Earnings Call: Yamaha Revises Forecasts Due to Slowdown in Chinese Market

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Earnings Call: Yamaha Revises Forecasts Due to Slowdown in Chinese Market

Yamaha Corporation (7951.T) announced its financial results for the second quarter of the fiscal year ending in March 2025, showing mixed performance across its segments. While the company demonstrated a significant increase in operating profit, it revised its full-year revenue and profit forecasts downward, citing further slowdowns in the Chinese market. Yamaha also reported an impairment loss of 7.8 billion JPY for its piano production facilities in China and Indonesia, reflecting the challenges in the Chinese piano market.

Key Points

  • Operating profit rose by 33% to 20.4 billion JPY, driven by sales of audio equipment and favorable exchange rates.
  • First-half revenue increased by 3.9% to 228.1 billion JPY, although it represented a 1.8% decline when excluding foreign exchange effects.
  • The sluggish Chinese market led to downward revisions of full-year revenue and profit forecasts, along with a significant impairment loss recorded at piano factories.
  • Despite stagnant performance in musical instruments, the audio equipment and IMC Business segments showed growth.
  • The year-end dividend per share is expected to remain at 13 JPY, translating to 39 JPY for the year-end before stock split and 76 JPY annually.

Company Outlook

  • Full-year revenue projection: 460 billion JPY, a decrease from the previous year.
  • Operating profit is expected to reach 37 billion JPY, an increase from the prior year.
  • Net profit is projected to be 18 billion JPY, significantly lower than the previous year and prior forecasts.

Negative Aspects

  • The sluggish Chinese market has significantly impacted the musical instruments segment, especially piano sales.
  • A decline in full-year revenue for musical instruments is expected, with no recovery anticipated in the Chinese market for the fiscal year.

Positive Aspects

  • Audio equipment sales are expected to grow for the full year, thanks to strong B2B sales.
  • The IMC Business and others are projected to show revenue and operating profit increases on a constant currency basis.

Underperforming Areas

  • Net profit has decreased due to impairment losses at piano production facilities and downward adjustments to the long-term sales outlook from the Chinese market.

Q&A Highlights

The Q&A session provided insights into Yamaha's strategic initiatives, such as strengthening its business fundamentals, positioning sustainability as a value source, and enhancing employee engagement.

Yamaha Corporation is facing a challenging market environment, particularly in China, which has compelled the company to adjust its financial outlook. However, strength in audio equipment sales and strategic initiatives aimed at sustainability and innovation indicate a balanced approach amidst the current economic landscape. Yamaha's stable dividend forecast underscores its commitment to shareholder returns while focusing on maintaining financial stability despite market challenges.