President Hiroshi Kubo
TSE 1st Section
1-7-2, Suehiro-cho, Ome-shi, Tokyo, Japan
End of December
Total Market Cap
Dividend Yield Est.
* The share price is the closing price on September 6. The number of shares issued, DPS, EPS and BPS were taken from the brief financial report of the 2Q of FY 12/21. ROE was taken from the previous term results.
December 2017 Act.
December 2018 Act.
December 2019 Act.
December 2020 Act.
December 2021 Est.
*Unit: million yen or yen. Net income is profit attributable to owners of the parent. Hereinafter the same shall apply. FY December 2017 was a 9-month one. The DPS of 40 yen for FY December 2018 includes the 5 yen dividend for commemorating the company’s 10th anniversary.
This report introduces YAMABIKO CORPORATION’s earnings results for the Second Quarter of Fiscal Year ending December 2021 and other financial details.
Table of Contents
2.Second Quarter of Fiscal Year ending December 2021 Earnings Results
3.Fiscal Year ending December 2021 Earnings Forecasts
<Reference 1：Outline and Key Initiatives of the Medium-term Management Plan 2022>
<Reference 2：Concerning Corporate Governance>
- In the second quarter of the term ending December 2021, sales increased by 12.4% year on year to 76.3 billion yen. Domestic sales rose by 2.7% year on year. Sales of industrial machinery were sluggish. On the other hand, agricultural machinery sales grew significantly, and outdoor power equipment sales performed well, partly thanks to the government's new budgeting for business continuity subsidies. Overseas sales increased 18.2% year on year. As a result of the favorable weather and spending longer time at home due to the spread of the COVID-19, sales of outdoor power equipment grew in their main markets of the Americas and Europe. Also, sales of industrial machinery in North America, which had been sluggish the previous year, recovered. Operating income rose by 13.6% year on year to 6.8 billion yen. Gross profit margin declined, but gross profit was up by 9.8% year on year, absorbing the rise in SG&A expenses. Ordinary income increased by 21.2% year on year due to foreign exchange gains. Both sales and profits reached record highs in the first half of the year. On a quarterly basis, sales were almost flat compared to the previous quarter and operating income slightly declined.
- The company revised the full-year forecasts upwardly again. This was due to factors including the overseas demand for outdoor power equipment continuing to exceed expectations from the previous year, and domestically, the agricultural machinery being driven by the government's business continuation subsidy. Sales are expected to increase by 3.1% year on year to 136 billion yen. In Japan, the government's economic policy positively affected the first half of the year. However, this impact is predicted to fade in the second half, leading to a significant decline in sales for the full year. Overseas, sales will be strong in both the United States and Europe. Operating income is projected to decrease 11.9% year on year to 8.5 billion yen. Although the favorable overseas sales will boost profits due to the increase in sales volume, costs such as transportation costs and domestic and overseas development investment will augment. The dividend forecast has also been revised from the previous forecast of 35.00 yen/share to 38.00 yen/share. The expected payout ratio is 25.9%.
- The forecasts have been revised upwardly again. Sales have been revised upwardly by 2 billion yen in Japan, the Americas, and Europe. Operating income was revised upwardly by 800 million yen due to an increase in sales and an improvement in profit margin, despite the increase in SG&A expenses. In particular, regarding the profit margin, the company anticipates seeing the impact of the cost reduction activities as raw material and other material costs increase, and we would like to see the progress of these activities. In addition, even after the upward revision, the progress rate of profits is still at a high level. Therefore, we would like to pay attention to whether it will be higher than the forecasted profits.
- If the company achieves the forecasts of the current term, it will significantly clear the target of the Medium-term Management Plan 2022 one year ahead of schedule. Moreover, the company will work to gain a market share in the global DC products and promote digital transformation by passing on the DNA of its founders, which is "responding to the changing environment" and "creativity and hard work." We want to keep an eye on these efforts.
1. Company Overview
YAMABIKO CORPORATION develops, manufactures and sells outdoor power equipment (e.g., trimmers, chain saws etc.), agricultural machinery (e.g., pest control equipment, sloop mower), industrial machinery (e.g., generators, welders etc.) in Japan and overseas. The overseas sales occupy about 60% of their total sales. In terms of manufacturing and selling outdoor power equipment, the company not only has the top share in Japan but also a large share in the US. Its strength is owning unique production technology, a variety of product line-ups, and an excellent technical support system.
1-1 Corporate History
YAMABIKO CORPORATION started as a joint holding company established in December 2008 through a merger between KIORITZ CORPORATION (listed in the first section of the Tokyo, Osaka and Nagoya Stock Exchanges), which dealt with agricultural machinery in Japan and outdoor power equipment overseas, and Shindaiwa Corporation (listed in the second section of the Tokyo Stock Exchange), which dealt with outdoor power equipment and industrial machinery globally. In October 2009, YAMABIKO CORPORATION established its current business entity by merging both KIORITZ and Shindaiwa.
KIORITZ CORPORATION was established in 1947 in Tokyo and originally called KIORITZ AGRICULTURAL EQUIPMENT CORPORATION. It has been a leading company in both agricultural equipment business through which they developed “Japan’s first speed sprayers” and outdoor power equipment business through which they developed “Japan’s first motorized backpack trimmers” and “the world’s first handheld power blowers”. Furthermore, since its establishment, it has been focusing on self-development of engines for outdoor power equipment. The accumulative number of engines produced in 2008, before the merger, was about 40 million.
Shindaiwa Corporation was established in 1952 in Hiroshima and was originally called Asamoto Precision Manufacturer. It not only developed “Japan’s first electric chain saws” for the outdoor power equipment business, but also manufactured and sold engine generators and engine welders for the industrial machinery business. Its strength was high technological development capabilities, as can be seen in the development of the world’s first mixed fuel 4-cycle engine.
In the late 1990s, with growing concern about global warming caused by greenhouse effect gas, and as engine’s emission gas control became stricter in the Western countries, especially in the US, research and development expenses increased to comply with the new regulations. In the 2000s, the medium and small-sized companies that could not afford these expenses went through rapid industry restructuring on a global scale in the outdoor power equipment industry.
Moreover, the business environment became further uncertain due to a flood of cheaper products from newly emerging countries and diversification of customers’ needs.
Under these circumstances, the two companies concluded a business and capital alliance agreement in May 2007 on the premise of future business integration in order to strengthen the vitality to survive and win the intensifying competition.
In December 2008, YAMABIKO CORPORATION was established as a joint holding company to achieve better efficiency and expansion for all its businesses including development, manufacturing, logistics, sales and management. In October 2009, YAMABIKO CORPORATION conducted an absorption-type merger of KIORITZ and Shindaiwa and became the current business entity.
The company name “YAMABIKO” derives from the mountain god, “Yamabiko”. Its corporate philosophy is to “create the bridge that bonds people and nature with the future”. This expresses the company’s willingness to contribute to the conservation and improvement of the nature and environment.
1-2 Corporate Philosophy, etc.
YAMABIKO Group’s corporate philosophy is formed from three elements: “Essence”, “Purpose of Existence” and “Code of Conduct”.
“Essence”, which incorporates both “Purpose of Existence” and “Code of Conduct”, expresses in a single word what YAMABIKO Group aims to be as a company, and the essence of its corporate activities.
“Purpose of Existence” sets out the role and responsibilities of YAMABIKO Group in society and makes a commitment to this.
“Code of Conduct” defines the attitude of each YAMABIKO Group employee in relation to their work.
(From the Company’s website)
*Create the bridge that bonds people and nature with the future.
*Offer the best products and service in the world.
*Support people and companies committed to sustaining nature and the environment.
*Lead the industry through the creation of new markets and customers, ultimately resulting in growth for tomorrow.
*Provide a sense of fulfillment for all persons affiliated with YAMABIKO CORPORATION.
*Observe change and anticipate the future.
*Combine fact with theory.
*Break the status quo through innovation and creativity.
*Think and act with the spirit and vitality of a globally competitive company.
*Conduct oneself with sincerity and grace.
In addition, the company established 14 detailed measures that augment the Code of Conduct to facilitate the implementation of business activities in accordance with the corporate philosophy.
1-3 Market Environment
Although no detailed statistics about the outdoor power equipment market is available, it is known that the largest market is in North America including the US, followed by Europe. In Japan, about 1 million outdoor power equipment/tools are sold per year. The indicators that may impact the company’s trend in the earnings include “number of housing start”, “commodity (grain) price”, and “crude oil price” for the overseas market and “rice price” for the Japanese market.
The company recognizes that there are two global manufacturers of outdoor power equipment in Europe (Germany and Sweden).
1-4 Business Description
YAMABIKO Group operates businesses in three sectors: Outdoor power equipment, Agricultural machinery and Industrial machinery. These three segments are reported.
(Developed by us based on YAMABIKO CORPORATION’s financial report.)
“Outdoor Power Equipment Business”
YAMABIKO CORPORATION manufactures and sells handheld or backpack-style forestry and landscape maintenance machinery powered by small internal combustion engines. The main products include chain saws, trimmers, power blowers, hedge trimmers, etc.
In November 2014, the company acquired “Belrobotics SA,” a Belgian venture company, which develops, manufactures, and sells robotic mowers for professional use. (In Jan. 2017, Belrobotics SA was renamed “Yamabiko Europe SA” for the purpose of enhancing sales in Europe.)
Based on the accumulated experiences and know-how and excellent development capabilities that meet the customers’ needs, YAMABIKO CORPORATION continues to produce high performance, highly durable and high-quality engines.
(Gasoline engine system)
The engines for outdoor power equipment such as chain saws and trimmers are mainly 2-stroke gasoline engines. As described later, the company’s excellent capability to develop engines is one of their most important features/strengths.
Brief information concerning the company’s engines is provided below because knowing the gasoline engine system and characteristics of each engine type helps to understand the business of the company,
Basically, a gasoline engine generates power by moving the piston down with the combustion of gasoline through the following 4 steps.
The air-fuel mixture is sucked in a cylinder.
The air-fuel mixture in the cylinder is compressed as the piston moves up.
When the air-fuel mixture is compressed the most, a spark will be generated to ignite. Expansion from burning pushes the piston down.
The burned gas is discharged outside.
Reciprocating motion of the piston is converted into revolution by a crankshaft. The rotating motion turns the rotating shaft of axel of a car or revolving shaft of chain saws.
The gasoline engine is largely categorized in two types (2-stroke engine and 4-stroke engine), depending on the number of reciprocating motions by piston to complete “1 cycle” of the 4 steps.
One power cycle is completed by 2-stroke. In other words, a power is generated by “1 piston reciprocating motion, 1 crankshaft revolution”.
First stroke (piston moving up): “Intake” and “compression” of air-fuel mixture occurs.
Second stroke (piston moving down): Piston moves down due to the “expansion” of air-fuel mixture and “exhaust” occurs later.
One power cycle is completed by 4-stroke. A power is generated by “2 piston reciprocating motions, 2 crankshaft revolutions”.
First stroke (piston moving down): “Intake” of air-fuel mixture occurs.
Second stroke (piston moving up): “Compression” of air-fuel mixture occurs.
Third stroke (piston moving down): Piston rapidly moves down as a result of “expansion”.
Fourth stroke (piston moving up): Combusted gas is “exhausted”.
The advantage of the 4-stroke engine is the easy control of intake and exhaust. However, its structure is complicated compared to a 2-stroke engine, because the intake/exhaust valves of a 4-stroke engine are installed at the cylinder head, while intake and exhaust of a 2-stroke engine occur at the port that is located on the body of the cylinder. Because of this structure, the weight of a 4-stroke engine is heavier than a 2-stroke engine.
On the other hand, a 2-stroke engine has a larger ratio of burning engine oil and fuel in order to make smooth piston motion and blow-by of air-fuel mixture. This means it releases more harmful substances in the exhaust gas as compared with a 4-stroke engine. However, because of its simple structure and smaller number of parts, the 2-stroke engine can be smaller and lighter. The overhaul is also easier for the same reasons. Therefore, a 2-stroke engine is the most appropriate engine for outdoor power equipment.
“Agricultural Machinery Business”
YAMABIKO CORPORATION manufactures and sells pest control equipment for Japan and agricultural harvesting equipment for North America.
Its major products include pest control equipment (speed sprayers, mounted equipment for cropland pest control, power sprayers), sloop mower, soy and potato harvesters, etc.
YAMABIKO CORPORATION’s technological strengths in this business segment are KIORITZ’s blowing, spraying, and pumping technology as well as technology to create small and light equipment. These technological capabilities have been built up over many years at KIORITZ.
<Mounted equipment for cropland pest control>
“Industrial Machinery Business”
YAMABIKO CORPORATION manufactures and sells equipment for construction, civil engineering and iron works.
Its major products include generators, welders, lighting equipment, cutting machines and high-pressure washers.
Technological strengths in this business segment are established by the R&D knowledge accumulated since YAMABIKO CORPORATION started business as Shindaiwa, and such strengths can be found in alternator designing capability enhanced by their efforts for alternative current motor development, as well as technologies for electronic control and noise prevention.
“Accessories and Parts”
The company manufactures and sells accessories and the parts for after purchasing service for various machines and equipment.
The profitability in this segment is the highest among all segments.
<Nylon trimmer line>
YAMABIKO CORPORATION was established based on the integration of two companies. The products of both companies are well recognized both in Japan and overseas for many years. Therefore, YAMABIKO CORPORATION maintains the brand names as KIORITZ, Shindaiwa, and ECHO.
YAMABIKO CORPORATION is proactively investing in marketing activities as well as exploring new sales routes to enhance its brand values.
3. Development structure
Each business segment is working on development with a focus on the following priority issues.
Priority issues for development
Outdoor power equipment
*To comply with exhaust gas regulations at the global level
*To comply with fuel permeability regulations in North America
*To comply with noise and vibration regulations in Europe
*To create smaller and lighter equipment with low noise, low fuel consumption and high durability
*To enhance safety
*To achieve reduction of drift, proper quantity of spraying, high performance, and easy operation
*To create smaller and lighter machinery with low noise, high performance, high function, and low fuel consumption
The exhaust gas regulations are expected to be further tightened in the future. Therefore, addressing them is of paramount importance.
In addition, the company is conducting research on control technology in the field of electronic control.
4. Production structure
The company has 3 plants (Yokosuka, Morioka, and Hiroshima) and 4 production related subsidiaries in Japan and a total of 10 production related subsidiaries in the USA, Belgium, China and Vietnam.
5. Sales route and sales methods
The company supplies its products in over 90 countries for about 28,000 stores.
More than 60% of the sales are from overseas sales.
Seven sales subsidiaries, which were separated mainly by region, were merged into YAMABIKO JAPAN CO., LTD. in April 2017, with the aim of allocating management resources in a more efficient manner, strengthening sales capabilities, and improving customer services through a unified management system and integral operation of business assets.
YAMABIKO JAPAN CO., LTD sells the products to distributors, ZEN-NOH (National Federation of Agricultural Cooperative Associations), home centers, and construction machinery rental companies, etc. Through them, the products are supplied to the end users including farmers/foresters, companies in the construction, civil engineering and iron industries and landscapers.
The company presents their products in exhibitions in collaboration with dealers and distributors and facilitates sales through demonstration and test drive.
Furthermore, the company accompanies dealers to visit end users to understand their needs and utilize the information for product development.
<North American market>
ECHO Incorporated Group, one of the company’s subsidiaries, sells the products to The Home Depot (*) and other distributors, through which the products are supplied to the end users such as landscapers, homeowners, farmers/foresters, and companies in the construction/civil engineering industry.
*The Home Depot: The Home Depot, Inc. is the world’s largest home center and construction products and services. It was established in 1978. Sales in 2020 were US$132.1 billion and net income was US$12.8 billion. It has over 2,296 stores in the US, Canada and Mexico. It is listed on the New York Stock Exchange. (Excerpted from the company’s website)
The Home Depot classifies their products into GOOD, BETTER and BEST in accordance with the quality. It is only YAMABIKO CORPORATION that supplies the high-quality BEST products to The Home Depot. This is one of the proofs that the company’s products are highly reputed in the North American market.
In the Central and South American market, ECHO Incorporated, one of the company’s subsidiaries, sells the products to the distributors of each country, and made their products supplied to the end users through dealers.
Yamabiko Europe SA in Europe and ECHO MACHINERY (SHENZHEN) Co., Ltd. in China, both of which are subsidiaries of Yamabiko, sell products to distributors in their respective countries. Asia and other areas, YAMABIKO CORPORATION sells the products to the distributors in each country.
The overseas dealers display the products by brand, and salesperson conducts person-to-person sales while understanding the needs of the end users.
The home center also displays the products by type and price. The end users purchase the products based on the needs, budget and image they have from advertisement, etc.
1-5 Characteristics and Strengths
①Unique production and technological capabilities and vertically integrated production
The most important characteristics and strengths of the company are the “unique production and technological capabilities and vertically integrated production capabilities”.
Their mainstay 2-stroke engines that are mounted to the outdoor power equipment are manufactured by an integrated production system solely by the company from development, procurement of aluminum, molding, parts production, processing to assembly, which is said to be unique anywhere in the world. The power sources for the products of agricultural machinery and industrial machinery are also engines, but they are mostly procured externally.
The company have solved various issues with their unique technologies including iron plating and electric discharge processing. This results in the quality improvement and production capacity improvement of the company.
Specifically, the company has established the following technologies.
<Example 1: Iron plating>
Plating is a surface covering method in which the surface of a metal is covered by a thin layer of another metal. For engine production, inside of the cylinder should be plated to avoid abrasion caused by dispute with a piston.
The conventional method is to use chrome plating from durability and cost perspectives. However, chrome plating gives negative impact on the environment. Its production efficiency is also low. Therefore, there was an increasing demand for different materials for plating.
The company has been working on “iron plating” since 1978 to reduce environmental load.
Initially, they could produce only hundreds per day. However, as a result of enhanced productivity, enhanced plating precision, and reduction of environmental load, the company now has the iron plating technology that does not require finish processing. Their technology has drastically smaller environmental load. Furthermore, their daily production capacity increased significantly, reaching thousands. The company holds 5 patents related to iron plating.
<Example 2: Electric discharge processing>
As described above, a 2-stroke engine requires a smaller number of parts and has a simpler structure as compared to a 4-stroke engine. Therefore, it is most suitable for the “handheld” and “backpack-style” outdoor power equipment. However, it releases some fuel mixed gas. In order to respond to the increasingly strict exhaust gas regulations globally, the company was faced with a challenge to control the flow of the fuel mixed gas for efficient burning.
In order to achieve it, the company explored the production methods to modify the internal shape of the cylinder (by installing a wall between the fuel mixed gas passage and internal shape of the cylinder).
A “wall” can be created by die-casting (*), but it requires a horizontal hole to lead the fuel mixed gas to a combustion chamber. With die-casting, it was impossible to create a horizontal hole. It was also difficult to carry out machining due to small space in the chamber.
The company came up with the idea of using “electric discharge processing (*)” to create a form while taking advantage of die-casting.
Although electric discharge processing enabled to create complicated forms, it was costly due to long processing time and high electrode consumption. The company conducted research on processing conditions for a large volume production and developed designs of special electrode form. As a result, it succeeded in producing a large volume of products, by shortening processing time, saving personnel, lowering the cost of electrode and enhancing efficiency.
Having obtained three patents related to electrode processing, the company has established the unique technology that cannot be imitated by other companies.
Die-casting is one of the metal mold casting methods. By injecting melted metal in a metallic mold, a large amount of casting with high precision can be produced within a short period of time. It enables to create a thin product at low cost.
(*) Electric discharge processing
Electric discharge processing is a machine processing method to remove a part of the surface of a non-processed workpiece through repeated electrode discharge at short cycles between electrode and the non-processed workpiece. It enables to cut out complicated outline on extremely hard steel.
With “advanced capabilities for creation” such as the above-mentioned technologies, the Company not only complies with exhaust gas regulations but also responds to various needs including weight reduction, enhancing durability and cost reduction. It succeeded in developing and mass-producing “a light weight and highly durable 2-stroke engine that meets the exhaust gas regulations”.
While many companies in the world are forced to leave the industry because they cannot address these issues, YAMABIKO CORPORATION continues to make further development as a leading manufacturer.
②Unique research and development capabilities for each business segment
The company’s capability to address environmental issues is high. The company possesses one of the highest number of US Environmental Protection Agency (EPA)-accredited engines in the world.
Furthermore, not only for outdoor power equipment, the company also has unique research and development capabilities for the agricultural machinery and industrial machinery.
Based on the technological capacities that have been accumulated by KIORITZ and Shindaiwa for many years, the company is further brushing up the capabilities.
③Extensive product lineup and expansion of sales network and domestic services network
The company has an extensive lineup of products that meet various needs of the customers in each of the three business segments.
It also currently supplies the products to about 28,000 stores in more than 90 countries across the world.
As a result of merging KIORITZ and Shindaiwa, YAMABIKO CORPORATION’s product lineup and sales network were further expanded.
With the aim of improving the satisfaction level of diversifying users, the company established “Yamabiko Service Shop” inside Japan in 2013, and is operating service systems for maintenance, repair a failure, etc., which are not offered by competitors, throughout Japan. The number of affiliated shops is 342 as of Mar.2020.
④Excellent technical support system
The company also provides excellent technical support in order to enhance credibility of the products and strengthen the relationships with distributors and dealers.
In addition to offering about 40 service schools annually both in Japan and abroad, in 2018, the company started to provide a new e-learning course using its originally developed teaching materials targeted at overseas distributors in an attempt to enhance their repair skills and deepen their understanding of the mechanism of the engines.
Furthermore, the European subsidiaries of the company recently organize road show-style education and training sessions for nurturing trainers at distributors, and lecture classes designed for distributors’ salespersons, endeavoring to further fortify its service capabilities.
⑤High product share
By demonstrating the above-mentioned characteristics and strengths (1-5-1) to (1-5-4) in an integrated manner, the company is becoming highly competitive at a global level. For the outdoor power equipment business, the company has the top market share (more than 30%) in Japan and is ranked high in North America, the largest market.
1-6 Return on Equity (ROE) Analysis
Net income margin [%]
Total asset turnover [times]
ROE rose to 11.4% in the previous fiscal year, thanks to margin improvement owing to sales growth.
2. Second Quarter of Fiscal Year ending December 2021 Earnings Results
2-1 Consolidated Business Results
2Q of FY 12/20
Ratio to sales
2Q of FY 12/21
Ratio to sales
Quarterly Net Income
*Unit: million yen. Net income means profit attributable to owners of parent.
Sales and profit increased
Sales increased by 12.4% year on year to 76.3 billion yen. Domestic sales rose by 2.7% year on year. Sales of industrial machinery were sluggish. On the other hand, agricultural machinery sales grew significantly, and outdoor power equipment sales performed well, partly thanks to the government's new budgeting for business continuity subsidies. Overseas sales increased by 18.2% year on year. As a result of the favorable weather and spending longer time at home due to the spread of the COVID-19, sales of outdoor power equipment grew in their main markets of the Americas and Europe. Also, sales of industrial machinery in North America, which had been sluggish the previous year, recovered.
Operating income rose 13.6% year on year to 6.8 billion yen. Gross profit margin declined, but gross profit was up by 9.8% year on year, absorbing the rise in SG&A expenses.
Ordinary income increased by 21.2% year on year due to foreign exchange gains. Both sales and profits reached record highs in the first half of the year.
On a quarterly basis, sales were almost flat compared to the previous quarter and operating income slightly declined.
2-2 Trends by Segment and Region
2Q of FY 12/20
Ratio to sales
2Q of FY 12/21
Ratio to sales
Outdoor Power Equipment
Outdoor Power Equipment
*Unit: million yen. The composition ratio for operating income means the ratio of operating income to sales.
◎Outdoor Power Equipment
2Q of FY 12/21
*Unit: million yen
A reactionary decline in demand occurred due to the impact of cash handouts in the previous year. However, sales increased mainly due to the sales growth of chain saws and power blowers.
In North America and Europe, which are the company's major markets, sales of accessories and major products such as chain saws, trimmers, and power blowers continued to augment against the backdrop of the longer time spent at home due to the spread of the COVID-19.
2Q of FY 12/21
*Unit: million yen
Sales of tractor operated boom sprayer were favorable due to the government's business continuation subsidy from the beginning of the year. Also, sales of sloop mowers, mowers, and elevating work platforms, which contribute to labor-saving and efficiency, increased.
Soy harvesters performed well in North America.
2Q of FY 12/21
*Unit: million yen
Sales activities stagnated as exhibitions were cancelled due to the spread of the COVID-19 and construction work was delayed. Furthermore, there was a reactionary decline in the demand for emergency generators for gas stations, which grew in the previous year.
Demand for generators in North America, which fell sharply last year, has recovered.
2Q of FY 12/21
*Unit: million yen
Snowplow sales and maintenance service revenue augmented.
2-3 Financial Standing and Cash Flows
◎Main Balance Sheet
End of December 2020
End of June 2021
End of December 2020
End of June 2021
Property, plant and equipment
Investment, Other Assets
Total Liabilities and Net Assets
*Unit: million yen. Payables include electronically recorded accounts payable.
Total assets increased by 13.1 billion yen from the end of the previous fiscal year to 120.3 billion yen, mainly due to an increase in receivables.
Total liabilities increased by 7.9 billion yen to 55.2 billion yen due to an increase in payable, etc.
Net assets increased by 5.2 billion yen to 65.0 billion yen due to an increase in retained earnings and foreign currency translation adjustments.
As a result, the equity ratio decreased by 1.7 points from the end of the previous fiscal year to 54.1%.
2Q of FY 12/20
2Q of FY 12/21
Operating Cash Flow
Investing Cash Flow
Free Cash Flow
Financing Cash Flow
Term End Cash and Equivalents
*Unit: million yen
Due to an increase in receivables, the surplus of operating CF and free CF decreased.
The cash position has improved.
◎ The selection of "Prime Market" in the new market category
Regarding the transition to the new market category scheduled for April 2022, in July 2021, the company received the preliminary judgment results from the Tokyo Stock Exchange Co., Ltd. related to the company's compliance with the listing maintenance standards in the new market category. The results confirmed that the company meets the listing maintenance standards of the "Prime Market."
Thus, the Board of Directors decided to select the new market category "Prime Market" and specify this in its application to the Tokyo Stock Exchange.
The company will proceed with the prescribed procedures for applying for the selection of the new market category scheduled to take place at the Tokyo Stock Exchange from September this year.
3. Fiscal Year ending December 2021 Earnings Forecasts
3-1 Earnings Forecasts
FY 12/ 20
Ratio to sales
FY 12/ 21 Est.
Ratio to sales
Progress rate against full-year forecast
*Unit: million yen. The forecast was those released by the company.
FY 12/21 Est.
*The dollar is based on a rate assumed by YAMABIKO CORPORATION
Full-year forecasts are revised upwardly again
The company revised the full-year forecasts upwardly again. This was due to factors including the overseas demand for outdoor power equipment continuing to exceed expectations from the previous year, and domestically, the agricultural machinery being driven by the government's business continuation subsidy.
Sales are expected to increase 3.1% year on year to 136 billion yen.
As for the domestic market, the first half of the year saw the effects of the government's economic policies, but the second half of the year will see the effects disappear, and sales are expected to decline significantly for the full year.
Overseas, in the U.S., demand from the previous year continues to be higher than expected. Inventories at distributors in North America and elsewhere are shifting slightly so far, and demand is expected to remain strong in the second half. On the other hand, the normalization of logistics operations is anticipated to take until the end of the year.
In Europe, demand continues to be strong, especially in Western Europe, and the securing of logistics shipping capacity and resolution of rising freight rates are both projected for the end of the year as well as for the America.
Other overseas markets are expected to recover from the previous fiscal year.
Operating income is projected to decrease 11.9% year on year to 8.5 billion yen. Although the favorable overseas sales will boost profits due to the increase in sales volume, costs such as transportation costs and domestic and overseas development investment will augment.
There is no change in exchange rate assumptions.
The dividend forecast has also been revised from the previous forecast of 35.00 yen/share to 38.00 yen/share. The expected payout ratio is 25.9%.
3-2 Key Initiatives for This Term
The company will focus on the following five initiatives.
① Reorganization of the development organization
Until now, the company's development functions have been separated into its three segments: outdoor power equipment, agricultural machinery, and industrial machinery. The company added three cross-divisional organizations to this and a new development organization, Engineering Research Center, to create a new matrix organization under the umbrella of the Development Integrated Headquarters.
Moreover, the company expanded the North American Battery R&D Center and established a task force for improving the profitability of the agricultural machinery segment.
Under the reorganized development functions, the company will develop various models of popular functions in the market, such as functions that utilize IoT and control systems to promote the development of high-value-added products.
The company will accelerate the dialogue with the market through organic collaborations with sales organizations, improve development efficiency by organizing development protocols and BOMs (Bill of Materials), establish a global platform management organization for battery products, and continue optimizing the organization.
The company will develop safe, secure, and highly operable products and auxiliary machines that can be used in smart agriculture and improve profitability through the task force. It also aims to commercialize maintenance and services.
A wide range of models will be equipped with a system that automatically adjusts the spray range.
Outdoor power equipment
Since the spread of the COVID-19, high demand has continued, mainly in overseas, and the Group is bringing together all its resources to meet this demand.
Global DC (direct current power supply) products are scheduled to be launched in the next term. While still focusing on engine products, the company will promote carbon neutrality by expanding DC products and working on e Fuel, an environmentally friendly synthetic fuel.
In addition, the company will continue to develop engine products with low environmental impact and reconsider its global brand strategy.
To contribute to personnel reduction and labor-saving, the company will work on the development of functions and products utilizing IoT systems for the reduction of management work at construction sites and such.
The company will also create a product range that contributes to the recovery after damages caused by frequent and severe natural disasters.
Furthermore, the generator with the remote monitoring function can check the operating status of a generator in remote locations. Thus, it can contribute to labor-saving in maintenance and inspection.
② Improving the management base
The president of the U.S. subsidiary has been appointed as the managing officer to promote the globalization and diversity of the management team.
An outside corporate auditor was added to the Nomination and Compensation Committee to ensure objectivity and transparency.
The personnel system is scheduled to be revised in January 2022.
Performance-based incentives for managing officers will be adopted during this term.
Managing officers will be strategically placed intensively on site.
The diversity of directors and corporate auditors will be ensured.
③ Enhancing IT infrastructure and digital transformation
The company renovated the IT infrastructure and IT network infrastructure. It also continues to make security investments.
The company is in the process of defining the conditions and requirements for ERP improvements.
It started the preparations for introducing actual costs.
The digital transformation remote monitoring service is being verified.
The groupware was replaced.
A global security system will be built by the end of the year.
After executing the planned BPR, the improved ERP will start operation in 2023.
Yamabiko LINK (tentative name) is scheduled to be launched by the end of this year.
The utilization of general-purpose business applications and tools and the improvement of business efficiency will be promoted.
④ Expansion of sales and improvement of profitability
To expand sales, the company launched a new model of the professional product, X series. The development of global DC products is also progressing steadily.
The company continues its cost reduction activities to improve profitability. In addition to establishing a task force to enhance the profitability of the agricultural machinery segment, Suzhou Yamabiko Agricultural machinery was liquidated, and the plants were consolidated. The company implemented strategic placement of production bases.
To expand sales, the company will continue to launch products mainly for professionals. Global DC products are scheduled to be launched worldwide next term.
The company plans to pass on the increase in materials, raw materials, and distribution costs to the selling price and return to the black by reviewing the portfolio of agricultural machinery products to improve profitability. In addition, it will work on systematization and service commercialization of industrial machinery products utilizing IoT.
⑤ Sustainable management of Yamabiko Group
The company has promoted efforts toward carbon neutrality and compliance with the new Corporate Governance Code.
They will prepare to comply with the TCFD requirements and disclose the GHG emissions.
They will also aim to adhere to the level of governance required in the Prime Market.
The company believes that it will contribute to solving environmental and social problems through its business activities. The company aims to improve corporate value and achieve the SDGs goals by further instilling and deepening its corporate philosophy of " Create the bridge that bonds people and nature with the future."
（Source: the company）
The forecasts have been revised upwardly again. Sales have been revised upwardly by 2 billion yen in Japan, the Americas, and Europe. Operating income was revised upwardly by 800 million yen due to an increase in sales and an improvement in profit margin, despite the increase in SG&A expenses.
In particular, regarding the profit margin, the company anticipates seeing the impact of the cost reduction activities as raw material and other material costs increase, and we would like to see the progress of these activities.
In addition, even after the upward revision, the progress rate of profits is still at a high level. Therefore, we would like to pay attention to whether it will be higher than the forecasted profits.
If the company achieves the forecasts of the current term, it will significantly clear the target of the Medium-term Management Plan 2022 one year ahead of schedule. Moreover, the company will work to gain a market share in the global DC products and promote digital transformation by passing on the DNA of its founders, which is "responding to the changing environment" and "creativity and hard work." We want to keep an eye on these efforts.
<Reference 1：Outline and Key Initiatives of the Medium-term Management Plan 2022>
(1) Policies and Key Initiatives Set in the Mid-term Management Plan 2022
① Basic policy
The basic policy set in the previous Mid-term Management Plan will be continued.
We will contribute to the development of society with our strong management foundation and sustainable growth, giving happiness to everyone connected to Yamabiko.
We will enhance our corporate value by creating innovative products and expanding manufacturing, sales, and services globally, while also adapting to the diverse set of values of everyone connected to Yamabiko.
② Goals and strategies in each segment
As to the major market environment, the demand for engine products is expected to remain strong in the professional market for outdoor power equipment where long-lasting products that can tolerate heavy loads are demanded, the company will shift to the professional market further.
As for agricultural machinery and industrial machinery, the Japanese agricultural and construction industries are seeing the shortage of manpower and the aging of workers, so labor-saving and energy-saving products are in demand.
◎Outdoor power equipment business
The priority measures are (1) to develop engine products ahead of the strict environmental regulations, (2) to monetize the robot business, and (3) to augment the lineup of DC products.
14.5 billion yen
77.4 billion yen
The company will enhance marketing strategies targeted at professionals, strive to grow sustainably, expand its presence in the market of engine products, and aim to expand its market share, which has been increasing steadily.
As priority measures, the company will augment the lineup of “X Series,” which is a highly functional product lineup for professionals and continue to enhance digital marketing activities. The company will strive to enhance its brand recognition, by diffusing professionals’ comments on the latest products via social media, optimizing marketing activities for each generation, and posting ads in baseball (MiLB) and football (MSL), which attract users.
At the Home Depot, which is the primary sales route, the company will concentrate on the sale of flagship products, expand sales area, and continue effective expansion of product sales for a limited period of time.
In addition, the company will put energy into the cultivation of the U.S. market for robot products.
The company will promote the sales of products –conforming to the needs of the market and enhance its brand recognition level.
As priority measures, the company will promote the sales of “X Series,” which is the lineup for professionals, and augment the lineups of battery products and engine products that comply with regulations on emissions, promote the sales of robot products, cultivate the relative market, and enhance the market recognition through digital marketing activities, etc.
In order to enhance the performance of robot products further, the company will reorganize Quimesis S.R.L. into an equity-method affiliate (capital contribution rati 24.9%) and proceed with software development.
As priority measures, the company will launch top handle chain saws as a new DC product, continue effective campaigns, promote the launch of labor-saving, efficient products (robotic mowers), and enhance the sales via home centers.
◎Agricultural Machinery Business
16.2 billion yen
4.6 billion yen
Specifically, the company will engage in efforts to reduce production costs and improve profitability by integrating development, production, and sales, expanding sales routes, continuing effective campaigns, and responding to smart agriculture.
◎Industrial Machinery Business
13.7 billion yen
5.4 billion yen
As there is the initiative of investment in infrastructure for preventing and mitigating natural disasters and promoting national resilience, the company will continue effective sales campaigns and enhance the sale to rental companies, so as to meet the increased demand adequately.
The company will build a market on a full scale targeting at wide-area rental companies in North America, promote sales of welders targeted at resource markets in Russia, and build new sales networks in Asia and Africa.
③ Key initiatives
◎Total cost reduction and product quality improvement
The company will keep improving production efficiency for further cost reduction.
The company will aim to establish a new production system for shortening manufacturing lead time and reducing inventory of products and also improve quality control continuously for actualizing “absolute quality.”
◎Strengthening of service capabilities
The company will strive to enhance its service capabilities, which would lead to the improvement in profitability.
The company will concentrate on the augmentation and expansion of sales of highly profitable service parts and accessories, the augmentation promotion of service materials for each product, the strengthening of training systems, the reduction of total logistics costs, the decrease of inventory, etc.
(2) Capital investment, R&D costs, and depreciation
（Source: the company）
Capital investment is estimated to be 13.3 billion yen, exceeding the total amount in the previous Mid-term Management Plan: 10.4 billion yen. (revised at the end of December 2020) While in cost control, the company will invest in R&D as planned.
(3) Numerical goals
The company aims to achieve “sales of 134 billion yen and an operating income of 8 billion yen” in the term ending December 2022.
While monitoring the situation of COVID-19, the company will make continuous efforts.
（Source: the company）
（Source: the company）
<Reference 2：Concerning Corporate Governance>
*Composition of the organizational structure, directors and auditors
Company with an auditor
7 (including 2 outside director)
4 (including 2 outside auditors)
◎Corporate Governance Report
Last update date: July 26, 2021
YAMABIKO CORPORATION (“the company”) actively promotes various measures to enhance the corporate value of the entire Group, including an optimization strategy and supervision function at the Group level, as well as the allocation of resources in order to achieve the Group’s global management strategy and growth.
To realize these objectives, the company implements sound and highly transparent Group management in order to deliver value to all of its stakeholders, including regional companies, shareholders, customers and employees. We do this by building a robust corporate culture based on our Corporate Philosophy and Code of Conduct, while enhancing and strengthening a system of corporate governance focused on Group compliance and risk management.
Our board of directors is composed of 7 directors, including 2 outside ones, and makes important decisions regarding our group’s management policy and strategy, and the guidance and supervision for business administration of group companies. In the board of directors, directors monitor and oversee the work of other directors and report their own performance regularly at their meetings. In order to put resolutions of the board of directors into action accurately and swiftly, the management strategy council deliberates them to a sufficient degree.
Our company adopted the auditor system, organizing the board of auditors with a total of 4 auditors, composed of 2 corporate auditors and 2 outside ones.
Auditors participate in the meetings of the board of directors, the management strategy council, and operating officers, and other important in-house meetings, to audit the business execution of directors, and secure the effectiveness of audit in cooperation with accounting auditor and the internal audit section, in accordance with the regulations for the board of auditors and the standards for auditors’ audit.
＜Reasons for Non-Compliance with the Principles of the Corporate Governance Code (Excerpts)＞
Reasons for not following the principle
【Supplementary principle 4-11-1． View on the structure of the Board of Directors, etc.】
It is considered that the Board of Directors has human resources with a good balance of knowledge, experience, and abilities, but we will continue to systematically train human resources to ensure diversity, including that of gender.
<Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)>
[Principle 1-4 the strategically held shares]
(1) Policy Regarding Strategic Shareholding
Our company conducts business in landscaping, agriculture, construction and civil engineering, and a variety of other fields inside and outside Japan.
Therefore, it is required for our company to cooperate with a number of firms involved in each of our businesses. We will strategically hold shares when we have judged that doing so will contribute to improving our corporate value in the medium- and long-term. Meanwhile, when we have determined that the significance of strategically holding shares is not sufficient, we will have dialogue with a relevant company, and then sell or reduce all or part of the strategically held shares by comprehensively taking into account various factors, such as the impact on the market.
Each year, regarding the strategically held shares of each listed company, our Board of Directors carefully verifies a multitude of matters, including the purposes of strategically holding the shares, such as maintenance and strengthening of partnerships, and economic rationality, and then determines whether or not our company will continue holding the shares and reviews the number of shares to hold strategically.
Since the adoption of the Corporate Governance Code in 2015, our company has reduced the number of corporations in which we hold shares from 25 to 17 after verifying them.
(2) Criteria for Exercising a Voting Right in Regard to Strategic Shareholding
Our company properly exercises our voting rights on the strategically held shares after making comprehensive judgment by taking into consideration not only business performance, but also whether or not strategically holding shares will contribute to properly strengthening the corporate governance framework and improving shareholder value, and the impact on our company. Furthermore, we hold dialogue with a relevant company as necessary regarding the contents of a proposal.
[Supplementary principle 4-11-3 Evaluation of the effectiveness of the Board of Directors]
Our company evaluates the effectiveness of the Board of Directors as a whole every year in order to improve the Board’s operation. In FY 2020, we conducted an analysis and evaluation of the directors and corporate auditors through individual questionnaires, and confirmed that the Board of Directors is effectively fulfilling its roles and responsibilities as a whole. Meanwhile, as some issues were recognized in terms of structure and management of the Board, we discussed measures the Board should take to address them going forward. We will continue to make efforts to further enhance the Board’s effectiveness.
[Principle 5-1 Policies Regarding Constructive Dialogue with Shareholders]
Our company implements the following measures as policies for maintaining a framework and making efforts to promote constructive dialogue with shareholders and investors.
(1) In order to promote the understanding of our company and contribute to the sustainable improvement of corporate value by disclosing company information fairly and in a timely manner, IR personnel (including corporate planning officers) actively engage in dialogue with shareholders and investors.
(2) With the corporate planning department at the helm, other relevant internal departments that assist in dialogue with investors, such as the general affairs, accounting, and sales departments, conduct their duties while actively collaborating with one another to create constructive dialogue, for example, by producing and reviewing materials to be disclosed and sharing necessary information.
(3) As a means of dialogue other than individual meeting with shareholders and investors, we regularly hold briefings for financial highlights and plant tours for institutional investors, and distribute booklets summarizing our company’s topics and business performance to shareholders. Furthermore, we use feedback and requests from shareholders and investors to improve the content of our website. We plan to improve our news releases page in the future.
(4) For information sharing, we give the thoughts of shareholders understood in dialogue to directors and relevant departments as feedback via the distribution of reviews and reports in a meeting body.
(5) Our company has set up the Insider Trading Management Regulation to prevent insider trading and thoroughly manage information on insider trading such as promoting the understanding and awareness within our company by posting articles on insider trading at new employee training program and in our company’s internal bulletin.
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