This article was originally published online by Pro Sound News sister magazine, TWICE.
By Joseph Palenchar -- TWICE, 2/2/2012
Shizuoka, Japan—Yamaha's board approved a merger effective April 1 of its U.S. home-audio subsidiary with its U.S.-based musical instruments and pro audio subsidiary, but the merged entity has no plans to merge sales or rep forces.
The merger "has the objectives of realizing maximum synergies and increasing management efficiency, principally in administrative business processes, by implementing closely coordinated sales and marketing of musical instruments and A/V [home audio] products," Yamaha said.
The home business, called Yamaha Electronics Corp. (YEC) USA, will become part of the larger Yamaha Corp. of America (YCA), which not only markets musical instruments and pro audio equipment but also manages music schools. YCA will continue to be headed by president Takuya Nakata. Tom Sumner, who is both YEC president and YCA senior VP, will retain his YCA senior VP title.
Both subsidiaries are located in Buena Park, Calif. YEC has 39 employees, and YCA has 335.
The merger "mirrors Yamaha's structure in other parts of the world" and follows mergers in recent years of Yamaha's home audio and musical instruments/pro audio subsidiaries in the U.K. and Europe, Sumner told TWICE.
Though YEC will become a part of YCA, many YEC functions have already been transferred to YCA over the past several years, including the parts and service department and accounting, he noted.
As a result, Yamaha will gain only "some small financial advantages" with the merger, including less accounting and tax paperwork, he said.
Within the merged entity, home audio sales, marketing, credit, and consumer and dealer support will remain separate because the sales channels for home and musical instruments, and pro audio "are really different channels," Sumner said.
Nonetheless, some YEC products, such as headphones, cross over into the pro and musical instruments category, and a handful of music dealers have begun to sell two-channel home audio equipment for use in home studios.
Yamaha bills itself as the world's largest musical instruments manufacturer, and musical instruments accounted for 73.3 percent of its consolidated worldwide sales in the first nine months of fiscal 2012. Home audio and IT equipment combined accounted for 15.6 percent of consolidated sales.
While announcing the merger, Yamaha also released financial results showing declines in sales and net income for the nine-month fiscal 2012 period, which ended Dec. 31. Nine-month sales fell 5.2 percent to 270.6 billion yen ($3.56 billion), operating income fell 32.8 percent to 11 billion yen ($144.3 million), and net income fell 72.7 percent to 2.73 million yen ($35.8 million).
For the full fiscal year, the company revised down its previous forecast, made in mid-December. The company now forecasts net sales of 354 billion yen, down 4.1 percent from the previous forecast; operating income of 7.5 billion yen, down 40 percent from the previous forecast; and zero net income, down from a previously forecast 4 billion yen ($52.6 million).
Conversion rates are based on 76.1 yen to the dollar.
The reasons for the revisions, the company said, "include the emergence of delays in production of digital musical instruments, even after the resolution of the difficulties in procuring parts in the wake of the Great East Japan Earthquake, and the resulting loss of sales opportunities; the outlook for a decrease in sales in the semiconductor business; an increase in the impact of foreign currency fluctuations due to further substantial appreciation of the yen; and other factors."
If the forecast pans out, fiscal 2012 sales will be down 1.3 percent from fiscal 2011, operating income will be down 5.1 percent, and zero net income will compare to 5.1 billion yen net income (67 million) in fiscal 2011.
Japan-based Yamaha markets home and professional audio equipment, IT equipment, semiconductors, golf products, and car interior wood components and also operates sports and accommodation facilities.