Make Waves 1.0 Medium-Term Management Plan

Make Waves 1.0

Yamaha is moving ahead with Make Waves 1.0, a three-year medium-term management plan that was launched in April 2019. In formulating this plan, we analyzed the rapid changes in the business environment and determined our future outlook, based on which we established a management vision for the Company over the medium to long term. We also unveiled a value creation story that will serve as our approach to realizing this vision. At the same time, we defined basic and key strategies along with corresponding management targets that comprise the three pillars of financial targets, non-financial targets, and shareholder returns.

Looking back on our medium-term management plans to date, YMP125 was carried out in a period when our business faced tough conditions due to yen appreciation. The period of YMP125 was positioned as a phase for rebuilding our business platforms through such means as restructuring our core business and integrating our sales offices in Europe and plants. After completing that phase, we commenced YMP2016, under which we transitioned from a business-unit organizational structure to a function-specific one, promoted optimized pricing, and moved forward with selection and concentration from a multifaceted perspective to focus on core business. Through these efforts, we were able to achieve an operating income ratio of 9.3%.

With the previous medium-term management plan, NEXT STAGE 12, we established the management vision of "Becoming an Indispensable, Brilliantly Individual Company." Guided by this vision, we worked to boost our brand power in an effort to take the next step toward further growth as a company. As a result, we were able to raise our operating income ratio to 12.8% (J-GAAP).

Taking into account the achievements we have made thus far, we have positioned the three years of Make Waves 1.0 as a period in which we will aim to develop closer ties with customers and society, and boost value creation capabilities, and we have adopted that aim as the basic strategy of the plan. Based on this strategy, we will pursue a two-pronged approach of boosting profitability and reinforcing our growth foundation. By fiscal 2022, the final year of the plan, we aim to increase our core operating profit ratio to 13.8% as a step toward reaching our long-term target of 20%, which we adopted under our management vision.

Financial Results

* The Company employed J-GAAP standards until fiscal 2019 and IFRS beginning in fiscal 2020
** Based on the impacts on the operating environment from the COVID-19 pandemic, the consolidated performance forecasts for fiscal 2022 announced on November 2, 2021, call for revenues ¥390.0 billion, core operating profits ¥40.0 billion, a core operating profit ratio of 10.3%, ROE of 8.7%, and EPS of ¥199.

Amid the rapid changes occurring in the operating environment, the environment within the Company’s business domains, which center on sound and music, is undergoing particularly dramatic changes. In light of these changes, we formulated our Makes Waves 1.0 medium-term management plan by making use of the backcasting method. Under this method, we established a long-term outlook for the future and analyzed how the changes in the operating environment would impact our business. We then examined which domains would allow us to realize further development as a company as well as the future growth opportunities and risks that may arise.

Assumptions of Our Outlook for the Future Business Environment


Analysis of Impacts on Operating Environment

(Examination of Development Domains, Growth Opportunities, and Risks)

Environmental Changes That Majorly Impact Yamaha and Related Growth Factors and Strengths

As the industrial structure changes rapidly due to the acceleration of digitalization, we are now able to form closer ties with our customers. Additionally, with remarkably enhanced levels of convenience realized through AI and the IoT, we find ourselves entering an era where there will be a greater demand for emotional satisfaction and authenticity. We are also seeing an even greater social awareness of sustainability. These operating environment changes are indicative of wide-ranging growth areas in which Yamaha is primed to capitalize on the technologies and foundations it has developed thus far.

Transformations caused by accelerated digital technologiesTransformations caused by accelerated digital technologies
  • Long-cultivated, cutting-edge digital technologies
  • Utilization of network technologies
  • Progression of direct digital marketing
Greater diversity in lifestyles and senses of valueGreater diversity in lifestyles and senses of value
  • Scientific insight on sensibilities
  • Provision of emotional satisfaction through the unique strength of combining technologies and sensibilities
  • Progression of direct digital marketing
Heightened awareness of sustainabilityHeightened awareness of sustainability
  • Utilization of advanced materials technologies
  • Initiatives toward sustainable timber procurement
  • Initiatives to help resolve social issues through sound and music

Directives of the Medium-Term Management Plan

In the era in which there is greater demand for emotional satisfaction and authenticity, the need for emotional value will unquestionably surpass the need for functional value. Our business domains center on sound and music, which offer significant value in the form of sensibilities and emotional impact. In these fields, these changes in needs will no doubt provide a positive boost to the Yamaha Group, which has assessed sound and musical instruments as a part of culture itself and has striven to refine its technologies and sensibilities.

It is therefore imperative that we fully leverage our strengths to capitalize on this growth opportunity by enhancing our ties with customers and society as well as our connection to market growth and growth domains.

The world is undergoing major changes at a rapid pace due to accelerated digitalization and diversification of value systems.

Combining technologies and sensibilities presents growth opportunities for Yamaha

Yamaha is enacting its value creation story to improve its core operating profit ratio and accomplish its long-term management vision.

Management Vision and Value Creation Story

We established a new value creation story that serves as our approach to realizing the management vision (medium- to long-term vision) that we adopted under the previous medium-term management plan, NEXT STAGE 12.

Management Vision
(Our future image in the medium to long term)
Becoming an Indispensable, Brilliantly Individual Company Boost brand power to become a highly profitable enterprise
(Core operating profit ratio of 20%)
Value Creation Story
Enhance corporate value and realize vision by creating social value

Basic Strategy

In a world undergoing major changes at a rapid pace,
we will develop closer ties with customers and society, and boost value creation capabilities.

Management Objectives

Management Objectives
Financial evaluation

Path to Improving Core Operating Profit Ratio

Path to Improving Core Operating Profit Ratio

We will leverage our unique strengths to increase our core operating profit ratio to the 14% level over the three years of the plan, with the overall goal of becoming the highly profitable enterprise described in our management vision.

Focusing on reaching a core operating profit ratio of 20%, a target we adopted under our medium- to long-term vision, or management vision, we set a goal of increasing our core operating profit ratio to the 14% level over the three years of Make Waves 1.0. While providing unique products and services that cannot be imitated by our competitors, we will achieve a leading position in the market by leveraging our strengths such as our tremendous market presence and high market share. We will also work to optimize pricing. In these ways, we will enhance profitability.

In addition, our high marginal income ratio and sales growth centered on emerging countries are two strengths that will also help us boost profitability. Furthermore, increasing profitability through efforts to reduce costs will contribute significantly to improving our core operating profit ratio.

Four Key Strategies

To promote our basic strategy of “develop closer ties with customers and society, and boost value creation capabilities“, we established four key strategies. By steadily executing these key strategies, we will realize Yamaha value creation and social value creation.

We will create customer value by developing closer ties with customers and offering them new value. We will also increase our profitability by enhancing productivity. Furthermore, we strive to contribute to society through our business activities, which we believe will lead to improvement in corporate value over the medium to long term.