Yamaha 2006 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2006 Yamaha annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

12
Message to Our Shareholders
Business conditions for the Yamaha Group were challenging in fiscal 2006 (the year
ended March 2006), the second year of our Yamaha Sustainable Development
50 (YSD50) medium-term business plan, which covers the three-year period from
April 2004 to March 2007. Consolidated sales remained roughly on a par with the
previous year, while operating income fell due to a considerable decline in income
from electronic equipment and metal products and as income from musical
instrument fell short of targets. As a result, the operating income target for the
final year of the YSD50 medium-term business plan now looks unattainable.
Nonetheless, we will stay true to the essential elements of the plan and
concentrate energies into executing measures aimed at realizing objectives.
Fiscal 2006 performance overview
During fiscal 2006, we worked to improve our earnings
capability primarily by strengthening profitability in the
musical instruments business to offset the downturn in
the semiconductor business which occurred faster than
we predicted in the YSD50 plan.
Nonetheless, consolidated sales during the year
were virtually unchanged from the previous year,
totaling ¥534.1 billion. Profits were dented by
declining margins within our semiconductor
operations and lower than expected income from
musical instruments. Operating income declined
32.4% year on year, to ¥24.1 billion. Net income
increased 42.8%, to ¥28.1 billion, due to an
improvement in non-operating income in line with a
gain on investment in equity method affiliates and as
the effects of extraordinary losses posted in the
previous year disappeared. In fiscal 2005, we
recorded fixed asset impairment losses that were
partly offset by gains arising from the return of
pension assets to the Japanese government.
Please refer to the “Management’s Discussion &
Analysis” section (pp. 47-53) for further analysis of our
financial performance. Here, we offer you the key
points of that performance.
• In the musical instruments segment, sales increased
as a result of strong performance in overseas
markets, particularly North America, and increased
sales of professional audio equipment. A significant
decline in sales of ElectoneTM organs in the
Japanese market, however, meant that the increase
in overall segment sales was only slight. Operating
income remained level with the previous year due to
changes in the composition of sales and higher
selling, general, and administrative expenses.
• In the AV/IT segment, the new product Digital
Sound ProjectorTM YSP was a hit with customers,
but overall sales in this audio equipment business
declined because of lackluster conditions in key
markets for home theater systems. In the IT
equipment business, sales fell as a result of
intensified competition and further declines in unit
prices of routers. As a result, segment sales and
income decreased year on year.
• In the electronic equipment and metal products
segment, a drop in demand for LSI sound chips for
mobile phones and a decrease in unit prices meant
that segment results were lower than initially projected.
Enriching lifestyles through
sound and music