Yamaha Motor Co., Ltd. says it plans to pursue a multi-prong strategy of reorganization, cost-cutting and improved efficiency during the next six months in an effort to combat the negative impact the economy has had on its business.
Working under what it describes as "very harsh business conditions," Yamaha recorded a net loss of ¥74.7 billion (approx. $783.68 million) on a 33.3 percent drop in sales revenue for the first half of the year ended June 30.
Sales revenue for the recently ended six-month period totaled ¥579.4 billion ($6.07 billion). Broken down by business segment, motorcycle sales fell 27 percent to ¥410 billion ($4.30 billion) and included a 23.8 percent drop in North America; marine product sales declined 41.9 percent to ¥83.2 billion ($873.02 million) on reduced outboard motor sales in North America and Europe; power product sales dropped 51.3 percent to ¥47.5 billion ($498.38 million) attributable to decreased sales of ATVs in the United States; and sales in the "other products" segment fell 41.8 percent to ¥38.7 billion ($406.05 million) due mainly to sluggish sales of automobile engines and surface mounters.
A strong yen has bolstered expenses and cut profits, and the company says there's no sign of recovery for demand of mainstay products of motorcycles, marine products and power product sales that have proved "sluggish" in Europe and the United States.
To deal with these challenges, Yamaha in the past week formed the "Developed Countries Business Reform Project Team." The Project Team — comprised of the president and members including directors and executive officers of development, manufacturing, sales, procurement, human resources development, finance & accounting and corporate planning — hopes to return the company to profitability in fiscal 2010 via the following measures scheduled for immediate implementation:
- Drastically lowering the break-even point by reducing fixed costs
- Reducing costs by eliminating waste
- Improving development efficiency
- Reorganizing and streamlining manufacturing systems
- Pursuing growth opportunities through innovative products responding to environmental and safety issues
- Reforming the business structure of manufacturing, development, sales and procurement in Europe and the U.S.
In a continued effort to reduce inventories over the next three years, the company also plans to lower unit production to 250,000 motorcycles, 230,000 outboard motors, and 140,000 ATVs and side-by-side vehicles. These figures represent significant reductions from the current manufacturing capacity of 500,000 motorcycles, 370,000 outboard motors, and 320,000 ATVs and side-by-sides.
"Today's second-quarter earnings report from our global parent Yamaha Motor Co., Ltd., underscores the severe global market challenges being faced by Yamaha and many other companies, in many industries, worldwide," says Masato Adachi, president of Yamaha Motor Corp., U.S.A. "Here in the U.S., we remain very confident in Yamaha's brand, products and business operations, and are working diligently through the market's challenges to prepare for future success."
Regarding the likely impact on Yamaha's customer, including dealers, Adachi says: "We now feel strongly that both our and our dealer partners' inventories are becoming more aligned with actual marketplace demand, and this will position us very strongly for the future."
—Submitted by Guido Ebert