Yamaha Riding On Poor Times

Monday, 15 February 2010

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Yamaha has released the worst full-year results in its entire corporate history, with sales slashed and widely anticipated massive losses.

For its financial year ending 31 December 2009, Yamaha sales revenue fell by 28.1 per cent year-on-year to £8.19bn (Y1153.6bn). This resulted in an operating loss of £444m (Y62.6bn), representing a decrease in operating income of £788m (Y111.0bn) from the previous year. The bottom line was a monumental net loss of £1.53bn (Y216.1bn) once a range of restructuring charges were added in.

Revenue from motorcycle sales - by far the biggest sector of company operations - fell by 20.6 per cent to £5.8bn (Y817.1bn). In Asia, outside of Japan, bike revenue was down by 7.9 per cent due to the negative impact of a stronger yen, although unit sales actually increased during the period. In North America and Europe the decline was 45.9 per cent and 33.2 per cent respectively. This was attributed to lack of demand, the stronger yen and significant production cutbacks designed to reduce distributor and group inventories. Marine product sales fell 37.1 per cent and power products (including ATVs) by 52.8 per cent.

Unsurprisingly, the company has cancelled its dividend payout for the 2009 financial year. It has also decided to further reduce the salaries of directors and executive officers in the light of such poor performance. Directors will suffer a 15 to 30 per cent cut in monthly pay and forego any bonuses. Executive officers will be 15 per cent worse off and also lose their bonuses. Managers will see their wallets take a five per cent hit.

Following the aggressive implementation of structural reforms, including reorganising manufacturing, cutting jobs and generally reducing costs, Yamaha is forecasting a break-even position in 2010. Its predictions are for net sales revenue of £8.87bn (Y1250bn), an operating profit of £71m (Y10bn) and a zero bottom line.