O U R V A L U E C R E A T I O N

I. Value Creation by Yamaha

Yamaha's Path of Ambition

06

Yamaha's Business

08

Management Vision and Value Creation Story

10

Special Feature:

Enactment of Yamaha's Value Creation Story

12

Performance Highlights

16

Yamaha by Creation Value

04

Yamaha Group Annual Report 2021

Yamaha Group Annual Report 2021

05

YAMAHA'S PATH OF AMBITION

The origins of the Yamaha Group date back to 1887, when company founder Torakusu Yamaha repaired an imported reed organ. Since then, Yamaha has aimed to create excitement and

1980

Advancement of Technology

Yamaha promoted the in-house production of semiconductors with the aim of improving the sound quality of its digital musical instruments. This process led the Company to develop new digital musical instruments and audio equipment with proprietary LSIs, thereby greatly expanding the scope and geographical breadth of its operations. The Company adopted its current name of Yamaha Corporation in conjunction with its centennial anniversary in 1987, becoming a global company in both name and substance.

DX7 digital synthesizer

SILENT™ Series

cultural inspiration together with people around the world while centering its business on sound and music. This spirit has continued to live on in the Yamaha Group throughout the course of its history that spans over 130 years, granting it strength and constantly driving it toward growth.

1887

1887

Domestic Production of Musical Instruments Beginning with Organ Repair

Following the repair of a single organ, Company founder Torakusu Yamaha succeeded in creating domestically produced organs in Japan. This success prompted him to establish Nippon Gakki Co., Ltd. (currently Yamaha Corporation), and commence the domestic manufacture of pianos. Through this undertaking, he created the foundations for the musical instruments business that is the core business of Yamaha today, while also proposing the culture of enjoying musical instruments to the people of Japan. This is the point of origin of Yamaha's Corporate Philosophy: "With our unique expertise and sensibilities, gained from our devotion to sound and music, we are committed to creating excitement and cultural inspiration together with people around the world."

The three tuning forks of the Yamaha brand logo repre-

sent the cooperative relationship that links the three

Origin of Yamaha's Competitiveness

pillars of our business-technology, production, and

Symbolism of the Yamaha Brand

sales. They also evoke the robust vitality that has

forged our reputation for sound and music the world

over, a territory signified by the enclosing circle. In

addition, the mark symbolizes the union of three essen-

Founder Torakusu Yamaha

tial musical elements: melody, harmony, and rhythm. The spirit of our founder expressed in this logo lives on today, spurring us forward to continue enhancing the Yamaha brand.

20001990

2010

Yamaha has amassed acoustic technologies in tandem with technological progress since its

Origin of Yamaha's Competitiveness

founding. By combining these technologies with digital technologies, we have been able to

create new products that are distinctively Yamaha. Digital technologies were embraced not

Value-Creating Combination of

only in product development but also in production activities, massively increasing produc-

Acoustic and Digital Technologies

tion efficiency and greatly contributing to today's acceleration of digital transformation.

Next Growth Stage Arrived at through Selection and Concentration and Structural Reforms in Core Business

The following years were characterized by massive changes to the operating environ-

ment, including ongoing yen appreciation, a shift to digital technologies, the special-

ization of industries arising from the globalization trend, and global financial crises.

Active field control hall

VOCALOID™

Amid this change, Yamaha undertook selection and concentration of its diversified

acoustics design system

businesses to focus more on its core business centered on sound and music. This

move saw us reorganizing and consolidating domestic and overseas production and

sales bases, merging the diverse technologies we had accumulated thus far, and

acquiring overseas companies to accelerate growth. This was the start of business

Acquisition of overseas companies

reorganizations aimed at taking our business to the next growth stage.

Origin of Yamaha's Competitiveness

Yamaha proceeded to develop growth foundations in its core business while conducting

M&As. For example, Germany-based Steinberg Media Technologies GmbH, Austrian-based

Strengthening of Growth

L. Bösendorfer Klavierfabrik GmbH, and French-based Nexo S.A. were acquired in the 2000s.

Foundations and M&As in

These business combinations had a ripple effect that strengthened our foundations and

spurred the growth of our business. The benefits included the ability to merge our hardware

Core Business

and software in the music production field, the enhancement of our

presence in the premium

piano market, and the provision of comprehensive solutions in the audio equipment business.

Yamaha by Creation Value

1940

Resolution of Social Issues and Improvement of Corporate Value to Become an Indispensable, Brilliantly Individual Company

1950

Spread of Music Culture, Diversification of Business, and Expansion Overseas as a Comprehensive Musical Instrument Manufacturer

Inspired by a desire to communicate the joy of music to as many people as possible, Yamaha began efforts to promote the spread of music, such as organ classes (predecessor of the Yamaha Music School). Meanwhile, the technology and sensibilities cultivated through the manufacture of musical instruments was adapted to broaden product lines to include audio equipment and to develop new businesses such as motorcycles, which would lead to the creation of Yamaha Motor Co., Ltd., and also sports equipment.

  • In 1958, Yamaha established its first overseas subsidiary in Mexico, marking the start of its global expansion as a comprehensive musical instrument manufacturer.

Yamaha has been engaged in an ongoing effort to establish a competitive edge and achieve improvements in profitability. Steps to this end have included transitioning from organizations based on business lines to organizations arranged by function. In addition, we have been optimizing prices while developing products with distinctive individuality and entering into new markets by merging our technologies. We have also been advancing global branding strategies, establishing the management vision of "Becoming an Indispensable, Brilliantly Individual Company" in 2016 and the brand promise of "Make Waves" in 2019. Furthermore, Yamaha is supplying new solutions that respond to recent changes in the social climate through sound and music. Examples of these solutions include the SYNCROOM online remote ensemble ­performance service, the Remote Cheerer powered by SoundUD remote cheering system, and the Distance Viewing next-generation live viewing service. By delivering these solutions, we aim to contribute to the resolution of social issues and improve corporate value.

SYNCROOM online remote

Distance Viewing next-

ensemble performance service

generation live viewing service

Yamaha Ginza Building

Charlie™ communication

reopened as an experience-

robot that matches its

1960

Yamaha expanded its global sales network

Origin of Yamaha's Competitiveness

with the establishment of Yamaha de México,

S.A. de C.V., its first

overseas subsidiary in

Laying of Groundwork

Mexico, in 1958, and developed a production

1970

as a Global Company

basis in Taiwan in 1969. This groundwork

served as a springboard for the aggressive

overseas expansion of the Company begin-

ning in the 1970s. Having quickly solidified its

global network, Yamaha was able to leverage this

network to exhibit significant competitiveness, supporting the growth of the Company, which

has more than 70% of its revenue generated overseas today.

Yamaha de México, S.A. de C.V.

2020

oriented brand shop in 2021 cadence to melodies

Origin of Yamaha's Competitiveness

The transition to organizations arranged by function

allowed for the consolidation and cross-organizational

Creation of Synergies and

utilization of the previously separate management

Refinement of Strengths through

resources that had been accumulated thus far. We were

thereby able to further refine our existing strengths,

Consolidation of Insight

including our production technologies, which combine

our craftsmanship with core and other technologies; our

music promotion, sales, and personal connection networks, which are several steps ahead of those of

competitors; and our healthy financial position.

Meanwhile, various unique, new products are being born

out of synergies between our various insight and technologies at the Innovation Center, established in 2018. Centered on the combination of technologies and sensibilities, Yamaha is able to heighten its

development capabilities in new sound and music fields that make use of physical sensibility evaluation

Innovation Center

technologies for quantifying sensibilities, material element technologies, artificial intelligence (AI) tech-

nologies, and elemental technologies. In this manner, we are capable of proposing new value.

06

Yamaha Group Annual Report 2021

Yamaha Group Annual Report 2021

07

YAMAHA'S BUSINESS

"With our unique expertise and sensibilities, gained from our devotion to sound and music, we are committed to creating excitement and cultural inspiration together with people around the world."

Groupwide Business Overview and Consolidated Revenue and Core Operating Profit

Major Products and Distribution of Revenue of Yamaha's Three Core Businesses

Yamaha is the world's largest comprehensive musical instrument manufacturer, producing and selling a complete lineup of products ranging from acoustic to digital musical instruments. We are developing wide-ranging, global operations spanning from businesses related to sound and music, encompassing musical instruments, professional audio (PA) equipment, and audio equipment, and component businesses focused on network equipment and semiconductors.

Global Business Scale, Ratio of Overseas Revenue, and Market Share (Fiscal 2021, IFRS)

Revenue Composition and Number of Employees by Region

Yamaha by Creation Value

Musical Instruments Business

For information on the strategies of the musical instruments business, please refer to page 60.

¥239.0 billion (64.1%)

Fiscal 2021 (IFRS)

Revenue

¥372.6 billion

Audio Equipment Business

For information on the strategies of the audio equipment business, please refer to page 64.

¥103.8 billion (27.9%)

Commercial audio

equipment

Other regions

Japan

Japan

¥57.5 billion (15.4%)

¥108.2 billion (29.0%)

Other regions

5,672 employees

Number of

China

Revenue

7,478 employees

employees

¥57.7 billion (15.5%)

¥372.6 billion

20,021

North America

Europe

North America

China

742 employees

¥73.2 billion (19.6%)

¥76.0 billion (20.4%)

5,018 employees

Europe

1,111 employees

Network devices

AV products

Core operating profit

¥40.7 billion

Voice communication

Music production

equipment

equipment and software

Others (Industrial Machinery and

Overseas Revenue Driving Growth

Ratio of Overseas Revenue

(%)

Distribution of Musical Instruments and Audio Equipment Sales by Region*

Digital musical instruments

Components Business, etc.)

For information on the strategies of the industrial machinery

and components business, please refer to page 66.

¥29.8 billion (8.0%)

100

75

71.0%

62.9%

50

47.3%

41.4%

25

0

05/3*

10/3*

15/3*

21/3

Overseas  Japan 

Other regions

16.9%

China

18.4%

Europe

24.2%

Japan

16.7%

North America

23.8%

Wind, string, and

Guitars

Music schools

Electronic devices Factory automation

Automobile interior

Golf products,

percussion instruments

(FA) equipment

wood components

resort facilities

* Ratio of overseas revenue (J-GAAP)

* Excludes revenue from music schools and other services

Breakdown of Core Operating Profit (Operating Income) and Core Operating Profit Ratio (Operating Income Ratio)

(Billions of yen)

(%)

80

J-GAAP

IFRS

40

60

48.8

56.0

52.7

30

44.3

46.4

47.0

40.7

40.7

40

26.0

30.1

10.9%

12.8%

12.1%

11.2%

20

9.3%

11.8%

20

9.2

6.3%

11.3%

10.9%

10

2.5%

7.0%

0

0

(20)

13/3

14/3

15/3

16/3

17/3

18/3

J-GAAP

IFRS

20/3

21/3

22/3

(10)

(Forecast)

19/3

Core Operating Profit (Operating Income)  Musical instruments business  Audio equipment business  Others

Core Operating Profit Ratio (Operating Income Ratio) (right)

Core Yamaha Products Boasting High Market Shares

Global Market Shares of Major Products (Fiscal 2021, monetary value basis, based on surveys by Yamaha)

All Musical Instruments

Pianos

Digital Pianos

Portable Keyboards

26%

39%

47%

52%

Wind Instruments

31%

Guitars

9%

08

Yamaha Group Annual Report 2021

Yamaha Group Annual Report 2021

09

MANAGEMENT VISION AND VALUE CREATION STORY

Value Creation Story

Enhance Corporate Value and

Realize Vision by Creating Social Value

Yamaha is strengthening all of its capitals by creating Yamaha value and social value through its business activities. In this way, Yamaha aims to realize its management vision by pursuing a cycle that improves both brand and corporate value. Yamaha's current value creation process is as described in the table below.

 The global COVID-19 pandemic is having a massive impact on our lives and on the global economy. Yamaha, however, sees this adversity as an opportunity to further its evolution. Accordingly, we are endeavoring to respond to the constantly changing social needs and issues with the aim of continuing to help resolve social issues through our businesses, and thereby improving corporate value.

Please refer to the following website for more information on Yamaha's value creation story. https://www.yamaha.com/en/ir/story/

Management Vision

Becoming an Indispensable,

Brilliantly Individual Company

Boost brand power to become a highly profitable enterprise

Corporate value improvement

Customers

Finance Brand Technology

Yamaha by Creation Value

Customers

Finance Brand Technology

People

Culture, Society, and

Environment

Value Creation Process

Yamaha value creation

Value creation process

Social value creation

Measures for Preventing Erosion of Value

Yamaha is ramping up its sustainability and risk management initiatives to minimize the potential negative impact of its business activities on the environment and society as well as the impacts of risks that could seriously threaten the Company's performance and financial condition.

Please refer to page 42 for more information on sustainability ­management initiatives and page 94 for information on risk management initiatives.

People

Culture, Society, and

Environment

Yamaha Philosophy and Brand Promise

Research and

Production

Sales and Marketing

Development

P.72

P.74

P.68

Musical

Global

Instruments

Craftsmanship

Business

Acoustic technologies

network

P.60

Integration

Sensibilities

Businesses and

Value Chain

pervading Yamaha technologies

Understanding

Technologies

Customer interface

Audio Equipment

of high-quality sound

(Broader, deeper, and longer)

Business

Sales networks and

P.64

Digital

store strategies

Bases for R&D activities,

technologies

artist relationships, and

service center

Industrial

Customer data platform (CDP)

Machinery and

/ Digital marketing

Mass production technologies

Components

Business / Others

and cost strategies

Activities to popularize music

Innovation Center

Overseas base strategies

P.66

Corporate Governance P.84 / Global Business Management Foundation

Products and Services

P.08

Products and Services Centered

on Sound and Music

Musical instruments

Audio equipment

Music schools

Other products and services

Output

Yamaha Value Creation

Achieving the management targets adopted under the Make Waves 1.0 medium-term management plan (2019-2022)

Corporate value (market capitalization):

¥1 trillion +

Financial targets (IFRS)

Core operating profit ratio*: 13.8%

Return on equity (ROE)*: 11.5%

Output

Earnings per share (EPS)*: ¥270

Non-financial targets

Corporate brand value: +30%

Music popularization for learning musical instruments

in emerging markets (cumulative total):

1 million people

Certified timber use: 50% of total use

Investment and shareholder returns

Total return ratio: 50%

Social Value Creation

Contributing to emotionally enriched lifestyles and a more comfortable society through sound and music

10 Yamaha Group Annual Report 2021

* Based on the impacts on the operating environment from the COVID-19 pandemic, the consolidated performance forecasts for fiscal 2022 announced at the financial results briefing for fiscal 2021 held on May 10, 2021, call for a core operating profit ratio of 11.8%, ROE of 10.0%, and EPS of ¥233. These forecasts assume foreign exchange rates of U.S.$1 = ¥105 and €1 = ¥125.

Yamaha Group Annual Report 2021

11

SPECIAL FEATURE:

ENACTMENT OF YAMAHA'S VALUE CREATION STORY

SPECIAL FEATURE: ENACTMENT OF YAMAHA'S VALUE CREATION STORY

Yamaha by Creation Value

New Form of Remote Communication

Remote Meeting System Responding to Rising Social Needs

Proposed through Sound and Network Technologies

The global COVID-19 pandemic transformed how we communicate with other people. This transformation also extended to the environments in which we work as teleworking systems were introduced around the world. It can therefore be expected that workstyles unbound by place will continue to become more commonplace and entrenched going forward.

 Yamaha has long been expanding its lineup of sound environment products that help make teleconferences and web conferences more comfortable as solutions for supporting workstyle reforms. We continue to combine the sound and network technologies and expertise we have accumulated over the years to propose new forms of remote communication that will be indispensable in this new era.

Teleconferences, web conferences, and other forms of remote meetings have become an indispensable form of communication underpinning teleworking and other diverse workstyles.

At the same time, needs pertaining to office meeting rooms are growing increasingly more diverse as companies seek to allow for layouts to be flexibly rearranged in order to ensure appropriate distance is maintained between participants, to utilize meeting rooms more efficiently based on the number of participants and the goals of meetings, and to install more comfortable sound environments. Against this backdrop, Yamaha's remote meeting solutions, which combine its sound and network technologies, are garnering attention.

  • One such solution is our ADECIA comprehensive remote conferencing solution. Launched in January 2021, ADECIA is a system for medium-sized meeting rooms comprised of components including ceiling array microphones and proces- sors, which enable it to cater to diverse needs by allowing for easy and flexible introduction and utilization of comfortable, high-quality communication environments. One characteristic of ADECIA is its use of multibeam tracking, a technology that effectively captures the voice of speakers while limiting the transmission of unnecessary noise from the surroundings, to realize high-quality communication. In addition, we released the RM-TT tabletop array microphone in June 2021. The ease of deployment this microphone makes it perfect for support- ing diverse remote meeting styles. These offerings use
    our proprietary sound signal processing technology to

accommodate simultaneous speech by multiple individuals and thereby transmit the on-site atmosphere of meetings to remote locations intact. Moreover, we provide all of the equipment and functions necessary for remote meetings, and are thereby able to resolve any issue faced with this regard, starting with determining the necessary equipment when considering the introduction of remote meeting systems and moving on to the installation of equipment and the adjustment of acoustics.

  • Furthermore, Yamaha boasts a robust lineup of products for all meeting sizes and applications, ranging from its YVC-200 and YVC-330 unified communication speakerphones for small

meetings to its YVC-1000 unified communication microphone and speaker systems for medium-sized to large meetings. We are thereby able to propose a multitude of products that realize comfortable, high-quality remote communication, whether in noisy open spaces or in quiet meeting rooms.

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Yamaha Group Annual Report 2021

Yamaha Group Annual Report 2021

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Yamaha Corporation published this content on 25 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 November 2021 04:59:07 UTC.