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Overview of New Medium-Term Business Plan (YSD50) |
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YAMAHA CORPORATION has established a new medium-term business plan (YSD50). As the successor to the current medium-term business plan (Kando Creation 21), scheduled for completion by the FY2004 year-end, YSD50 details fundamental management policies, strategies for key businesses, and measures of performance, including numerical targets, for the three-year period from the fiscal year ending March 2005 (FY2005) to the fiscal year ending March 2007 (FY2007).
YSD50 is a management paradigm for executing policies aimed at realizing a business structure that will enable YAMAHA to achieve sustainable development and generate stable, high earnings. Final-year (FY2007) targets call for consolidated sales of ¥590.0 billion, consolidated operating income of ¥50 billion, and zero interest-bearing debt.
*YSD is an acronym for YAMAHA Sustainable Development. The number 50 indicates the target of ¥50.0 billion in operating income and zero net debt.
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| 1. Current medium-term business plan (Kando Creation 21) |
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Kando Creation 21 has provided a paradigm for business execution under three broad themes: “Striving for Growth,” “Consolidated Group Management,” and “Value-Added Business, Sparkling YAMAHA Brand.”
In its final year (FY2004), Kando Creation 21 targets sales of ¥560.0 billion, operating income of ¥25.0 billion, and recurring profit of ¥20.0 billion. YAMAHA’s current forecasts for FY2004 are consolidated sales of ¥542.0 billion, operating income of ¥45.5 billion, and recurring profit of ¥51.0 billion. Although YAMAHA expects sales to fall slightly short of plan, earnings are on track to significantly exceed targets, supported by improved profits in the musical instruments business and strong earnings from mobile phone sound source chips. Another contributing factor is the heightened awareness among employees regarding the importance of enhancing the YAMAHA brand.
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| 2. Overview of new medium-term business plan (YSD50) |
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(Fundamental concept)
Realize a business structure that will enable YAMAHA to achieve sustainable development and generate stable, high earnings.
(Numerical targets)
Consolidated earnings targets for the final year of YSD50 (FY2007) are shown below:
| Sales |
¥590.0bn |
ROE |
10%
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| Operating income |
¥50.0bn |
Free cash flow (3-year) |
¥60.0bn
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| Recurring profit |
¥52.0bn |
Net interest-bearing debt |
0
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| Net profit |
¥34.0bn |
Inventory (No. of months of cost of sales ) |
2.9months
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(Three basic policies)
The three basic policies and various measures contained in YSD50 are shown below:
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1. |
Earnings structure for sustainable development and the stable generation of high earnings
With the understanding that the semiconductor business, centered on mobile phone sound source chips, is subject to significant earnings volatility, YSD50 calls for strengthening the earnings capabilities of all YAMAHA businesses, with the musical instruments business particularly targeted for a substantial enhancement of profitability. The ultimate goal is to create an earnings structure for the YAMAHA Group as a whole that will consistently generating high earnings.
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- Musical instruments: Operating income of ¥30.0bn
- Other core businesses: Stabilize earnings bases
- All existing business units: Ensure profitability
- Reduce expenses across the board by cutting procurement costs, revamping manufacturing processes, retooling business processes, and rationalizing clerical tasks.
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Create and develop innovative, high-quality products and businesses
YSD50 calls for cultivating new demand by proposing innovative new products that leverage YAMAHA’s comprehensive capabilities while positioning the YAMAHA brand for greater competitive advantage, focusing on the middle range/high-end of markets for every business.
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- Propose new methods of amusement (network connectivity, ease of performance)
- Continually deploy comprehensive media strategy (create new businesses that interlock hardware, software, and content)
- Create new businesses based on YAMAHA’s core competence in ‘sound’
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Emphasize corporate social responsibility (CSR)
Take responsibility socially, environmentally, and economically with the goal of continually enhancing corporate value/brand value.
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- Compliance with laws and regulations
- Environmental preservation (green procurement, environmentally friendly design, zero emissions, etc.)
- Safety and health
- Disclosure,
- Harmony with society/culture
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(Main policies for individual businesses)
The main policies for individual businesses under the basic concept of YSD50 are as follows:
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Musical instruments business
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Increase the added valued of products by strengthening planning/development and marketing capabilities
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- Develop high-valued-added products (supply instruments that are fun and easy to play)
- Strengthen the development of mid-range and high-end models
- Meet the needs of artists/specialists
- Develop website dedicated to artist relations
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Revitalize the Japanese market and pursue growth in the Chinese market and in the field of professional audio equipment
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- Professional audio equipment business: Develop system solutions, centered on mixers, and strengthen sales system
- China: Strengthen sales network and marketing systems, enhance YAMAHA brand, and set up YAMAHA music schools
Japan: Revise sales mechanisms, bolster investment in dissemination/sales points
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Revamp manufacturing processes
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- Deploy TPS and TPM across the board (Toyota Production System, Total Production Management)
- Reduce inventories through links to SCM activities
- Bolster and reposition production bases
- Get Hangzhou Yamaha Musical Instruments on track
- Curtail procurement costs
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Other core businesses
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AV/IT business
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- Strengthen the home theater business
- Expand enterprise/SOHO router business and solutions business
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Semiconductor business
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- Sustain global market share in mobile phone sound source chip business
- Seek growth in domains outside of mobile phone sound source chips (amusement, audio, telecom)
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Content/media business
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- Grow overseas ringing melodies distribution business
- Leverage portal sites to develop new businesses
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Other businesses |
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Lifestyle-related products
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- Establish business model for remodeling operations
- Lower breakeven point further and continually deploy resources
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Recreation
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- Offer differentiated experiences in terms of amusement, hospitality, and food
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Golf products
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- Heighten brand awareness of NEW “Inpres” series
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Automobile interior components
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- Re-engineer cost structure to reduce costs and increase competitiveness
- Cultivate new customers
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Metallic molds and factory automation products
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- Realize No. 1 factory status in terms of manufacturing costs for magnesium parts
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Electronic equipment and metal products |
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- Expand production capacity by converting former Invar materials facility
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For further information, please contact
Yamaha Corporation
Corporate Communication Group,
Public Relations Division
Mr. Mike Tanaka
TEL. +81-3- 5488-6601
FAX. +81-3-5488-5060
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