earn profits from motorcycle, outboard motor, and ATV/SSV businesses in developed nations -- regardless of the size of the nations' markets. In addition, the Company is seeking to aggressively expand the motorcycle business in emerging nations that show growth potential, on both a qualitative and quantitative basis.
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Three management policies |
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1. |
Reforming the profitability structure of businesses in developed nations (Phase I) |
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Reorganize the manufacturing layout |
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Respond to the need to downsize the workforce (worldwide) |
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2. |
Quantitative and qualitative expansion of the motorcycle businesses in emerging nations (Phase I) |
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3. |
Laying the groundwork for future growth (Phase II) |
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Release global strategic models |
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Simultaneously increase products' appeal and profitability |
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Accelerate the development of super-fuel-efficient engines |
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Accelerate the development of Smart Power* technologies |
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*Smart Power: |
New power sources, primarily for electric vehicles, designed to create a new paradigm of mobility |
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Goals for mainstay businesses |
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< Motorcycle business in developed nations > |
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Reforming the structure to enable profitability and accommodate the market recovery |
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Implement structural reforms to enable profitability, even at exchange rates of 1U.S. dollar = 85 yen and 1 euro = 120 yen |
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< Outboard motor business > |
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Attaining far and away the top share in the global market |
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Enhance profitability and accelerate the development of leading-edge environmental technologies. |
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< ATV/SSV business > |
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Restructuring the business foundation |
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Reform the structure to enable profitability, even at an exchange rate 1 U.S. dollar = 85 yen and unit sales of 100,000 |
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< Motorcycle business in emerging nations > |
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Achieving aggressive, quantitative and qualitative expansion |
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Increasing business volume to 8 million units with a 10% operating income margin |
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ASEAN: |
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Simultaneously increasing the appeal and profitability of products
・Aggressively releasing fuel-efficient models
・Enhancing the manufacturing cost-cutting activities (PRO-10)
・Strengthening the product appeal with new technologies
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China and India: |
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Enhancing Yamaha presence in the market
・Aggressively releasing low-priced models
・Expanding and enhancing the sales network
・Expanding exports (from India and China to the rest of the world)
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Structural Reforms (Phase I) |
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In formulating the management plan discussed above, the Company assumed that demand in developed nations will fall below the levels it officially announced on August 4, 2009 in its consolidated financial results for the first six months of the fiscal year ended December 31, 2009. |
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Based on these assumptions, the Company has lowered the annual production volume required to reach the break-even point for some mainstay products. For outboard motors, the break-even point remains at 230,000 units, unchanged from the August announcement. However, for motorcycles, the number has been reduced from 250,000 to 200,000, while for ATVs and SSVs, it has been lowered from 140,000 to 100,000. At the same time, the Company is expanding the scope of three structural reforms -- reorganizing the manufacturing layout, streamlining the workforce, and reducing costs -- beyond the level envisioned in the previous announcement. The moves are designed to significantly reduce fixed costs and improve profitability. |
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Key points |
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1. |
Reorganizing the manufacturing layout |
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The scope of the reorganization has been expanded from Japanese factories to include factories and group manufacturing companies worldwide |
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For the period 2010-2012: |
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Previous release: |
10 factories → 7 factories |
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New release: |
12 factories in Japan → 7 factories;
9 overseas factories → 7 factories
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2. |
Downsizing the workforce |
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Additional workforce reduction programs will be initiated, beyond the surplus workforce reduction already initiated.* |
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Previous release: |
surplus workforce reduction programs affecting 1,700 positions in 2009 (Japan, Europe and the United States) |
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New release: |
additional reductions covering 1,000 positions in 2010 (Japan, Europe and the United States) |
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1,620 position workforce reduction in 2009 according to the previous plan |
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Additional workforce reduction affecting 800 positions in Japan in 2010 (voluntary retirement) and 200 in Europe and the United States. |
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3. |
Reducing costs |
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Significant cost reduction will be achieved through three key measures: expanding cost-cutting programs from Asia to the rest of the world; establishing the Cost Innovation Section -- integrating technology, manufacturing and procurement -- and enhancing global collaboration with major suppliers. |
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Previous release: |
35 billion yen cost reduction targeted in 2011* |
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New release: |
60 billion yen cost reduction targeted in 2012** |
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Target for the 2009-2011 period, compared with 2008 results |
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Target for the 2010-2012 period, compared with 2009 results |
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Key points |
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1. |
Low-priced motorcycles for emerging nations |
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Releasing low-priced motorcycles in India and China (ratio of low-priced models: 20% in 2009 → Target: 60% in 2012) |
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Reducing manufacturing costs of models for emerging nations
(Increasing profitability through model platform-sharing and the complementary parts supply system)
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2. |
Motorcycles for the ASEAN region |
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Simultaneously increasing the appeal and profitability of products featuring the fuel-injection (FI) system
(Enhancing the product appeal by increasing the ratio of models featuring the FI system. Ratio of FI models: 3% in 2009 → Target: 50% in 2012 → Target: 80% in 2015)
(Raising profitability by reducing FI system cost and expanding the business)
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3. |
Next-generation environmentally friendly engines |
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Targeting an increase in motorcycle fuel efficiency up to 50%* in 2015, making Yamaha commuter vehicles more competitive in ASEAN markets
(* compared with 2008 Yamaha conventional models) |
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Targeting an increase in outboard motor fuel efficiency up to 30%* in 2015, building the superiority of next-generation 4-stroke models
(* compared with 2007 Yamaha conventional models)
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4. |
Smart Power |
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Accelerating the development of electric powered motorcycle technologies, and the marketing of products featuring the technologies
Releasing products in Japan in 2010, marketing more model varieties -- including business-use models -- and promoting the business in overseas markets
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Strengthening Yamaha Motor's product presence in the growing electrically power assisted bicycle market, appealing as a market pioneer
achieving 30% share in the 500,000-unit-Japanese-market, and developing the business in the rapidly growing European market
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Numerical targets |
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Numerical targets for consolidated financial results |
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As stated earlier, the new management plan envisions a return to profitability on a consolidated basis in fiscal 2010 and a consolidated operating income margin of 5% in its final year, fiscal 2012. To attain these objectives, the Company intends to reform the profitability structure so that it is not dependent on market size in developed nations, while achieving quantitative and qualitative expansion of the motorcycle business in emerging nations. |
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The Company has specified the numerical targets highlighted in the table below for the plan's consolidated financial results. The targets are premised on exchange rates of 88 yen against the U.S. dollar and 128 yen against the euro |
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FY2009 results |
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Consolidated net sales |
1,153.6 billion yen |
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Consolidated operating income (loss) |
(62.6) billion yen |
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Operating income margin |
- |
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| FY2010 forecasts |
FY2012 targets |
| 1,250 billion yen |
1,400 billion yen |
| 10 billion yen |
70 billion yen |
| 0.8% |
5% |
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Capital expenditures, cash flows, interest-bearing debt |
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The Company plans to use 120 billion yen as capital expenditures during the period, primarily in support of new motorcycle releases in emerging nations and the ASEAN region, cost reduction programs, and environmentally friendly engine and electric-drive technology development. The investments are targeted toward achieving future growth.
The Company also aims to generate free cash flows of 150 billion yen, while reducing 150 billion yen in interest-bearing debt in the new three-year period.
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Capital expenditures: |
120 billion yen (cumulative over three years) |
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Free cash flows: |
150 billion yen generated (cumulative over three years) |
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Interest-bearing debt: |
150 billion yen reduction (cumulative over three years) |
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