"NEXT STAGE 12" Overview

Basic Strategy
Consolidating competitive superiority through adding new values and differentiation

By further deepening our connection with customers, we will raise attractive quality, and always offer solutions with new values added

Environmental Factors

  1. Although uncertainty remains over global macroeconomic prospects, gradual growth is anticipated in the medium term
    • Mature economies:Gradual growth paths are returrned in Europe and North American regions once short term financial market adjustments settle.
    • China:Growth rate will continue to trend downward, but a certain level of economic growth will continue. Rise in average income is seen.
    • Emerging economies:Market condition varies by country as steady growth is anticipated in the ASEAN region while Latin America and Russian economy will remain challenging.
  2. IT networks will accelerate links among people, products, and experiences, creating new values and enjoyment.

Market Projections

Musical Instrument market

Market growth rate 6% (over 3 years)

Audio Equipment market (consumer/commercial)

Market growth rate 8% (over 3 years)

  • The musical instrument market will expand gradually as middle-class disposable income rises in emerging countries.
  • Innovative network technologies will create new demand and expand the audio equipment market.

A Path to "NEXT STAGE12"

2010~2013
YMP125:Rebuilding business platform through restructuring

Targeting operating income ratio 2.5%(FY2013.3)

2013~2016
YMP2016:Sharply increasing profits through business restructuring, cost reduction,improved gross margins in musical instrument business, etc.

Targeting operating income ratio 9.4%(Projection for FY2016.3)

2016~2019
Medium-Term Management Plan "NEXT STAGE 12"
(Yamaha Medium–Term Management Plan)

  • Increasing brand power and showing stronger profitability as a result
  • Targeting operating income ratio 12%(a target for FY2019.3)
  • Overcome yen appreciation trend and enhance profitability

Aims to:
become an indispensable, brilliantly individual company,
boost brand power to become a highly profitable enterprise
(achieving operating income ratio of 20%)

Management Objective (over 3 years)

Achieving operating income ratio of 12% (by FY2019.3)

Four Key Strategies
Technology that Crosses Over Sound and People

Enriched Lives + Comfortable Society

1.Development of products with distinctive individuality
Add original values to high basic functions and develop products others cannot imitate

Technology that crosses over sound and people -Yamaha's core competences-

Evaluation technology
to scientifically assess human sensitivities and sound recognition

Mechatronics technologies
to express minute movements

High-quality, easy-to-operate
network technologies

Sensing technologies
to accurately track motion

Signal processing technologies
for rich sound processing

Materials/analysis technologies
to bring out the best qualities in raw materials

Sound source technologies
enabling diverse expression

Others

Joy

Beauty

Confidence

Discovery

2.Customer Interaction Enhancement
Forge stronger, broader ties with customers

Getting Closer to Customers

For consumers
Respond to market expansion and diverse needs

Expanding Sales Channel

Increase the worldwide number of contract dealers by 10%

  • Mature markets: Secure channels through other industries
  • Emerging countries: Expand from urban to regional areas
Promoting music popularization activity to suit local needs

Join activities with public and corporate sectors

  • ASEAN region: Promote music education in public elementary schools
  • Latin America: Support local youth orchestras

For Corporate and B2B Customers
Develop value we provide to customers as a solutions vendor

Strengthening personnel and service bases to improve support to customer

Increase number of accounts to audio contractors by 50%

  • Increase worldwide number of technical and other staff supporting audio contractors by about 80
Expanding products and services to meet customer needs

Offer new solutions in tune with social changes

  • Better reflect customer needs in product development through support activities
  • Develop and provide new product offerings in the industrial machinery and components business

3.Continual Cost Reduction
Achieve ¥8 billion (net) in cost savings over three years

Achieve continuous cost reductions similar to the previous medium-term plan period by reducing manufacturing costs (reorganising production processes, reducing purchasing costs, introducing new processing methods, etc.) and improving productivity of indirect operations.

Absorb ¥6 billion cost increase and pursue further manufacturing cost reductions

4.Global Business Platforms Strengthening
Develop human resources to support global business operations and reinforce infrastructure

Proportion of total sales made overseas:67%

Overseas business bases: 51 in 32 countries*
(*as of April 2016)

Facilitating international careers

  • Establish global core positions (approx. 200) to implement global grading system
  • Promote cross-border personnel assignment
  • Select candidates for the core positions of next generation and promote development program

Optimising IT, logistics, finance and administration functions at the global level

  • Establish regional IT headquarters in three regions: Europe, U.S., and Japan (Asia)
  • Establish 24-hour surveillance and service system using resources in the three regions
  • Build efficient logistics system
  • Aim for logistic cost reduction through optimising distribution network, improving efficiency of packing and lading, centralizing procurement distribution, and promoting application of preferential tariffs
  • Prepare for introduction of International Financial Reporting Standards (IFRS)
    • *consider introduction of IFRS in FY2020.3
  • Aim for improvement in possibilities for international comparability of financial information and uniformity in the Group's financial information
  • Strengthen global support systems of HQ corporate staff
  • Improve management level of regional offices in all countries

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 predictions 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.