Yamaha 2006 Annual Report Download - page 47

Yamaha Annual Report 2006 47
Management’s Discussion and Analysis
Business Results
Sales by Business Segment
Sales increased on a year-on-year basis in the musical instruments and lifestyle-related prod-
ucts businesses. But sales from electronic equipment and metal products fell sharply
because of lower demand for the LSI sound chips used in mobile phones and as a result of
continued price erosion. Sales also fell in the AV/IT and recreation segments. Net sales
amounted to ¥534.1 billion, on a par with the previous year.
Sales of the musical instruments segment increased ¥11.5 billion, or 3.8%, compared with
fiscal 2005, to ¥314.1 billion. Positive currency translation effects due to yen depreciation
accounted for ¥8.3 billion of the increase in sales posted by this core segment. Excluding such
effects, the real year-on-year increase in musical instrument sales was ¥3.2 billion, or 1.1%.
Sales in the Japanese market declined after demand for STAGEATM, a new ElectoneTM
model, settled down following that product’s launch in 2004. Sales in the North American
market, conversely, rose on the growth in sales of pianos, professional audio equipment, and
wind instruments. Sales were also brisk in Europe, reflecting strong demand for electronic
musical instruments and for professional audio equipment. Sales in both of these markets
increased compared with fiscal 2005. Other markets where sales increased over the previous
year included South Korea, South America, and the Middle East. Double-digit sales growth
was posted in China once again, spurred by strong piano sales supported by increased
piano production at the Yamaha plant in Hangzhou.
By product category, sales of ElectonesTM fell sharply in fiscal 2006. Professional audio
equipment sales, though, increased more than 20% over the previous year due primarily to
sales growth overseas, especially in North America. Other product categories posting year-
on-year gains in sales included pianos and wind instruments. However, sales of guitars in
North America were lower than expected, which led to an overall decrease in sales of guitars.
The company continued its efforts to make its music schools appeal to modern con-
sumer lifestyles through new concepts and facilities, while also striving to boost student
enrollment numbers. As a result, overall students numbers expanded as both children and
adult enrollments increased compared with fiscal 2005, leading to higher sales. Music school
operations also commenced in China.
Sales in the AV/IT segment fell ¥1.8 billion, or 2.3%, compared with the previous year,
to ¥75.9 billion. In audio products, although shipments of the new Digital Sound ProjectorTM
YSP range of products were favorable, overall sales of audio products were poor because
of a depressed home theater market. By market, sales rose in the U.S. market, led by medi-
um- and high-end amplifiers and receivers, but sales fell in Japan and Europe amid fierce
competition. Sales of routers to small and medium-sized firms also declined on account of
intense competition and the effects of price erosion.
Electronic equipment and metal products segment sales fell ¥12.9 billion, or 18.7%,
compared with the previous year, to ¥56.2 billion. A drop in demand in the market for the LSI
Sales by Business Segment
(Millions of Yen)
[1]: Musical Instruments
[2]: AV/IT
[3]: Electronic Equipment and Metal Products
[4]: Lifestyle-Related Products
[5]: Recreation
[6]: Others
314,078
75,939
56,167
45,214
24,671
18,013
Fiscal 2005 Fiscal 2006
[1] [2] [3] [4] [5] [6]