Yamaha Motor Co Unsp/Adr

Thank you for joining the online business results meeting of Yamaha Motor Company Limited today. First, I'd like to express my sincere gratitude to all stakeholders who support our initiatives in this difficult environment. And I express my deep apologies for causing inconveniences to customers due to production delays and inventory shortages. Now I present the outline of the business results for the first nine months. Please turn to page 4. I will explain the key points in the first nine months. As for the business performance, highest ever sales and operating income for the first nine months were recorded thanks to the favorable business environment. As for the external environment, trends in the first half year continued. As the positive side, restarting of economic activities after COVID-19 continued. and on the negative side, global supply chain disruptions and soaring prices for raw materials continued. We suffered adverse impacts on parts procurement and production operations due to resurgence of the COVID-19 pandemic and lockdown in ASEAN countries. As for the state of our businesses, steady demand in all businesses were sustained, including demand for outdoor recreation and personal mobility, In post-COVID era, demand for semiconductor in the robotics business and increased investment for labor savings and profitability improved thanks to strengthening our break-even point management style. As for future outlook, we expect the continued strong demand in all businesses and full recovery in ASEAN markets. On the other hand, we remain watchful the impacts on demand by Chinese economic slowdown as risks. As for the issues of procurement, production, and logistics, due to the shortages of parts, labor for production, containers, and shipping space, which are already materialized, we will strive to minimize the opportunity losses in sales with quick and flexible responses. Please turn to page 5. This slide shows the unit sales and inventories buy major product as of the end of September in comparison with those in 2020 and 2019 in percentage. As for unit sales, outboard unit sales, food supply delay has been continuing since the previous year progressed with production expansion. Logistics issues continue mainly in the U.S., but supply volume is on the recovery track. On the other hand, in the third quarter, resurgence of COVID-19 in ASEAN countries led to the emerging shortages of components including semiconductors. Especially, factory operation was restricted in Vietnam and Philippines, and the period of unstable operation continued. The level of product inventory has not recovered to the normalized level due to the supply issues in many countries. but will promote supply, addressing procurement and production issues. Please turn to page 6. Let me explain the overall management figures. This table shows from the left column the results of Q3 total benchmarking years of 2019, 2020, and 2021, and on the right, the comparison with 2019 and 2020 are listed. As for 2021, Net sales were 128% of the previous year, 1,362.6 billion yen. Operating income was 274% of the previous year, 154.6 billion yen, and operating income ratio was plus 6.0 point a year at 11.3%. Ordering income was 269% of the previous year, 160.6 billion yen, Net income attributable to owners or parents was 137 billion yen, and this includes the gain on the sales of Yamaha Corporation's shares, 12.8 billion yen, which was implemented in August. Despite the resurgence of COVID-19 infections in ASEAN markets, sales increased due to the overall continued favorable business environment. Profits rose significantly due to higher sales, improved model mix, and reduce promotion expenses and production costs, thereby maintaining high profitability structure. Actual exchange rates are as shown at the bottom of the table. Please turn to page 7. Factors for change between Q3 total operating income in FY 2020 and FY21 by segment are shown here. Change by business, growth strategy expenses, and exchange effects are described. profits rose in all businesses, with marine products and robotics businesses posting significant gain in the third quarter from July to September. On the other hand, as for the emerging markets which are on the recovery track from COVID-19, we suffered negative impacts by lockdown and declined factory utilizations due to resurgence of COVID-19. India, in particular, was affected by parts shortages. As a result, motorcycle business in margin markets in Q3 total marked the positive impacts of 33.6 billion yen as shown in the chart. But in the period from July to September alone, it was negative of 3.2 billion yen. Exchange effects were positive, 4.4 billion yen due to depreciation of yen. Please turn to page 8. Operating income change, which was shown by segment on the previous page, is divided by factor here. As you see, sales increase made a substantial contribution of 118.7 billion yen, and its breakdown is scale increase plus 75.7 billion yen, model mix improvement mainly in motorcycle emerging market plus 34 billion yen, rebate reductions plus 6.5 billion yen, temporary decrease in allowance for doubtful accounts plus 6.4 billion yen, and increase in logistics costs minus 3.9 billion yen. And cost reductions made positive impact of 6 billion yen, but raw material cost surge made significant impact of minus 15.6 billion yen. Growth strategy expense decreases made positive impact of 2.2 billion yen, but increasing SG&A expenses, including a variable cost increase with volume growth, made a negative impact of minus 17.5 billion yen. including the exchange effects of plus 4.4 billion operating income resulted in 154.6 billion. Negative impacts by raw material cost surge and increased logistic cost were offset by the mixed improvement and cost reductions, among others. Please turn to page 9. This slide shows the unit sales forecast by major product and region. The results up to the third quarter, and the forecast for the fourth quarter in their comparisons to 2020 and 2019 are shown here. With slow inventory, Indonesia and Thailand have been making robust recoveries. However, due to the impact of semiconductor shortage and production unit falls due to labor shortage in many markets, the supplies will be in further shortage in the fourth quarter. We will strive to meet the market demand as much as possible by taking measures in parts procurement and labor shortage issues. Please turn to page 10. Based on the unit sales forecast shown before, we revised the business forecast. Net sales are revised to 122% of the previous year, 1,800,000,000,000 yen due to parts shortages including semiconductors. Operating income is revised to 211% of the previous year, 172 billion yen, due to further cost reductions. Operating income ratio is revised to the improvement of 4.0 to 9.6%. Ordinary income is revised to 203% of the previous year to 178 billion yen. Net income is revised to 273% of the previous year to 145 billion yen. marking the record-highest net sales and operating income. Full-year exchange rate assumptions are kept unchanged. Please turn to page 11. Let me explain the shareholder returns. Acquisition of Treasury stock was approved by the Board of Directors on November 8, 2021, for the improvement of shareholder returns and capital efficiency. As a result, total return ratio is to be 31.7% with a full-year dividend of 100 yen. Full-year dividend of 100 yen per share remains unchanged from the previous announcement. Earning per share will be 416 yen. A chart on the right shows the cash flow excluding sales finance receivable reflecting Treasury stock acquisitions. I am Noda. I will explain details by business segment. Please turn to page 13. Let me explain net sales and operating income by business. Chart carries three-year results of 2019, 2020 and 2021. As for the results in 2021, in land mobility, sales were 882 billion yen, operating income was 60.4 billion yen. Marine product sales were 302.6 billion yen. Operating income was 64.5 billion yen. Robotics sales were 88.6 billion yen. Operating income was 13.8 billion yen. Financial services sales were 35.9 billion yen. Operating income was 15 billion yen. And other product sales were 53.6 billion yen and Operating income was 0.9 billion yen. As you see here, in all businesses, sales and profit increased year on year. And compared to 2019, sales and profit also increased. I will explain the business condition by segment from the next page and onward. Please turn to page 14. Motorcycle business in land mobility business. Motorcycle business in developed market is shown on the left. Unit sales increased in all regions and net sales increased from 172.3 billion yen to 200.8 billion yen. Operating income ratio turned from minus 5.3% to plus 1.6%, securing profitability due to improvement in manufacturing utilization and reduction in rebate and expenses for sales activity. Motorcycle business emerging market is shown on the right. Net sales increased from 425.7 billion yen to 564 billion yen. Operating income ratio improved substantially from 3.6% to 8.0% due to the promotion of premium segment strategy. Due to resurgence of infection and shortages in parts including semiconductor, ASEAN countries and India have not yet recovered to the level of 2019, but sales in Latin America and China recovered beyond the level of 2019. Please turn to page 15. Left part shows RV. Following the second quarter, strong demand in recreational category continued, and net sales increased from 53.4 billion yen to 79.3 billion yen. Operating income ratio improved substantially from minus 3.3% to plus 7.4% due to sales unit growth and reduction in rebate and sales activity expenses. Due to the part supply delays and infection cases of workers caused by resurgence of infection in the U.S. in August, supply issues still continue. Market inventory level is declining, and we will minimize opportunity losses by effort in production and procurement, and by implementing effective allocations. SPV is shown on the right. Demand for electric power-assisted vehicle and e-bike continue to expand at high level as the personal mobility and casual outdoor leisure. As a result, mainly due to strong sales in e-kit for Europe, Net sales increased from 31 billion yen to 37.9 billion yen and operating income ratio improved from 14.8% to 16.6%. We continue to capture the sales opportunities in the growing market and we expand the business. Princeton to page 16. Left part shows marine business. Demand of large outboard mortars and our sales have been strong. And the sales of water vehicles, which have faced delayed production and supply due to cold waves in the U.S. and past procurement issues, improved in the third quarter. As a result, net sales improved from 247.4 billion yen to 302.6 billion yen, and operating income ratio improved from 16.4% to 21.3% maintaining high profitability. Right part shows robotics business. In addition to the sales growth in China, sales in Europe, the US, and Japan have been recovering. Sales in Yamaha Robotics Holdings also grew, and as a result, net sales increased from 54.7 billion yen to 88.6 billion yen. Operating income ratio improved drastically from 1.8% to 15.6%. We continue to grow this business through synergy effect with Yamaha Robotics Holdings. Please turn to page 17 for financial services business. Left chart shows receivable balance and its regional breakdown, and right chart shows net sales and operating income ratio. As for the receivable balance, as of the end of September 2021, it increased mainly due to steady retail financing in North America. In other areas, receivable balance has been also growing steadily, and the overall balance increased to 364 billion yen. Net sales in 2021 increased to 35.9 billion yen. On the profit side, it was substantially affected by the reversals. of allowance for doubtful accounts and operating income ratio increased to 41.7%. This concludes my presentation. Thank you for your attention.