Yamaha Restructures with ’09 Losses

February 19, 2010
Bart Madson
By Bart Madson
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Bashing away at the MotoUSA keyboard for nine years now, Madson lends his scribbling and editorial input on everything from bike reviews to industry analysis and motorcycle racing reports.

The release of its year-end financial summary shows Yamaha felt the sting in 2009, just like the rest of the motorcycle industry. Now the world’s second-largest motorcycle maker reveals plans for turning things around in 2010 and beyond, including restructuring and job cuts.
Yamaha Motorcycles

2009 Yamaha Results

Consolidated 2009 net sales for Yamaha were 1,15 trillion yen, with an operating net loss of 216.1 billion yen. These numbers reflect a 450.2 billion decrease in total net sales (28.1%). All told the motorcycle segment tallied a 4.2 billion yen operating loss, down 37.8 billion from the year prior, as worldwide sales dropped 20.6%.

Sales declines in North America (45.9% – from 107,123 to 57,979 units) and Europe (33.2%) were more precipitous. In its fiscal year summary Yamaha says of the drop in these markets: “This was mainly attributable to sluggish demand and the negative impact of the stronger yen, coupled with significant production cutbacks designed to reduce market stocks.”

Citing reduced demand from the recession in the US and Europe, as well as its domestic Japanese market, Yamaha notes that demand “recovered early” in critical Asian markets, like Vietnam and India.

Restructuring Plans

Yamaha announced expanded structural reforms to its manufacturing, with more closed plants and job cuts. From 2010-2012 the company will close seven factories total. Factories in Japan will reduce from 12 to seven. The closure of two overseas plants brings the non-domestic factory count from nine to seven.

Job cuts also expand from the previous announcement of 1700 positions, with an additional 1000 marked for reduction. Of those 800 positions in Japan are targeted in 2010 with voluntary retirement. The 200 remaining job losses will take place in Europe and the US.

Yamaha has also targeted cuts in executive pay. No bonuses will be meted out to executive officers or directors, monthly remuneration has also be further reduced (up from minimum 10% reduction in 2009 to at least 15% in 2010 – with auditors getting 20% cut up from 15% in 2009).

2010 Forecasts Return to Break Even

Yamaha does project a break even on net income for 2010. However, due to the sales drops, the annual production volume will decrease for motorcycles from 250,000 to 200,000. The ATV and UTV market production is lowered as well, from 140,000 to 100,000. And the Japanese marque paints a somber picture for improvement in the US and European market saying in its forecast for 2010:

“In fiscal 2010, motorcycle demand in Asia (excluding Japan) is expected to increase, while demand in Europe and the United States is not expected to recover for some time. Thus, sales conditions surrounding the Yamaha Motor Group are expected to remain harsh.”

Asian Expansion & Electric Development

Yamaha plans to focus its immediate efforts on expanding into the Asian market. It sets specific goals for China and India, the world’s two largest motorcycle markets, by increasing its ratio of low-priced models from 20% to 60% by 2012.

Yamaha also plans to increase the ratio of fuel-injected models from the current 3% to 50% by 2012, and 80% by 2015. It also seeks a 50% increase in fuel efficiency by 2015.

Another area of focused development is electric powered motorcycle technology. Yamaha specifically wants to increase its presence in “the growing electrical power assisted bicycle market.” Yamaha will use some of the 120 billion yen it plans to spend over the next three years in capital expenditures on “electric-drive technology development.”

A recent study by Pike Research forecasts 466 million electric PTW sales between 2010 and 2016. While the number seems staggering, it would seem Yamaha has identified the electric PTW as a key market in its recovery.

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