Yamaha : Analyst and Investor Briefing on First Quarter of FY2021.3

Analyst and Investor Briefing on

First Quarter of FY2021.3

(Fiscal year ending March 31, 2021)

August 5, 2020

Yamaha Corporation

写真提供/JICA

FY2021.3 1Q Highlights

Overview

FY2021.3 1Q Achievements (Three Months)

• Revenue and profit both declined sharply as the COVID-19 pandemic led to decline in sales and forced factories to shutdown.
• A net profit was negative, due to a 2.5 billion yen loss resulting from suspension of operations.

Outlook

Full Year Forecasts for FY2021.3

• Market conditions are predicted to recover from the third quarter. Production and supply shortage are expected to continue until the third quarter, and full year revenue is projected to decline.
• Cost control efforts will not be able to compensate for the impact of lower 1H revenue and production, and core operating profit is projected to fall.
• In accordance with the stable dividend policy, the planned annual per-share dividend is 66 yen, the same amount as the previous year (dividend payout ratio of 73%).

Note: Figures conform with IFRS standards throughout this document

1

1. Performance Summary

	FY2021.3 1Q Performance	FY2021.3
	(three months)		Full Year Outlook
FY2021.3 1Q (Three Months) Summary
									(billions of yen)
				FY2020.3 1Q		FY2021.3 1Q		Change (YoY)
	Revenue		99.5		71.8		-27.7	*2
				-27.9%
	Core Operating Profit	10.8		1.1		-9.7	-89.5%
	(Core Operating Profit Ratio)	(10.8%)		(1.6%)
	Net Profit*1	7.3		-1.8		-9.1	-
									*2 -25.5%
	Exchange Rate (yen)
							(Excluding the impact
									of exchange rate)
	Revenue		US$	110		108
	(Average rate during
		EUR	123		119
	the period)
	Profit		US$	111		108
	(Settlement rate)		EUR	126		121

*1 Net profit is presented as net profit attributable to owners of parent on the consolidated financial statements.

3

FY2021.3 1Q Performance	FY2021.3
(three months)	Full Year Outlook

Core Operating Profit Analysis

Versus previous year

(billions of yen)

Impact of exchange

10.8 rates

-0.7

Labor cost	Decline in sales
at overseas
factories	and production
and model mix, etc.
-0.3

-14.1

SG&A

*1

IMC business

Cost reduction and others

0.1 -0.41.1

FY2020.3	5.7	FY2021.3
1Q		1Q

*1 Industrial Machinery and Components

4

	FY2021.3 1Q Performance	FY2021.3
	(three months)	Full Year Outlook
Performance by Business Segment
							(billions of yen)
			FY2020.3 1Q	FY2021.3 1Q	Change	Exchange
							rate impact
	Musical	Revenue	67.5		46.6	-20.9	-1.8
	Core Operating	9.8		2.5	-7.3	-0.6
	Instruments	Profit
		Core Operating Profit	14.6%		5.4％	-9.2P
		Ratio

Audio Equipment

Revenue	24.8	19.5	-5.3	-0.6
Core Operating	0.9	-1.1	-2.0	-0.1
Profit
Core Operating Profit	3.5%	-5.5％	-9.0P
Ratio

IMC*1Business	Revenue	7.2	5.6	-1.6	-0.0
Core Operating	0.1	-0.3	-0.4	0
and Others	Profit
	Core Operating Profit	0.9%	-5.3%	-6.2P
	Ratio

*1 Industrial Machinery and Components

5

FY2021.3 1Q Performance	FY2021.3
(three months)	Full Year Outlook

FY2021.3 Outlook

								(billions of yen)
					FY2020.3	FY2021.3	Change
					Full year
					Full year
					(projections)
	Revenue			414.2	355.0	-59.2	*2
		-14.3%
	Core Operating Profit	46.4	25.0	-21.4	-46.1%
	(Core Operating Profit Ratio)	(11.2%)	(7.0%)
	Net Profit*1	34.6	16.0	-18.6	-53.8%
								*2 -12.9%
	Exchange Rate (yen)						(Excluding the impact
						of exchange rate)
	Revenue		US$	109	108
	(Average rate during		EUR	121	120
	the period)
	Profit		US$	109	108
	(Settlement rate)		EUR	122	120

*1 Net profit is presented as net profit attributable to owners of parent on the consolidated financial statements.

6

FY2021.3 1Q Performance	FY2021.3
(three months)	Full Year Outlook

Core Operating Profit Analysis

Versus previous year

(billions of yen)

	Impact of
46.4	exchange
rates
	-2.4

Labor cost	Decline in sales,
at overseas
factories	production and
-1.6	model mix etc.

-29.2

SG&A	Cost reduction	25.0
1.4
10.4

FY2020.3 Full year

FY2021.3 Full year

(projections) 7

FY2021.3 1Q Performance	FY2021.3
(three months)	Full Year Outlook

Outlook by Business Segment

Musical Instruments

				(billions of yen)
	FY2020.3	FY2021.3	Change	Exchange
	Full year
	Full Year	rate impact
	(projections)
Revenue	269.4	228.0	-41.4	-4.4
Core Operating	37.8	20.0	-17.8	-1.9
Profit
Core Operating Profit	14.0%	8.8%	-5.2P
Ratio

Audio Equipment

Revenue	114.4	100.0	-14.4	-1.5
Core Operating	8.6	5.0	-3.6	-0.5
Profit
Core Operating Profit	7.5%	5.0%	-2.5P
Ratio

IMC*1 Business	Revenue	30.5	27.0	-3.5	-0.1
Core Operating	0.0	0.0	0.0	-0.0
and Others	Profit
	Core Operating Profit	0.1%	0.0%	-0.1P
	Ratio
					8
*1 Industrial Machinery and Components

	FY2021.3 1Q Performance			FY2021.3
	(three months)			Full Year Outlook
	Key Management Figures
																					(billions of yen)
	Core Operating Profit									Earnings per Share (yen)
	Ratio						ROE
									222
	12.1%	11.2％	11.1%
	10.1%							195
		7.0%
								4.8%											91

FY2019.3

FY2020.3

FY2021.3

FY2019.3

FY2020.3

FY2021.3

FY2019.3

FY2020.3

FY2021.3

projections

projections

projections

9

2. Segment Overview & Updates

Musical Instruments

Audio Equipment

IMC Business and Others

Segment Revenue and Core Operating Profit

Revenue

300

250

200

150

(billions of yen)

Three months: Strong e-commerce sales, but the store closure and other impact of COVID-19 led to sharp decline in sales

• Piano sales faced major headwinds due to the impact of store closures. Although digital musical instruments sold briskly in North America, sales were down due to supply shortage. Demand for wind, string, and percussion instruments was sluggish due to school closures, but stay-at-home demand and e-commerce drove robust sales of guitars.
• Revenue from music schools and software products halved due to the severe impact of closures

Full year projection: Market conditions predicted to recover and supply shortage is expected to be resolved in 2H

• Market conditions for piano sales are expected to recover from 2H, and digital musical instrument supply shortage will also be resolved in 2H. Sharp contraction of the market for wind, string, and percussion instruments is anticipated due to school closures, but guitar sales are projected to increase.
• Sales are expected to rise in China, but fall in other regions

			Core Operating Profit	(billions of yen)
50
[14.6%]	[14.0%]	[5.4%]	[8.8%]

269.4(86%)

228.0

100

50				(72%)
67.5
	46.6
0
	FY2020.3	FY2020.3	FY2021.3	FY2021.3
		1Q	Full year	1Q	Full year

(projections)

40
30
20			37.8
10				2.5	20.0
9.8
0
	FY2020.3	FY2020.3	FY2021.3	FY2021.3
		1Q	Full year	1Q	Full year
					(projections)

Red figures show actual YoY changes discounting impact of exchange rates	Figures in [ ] indicate core operating profit ratio	11

Musical Instruments

Audio Equipment

IMC Business and Others

Revenue by Major Product Category

Pianos	Digital Musical	Winds, Strings
	Instruments	/Percussion

(billions of yen)

Guitars

＊Guitars include Line 6 and Ampeg products

			92.1
				(90%)
			19.0	80.7
	53.0	(92%)	28.7		50.7
		47.6
4Q	9.5				(77%)
			11.3
					38.5
3Q	15.0		23.5		11.2		28.6	(101%)
					28.3
2Q	15.0				13.7		6.2
				8.4
				(85%)
			20.9			7.3
1Q	13.4	(68%)	17.0	14.5	(60%)	(100%)
	6.8
		8.7				8.4	6.5
	FY2020.3	FY2021.3	FY2020.3	FY2021.3	FY2020.3	FY2021.3	FY2020.3	FY2021.3

Red figures show actual YoY changes discounting impact of exchange rates

12

Musical Instruments

Audio Equipment

IMC Business and Others

Revenue by Region

(billions of yen)

	68.9
4Q	16.0	(73%)
		50.2
3Q	15.4
2Q	18.0
1Q	19.5	(54%)
		10.6

57.5	(90%)
13.4	51.1
16.0
15.3
12.8	(84%)
10.5

49.7	(90%)
9.9	44.3
16.4
11.6
11.7	(81%)
9.0

	(103%)
44.3	44.4
5.8
12.7
13.4
12.5	(81%)
9.5

48.9
11.0	(82%)
38.0
14.2
12.7
11.0	(69%)
	7.1

FY2020.3 FY2021.3

FY2020.3 FY2021.3

FY2020.3 FY2021.3

FY2020.3 FY2021.3

FY2020.3 FY2021.3

Japan

North

Europe

China

Other

America

Regions

* Software products and music schools included	13
Red figures show actual YoY changes discounting impact of exchange rates

Musical Instruments

Audio Equipment

IMC Business and Others

Segment Revenue and Core Operating Profit

				Three months: Stay-at-home demand increased for AV products, but PA equipment
				struggled
		Revenue	(billions of yen)	•	AV products: sales of sound bars and earphones were robust, but AV receivers struggled
			•	equipment installation in Japan was robust
				PA equipment: the live performance market and CA equipment sales both slumped, but
125				•	ICT equipment: conference system sales were strong

Full year projection: Although demand is predicted to grow, especially from stay-at- home demand, but PA equipment continues to face difficult situation

• AV products: strong growth is projected in earphone sales, and AV receivers are expected to

100								remain in short supply
						• PA equipment: sales are projected to decline, with no recovery in sight for the live
								performance market though robust music production products are projected
							• ICT equipment: double digit growth is predicted, driven by strong sales of conference
								systems
75											Core Operating Profit	(billions of yen)
			114.4		(89%)			12		[3.5%]	[7.5%]	[-5.5%]	[5.0%]
						10
50					100.0
						8
25								6			8.6
			(81%)				4				5.0
24.8
				2
	19.5					0.9
0								0
										-1.1
	FY2020.3	FY2020.3	FY2021.3	FY2021.3
		-2
		1Q	Full year	1Q	Full year		FY2020.3	FY2020.3	FY2021.3	FY2021.3
					(projections)
							1Q	Full year	1Q	Full year
Red figures show actual YoY changes discounting impact of exchange rates	Figures in [ ] indicate core operating profit ratio		(projections)	14

Musical Instruments

Audio Equipment

IMC Business and Others

Revenue by Major Product Category

AV ProductsPA Equipment

*Includes only sales of products for PA Equipment (excluding engineering and installation services)

(billions of yen)

ICT Equipment

40.9	(94%)
37.6

4Q 8.0

3Q 13.5

2Q	10.7
1Q	8.7		(93%)
	7.8
		FY2020.3	FY2021.3

47.3

10.3	(80%)
37.0
12.7

12.0

12.3	(60%)
	7.1
FY2020.3	FY2021.3

(111%)

(117%)

13.0	14.4
4.1
3.2
3.3
2.4	2.4	(101%)
		(113%)
FY2020.3	FY2021.3

	Blue figures show actual YoY changes
Red figures show actual YoY changes discounting impact of exchange rates	excluding the sales of OEM products	15

Musical Instruments

Audio Equipment

IMC Business and Others

Revenue by Region

											(billions of yen)
	31.3	(96%)			30.3
	30.1
			26.5			(86%)
			(91%)	6.1	26.0
4Q	11.4
	5.6	23.9
					9.1					18.8
3Q	6.8		8.0							4.2	(76%)
											13.4
					7.2			(91%)		5.5
2Q	8.3		7.3				7.5	(100%)
				6.7
							1.0		4.9
		(125%)		(95%)	7.9	(62%)	2.2
			2.0
1Q	4.8	5.9	5.7	5.3		4.7			4.2	(57%)
	2.3		(66%)
							1.4		2.2
							(74%)

FY2020.3 FY2021.3 FY2020.3 FY2021.3 FY2020.3 FY2021.3 FY2020.3 FY2021.3 FY2020.3 FY2021.3

	Japan		North		Europe		China		Other
		America				Regions
						Blue figures show actual YoY changes
Red figures show actual YoY changes discounting impact of exchange rates	excluding the sales of OEM products	16

Musical Instruments

Audio Equipment

IMC Business and Others

Segment Revenue and Core Operating Profit

(billions of yen)

40Revenue

30

20

30.5	(89%)
	27.0

10

7.2		(79%)
	5.6
0
	FY2020.3	FY2020.3	FY2021.3	FY2021.3
		1Q	Full year	1Q	Full year

(projections)

Three months:

• In-vehicleelectronic devices and automobile interior wood components struggled due to the impact of automobile market conditions

Full year projection:

• Given the uncertain outlook for in-vehicle electronic devices and factory automation related capital expenditure associated with the impacts of COVID-19, recovery in market condition is expected to be delayed

Core Operating Profit (billions of yen)

1.2

[0.9%]

[0.1%]

[-5.3%]

[0.0%]

0.8

0.4

0		0.1	0.0		0.0
		-0.3
-0.4		FY2020.3 1Q	FY2020.3	FY2021.3	FY2021.3
			Full year	1Q	Full year

(projections)

Red figures show actual YoY changes discounting impact of exchange rates	Figures in [ ] indicate core operating profit ratio	17

3. Other Financial Figures

Performance	Segment Overview	Other
Summary	Financial Figures

Balance Sheet Summary

(billions of yen)

	As of Mar.			As of June		Change			As of March
						31, 2021
31, 2020			30, 2020
					(projections)

Cash and cash equivalents

Trade and other receivables

Other financial assets

Inventories

Other current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total equity

Total liabilities and equity

92.7	88.5		-4.2	89.2
58.1	47.4		-10.7	59.0
12.9	7.4		-5.6	7.4
100.1	100.8		0.8	95.0
6.5	7.8		1.3	9.7
203.8	215.1		11.2	214.3
474.0		466.9		-7.1		474.5
99.1		90.1		-9.1		86.3
48.4	45.7		-2.7	45.1
326.5	331.1		4.7	343.1
474.0		466.9		-7.1		474.5

19

Performance	Segment Overview	Other
Summary	Financial Figures

Capital Expenditure/Depreciation, R&D Expense

Capital Expenditure/Depreciation

(billions of yen)

■ Others

■ Audio Equipment ■ Musical Instruments ■ Depreciation

3.8		3.1		20.5		14.8
0.1			1.2
	0.2		4.3		0.8
1.0
		0.6				3.0
2.7	2.7	2.3	2.8	15.0	11.2	11.0	11.8
FY2020.3 1Q	FY2021.3 1Q	FY2020.3	FY2021.3
				Full year	Full year

											(projections)
R&D Expenses
		6.1	6.1	24.8	24.0
					3.9
						3.7
		1.0
■ Others			0.9
		11.1
		10.7
■ Audio Equipment	2.7	2.7
■ Musical Instruments	2.4	2.4	9.8	9.6
		FY2020.3 1Q			FY2021.3 1Q				FY2020.3		FY2021.3
									Full year		Full year

(projections) 20

Appendix

1Q Other Income and Expenses

			FY2020.3 1Q	FY2021.3 1Q		(billions of yen)
Core Operating Profit	10.8	1.1
	Profit from (loss on)	0.0	0.0
Other Income	disposal of fixed assets
Others
and Expenses	0.3	-2.7
	Total		0.3	-2.6
Operating Profit			11.1	-1.5
Financial Income	Dividends income	0.3	0.3
Others	-0.4	-0.5
and Expenses
	Total		-0.1	-0.2
Profit before Income Taxes	11.0	-1.7
Income taxes			3.7	0.1
Net profit attributable to non-controlling interests	0.0	0.0
Net Profit*1			7.3	-1.8

*1 Net profit is presented as profit attributable to owners of the parent on the consolidated financial statements.	22

Full Year Other Income and Expenses

			FY2020.3	FY2021.3			(billions of yen)
			Full year
			Full year
			(projections)
Core Operating Profit	46.4		25.0
		Profit from (loss on)	0.3		-0.0
Other Income		disposal of fixed assets
	Others
and Expenses	-3.3		-2.5
		Total	-3.0		-2.5
Operating Profit		43.3		22.5
Financial Income		Dividends income	3.7		2.1
	Others	0.2		-0.8
and Expenses
		Total	3.9		1.3
Profit before Income Taxes	47.2		23.7
Income taxes		12.5		7.6
Net profit attributable to non-controlling interests	0.1		0.1
Net Profit*1		34.6		16.0

*1 Net profit is presented as profit attributable to owners of the parent on the consolidated financial statements.	23

In this report, the figures forecast for the Company's future performance have been calculated on the basis of information currently available to Yamaha and the Yamaha Group. Forecasts are, therefore, subject to risks and uncertainties.

Accordingly, actual performance may differ greatly from our projections depending on changes in the economic conditions surrounding our business, demand trends, and the value of key currencies, such as the U.S. dollar and the euro.