Yamaha Motor Co., Ltd. (7272) Earnings Call Transcript & Summary

Good afternoon, and thank you very much for attending our presentation today. We would now like to start the Fiscal Year 2026 First Quarter Earnings Presentation for Yamaha Motor. Before the presentation, I would like to introduce the presenter for the day, our Executive Officer, Mitsuru Hashimoto. Today, we will first have the earnings presentation. And then after that, there will be a detailed explanation by business segment. After that, we will have a Q&A session for the media and then a separate session for analysts and investors through Zoom. The presentation material has been uploaded on the Yamaha Motors corporate website. So then let us start the presentation.

I am Hashimoto from Yamaha Motor. Thank you very much for attending the Yamaha Motor earnings presentation today despite your very busy schedules. I would also like to take this opportunity to express our sincere appreciation for your continued support and understanding for our business operations. Now I would like to present our business results. First, starting with the key points. Please refer to Page 4. The 2026 results compared to the same period of the previous year, we have seen an increase in revenue and profit. Across our business, especially in motorcycle business, we have seen an increase in sales, which led to growth in revenue. The U.S. tariffs and the rising raw material prices have had an impact. However, with increased sales and appropriate control of expenses and because of the favorable foreign exchange situation, we have seen an increase in profit. Also, as we have presented in the February presentation, the structural reforms in the United States is going as scheduled. The future outlook reciprocal tariffs have been ruled unconstitutional, and our products have been exempted from the steel and aluminum tariffs. And therefore, we have -- we are expecting a reduction in tariff-related impact. The raw material prices are on the increase and also the unclear situation -- unclear outlook situation will continue. And therefore, however, we have maintained our full year plan. We will not change it, and we will continue to strive to achieve the plan. The rise in raw material prices as well as raw rare earth elements and semiconductor shortage, because of these, we have tried to turn to alternative component procurement and also cost reduction so that we can minimize the impact. The U.S. structural reform has been carried out at accelerated pace and in order to improve our profitability. The Middle East situation has had an impact on manufacturing and procurement. However, with the collaboration with our suppliers and also a review of allocation among key sites, we believe that this only has a very limited impact currently. And we will continue our measures, and we will closely monitor the impact on our business performances. Next, unit sales and inventory. Please refer to Page 5. The table on the left shows the core products, total demand and unit sales and a comparison with the previous year. Our motorcycles in ASEAN and India and other major markets, we have seen a strong wholesale shipment. Last year, the shipment was down in Vietnam, but now the plant operation has normalized and sales is recovering steadily. Thailand, India, Philippines, demand is growing, and our shipment actually is exceeding that demand growth. Indonesia, the levying of provincial taxes have been delayed, which had a favorable effect on demand and our retail sales increased. Outboard motors in North America and in Europe, the sales has been steady and unit sales has exceeded the previous year. Looking at the right-hand graph, market inventory is compared with the appropriate level. where market sales is trending well, the inventory level is slightly below the appropriate level. However, we do not want to miss this opportunity. Therefore, we would like to catch up in the production of our products. Next, the overall business results. Please refer to Page 6. First quarter of 2026, revenue versus the previous year was 117% at JPY 730.1 billion. Operating income against the previous year, 144% at JPY 62.6 billion. Operating income ratio, plus 1.6 points from the previous year at 8.6%. Net income attributable to owners of parent against the previous year was 135% at JPY 41.3 billion. EPS versus the previous year, 135% at JPY 42.52. The actual exchange rates utilized was JPY 157 against the dollar and JPY 184 against the euro. Moving on to factors behind changes in the operating income. Please refer to Page 7. As you can see, sales effect was plus JPY 24.1 billion. Looking at the breakdown, Scale effects, plus JPY 18.7 billion; Financial Services, plus JPY 2.9 billion, Price Increase Effects and Rebates totaling -- for the pricing was plus JPY 7.1 billion and others was negative JPY 4.6 billion. Net cost impact, plus JPY 6.8 billion; breakdown, cost reduction, plus JPY 4.3 billion, and cost raises plus JPY 11.1 billion. Also, R&D expenses reduction, plus JPY 900 million. SG&A expenses reduction caused a plus JPY 1.9 billion, equity method investment gain and loss and others, plus JPY 1.8 billion; exchange rate effects, plus JPY 12.3 billion and tariff effects, minus JPY 15.1 billion. Next, business performance by business segment. Please find details on Page 9. Motorcycle, Robotics and Financial Services. Motorcycle Robotics, Financial Services achieved increases in both revenue and operating income. Marine business operation recorded higher revenue, but tariff pushed down the profit. SPV business also posted revenue growth, while its operating loss remained at the same level as the previous year. Other businesses recorded lower revenue, but higher profit, while OLV reported revenue on par with the previous year, although its profit declined. Let me walk you through the details of each business segment. First on Motorcycle business on Page 10. Revenue increased due to higher unit sales in developed markets and in ASEAN and India. Operating income also increased, supported by thorough expense control and positive effects from the weaker yen. From the second quarter onward, we will continue working to strengthen our competitiveness by responding steadily to strong demand. Next, Marine Products. Revenue increased as outboard motor sales remained solid in Europe and North America. Although we reduced R&D and SG&A expenses, operating income declined year-on-year due to higher costs resulting from the U.S. tariffs. As the impact of tariffs is expected to ease from the second quarter onward, we will work to secure profits by maintaining solid sales performance. Let me introduce our new motorcycle model. Please take a look at Page 11. The scooter on this page is Fazzio, a Class-2 moped launched in April in Japan. It has long enjoyed strong popularity in Indonesia, and we decided to respond to the customer demand at home. In addition to its unique and clean design, Fazzio is Yamaha's first domestic model featuring the power assist function that kicks in during initial acceleration as a domestic model. It is a highly attractive model in terms of functionality as well. Through the launch of this model, we aim to create new demand in the domestic business and drive future sales growth. Let me now discuss Robotics business. Please turn to Page 12. Driven by strong sales of surface mounters, particularly in China, our key market, we recorded higher revenue. Operating income also increased due to higher sales and tighter expense control. Next, on Financial Services. Revenue increased as a result of growth in outstanding receivables. Operating income also increased mainly because no valuation losses were recorded this period on interest rate swaps, which had negative impact results on the previous year's outcome. Lastly, SPV and OLV businesses on Page 13. First, on SPV business. Although R&D expenses and other costs increased, revenue rose, thanks to higher e-Kit sales. Operating loss remained at the same level as the previous year. As for OLV business, sales of ATV increased due to lower sales of ROV and LSM. However, revenue remained roughly the same as the previous year. In addition, increased R&D expenses and tariff-related impacts pushed down operating income. We will further push the structural reforms in the United States to strengthen our earnings structure. This concludes our presentation on the financial results for the first quarter of the fiscal year ending December 2026. Thank you very much for your attention.