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Overview of Operating Results for the Fiscal Year Ended March 31, 2006, and Forecasts for Year Ending March 31, 2007 |
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Operating Results for the Fiscal Year Ended March 31, 2006
Consolidated sales remained at approximately the same level as in the previous fiscal year and operating and recurring income declined for the second consecutive year; however, net income rose in the year under review |
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Consolidated net sales for the fiscal year ended March 31, 2006, amounted to ¥534.1 billion, approximately the same as for the previous fiscal year. Sales in the core musical instruments segment rose from the prior year. However, sales in the AV/IT segment declined, and the sales in the electronic equipment and metal products segment, whose core product is semiconductors, decreased significantly. Sales in the lifestyle-related products and others segments increased.
Consolidated operating income decreased a substantial 32.4% in comparison with the previous fiscal year, to ¥24.1 billion. Although the lifestyle-related products and others segments reported higher income and the profitability of the recreation segment improved, the operating income of the electronic equipment and metal products segments and the AV/IT segments dropped, and, although the musical instruments segment posted a gain in sales, operating income remained at about the same level as in the previous fiscal year.
As a result, consolidated recurring profit declined 14.7% from previous year, to ¥35.2 billion, despite an expansion in equity in earnings of unconsolidated subsidiaries and affiliates as a result of the strong performance of Yamaha Motor Co., Ltd., an affiliated accounted for under the equity method.
Consolidated net income rose 42.8% from the prior fiscal year, to ¥ 28.1 billion, principally owing to the absence of impairment losses on fixed assets recognized in the previous fiscal year.
Compared with the forecast for the fiscal year ending March 31, 2006, issued on February 8, 2006, at the time of the announcement of operating results for the third quarter, sales were ¥5.1 billion higher than expectations. In terms of profit, operating and recurring profit for the fiscal year under review were as forecast, while net income exceeded our forecasts by ¥2.1 billion.
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| Sales and Operating Income by Business Segment |
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| (Figures in parentheses are percentage changes from the previous fiscal year.) |
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Musical Instruments — Sales of ¥314.1 billion (+3.8% year on year) and operating income of ¥14.1 billion (–0.4% year on year)
Sales expanded as a result of strong conditions in overseas markets. Sales of pianos were firm in overseas markets, especially in North America. In the electronic instruments segment, sales of the Electone "STAGEA" reported a marked decrease as demand peaked out and declined, but sales of digital keyboards and synthesizers increased. In addition, sales of professional audio equipment rose in overseas markets, particularly in North America, while sales of wind, string, and percussion instruments posted gains in the domestic market as well as in the markets of North America and the rest of Asia. The music schools segment increased its sales owing to promoting enrollment of students and expanding a new Uni styleTM range of music schools in suburban locations and music schools specifically for adults in city locations in Japan. YAMAHA's English- language schools increased their sales. Operating income remained at approximately the same level as during the previous fiscal year, owing to the effect of changes in the composition of sales, higher logistics costs, costs associated with cutbacks in production and disposal of inventories of certain products, and other factors.
AV/IT — Sales of ¥75.9 billion (–2.3%) and operating income of ¥2.1 billion (–42.1%)
Sales of audio equipment declined, despite a favorable market response to the Company's newly introduced Digital Sound Projector YSP Series, principally because of lackluster conditions and other factors in the home theater market. In addition, sales of IT equipment declined because of growing competition and further declines in prices in the market for enterprise-use routers. As a result, sales and operating income in the AV/IT segment as a whole declined.
Electronic Equipment and Metal Products — Sales of ¥56.2 billion (–18.7%) and operating income of ¥7.9 billion (–60.3%)
Sales and operating income in the semiconductor business decreased markedly from the previous fiscal year, owing to a decline in the unit volume of sales of LSI sound chips for mobile phones and lower prices for these devices. On the other hand, sales of electronic metal products increased. As a consequence, major declines in sales and operating income were recorded because of the drop in gross profit on sales.
Lifestyle-Related Products — Sales of ¥45.2 billion (+5.5%) and operating income of ¥1.2 billion (versus a loss of ¥24 million in the previous fiscal year)
Sales expanded over the previous year, reflecting the strengthening of the Company's home refurbishment business operations and a favorable response to the introduction of new system kitchens equipped with artificial marble countertops. Major improvements were made in profitability owing to the rise in sales combined with reductions in manufacturing costs and cutbacks in fixed costs.
Recreation — Sales of ¥18.0 billion (–1.5%) and an operating loss of ¥1.8 billion (versus an operating loss of ¥2.3 billion in the previous fiscal year)
Although market demand for lodging showed a steady rising trend, Company sales experienced a slight decline as revenues from wedding-related and other activities decreased. The operating loss diminished from the previous year because of lower selling and administrative expenses due mainly to lower depreciation.
Others — Sales of ¥24.7 billion (+4.7%) and operating income of ¥0.58 billion (+245.4%)
In the golf products business, sales of new golf clubs that meet rules restricting club kickback effect were firm in Japan and overseas, thus leading to a rise in total golf-related sales. Other factors contributing to overall expansion in sales of this segment were improved revenues from the factory automation (FA) business and recovery in orders in the metallic mold and components business. In addition, sales in the automobile interior wood components business increased as a result of the development of new customers. As a consequence of these factors, sales and operating income in the segment as a whole increased for the fiscal year under review.
Parent Company Operating Results — Echoing the consolidated results, non-consolidated net sales and operating income declined for the second consecutive fiscal year but net income rose.
For YAMAHA CORP. on a non-consolidated basis, sales declined 5.9%, to ¥321.3 billion, higher than was forecast for the full year at the time of the announcement of operating results for the third quarter. However non-consolidated operating income declined 64.7%, to ¥8.0 billion, and recurring profit decreased 44.5%, to ¥14.0 billion. Both these figures were lower than the forecasts for the full year released at the time of the announcement of operating results for the third quarter. Net income, however, amounted to ¥10.2 billion, representing a strong recovery of 3,770.3% from a year earlier that was in line with the forecast announced along with the operating results for the third quarter. |
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| Outlook for the Fiscal Year Ending March 31, 2007 — Higher consolidated net sales with profitability at about the same level as in the previous year. |
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Fiscal 2007 will be the final year of the YSD medium-term management plan. For fiscal 2007, on a consolidated basis, the Company is forecasting increases in net sales and operating income in its core musical instruments business, with lower sales and slightly higher operating income in the lifestyle-related products segment, along with improvement in profitability in the recreation segment. However, in the AV/IT segment, the Company is forecasting sales at approximately the same level as in fiscal 2006, but with a decline in operating income. In the electronic equipment and electronic metal products segment, the outlook is for unavoidable decreases in sales and operating income because of greater competition in LSI sound chips for mobile phones. As a result, on an overall basis, the Company will fall short of the goal set in the medium-term plan of ¥50.0 billion in operating income.
On a non-consolidated basis, the Company is forecasting sales of ¥323.0 billion, operating income of ¥6.5 billion, recurring income of ¥10.0 billion, and net income of ¥7.0 billion.
Note: Sales and income figures in the text have been rounded to the nearest ¥100 million (one tenth of a billion yen). Figures in parentheses are generally percentage changes from the previous period.
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For further information, please contact:
YAMAHA CORPORATION
Public Relations Division
Mr. Misao Tanaka
TEL. +81-3-5488-6601
FAX. +81-3-5488-5060
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Consolidated Basis