Yamaha 2006 Annual Report Download - page 18

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18
Besides musical instruments, this segment includes the manufacture and sale
of professional audio equipment, the operation of music schools and English
language schools, and content distribution services such as polyphonic
ringtones for mobile phones. Yamaha also sells a variety of music-related
products sourced from other manufacturers and accessories.
In broad terms, Yamaha’s musical instrument categories span acoustic
instruments and electronic and digital instruments. Yamaha has also carved
out a new segment in hybrid instruments, which combine acoustic and digital
qualities. The Company’s expertise in acoustic and digital technologies makes
it the world’s only integrated manufacturer of a complete lineup of musical
instruments, which are sold to professionals and beginners alike.
STRIKING THE PERFECT PITCH
Review of Operations Musical Instruments
Grand piano S6B
Fiscal 2006 performance
In the musical instruments segment, despite
lower sales in Japan, higher sales were posted
in North America and Europe. Elsewhere, sales
growth was posted in Korea, South America and
the Middle East. A double-digit increase in sales
was achieved in China again, particularly for
pianos, in line with efforts to boost production
at the Hangzhou Plant.
In electronic instruments, demand for
ElectoneTM “STAGEATM” peaked out and declined
substantially, but sales of portable keyboards
and synthesizers rose. Sales of professional
audio equipment expanded over 20%, principally
owing to robust performances in overseas mar-
kets, especially North America. Sales of pianos
and wind instruments also grew, while lower-
than-expected sales of guitars in North America
pushed down overall sales of guitars.
Revenues expanded in the music school busi-
ness as increased enrollment numbers for children
and steady enrollments for adults led to higher
overall enrollment numbers. Revenues from the
English language school business also increased.
Sales of content distribution services grew
along with the expansion of this business in the
Japanese market.
Total segment sales rose 3.8% year on year,
to ¥314.1 billion. The operating income derived
from this higher sales and currency translation
gains due to yen depreciation were offset by
a combination of higher raw material prices,
adverse changes in the product sales mix, and
corrective inventory-related measures, which
resulted in lower gross profit margins for the seg-
ment. As a result, the segment operating income
remained largely unchanged, at ¥14.1 billion.