Annual Report 2020 Annual

YAMAHA GROUP ANNUAL REPORT 2020 Annual Report 2020 https://www.yamaha.com/en/ Printed in Japan YAMAHA PHILOSOPHY BRAND PROMISE The Yamaha Philosophy expresses the core framework of the Yamaha Group’s management and consists of A feeling of enthusiastic excitement lives in sound and music, four elements: the Corporate Philosophy, Customer Experience, through playing or simply listening. We at Yamaha want to inspire peoples’ passion Yamaha Quality (criteria for quality), and Yamaha Way (mindset and manners). and help them make a step forward to express their individuality, emotion and creativity. We utilize the Yamaha Philosophy as a foundation to draw from, try to think from the customer’s viewpoint, and consistently provide high-quality products and services that exceed the expectations of our customers, and to create excitement and cultural inspiration together with people around the world. Diagram of the Yamaha Philosophy Make Waves Just a few notes or a simple melody can send out ripples that trigger an emotional bond with another person. Sound and music have a transformational impact on individuals and the world around us. The “Make Waves” concept focuses on our passions and what matters most to people, namely, expressing themselves and making an impact, to progress personally as a listener and player, and to come together with others. Yamaha is committed to empowering people to “Make Waves” with their sound and music. Yamaha Group Annual Report 2020 01 PUBLISHING ANNUAL REPORT 2020 CONTENTS Since 2018, the Yamaha Group has been integrating its prior annual reports and corporate I. Value Creation by Yamaha 04 V. Financial and Corporate Information 96 social responsibility (CSR) reports to publish integrated reports that communicate the Group’s medium- to long-term value creation initiatives to shareholders, investors, Yamaha’s Path of Ambition 06 11-Year Summary 98 Yamaha Creation by Value and all of our other stakeholders. This report is our third such integrated report. Yamaha’s Business 08 Financial Review 100 When creating Annual Report 2020, we referenced the International Integrated Management Vision and Value Creation Story 10 Consolidated Financial Statements and Notes 104 Reporting Council’s International Integrated Reporting Framework as well as the Ministry Special Feature: Independent Auditor’s Report 153 of Economy, Trade and Industry’s Guidance for Integrated Corporate Disclosure and Enactment of Yamaha’s Value Creation Story 12 Main Networks Company-Investor Dialogues for Collaborative Value Creation. Summarizing the policies 156 Performance Highlights 18 we adopt on a Groupwide basis, this report was created thanks to the cooperation of Stock Information 158 each division of the Company. As such, I believe the creation process and the content of Sustainability Priorities and Progress 20 Company Information 159 this report to be appropriate. Going forward, we will utilize our integrated reports as engagement tools as we pursue Scope of This Report constructive dialogue with our stakeholders. It is our hope that these reports help our II. Management Strategy 22 Information in this report covers 66 companies (as of March 31, 2020): stakeholders feel confident about our efforts to realize a sustainable society and elicit Yamaha Corporation, its 61 consolidated subsidiaries, and its 4 affiliates. Management Strategy Message from the President 24 In cases where it is necessary to specify the scope of reporting, this their understanding and support of our long-term corporate value creation. report lists the applicable institution individually. Make Waves 1.0 Medium-Term Management Plan 32 October 2020 Positioning of the Makes Waves 1.0 Medium-Term Reporting Period Management Plan 32 This report primarily covers fiscal 2020 (April 1, 2019 to March 31, 2020). However, certain sections of this report include information from April 1, Approach to Formulating the Medium-Term 2020, and onward. Management Plan 33 Takuya Nakata Major Medium-Term Management Plan Measures Disclaimer on Forward-Looking Statements The forward-looking statements such as data and forecasts included in Director, President and Representative Executive Officer for Accomplishing Our Management Vision 34 this report are based on assumptions and information available at the Strategies by Business and Function Strategies by Four Key Strategies 36 time of publication and are subject to change due to various factors. These statements are not guarantees that Yamaha will achieve its targets Financial Strategies 44 and forecasts or realize its anticipated future business results. In addi- tion, the content of this report may be changed without prior notice. Accordingly, Yamaha cautions readers not to place undue reliance on Key Points of Annual Report 2020 III. Strategies by Business and Function 48 these forward-looking statements, which are valid only as of the date thereof, and undertakes no obligation for any negative impact caused by Annual Report 2020 provides details on Yamaha’s progress during the first year of its Make Waves 1.0 medium-term management the use of this report. plan. It also offers information on concrete initiatives for creating social value while leveraging the accumulated strengths and Strategies by Business 50 technologies of the Yamaha Group and identifying business risks and opportunities based on the perspective of medium- to long- Musical Instruments Business 50 Names, including those of products and services, used in this report are term growth. We encourage readers to focus on the following key points to help deepen their understanding of the content of trademarks or registered trademarks of Yamaha Corporation or of the Audio Equipment Business 54 respective rights holders. this report. Industrial Machinery and Components Business 56 Strategies by Function 58 Disclosure Structure Fully leveraging the technologies and sensibilities centered on sound and music that Yamaha has Sales 58 Overall Corporate Activities Corporate Governance POINT 1 continued to cultivate since its founding, we aspire to cater to new demand and to help resolve Production 60 the social issues arising in the contemporary business environment and to create new value that Corporate Website: https://www.yamaha.com/en/ Creation of New Value through enriches people’s lives. Research and Development 62 Sound and Music About Us Management Vision and Value Creation Story (Pages 10–11), Special Feature: Enactment of Design 66 https://www.yamaha.com/en/about/ Yamaha’s Value Creation Story (Pages 12–17) Human Resources 68 Research and Corporate Profile Business Activities Development The changes to social structures that will represent the new normal after the global COVID-19 POINT 2 pandemic has been brought under control are something that we can address by following the path IV. Corporate Governance 70 we have walked thus far. While responding to the issues brought to light by the pandemic, we will Information for Investors Sustainability Information Progress in the First Year of Make steadily advance the key strategies of Make Waves 1.0 as we nurture the seeds of future growth in Directors 72 https://www.yamaha.com/ https://www.yamaha.com/ Financial and Corporate Information Waves 1.0 and Preparations for the order to capitalize on the opportunity to act ahead of the times presented by the current adversity. en/ir/ en/csr/ Reasons for Director Appointment 74 New Normal Message from the President (Pages 24–31), Make Waves 1.0 Medium-Term Management Plan (Pages 32–43), Financial Strategies (Pages 44–47) Executive Officers, Operating Officers, Securities Reports Sustainability Reports and Audit Officers 75 Corporate Governance Environmental and Messages from the Outside Directors 76 Reports Social Data One facet of the Company’s efforts to reinforce the management function of the Board of POINT 3 Directors was to establish the new position of audit officer, effectively enhancing the auditing Corporate Governance 78 function. Meanwhile, the Company improved and revised its risk management measures and Reinforcement of Oversight Risk Management 90 Function and Highly Transparent entrenched compliance throughout the organization for the purpose of practicing healthy and highly transparent management. Compliance 94 Annual Report 2020 Management Corporate Governance (Pages 70–95) 02 Yamaha Group Annual Report 2020 Yamaha Group Annual Report 2020 03 Value Creation by Yamaha Creation by Value OUR VALUE CREATION I. Value Creation by Yamaha Yamaha’s Path of Ambition 06 Yamaha’s Business 08 Management Vision and Value Creation Story 10 Special Feature: Enactment of Yamaha’s Value Creation Story 12 Performance Highlights 18 Sustainability Priorities and Progress 20 04 Yamaha Group Annual Report 2020 Yamaha Group Annual Report 2020 05 YAMAHA’S PATH OF AMBITION Advancement of Technology Yamaha promoted the in-house production of semiconductors with the aim of improving the sound quality of its digital musical instruments. This process led the Company to DX7 digital develop new digital musical instruments and audio equipment with proprietary LSIs, synthesizer The origins of the Yamaha Group date back to 1887, when company founder Torakusu Yamaha repaired an 1980 thereby greatly expanding the scope and geographical breadth of its operations. The Company adopted its current name of Yamaha Corporation in conjunction with its cen- imported reed organ. Since then, Yamaha has aimed to create excitement and cultural inspiration together with tennial anniversary in 1987, becoming

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