Yamaha: Business Conditions 'Worrisome'

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Yamaha Motor Co. Ltd. ended 2006 with record net sales and income, but company officials say a slowdown in motorcycle sales in North America and Europe last year may cause concern if it continues through 2007.

Yamaha net income for the year ended Dec. 31, 2006, was 77.2 billion yen, up 20.6 percent from 64 billion yen in fiscal 2005. Net sales totaled 1.582 trillion yen, up 15 percent from 1.375 trillion yen in the year prior.

North America accounts for 29.6 percent of Yamaha's net sales, compared to 26.8 percent for Asia and 21.1 percent for Europe. While net sales in North America gained 8.8 percent to 457.7 billion yen — largely on the back of increased side-by-side and improved personal watercraft sales — operating income fell 7.1 percent to 22.4 billion yen, a result Yamaha said came from higher promotional costs.

The bread and butter of Yamaha's business, motorcycle sales account for nearly 58 percent of Yamaha's worldwide sales. Yamaha worldwide motorcycle sales in 2006 totaled 4.419 million units, up from 3.849 million units in 2005. Motorcycle sales in North America fell 7.2 percent to 207,000 units, while sales in Europe fell 11.9 percent to 407,000 units. On the flip side, sales in Asia grew 31.6 percent to 3.27 million units, and sales in "Other Areas" climbed 35.8 percent.

While overall Yamaha motorcycle unit sales in the United States dropped in 2006, sales of large-displacement units continued to grow and helped bring the value of brand bikes sold in the United States to 143.4 billion yen, up 9.8 percent.

"Business conditions surrounding the Yamaha Motor Group are expected to remain worrisome, reflecting uncertainties over the future of the U.S. economy and persistently high raw material prices," Yamaha officials said within the company's year-end financial report. "Against this backdrop, demand for motorcycles in Japan, Europe and the United States in fiscal 2007 is projected to remain about the same as fiscal 2006.

"In the power product segment, demand for all-terrain vehicles is expected to decrease in Europe and the United States."