Yamaha 2008 Annual Report Download - page 36

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34 Yamaha Corporation
Lifestyle-Related Products
Key Policies and Priority Measures in Fiscal 2008
■ Develop a growth strategy centered on kitchen products
Develop product line categorizations: luxury / moderately-priced / entry-level
■ Realign sales and marketing activities to match market needs (open new
showrooms, expand remodeling business)
■ Continue efforts to differentiate products from those of competitors (artificial
marble, Sound ShowerTM, etc.)
■ Reduce costs by standardizing products and reducing production lead times
Fiscal 2008 Highlights
■ Sales of system kitchens increased 7% year on year owing to new sales
promotion strategy
■ Number of visitors to the showrooms increased as expansion and relocation
of showrooms continued
Business Outline
The lifestyle-related products segment is mainly composed of
system kitchens, system bathrooms and washstands. Yamaha
Livingtec Corporation is the principal Yamaha Group subsidiary
in this segment. The company’s artificial marble production
process and advanced coating and wood-processing technol-
ogy allow it to offer high-quality, highly functional products that
closely match customer tastes and preferences. The company is
currently restructuring its production system, including the
streamlining of production processes and the reinforcement of
its procurement system in order to improve profitability.
Performance Overview
In fiscal 2008, business conditions in the market for home fix-
tures and equipment were very challenging. Revisions to the
Building Standards Law, which went into effect in June 2007, led
new housing starts to drop off dramatically compared with the
previous year. Even demand for refurbishing, structural additions
and home remodeling was weak. Sales in Yamaha’s lifestyle-related
products business fell 2.3% from the previous year, to ¥45.5
billion. In addition to the decline in revenues, soaring raw materials
costs combined with a reduction in unit prices to erode the gross
profit margin. As a result, operating income contracted 48.8% to
¥0.6 billion.
By product, sales of system kitchens with artificial marble
sinks increased steadily, led by the moderately-priced berryTM
product line. However, sales of system bathrooms dropped off
sharply compared with the previous year. Although Yamaha
Livingtec introduced new system bathroom products in the
mid- and upper-level price range, sales of these items were not
enough to offset the drop in new housing starts and declining
unit prices caused by increased competition.
Three years ago, Yamaha Livingtec launched a major restruc-
turing effort which included a thorough review of its business
design. The company addressed six issues related to its busi-
ness processes, and has been working to implement these
reforms one by one. In fiscal 2008, the company focused its
efforts on the expansion and relocation of showrooms, as well as
showroom staff training, with the aim of reinforcing the remodel-
ing business—one sector in which the company expects to
achieve growth.
04/3 05/3 06/3 07/3 08/3
44,765 42,844 45,214 46,573 45,520
Net Sales
(Millions of Yen)
System kitchen
DOLCETM