Yamaha sees Asean push lifting margins amid Indonesia slump2 min read . Updated: 12 Aug 2016, 05:56 PM IST
Yamaha Motor's operating profit ratio for the two-wheeler business in the Asean region may reach 10% this year, thanks to robust growth
Tokyo: Yamaha Motor Co, which sold a third of its motorcycles in Indonesia last year, plans to make up for a slump in the market by boosting sales to the rest of South-East Asia with new models and almost double profit margin in the region.
The operating profit ratio for the two-wheeler business in the Asean region may reach 10% as soon as this year, compared with 5.7% in 2015, chief executive officer Hiroyuki Yanagi said in an interview. That’s at least a year ahead of projections by Koichi Sugimoto, an analyst at Mitsubishi UFJ Morgan Stanley.
Indonesia’s economy is feeling the effects of a slowdown in China, its top export market, and slumping commodity prices, weighing on a motorcycle market Yamaha counts on for sales. The manufacturer has introduced models built on common platforms such as the M-SLAZ sports model and the NMAX scooter to reduce costs and boost profitability in South-East Asia markets Vietnam, Thailand and the Philippines.
“As they upgrade the model lineup, the margins will greatly improve," Sugimoto said by phone. “The new models have much better margins."
Yamaha rose as much as 1.9% and traded up 1.7% to 1,916 yen as of 10:06 am on Friday in Tokyo. The shares have jumped 25% since 12 July, when Nikkei Inc. said the company would replace Sharp Corp. on the Nikkei 225 Stock Average from 1 August. The benchmark index has gained 5% in the same period.
Yamaha last week cut its full-year net income forecast by 25% to $591 million as the yen strengthens and sales in Indonesia are estimated to plunge about 40% from 2014 levels. Indonesia’s market may recover next year, Yanagi said on Tuesday.
The operating profit margin for the company’s two-wheeler business in the Asean region widened to 7.8% in the first half, according to Yanagi.
In India, the largest motorcycle market in the world, Yamaha forecasts sales will rise 35% this year to 806,000 units, as the company expands its dealer network in rural areas. India will become another “pillar" of Yamaha’s motorcycle business, after Indonesia and other markets in South-East Asia, Yanagi said.
“The growth will mainly come from more expensive segments in Asian markets including India," said Yanagi, who sees buyers upgrading from cheaper scooters to higher-spec models. “I’m not concerned that our overall profit margin will be watered down in the future because of sales volume growth in these markets." Bloomberg