Message from the President

Yamaha is committed to returning to a growth track by exploring new fields and evolving its business structure.

Dedicated Management for Winning Out Against Competition

Since assuming the position of president of Yamaha, I have had the opportunity to speak with the leaders of various companies from different industries. These conversations have given me a sense of urgency with regard to the future based on the understanding that management will be a race against time going forward. The managers of companies in automotive, IT, infrastructure, and various other industries have been drawing upon the depths of their knowledge to develop businesses that surpass customer expectations while working to respond to rapid operating environment changes and technological progress. Their diligence truly resonates with me and also inspires me.

Viewing Yamaha with eyes opened by the stories of challenges faced by others has made me realize the multitude of issues that we must address. We have to deliver value that exceeds customer expectations. We must explore new business fields in response to technological advances and changes in customer tastes. It is essential that we develop frameworks for ensuring business continuity in the face of emerging geopolitical and other management risks. Finally, we must achieve management efficiency and growth that surpass the demands of investors. Recognizing these challenges, I am committed to pursuing a speed that can win the race against time in all aspects of management based on the understanding that there is no future for Yamaha if we cannot live up to the expectations of our stakeholders. It is this commitment that shaped Rebuild & Evolve, the new medium-term management plan that charts the course Yamaha will take over the medium to long term.

Inability to Overcome Challenges Made Clear by Operating Environment Changes Under Make Waves 2.0

Before getting into the goals of the new medium-term management plan, I would like to talk about the results of, the issues made clear by, and the priority measures advanced under Make Waves 2.0, the previous medium-term management plan.

Compared to fiscal 2022, the fiscal year immediately preceding the start of Make Waves 2.0, performance in fiscal 2025 was down with regard to the core operating profit ratio, return on equity, and return on invested capital, all indicators for which financial targets were set in this plan. For this unfortunate outcome, we have to blame our inability to overcome the challenges presented by the rapid market changes, attributable largely to two factors: the change in government education policies in China and the decline in demand following the dissipation of the special demand trend associated with people staying at home during the COVID-19 pandemic. In China, the government instituted restrictions on the extracurricular activities of children and eliminated the system for adding additional points to school entrance exams for artistic skills. These changes sparked a sharp contraction in education-related demand, which dealt a devastating blow to the country’s acoustic piano market. We sought to respond to this cooling of the market by commencing piano production structural reforms in fiscal 2024, but this response proved to be too late as the speed of the demand decline surpassed our expectations. In other words, I have to admit that, in this case, we lost the race against time that I mentioned earlier.

In the past, the musical instruments industry has been one with generally low volatility in demand. It could thus be said that we had become complacent due to the relatively slow flow of time in this industry, and this complacency caused us to drop our guard and delayed our decision-making and actions in responding to the recent demand fluctuations and the fierce competition. This was likely what caused our slump in performance under Make Wave 2.0. We have to be humble and recognize that we lacked responsiveness. This recognition should then be used to propel us forward in bolstering Yamaha’s resilience and agility to ensure that the Company is able to act quickly in the face of adversity in the future.

While there were some shortcomings when it came to our financial performance, this does not undo the strong progress we made with regard to the three key policies of the plan, namely, “further strengthen the business foundation,” “set sustainability as a source of value,” and “enable Yamaha colleagues to be more valued, more engaged, and more committed.” Through our initiatives to further strengthen the business foundation, we succeeded in achieving registration numbers for Yamaha Music ID, a digital customer touchpoint, that greatly exceeded our target. As for physical touchpoints, we have received an incredibly positive response from a diverse range of customers, including those with and without instrumental music performance experience, with regard to our newly opened experience-oriented stores. We also were able to expand our customer base through the growth of our automotive audio equipment operations and the introduction of products based on new concepts. Other efforts included the establishment of a business development entity and a corporate venture capital fund in Silicon Valley to support the creation of new value.

New Rebuild & Evolve Medium-Term Management Plan

The new medium-term management plan bears the name of Rebuild & Evolve. The “Rebuild” portion of this name symbolizes our commitment to rebuilding existing businesses to return them to a growth track by recovering their earnings power to pre-COVID-19 pandemic levels. Meanwhile, the “Evolve” portion is an expression of our desire to grow our business domain in order to evolve Yamaha’s business model. Based on these goals, we have put forth the three strategic policies of “rebuilding a strong business foundation,” “evolving to create the future,” and “strengthening the management foundation.” Through the implementation of these policies, we aim to achieve a compound annual growth rate of 5% over the three-year period of the plan and return on equity of 10% in fiscal 2028, the final year of the plan.

Yamaha’s operating environment is expected to continue to be volatile. As we move forward, we will need to respond to macroeconomic changes, such as high parts costs stemming from rising commodity prices, interest rate hikes, foreign exchange rate fluctuations, and changes in geopolitical and other risk levels. We also project the rapid diversification of customer lifestyles and values as well as an accelerated shift toward making purchases online. At the same time, advancements in technology—particularly the evolution of generative AI—are fundamentally transforming how business is done in a plethora of industries. We will thus be dedicating efforts to building an operating foundation that will enable us to furnish swift and flexible responses to such changes and to achieve sales and profit growth even under adverse conditions. Another focus in our pursuit of medium- to long-term growth will be bolstering our portfolio of new businesses that create experiential value for broadening the ways that customers enjoy sound and music.

A major theme emphasized in the process of developing the new medium-term management plan was heightening effectiveness. Based on this theme, we engaged in a series of discussions aimed at using the most direct terms for explaining our approach toward accomplishing our goals and the factors that divisions should focus on. We also sought to ensure that the plan was more than a mere collection of plans for individual divisions. As such, the process was characterized by how we shared information on the goals of individual divisions and then worked to coordinate these goals to craft a cohesive overall plan. Meanwhile, during discussions at meetings of the Board of Directors, we were made aware of outside perspectives that were not sufficiently considered during discussions by the executive team. For example, it was pointed out that we needed to clarify the position Yamaha seeks to achieve on the basis of individual products and specific price ranges in light of the competition seen in the global market and then formulate strategies for achieving this position in the regions we serve. A need was also identified to provide more in-depth explanations regarding factors such as the value to be supplied to customers by, and the targeted scales of, the new businesses to be developed in pursuit of growth over the medium to long term. Yamaha is unparalleled on the global stage as a comprehensive musical instruments manufacturer, and we have held a leading position in the markets for numerous products throughout our history. We thus decided to take a humble reexamination of Yamaha’s position based on the perspective of customers to determine if it is possible that this history had made us overconfident when it came to making comparisons and assessing competition. We also sought to determine if we were accurately assessing the changes in market and customer preferences.

Co-Creation of Social Value to Heighten Corporate Value

In conjunction with the announcement of the new medium-term management plan, Yamaha also unveiled its new management vision of “Creating a future where individuality shines through the power of sound and music – Enhance corporate value through the co-creation of social value.” This vision is meant to clearly define the type of company we want to make Yamaha over the medium to long term. There are three elements to this vision. The first element is pursuing the possibility of new value creation in the area of sound and music, where Yamaha’s strengths and uniqueness can be fully utilized. The second element is consistently providing products and services encouraging self-expression and the diverse individualities of people around the world. The third element is proactively collaborating with diverse stakeholders to create new value together that contributes to the resolution of social issues.

Guided by this vision, Yamaha will continue its quest to provide more enjoyable, creative, and convenient experiential value while refining the fundamental value of products using the technologies and sensibilities it has fostered in relation to sound and music. We will also seek to develop operations in fields that lay adjacent to our existing business domain. Furthermore, we will look to broaden our business domain through the exploration of new possibilities for sound and music to contribute to resolve social issues in a way that is not limited to our existing products and businesses.

Yamaha is more than just a supplier of products; we offer comprehensive support for self-expression. In this capacity, we aim to continue supporting a society where diversity shines with the goal of shaping a better future. As we boldly advance toward this vision, we must also grow as a company through this process.
I want to make it clear that this approach toward growth is something we treasure.

Priorities for Improving Profitability

As we seek to improve profitability, we will prioritize our piano and home audio product operations. In regard to pianos, we made the difficult decision to restructure our production network in response to the contraction of demand in the Chinese market. As part of this restructuring, production in Indonesia will be discontinued in December 2025 and we will reorganize and consolidate production into bases in Japan and China. By achieving a production structure that better matches the scale of the market, we look to reduce fixed production costs. At the same time, we will seek to heighten the ratio of sales attributable to high-margin, high-value-added products. In these ways, we will pursue higher profitability.

As for home audio products, we are shifting our approach to focus more on high-value-added products targeting customers with discerning tastes in sound quality. As we bolster our lineup of high-margin premium products, we will also institute massive cuts to fixed development and production costs in relation to entry-level products, an area where competition is intense.

Meanwhile, higher levels of competitiveness will be pursued in growing fields to accelerate the growth of the Company.

Yamaha will also strive to grow sales of bundled acoustic systems in the field of public address equipment for entertainment applications. We look to accomplish this by enhancing connectivity between our high-market-share digital mixers and our speakers, which are anticipated to benefit from a growing market going forward. Other efforts in this field will include the development of optimal frameworks for supplying timely responses to customer needs in business-to-business operations to accelerate our growth by capitalizing on the expansion of the global market for concerts and other in-person experiences.

Meanwhile, initiatives pertaining to digital pianos will include the promotion of sales of high-value-added models with the capacity for genuine expression made possible by Yamaha’s deep insight into acoustic pianos. In addition, we will seek to increase our presence in the field of entry-level digital pianos by bolstering online sales networks and optimizing our digital marketing approach.

Exercise of Strengths as a Comprehensive Musical Instruments Manufacturer

If Yamaha is to continue to grow and create value going forward, it will be imperative that we exercise our strengths as a comprehensive musical instruments manufacturer as we proceed with our business-specific initiatives for improving value. Yamaha Music Connect will be integral to laying the groundwork for these efforts. In this business, we will link our musical instruments with music services that help users better enjoy these instruments in order to support the enhancement of performance experiences.

Yamaha Music Connect is a platform for designing the ideal services for each individual customer based on our customer data platform by drawing up offerings such as online lessons, content marketplaces, and community services. This platform allows us to connect customers playing different instruments or provide opportunities for a customer to have fun playing an instrument different from their usual instrument. By delivering this type of enriching music experience that only Yamaha can offer, we aim to evolve our business model to transition from an emphasis on selling goods to a focus on selling experiences.

This desire to qualitatively change and evolve existing businesses by exploring new fields is the reason why we included “Evolve” in the name of the Rebuild & Evolve medium-term management plan. Propelled by this desire, we will endeavor to create new musical instruments business opportunities by improving experiential value and customer success. We thereby aim to break out of the mold of a mature business, which our musical instruments business could be considered if we look only at hardware sales, and return this business to a growth track.

New Challenges for Expanding Business Domain

Yamaha must expand into business areas adjacent to existing businesses and into completely new fields if it hopes to develop a business that can continue to achieve robust growth over the medium to long term.

Under the previous medium-term management plan, we began ramping up our efforts in our automotive sound system operations. In this field, we will seek to increase the range of vehicles using Yamaha equipment by taking full advantage of our proprietary Music:AI technology to deliver premium customer experiences and by soliciting the benefits of shortened development periods and other advantages that we offer to automobile manufacturers.

Meanwhile, our efforts to create businesses in new fields other than musical instruments and audio equipment will include developing open innovation frameworks for consolidating internal and external expertise. With these frameworks, we will work to create new businesses through collaboration with external partners, rather than purely focusing on commercializing the ideas that emerge within the organization. Yamaha Music Innovations, our base located in Silicon Valley, is being used as a hub for collaboration with external partners. At the same time, we are conducting corporate venture capital investment to develop businesses from an outside-in approach.

At Yamaha, we aspire to contribute to the resolution of social issues with the power of sound and music as well as the technologies and sensibilities fostered through our business activities. Specific aims include creating connections between people through music, providing feelings of safety and security with sound, and promoting resource circulation on a global scale to ensure the sustainability of music and instrument cultures. As we pursue these aims, we will strive to unlock new possibilities for sound and music and thereby expand our business domain.

We will not allow ourselves to be bound by our existing businesses, but rather will seek to create new businesses that help resolve social issues with sound and music. This future-oriented quest will no doubt give Yamaha the momentum needed to take its next big step.

Improvement of Capital and Asset Efficiency

The new medium-term management plan defines improving capital and asset efficiency as one of the central pillars of the strategic policy of strengthening the management foundation. To this end, improvements to the health of our balance sheet will be pursued through reductions to inventories and cross-shareholdings. We have also performed a tree analysis of return on invested capital by business segment to guide efforts to boost business efficiency and profitability. Enhancing portfolio management is another important theme of the new medium-term management plan. The plan therefore includes a visual representation of our business portfolio vision in which existing and new businesses are placed in one of four categories, either Foster, Growth, Stable, or Rebuild. We are accelerating investments in growth businesses while working toward quick improvements in challenging businesses through ongoing monitoring based on these categorizations. In addition, we have introduced a management process involving regular reviews of our portfolio in which the meaningfulness of our asset holdings is assessed using three evaluation axes: consistency with management vision and other aims, future business potential and profitability, and the meaning of holdings from the best owner perspective.

Although there has been no change to our emphasis on a balance between investment and shareholder returns, the new medium-term management plan does place additional weight on growth investments. If we neglect investments due to an overemphasis on returns, it may result in both shrinking, which would hinder efforts to enhance corporate value. Accordingly, we will be looking to live up to shareholder expectations by achieving growth through proactive investment. We are also dedicated to restoring the capital market’s trust in Yamaha. This is why we intend to provide highly detailed explanations of our medium- to long-term growth strategies and practice healthy engagement while delivering steady growth in quarterly performance in the short term.

Creation of Value Using Intangible Assets

Workplace visit by President Yamaura to speak with employees

Yamaha possesses a number of intangible assets that are not being utilized to their full capacity to contribute to corporate value. The most prominent of these assets is the brand power we have built over the years, but other examples include our acoustic and digital technology development capabilities, global sales networks, and initiatives for promoting instrumental music education in emerging countries. The intangible asset that we should perhaps most actively mobilize to create value is our people. This is why we have positioned strengthening human capital as one of the key themes of the new medium-term management plan and why we are working to foster an environment in which human resources with diverse values and from diverse backgrounds can succeed. In more concrete terms, the plan calls on us to transform our human resource portfolio by fostering a creative and ambitious organizational culture, establishing a system to strengthen organizational capabilities and encourage individual growth, and establishing a human resource management system linked to business strategies.

Needs related to sound and music are growing increasingly diverse. We will have to empower every employee to fully exercise their skills if we want to continue to effectively accommodate these needs and create new value. We believe that it is only when diverse employees are able to realize their full potential that they help us shape a future in which people’s individuality shines through sound and music, regardless of their experience with instruments, proficiency at performances, local culture, or gender.

Shaping a Brighter Society Through the Power of Sound and Music

Driven by its mission of supporting the “Well-Being of People around the World,” Yamaha is fully dedicating its efforts to business activities that let people around the world exercise their creativity and shine.

We look to explore, create, and grow new business models that are founded on empathy and entail coordination with external partners to help resolve social issues through the power of sound and music. We envision a cycle in which Yamaha advances business activities that support people around the world in exercising their creativity, making their individuality shine, and creating light that illuminates the Yamaha brand. I hope to build such a cycle together with stakeholders.

Yamaha will continue to engage in earnest and constructive communication with its shareholders and other investors, while turning a receptive ear toward even the most scathing feedback. As we do this, I would like to ask our shareholders and other investors for their ongoing support and understanding.

September 2025

Atsushi Yamaura
Director, President and Representative Executive Officer