Yamaha's European Motorcycle Sales Plummet on Debt Crisis, Stronger Yen
Yamaha Motor Co., the world’s second-largest motorcycle maker, said sales in North America and Europe may fall twice as much as forecast as a spreading debt crisis damps demand. The shares fell the most in three months.
“From May, there has been a sudden impact from the Greek crisis,” Chief Executive Officer Hiroyuki Yanagi said in an interview in Tokyo yesterday. Combined sales in North America and Europe may decline as much as 20 percent this year, compared with an earlier estimate for a drop of about 10 percent, he said.
Slumping demand for motorcycles in developed countries is forcing Yamaha to slash jobs and close plants. The company will shut five factories in Japan and one making boats in the U.S. by 2012, adding to the closure of a motorcycle plant in Italy last year. Yamaha will cut as many as 1,000 jobs this year after eliminating 1,100 positions in 2009.
The company last year posted its first loss since the year ended April 1984 as sales tumbled 45 percent in North America and 25 percent in Europe. Yamaha’s motorcycle sales in the two markets made up 25 percent of its global two-wheeler revenue in 2009, down from 31 percent a year earlier. Declining demand for large leisure-oriented models in the U.S., such as the 1.3-liter $19,690 Royal Star Venture, contrasts with a recovery in car sales.
Sales in Asia excluding Japan this year may exceed a 14 percent growth forecast made in February, Yanagi said. Yamaha expects to break even this year, and Yanagi declined to comment on whether it would revise its forecast before the company’s second-quarter earnings announcement on Aug. 4.
After the company posted 7.5 billion yen ($85 million) in first-quarter net income on May 12, “there has been expectation in the market that the company will raise its forecast,” said Kohei Takahashi, an analyst at JPMorgan Chase & Co in Tokyo. A reiterated forecast “would be a negative surprise,” he said.
Honda Motor Co., the world’s largest motorcycle maker, said in an April presentation it expects its two-wheeler sales in North America and Europe to drop less than 1 percent to 385,000 units in the fiscal year ending March 31.
Harley-Davidson Inc., the largest U.S. motorcycle maker, may report sales in the quarter ended June 30 fell to $1.13 billion from $1.28 billion a year earlier, according to the average of eight analyst estimates compiled by Bloomberg.
Yamaha fell 4.9 percent, the most in more than three months, to close at 1,146 yen in Tokyo trading, compared with a 1.1 percent drop in the benchmark Nikkei 225 Stock Average.
The euro has weakened beyond Yamaha’s currency hedging position and may crimp earnings in the second half of the year, Yanagi said.
Yamaha based its earnings forecast on an exchange rate of 128 yen per euro. So far this year, the Japanese currency has averaged about 121 to the euro, gaining 18 percent. A stronger yen cuts the value of repatriated earnings from exports.
The company is investing proceeds from a share sale in April to develop lower-priced motorcycles to boost sales in emerging markets. The company’s biggest such market is Indonesia, and growth will come mostly in China and Vietnam, Yanagi said.
Yamaha, which helped develop the V10 engine for Toyota Motor Corp.’s Lexus LFA supercar, aims to cut costs by 60 billion yen between this year and December 2012, according to its mid-term plan.