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Summary of Fiscal 2005 results and Forecasts for Fiscal 2006 |
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Fiscal 2005 Results Summary
Sales and profits declined for the first time since fiscal 2002
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In fiscal 2005, consolidated sales declined 1.0% year on year, to ¥534.1 billion. Sales rose in the mainstay musical instruments segment. However, fiercer competition in the LSI sound chip business for mobile phones led to price declines, depressing sales in the electronic equipment and metal product segment, which consists mainly of semiconductors. Moreover, sales decreased in the lifestyle-related product segment, the recreation segment, and the other business segment.
Consolidated operating income fell 20.8%, to ¥35.7 billion, as profits increased in the musical instruments segment, but fell significantly in the electronic equipment & metal products segment. The AV/IT, lifestyle-related products, and recreation segments posted either lower profits or widening losses. Consolidated recurring profit declined 19.1%, to ¥41.3billion, reflected a contraction in equity-method income due to a change in the fiscal accounting period at YAMAHA Motor Co., Ltd., an equity-method affiliate. Consolidated net income declined 54.8%, to ¥19.7 billion, as ¥19.9 billion in extraordinary profits from the return of the substitutional portion of employee welfare pension funds and ¥6.5 billion in extraordinary profits from the sale of investment securities could not compensate for ¥32.7 billion in extraordinary losses from the early application of impairment loss accounting for tangible assets.
Compared with figures previously announced regarding outlook for fiscal 2005, net sales did not reach the target. However, figures for recurring profit and net income almost matched the forecasts.
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| Sales and Operating Income by Business Segment: |
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Musical Instruments— Sales of ¥302.6 billion (+3.1% year to year), operating income of ¥14.2 billion (+35.3% year to year)
Sales increased, as the launch of the Electone STAGEA® organ fueled growth in the Japanese market for the first time in several years, and sales increased in South Korea, the Middle East, and China. In the North American market, sales rose on a local-currency basis. However, sales in the European market did not change due to sluggish sales in the leading local markets of Germany and France. By product, piano sales contracted, but sales of Electone and Clavinova among electrical instruments were higher and sales of professional audio equipment increased. Revenues from classroom instruction increased, as enrollment at music schools recovered slightly among both young children and juveniles, and music instruction for adults rose steadily, and higher enrollment buoyed revenues from English language classes. Revenues from ring-tone melody distribution services climbed on the back of growth in overseas markets. As a result, profits surged from year-earlier levels.
AV/IT— Sales of ¥77.7 billion (– 0.7%), operating income of ¥3.6 billion (– 17.4%)
Sales of medium and high-end amplifier-receivers increased, especially in the United States, but stiffer competition in Japan and Europe weighed down sales. For data-communications equipment, enterprise-use routers were well received and recorded sales growth. Nonetheless, segment sales as a whole declined slightly due the effect of the exchange rate fluctuations. Profits decreased as a result of contracting sales.
Lifestyle-related Products— Sales of ¥42.8 billion (– 4.3%), operating losses of ¥24 million (operating profit of ¥1.5 billion in fiscal 2004)
In the first half of the fiscal year, sales of mainstay system bathroom products and system kitchen products fell steeply, reflecting YAMAHA’s late response to the trend toward lower market prices and delayed introduction of new products. In the second half, the Company worked to forge a sales recovery, but sales contracted over the full term. The sharp sales decline prompted the segment to turn unprofitable at the operating level.
Electronic Equipment and Metal Products— Sales of ¥69.0 billion (+10.2%), operating income of ¥20.0 billion (–33.5%)
In the semiconductor business, more intense competition in the market for LSI sound chips used in mobile phones prompted unit price reductions, which in turn depressed sales considerably. In the electronic metal products business, sales were brisk in the first half of the fiscal year, but market inventory adjustments pushed down sales from summer to the end of the fiscal year. Profits fell substantially owing to the sales decline.
Recreation— Sales of ¥18.3 billion (–9.0%), operating losses of ¥2.3 billion (operating losses of ¥1.1 billion in fiscal 2004)
Amid difficult business conditions in the domestic travel market, the Company worked to attracted customers to its facilities and improve efficiency. However, the declining skier population led to sluggish customer numbers, and typhoons and other unfavorable weather conditions caused revenues to contract, and operating losses widened.
Other Businesses— Sales of ¥23.6 billion (–9.6%), operating income of ¥170 million (operating losses of ¥210 million in fiscal 2004)
Golf product sales fell, owing partially to sluggish market conditions. The factory automation business registered firm growth as capital investment rose in China. However, sales in the metallic molds and components business fell, reflecting contracting demand for magnesium, as inventories of magnesium components used in mobile phones were pared back and mobile phone prices turned lower. The automobile interior wood components business recorded lower sales because model changes for autos using the components entered a slow phase. However, the segment stayed profitable at the operating level on the back of major production cost declines in the metallic molds and components business. |
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YAMAHA’s non-consolidated results
Sales and profits declined for the first time in three fiscal years
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| For YAMAHA, the parent company, sales totaled ¥341.5 billion, down 1.1%, and largely matched the Company’s forecast when third-quarter results were announced. Operating income declined 16.0%, to ¥22.6 billion, and recurring income fell 10.6%, to ¥25.1 billion, both exceeding estimates when third-quarter results were disclosed. Net income fell 99.0%, to ¥260 million, compared with the estimate for a ¥2.0 billion net loss. |
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| Fiscal 2006 forecasts |
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| In fiscal 2006, the YSD50 medium-term management plan that was inaugurated in April 2004 is entering its second year. YAMAHA has identified fiscal 2006 as the year in which the Company should record progress toward reaching its target of building a dynamic and stable corporate structure geared toward generating sustainable and stable earnings. YAMAHA forecasts sales and profit growth in the core musical instruments and AV/IT segments, but declining sales and profits in the electronic equipment and metal products segment. At the consolidated level, the Company forecasts sales of ¥546 billion, operating income of ¥37 billion, recurring profit of ¥42.5 billion, and net income of ¥29 billion. It forecasts parent sales of ¥334 billion, operating income of ¥18 billion, recurring income of ¥21 billion, and net income of ¥12 billion. |
Note: Sales and profit figures are rounded off generally rounded off to the nearest ¥100 million. In addition, figures in parentheses denote year on year comparisons. |
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For further information, please contact:
YAMAHA CORPORATION
Public & Investor Relations Group,
Public Relations Division
Misao Tanaka
TEL. +81-3- 5488-6601
FAX +81-3-5488-5060
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Consolidated Basis