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Earnings call: Yamaha Motor reports record-breaking sales



© Reuters.

Yamaha Motor Company (TYO: 7272) has announced record-breaking sales and operating income for the fiscal year ending December 31, 2023, with strong performance in the motorcycle and marine sectors.

Despite facing challenges in its robotics business due to a sluggish Chinese economy, the company is optimistic about demand in emerging markets and plans to continue its growth trajectory in 2024. Yamaha is also committed to sustainability, aiming for carbon neutrality and enhancing employee engagement.

Key Takeaways

  • Yamaha Motor achieved record sales and operating income in 2023.
  • Shipments of motorcycles and large outboard motors increased, while robotics faced challenges.
  • For 2024, Yamaha expects strong demand in emerging markets and plans for record sales and operating income for the fourth consecutive year.
  • The company is focusing on cost control and new models in the marine business to enhance corporate value.
  • Yamaha is committed to sustainability and has established a new company in the medical and health field.
  • Financial projections for 2024 include net sales of JPY 2.6 trillion and operating income of JPY 260 billion.
  • Dividends are set to increase to JPY 50 per share, with a JPY 20 billion treasury stock repurchase planned.

Company Outlook

  • Yamaha forecasts increased revenue and operating profit for Marine, Robotics, Financial Services, and Other segments in 2024.
  • The Land Mobility business is expected to see increased profit despite a decrease in operating profit.
  • New products like the XSR125 ABS motorcycle and F350B outboard motor have been introduced.
  • Yamaha aims to achieve a return on capital that exceeds the cost of capital.

Bearish Highlights

  • Small and midrange outboard motor sales in Europe and the US declined due to reduced demand from middle-income consumers.
  • The RV business experienced a drop in demand in 2023, with fierce price competition expected in 2024.
  • The Robotics division’s revenue and profit declined due to the Chinese economic slowdown.

Bullish Highlights

  • Sales of outboard motors in regions outside Europe and the US, along with water vehicles and sports boats, increased.
  • The Marine business increased its top line and operating profit.
  • A new model for large-sized outboard motors is expected to meet strong demand.


  • The SPV business saw a decrease in sales volume due to inventory adjustments in the bicycle market.

Q&A Highlights

  • Yamaha is adjusting model launch timings and enhancing promotion activities to counter the SPV division’s sales volume decrease.
  • The company expects the Robotics division to recover demand in the second half of 2024 and is launching a new surface mounter to aid growth.
  • Despite higher interest rates, the Financial Service business is projected to increase revenue and operating profit in 2024.

Yamaha Motor’s strategic approach to overcoming economic challenges in various markets, coupled with its investment in new products and sustainability, positions the company for continued success in the coming year. With a focus on emerging markets and innovative business strategies, Yamaha Motor is set to navigate the complex global economic landscape while aiming for sustainable growth and enhanced corporate value.

Full transcript – None (YAMHF) Q4 2023:

Yuuko Kurabe: Hello, everyone. Thank you very much for making the time for Yamaha Motor Company’s earnings presentation for the fiscal year ending December 31, 2023. My name is Kurabe of the Corporate Communications department and I’ll be chairing today’s meeting. Before explaining the contents of the meeting, I’d like to introduce the attendees for today. We have Mr. Yoshihiro Hidaka, President and Representative Director and Mr. Motofumi Shitara, Director and Senior Executive Officer. After a brief overview of the financial results from Mr. Hidaka, Mr. Shitara will explain the details of each business segment. And then there will be a Q&A session via Zoom (NASDAQ:) for the members of the present analysts. The earnings presentation deck is available on Yamaha Motor’s website. We will now begin our presentation of the business results.

Yoshihiro Hidaka: Hello, everyone. My name is Hidaka from Yamaha Motor Company. Thank you very much for taking time out of your very busy schedules today to attend the Yamaha Motor Company’s earnings presentation. First, I’d like to express my deepest sympathies to the victims of the Noto Peninsula earthquake. We pray for the safety of the people in the affected areas and for the earliest possible recovery and reconstruction. We would also like to thank you for your continued understanding and support of our business activities. I will now give an overview of the business results. First, here are the key points. Please see Page 4. In 2023, we achieved record sales and operating income. In the core business of Motorcycles, shipments increased due to firm demand and improved production of premium models from the second half of the year. In Marine, shipments of large outboard motors and water vehicles increased, while the Robotics business continued to face difficult conditions due to the sluggish Chinese economy. Next is the outlook for 2024. Regarding the external environment, emerging countries are expected to continue to experience some economic slowdown in Vietnam, but there is continued strong demand in Indonesia, India and Brazil. In developed countries in Europe and the U.S., the economy is stagnating due to rising interest rates and inflationary effects. But consumption among high-income earners in the U.S. will remain strong. In addition, ocean-sea freights are expected to fall and the surge in raw materials is expected to slow down. In our businesses, semiconductor procurement will normalize, providing a tailwind to produce premium models of motorcycles in emerging countries. In the Marine business, we aim to — for greater than market growth by introducing new models to the large outboard motor market in the U.S. where demand remains strong. The downturn in the robotics market has bottomed out and is expected to recover in the second half of 2024. We will maintain high profitability and efficiency and enhanced business competitiveness as outdoor leisure demand peaks out and the competitive environment in the market returns to normal. We plan to achieve record high sales and operating income for the fourth consecutive year in 2024 by controlling expenses with a balanced approach. I would also like to explain today our efforts to enhance corporate value. Next is unit sales and inventory. Please see Page 5. The table on the left compares our unit sales by major product against the actual results in 2022. Unit sales increased mainly in Indonesia, India and Brazil, where demand remains strong. Outboard motor unit sales are small and medium-sized models declined significantly. ATV and ROV unit sales declined due to slowing demand. Unit sales of SPVs decreased due to an increase in inventories in the overall bicycle market. Mounter unit sales to China and other Asian countries decreased. The graph on the right compares the current state of market inventories with appropriate levels. In regions and businesses where inventories are above appropriate levels, production adjustments are being made, while at the same time, sales promotion measures are being strengthened to reduce our inventory levels. Next, the overall business results for 2023. Please take a look at Page 6. In 2023, net sales were up 107% from prior year at JPY 2.414 trillion. Operating income was JPY 250.7 billion, 111% for the prior year level. Operating income ratio was 10.4%, up 0.4 percentage points from the prior year. Ordinary income was JPY 242 billion, 101% at the prior year’s level. Net income attributable to shareholders of the parent company was JPY 164.1 billion, 94% of the prior year’s level. EPS was JPY 163.57, 96% of the prior year’s level. Shipments of motorcycles in emerging countries increased due to the improved procurement of semiconductor components. Furthermore, in addition to the expanded effect of passing on prices, a tailwind from the weekend also contributed to the increase in profit. The prevailing exchange rates are JPY 141 to the U.S. dollar and JPY 152 to the euro. Emerging market currencies against the U.S. dollar are as stated. Here are the operating income factors in 2023. Please see Page 7. As you can see, the increase in revenue contributed JPY 22.2 billion. The breakdown is as follows: price raises and rebates totaled JPY 49.4 billion, unrealized profit impact was positive JPY 4.7 billion, negative JPY 500 million in financial services; decrease in scale, minus JPY 15.7 billion; product mix and others were negative JPY 15.8 billion; and net cost reduction was minus JPY 3.2 billion. That breaks down into JPY 20.5 billion positive contribution in cost reductions and JPY 23.7 billion in cost increases. In addition, an increase in growth strategy expenses resulted in a negative JPY 7.3 billion. The increase in SG&A expenses resulted in a negative JPY 32.7 billion, with foreign exchange effects, a positive JPY 46.8 billion. Next is the outlook for 2024. Please see Page 8. Although demand varies depending on region and business, we plan to increase net sales and each profit line over the prior year, factoring in improved supply of premium model motorcycles in emerging countries and a turnaround in the Marine business. From 2024 onward, the company will adopt IFRS, International Financial Reporting Standards in place of the previous Japanese GAAP; revenue, JPY 2.6 trillion; operating income, JPY 260 billion; operating income ratio, 10%; net income, JPY 175 billion. EPS is expected to be JPY 196.49. The assumed exchange rates are JPY 140 to the U.S. dollar and JPY 150 to the euro. Emerging market currencies against the U.S. dollar are as shown. Next, the operating factors for 2024. Please see Page 9. As shown, the increase in revenue contributes JPY 40 billion, which breaks down as minus JPY 1.6 billion in pricing, which is a sum of price increase effect and rebates; unrealized profit impact, positive JPY 60.9 billion; financial services, plus JPY 2.3 billion; scale increase, plus JPY 44.8 billion. The total of product mix and others is minus JPY 66.4 billion. Cost reduction was minus JPY 4.3 billion. This breaks down into JPY 16.2 billion in cost reductions and JPY 20.4 billion in cost increases. In addition, a decrease in growth strategy expenses result in an increase of JPY 0.8 billion, decrease of JPY 32.9 billion due to an increase in SG&A expenses. ForEx impact will be a positive JPY 700 million. On a Japan GAAP basis, we expect a JPY 4.3 billion year-on-year increase. The impact of the change in accounting standards results in a further additional JPY 5 billion increase, operating income on an IFRS basis is expected, therefore, to be JPY 260 billion. Next to the key financial indicators. Please see Page 10. The graph show ROE, ROIC, ROA and equity ratio, which are the KPIs of the midterm plan and represent our efficiency. The charts show results for 2022 and 2023 and the forecast for 2024. For 2024, the solid line is the IFRS forecast. The dotted line is calculated and shown in the Japanese GAAP for reference. In 2023, the ROE 15.4%, ROIC of 9.2% and ROA of 10.5%. The equity ratio 43.7%. Each indicator is expected to achieve the 3-year average target for the period of the midterm plan. Next is our shareholder returns policy. Please see Page 11. Regarding dividends, we aim to pay stable and continuous dividends while taking into consideration the outlook for business performance and investments for future growth. We will also flexibly return profits to shareholders in accordance with scale of cash flow. We aim to achieve a total payout ratio of 40% over the medium-term plan period. The company conducted 3-for-1 stock split on January 1, 2024. And the dividend for the fiscal year ending December 31, 2024, is the amount after the stock split. We plan to increase the dividend from fiscal year 2023 to JPY 50 per share for the full year. For your reference, the annual dividend without considering the stock split would be JPY 150 per share. In addition, we plan to repurchase JPY 20 billion of treasury stock in 2024. As a result, the total return ratio will be 41% for the 3-year period from 2022 to 2024. This is expected to exceed the 40% total return ratio committed to in our midterm plan. We will continue to strive for stable and continuous returns to our shareholders. Next is our progress of medium- and long-term measures. Please see Page 12. First, I’d like to discuss progress in each area of portfolio management, which has been implemented since the current midterm plan. In core businesses, including Motorcycle and Marine, the ROS forecast is 14% compared to a 3-year average target of 11%. Sales are expected to exceed the target due to increased sales of high value-added motorcycles and highly profitable large outboard motors. In addition, in the Financial Services business, which supports our existing business, we have relocated most of the operation and control functions of our U.S. operations from headquarters to locally in the U.S. Full scale operations will begin in ’24 with the aim of achieving sustained growth and expansion in this business. Next, in structural reforms, the decision to conclude a partial transfer agreement for the Power products business and to withdraw from the swimming pool and snowmobile businesses is progressing as planned. Growth businesses are expected to fall short due to continued challenging marketing conditions. However, both the SPV and Robotics businesses will remain positioned as growth businesses in the long term. In each case, we’re steadily improving our production sales and service systems so that we can respond quickly when the market recovers. And finally, in terms of new businesses, although there is concrete progress in the establishment of a new company in the medical and health field and the launch of a new mobility service, sales are projected to be JPY 10 billion in 2024. The next step for us is to address and take initiatives for environmental and resource issues. On the left, efforts to support electrification of Marine and Motorcycles have moved forward. In Marine, there’s been an agreement signed to acquire Torqeedo, a pioneer brand in the electric domain. In Motorcycles, we’ve invested in world of River, a start-up company involved in the manufacture and sale of electric scooters in India. On the right is the progress of research on hydrogen engines. The ROV and golf car will present as concept models powered by hydrogen engines. The development prototype of the hydrogen outboard motor will be exhibited at the Miami Boat Show in 2024. To achieve carbon neutrality, we’ll promote not only electrification initiatives but also a multipath development of new energy technologies. Finally, I will be covering our response to achieve management conscious of capital costs and stock prices. Please see Page 13. First, a recognition of our current situation. Our PBR is approximately x1.1 or 1.1 fold. And considering our ROE of 15.4% in 2023, we recognize that our PER is about sevenfold. We’ve set our ROE target at 15% from the past and have worked with financial discipline. We will continue to promote business portfolio management, which was introduced in this current midterm plan to achieve return on capital, which exceeds the cost of capital. On the other hand, PER is about sevenfold, and we recognize that improving this is an issue for us as well as the individual business briefings and active dialogue. In addition, we will strengthen our sustainability initiatives, including carbon neutrality, employee engagement and human rights. We aim to secure our ESG evaluation by further enhancing our nonfinancial information and the opinions obtained through these activities will be fed back to the management and lead to the improvement of corporate value.

Motofumi Shitara: Good afternoon. I’m Shitara, and I would like to give you an update per business domains. So first, I want to update you on revenue and operating profit results for 2023 and the guidance for 2024. Please take a look at Page 15. Starting with 2023 results. Motorcycle and RV in Land Mobility business and the Marine business achieved increase in both revenue and profit. Financial Services and Other segment finished the year with increase in revenue but decrease in profit. Both top line and operating profit declined for SPV and Robotics business. For 2024 guidance, we are expecting increase in revenue and operating profit for Marine, Robotics, Financial Services and Other segment. Each subcategories under Land Mobility business are expected to see increase in profit but decrease in operating profit. And let me go into the details of each businesses. Please go to Page 16. The graph on the left is the year-on-year market demand in major markets. The one on the right shows revenue in each region. In 2023, excluding Vietnam, China and the Philippines emerging markets as well as Europe and America enjoyed solid demand. Starting from the second half, demand has started to slow down in China and Thailand, but thanks to improvement in premium model supply, we have seen increase in number of shipments globally. In addition, benefit of a pass on to price expanded in turn, pushed up revenue and operating profit. For 2024 forecast, we are expecting strong demand to continue in Indonesia, India and Brazil. Meantime, Vietnam, China and Thailand are expected to see sluggish demand due to economic conditions. So there will be difference in colors between markets. Yamaha is going to increase premium model supply in emerging markets, but return of competition, increase in expenses due to increase in promotion costs to boost up sales in markets with decreased demand will bring up top line but push down profit. Now let me introduce our new product. Please turn to Page 17. We have launched our XSR125 ABS in Japan back in December 2023. In addition to the fusion of XSR Series identity of timeless and pure style and the latest components, Neo-Retro concept, it offers lightness and ease of handle, which is a unique to 124cc engine. For the last few years, 51 to 125cc motorcycle with a shift gear has been drawing an interest of customers in their 20s. After announcing the launch of XSR125, we have received many orders. Next is Marine business. Please go to Page 18. The graph on the left side shows year-on-year outboard motor retail registrations in the United States. The one on the right shows revenue per each product. In 2023, demand for large-sized outboard motor remains strong. Our model with 300 horsepower and above had higher unit shipment. Meanwhile, consumption among the middle income people in Europe and the United States declined, leading to a drop in the demand for small and midrange outboard models. As a result, outboard motors sales in Europe and the United States declined. On the other hand, outboard motors in other regions, water vehicles and sports boat shipment increased. Hence, Marine business as a whole finished with increase in both top line and operating profit. For 2024, we are expecting similar trend to continue in each market. Small and midrange outboard motors inventory adjustment will continue, but we will launch new model for large-sized model, which still enjoy strong demand. We will be meeting large-sized model needs, which is expected to expand going forward. So let me show you our new models in outboard motor launching in spring 2024 and later. Please turn to Page 19. This F350B is outboard motor using newly developed V-type 6 cylinder engine. It achieves both overwhelming power and lightness with a sophisticated design suitable for premium motors. After launching in the North American market, we will be launching them in other major markets like Europe and Australia. Please check it out. Next is RV business and Financial Service business. Please turn to Page 20. The left is RV business. In 2023, demand slowdown and the shipment had dropped. But thanks to improvement in production efficiency at the U.S. factory, this segment recorded increase in both revenue and operating profit. We are expecting a replacement demand to support in 2024, but supply has been normalized at all players, price competition expected to be fierce. Yamaha 2 is expecting to increase our promotion costs and other expenses, a forecasting increase in top line but decrease in profit. The one on the right is the Financial Service business. In 2023, in tandem with increase in sales volume, receivables are increased across the region, pushing up revenue. However, due to sharp rise in interest rate, funding cost has been increasing. In addition, higher allowance for doubtful accounts and our interest swap valuation loss were recorded, bringing down operating profit year-on-year. We are expecting revenue and operating profit to increase in fiscal year 2024 coming from higher receivables and passing the cost onto the new receivables, while still experiencing impact for higher rate. Lastly, this is growth business, SPV and Robotics. Please turn to Page 21. The left is SPV. Bicycle market around the world was going through inventory adjustment in 2023. And the Yamaha Motor undergone production adjustment, resulting in big drop in sales volume, ending the year with a revenue and a profit decrease. We are expecting the trends to continue in 2024 as well. We will adjust model launch timing and enhance our promotion activities at global offices but expecting it will take until the end of the year to normalize inventory level. The one on the right is Robotics. Demand for application for automobile and industrial devices in developed markets remain strong. However, slowdown in Chinese economy impacted significantly pushing down revenue and our profit from previous year. We are expecting demand to recover in the second half of 2024. And we are expecting revenue and profit to grow, thanks to new surface mounter launching in March and by strengthening our sales organization in overseas growing markets. This is the end to the explanation for the fiscal year ending December 2023. With this, Yamaha Motor’s 2023 December of — term — of fiscal — financial result meeting. Thank you very much for watching the YouTube Live.

End of Q&A:

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