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Companies

Yamaha to build up $220m cash flow for shareholder returns

Instrument maker to strengthen dividends and buybacks in fiscal 2019

Growing sales of musical instruments, such as guitars in the U.S., are generating cash for Yamaha.

TOKYO -- Yamaha is targeting a 150% rise in free cash flow to about 25 billion yen ($224 million) in fiscal 2019, a sum that would enable the musical instrument manufacturer to increase dividend payments and buy back stock.

Free cash flow is calculated by subtracting capital expenditures from operating cash flow. Yamaha's profitability is improving, with operating cash flow seen climbing from the 35 billion yen projected for this fiscal year to 40 billion yen in the year ending March 2020 on continued strong sales of pianos in China and guitars in the U.S. The Japanese company also expects to eliminate a tax burden related to securities sales.

Meanwhile, investment expenditures are seen leveling off. Yamaha is expected to continue with high levels of capital spending to accelerate growth. It projects a negative investment cash flow of 25 billion yen this fiscal year, but the figure is seen leveling off to just under 20 billion yen in fiscal 2019.

Yamaha's consolidated net profit grew 16% to a record 54.3 billion yen in fiscal 2017. The annual dividend rose by 4 yen to 56 yen and is set to increase by another 4 yen this year.

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