Yamaha revs up its recovery with share issue

JAPANESE motorcycle maker Yamaha is to raise up to ¥76.1 billion (£531 million) in a share sale to finance the development of fuel-efficient engines and low-cost bikes for emerging markets.

Hit by a demand slump in the United States and Europe, as well as restructuring costs, Yamaha booked a hefty net loss of 216bn (1.5bn) in 2009 and aims to break even this year.

The offering will mark the largest equity-based fund raising by a company in the Japanese motor sector since Mazda's deal to raise 98bn last October.

Players in the motor industry have entered into a costly race to cope with the demand plunge in the US, the world's largest market, as well as a shift in customer appetite towards environmentally-friendly products, including hybrid and electric vehicles.

Yamaha – whose recent models on sale in the UK include the Super Tnr and FZ1 motorbikes – yesterday said it will develop more fuel-efficient engines for motorcycles and boats to improve the competitiveness of its products, as well as electric motorcycles and motor-assisted bicycles, for which demand is seen rising.

This is the first equity fund- raising by Yamaha since it raised 40.3bn in May 2007.

The company said it will issue up to 63.25 million shares, with the public offering increasing its total number of shares outstanding by 22 per cent. Nomura Securities will manage the sale.

Yamaha said it would spend a total of 202bn on research and development in the three years to 2012 to help achieve growth in emerging countries and to accelerate the development of environmentally-friendly engines.

The company spent 62bn on research and development in 2009 and has budgeted 60bn for the current year. Under its recently compiled mid-term business plan, the company aims to raise its annual revenues to 1.4 trillion by 2012 from 1.15tn in 2009, although that would still be short of the 1.6tn achieved in 2008.