Yamaha 2002 Annual Report Download - page 22

Yamaha Corporation Annual Report 2002 Management’s Discussion and Analysis
20
Management’s Discussion and Analysis
INCOME ANALYSIS
Net Sales
In fiscal 2002, although the weak yen contributed ¥20.4 billion to net
sales, domestic demand remained sluggish, the global economy weak-
ened, faltering demand for semiconductors put downward pressure on
musical instrument sales, and sales of CDR-RW drives, lead frames
for semiconductors, and other products declined. As a result, net
sales amounted to ¥504.4 billion, a 2.8% decrease compared with the
previous term. Excluding contributions to sales from the yen’s depre-
ciation against the U.S. dollar, the actual fall in net sales was 6.8%,
or ¥35.1 billion.
In Japan, sales in our mobile phone related businesses (sound
chips for mobile phones and the ringing melody distribution service)
increased compared with the previous term. However, the Company
recorded decreased sales in most of its other businesses. In particular,
sales of such large keyboard instruments as pianos and ElectonesTM,
and other instruments continued to fall, as did those of CDR-RW
drives, lead frames for semiconductors, and other products. Overall,
domestic sales decreased ¥18.5 billion (6.0%), to ¥290.0 billion.
The depreciation of the yen against the U.S. dollar and the euro
contributed to sales reported for each of the overseas regions. As a
result, overseas sales increased ¥3.8 billion (1.8%) compared with
the previous term, to ¥214.4 billion. However, when gains from for-
eign currency exchange are excluded, actual sales in these regions
decreased. Looking at sales measured in local currencies, in North
America the economic slowdown resulted in a substantial decline
in sales of pianos and other musical instruments, while, in Europe,
although sales of CDR-RW drives fell sharply due to inventory
adjustments, sales of musical instruments remained relatively stable.
Sales decreased in Central America and South America and Taiwan
but increased in other Asian countries outside Japan, particularly
in the Chinese market, which has exceptional growth prospects.
Cost of Sales and Other Expenses
Although the cost of sales decreased ¥5.8 billion, to ¥340.4 billion,
the cost of sales ratio edged up 0.8 percentage point compared with
the previous term. Excluding contributions to sales from the yen’s
depreciation against the U.S. dollar and the euro, the actual cost of
sales expanded 2.9%, or approximately ¥10.7 billion, for a cost of sales
ratio of 2.1%. This was attributable to an increase in fixed expenses—
which include such items as depreciation expenses and personnel
costs—primarily due to a decrease in production, and the implementation
of price reductions as part of efforts to reduce excess inventories.
Selling, general and administrative expenses were up ¥3.0 billion
compared with the previous term, at ¥153.0 billion, reflecting a ¥0.5
billion depreciation expense associated with pension obligations and
a ¥4.0 billion increase in expenses due to the depreciation of the yen
against the U.S. dollar and the euro.
Operating Income and Net (Loss) Income
In fiscal 2002, despite recording gains on currency exchange, operat-
ing income plummeted 52.0%, to ¥11.0 billion. In addition, YAMA-
HA recorded a ¥14.9 billion loss on devaluation of its shareholdings
in banks and other companies, and thus a net loss for the year of
¥10.3 billion.
0 100 200 300 400 500 600 700
’02
’01
’00
’99
’98
Musical
instruments
and AV/IT
Others Storage
heads
Net Sales by Business Segment
(Billions of Yen)
0 100 200 300 400 500 600 700
’02
’01
’00
’99
’98
Net Sales by Geographical Segment
(Billions of Yen)
Japan North Europe Others
America
-5 0 5 10 15 20 25
’02
’01
’00
’99
’98
Operating Income and Operating Margin
(Billions of Yen, %)
Operating Operating
income margin
4.0
0
1.5
4.4
2.2