Yamaha Corp

I am Nishimura. I will now take you through the financial results of the fiscal year ended March 2025. I will start with highlights of the results. The full year ended March 2025 revenue was almost flat year on year with continued slump in the musical instruments business due to sluggish market conditions in China. despite continued strong performance of B2B audio equipment and weaker Yen. Core operating profit increased driven by the impact of FX, significant profit growth in the audio equipment business, structural reform last fiscal year, and the curbing of SG&A spending, which more than offset the decline of revenue in real terms. Net income decreased mainly due to ¥14.3 billion worth of structural reform expenses, including impairment loss on piano manufacturing facilities. As for our focus for the full fiscal year ending March 2026, we expect positive revenue growth in real terms driven by global recovery in musical instrument sales despite lingering weakness in Chinese market. With regards to the U.S. tariffs, those that were in effect as of March have been baked into our forecast, but there are still a lot of uncertainties. Therefore, we have not factored in additional tariffs to take effect in April and beyond in our current guidance. Next, I would like to move on to a financial summary. First, with the fiscal year 2025 March results, revenue was 462.1 billion yen. Core operating profit was 36.7 billion yen with 7.9% margin. Net profit was 13.4 billion yen. The exchange rate of the full year is shown in the table. I will take you through some positive and negative contributions to core operating profit. The upper table shows the comparison with the previous fiscal year ended March 2024. FX brought 8 billion yen favorable variance. The cost increase on higher ocean freight resulted in a negative impact of 2.7 billion yen. And impact of weaker cells, which led to lower production, resulted in a negative impact of 7 billion yen. The structural reform implemented last fiscal year, ended March 2024, generated positive impact of 2 billion yen. Fewer one-time expenses brought a positive variance of 2.1 billion. And curving SG&A expenses contributed 1.2 billion yen, putting all those together. March 2025 landed at 36.7 billion. The bottom table shows the comparison against the last forecast. The forecast as of third quarter was 33 billion yen. Stronger cells and better model mix brought 1.5 billion in favorable variants. Fuel one-time expenses brought a positive variance of 700 million, and carbon S-gen expenses contributed 700 million. IMC and other businesses, mainly driven by sales expansion, contributed 700 million. With all those combined, the year landed at 36.7 billion yen. Here are the results by segment. For details, please refer to the slides. I will continue with the full year forecast for the year ending March 2026. Revenue is 455 billion yen. Core operating profit is 40 billion yen with 8.8% margin. Net profit is 28.5 billion yen. The exchange rate assumption for the full year is 145 yen to the US dollar and 160 yen to the euro. The impact of 1 yen fluctuation is noted below on the right. This is a core operating profit reach from 36.7 billion yen in the previous year to the forecast of March 2026. FX creates 2.4 billion negative variance. Cost increase brings a negative impact of 700 million. An impact of stronger sales, which led to higher production as well as model mix improvement, result in a positive impact of 3.6 billion yen. The structural reform implemented last fiscal year ended March 2025 brings positive impact of 2 billion. Absence of one-time expenses brings a positive variance of 2.3 billion. SG&A expenses increase is a drag of 2 billion yen on profit. In addition to downsizing spending in unprofitable business areas and controlling logistics and others, The company also makes upfront investment for the future growth, resulting in overall increase in its journey expenses of 2 billion yen. With an improvement of 500 million yen in other businesses, we are forecasting 40 billion yen core operating profit for the year. Next is segment outlook. As you can see at the bottom of the slide, the electronic device business has been reclassified from IMC and other business segment to the audio equipment segment, starting from the fiscal year ending March 2026. The forecast for the year ending March 2026 and the results for the year ended March 2025, shown here, are the numbers after reclassifying the segment of the electronic device business into the audio equipment segment. The segment core operating profit margin forecast is 9.2% for the musical instruments, 8.8% for the audio equipment, and 2.5% for the other businesses. I will now touch on the estimated impact of the U.S. tariffs. As I mentioned earlier, the impact of additional U.S. tariffs has not been factored in our guidance for this fiscal year. What you see here is an estimate of the impact of the additional tariffs on our business as risks. The assumptions used in the estimation are based solely on the impact of the increased U.S. tariffs and do not take into account the recovery from the countermeasures described at the bottom of the slide. The tariff rate used in the estimation are 145% for Chinese products from April to June, and 10% for production in other countries. And in July, when the 90-day pause expires, country-specific reciprocal tariffs are set to return as announced by the U.S. government on April 3rd. The impact of tariffs on core operating profit is estimated at around 14 billion yen. In reality, we will be taking the countermeasures described below to reduce the impact. The measures include the price optimization and cost reduction. In the first quarter, during the 90-day suspension of additional tariffs beyond 10%, we are expediting shipments of products made outside China to the U.S. We are also expanding products with relatively low tariff rates in comparison to competitors. As for the fourth point, we will look into the possibility of transferring production from China to other countries at item level rather than plant level. I would like to reiterate that the estimates are based on the information available at this time and involve risks and uncertainty, given that the final tariff rates, products subject to the tariffs, and impact on the US and other economies are still uncertain. I will now give an overview by business segment. First, starting with the musical instruments. Revenue declined in the fiscal year ended March 2025, mainly due to sluggish Chinese market, despite the recovery of digital pianos. Piano sales declined significantly due to sluggish market conditions in China and softening global demand. Sales of digital musical instruments were flat year on year, attributable to recovery of sales of digital pianos and its market share. Sales of winds, strings, and percussion declined due to the end of the financial subsidies in the U.S. Guitar sales were flat year-on-year, although peripheral products struggled. For the fiscal year ending March 2026, sales are expected to recover, with the exception of China, and we expect revenue growth. Sales of pianos are expected to increase, with strong sales in other countries offsetting the weakness in the U.S. and China. Sales of winds, strings and percussions and guitars are expected to grow in all regions. The slide shows the revenue mixed by major products.

You can also find the revenue breakdown by region. Now let me turn to the audio equipment business.

The results for the fiscal year ended March 2025 are reported under the previous segment, which combines consumer and B2B products. The fiscal year March 2025 shows revenue growth driven by strong B2B product sales, while consumer products revenue declined due to downsizing home audio business. B2B business enjoyed double-digit growth driven by booming entertainment market.