Q1: Looking back on April, what impacts does the increase in consumption tax appear to have had?
A1: As far as we are aware, the reaction to the increase in consumption tax has thus far been roughly within the scope we expected.
The store traffic of our retailers appeared to decrease considerably in the first half of the month, but picked up again afterward. We have not seen a greater decrease than expected.
Sales for the first quarter are not expected to fall further than initially projected, as we have some outstanding piano orders that could not be delivered by March, which will contribute to sales for April and May.
Q2: Please tell us how you envision that your two new wholly owned subsidiaries, Line 6 and Revolabs, will contribute to sales and income.
What is the amount of the goodwill of the two companies?
What is the time frame in which you expect the two companies to be able to contribute to profits?
A2: On page 15 of the briefing materials, you can see that a ¥12.8 billion increase in sales is expected to occur due to the new consolidations. Line 6 accounts for around 60% of this, and Revolabs accounts for the rest.
Income for this fiscal year will decrease by ¥1.4 billion as a result of the new consolidations.
While operating income is expected for both companies, ¥2.5 billion in goodwill will be amortized for the two companies.
The new subsidiaries are expected to contribute to profits during the period of the next medium-term management plan (April 2016 to March 2019).
Q3: It seems like it will largely be possible to meet the targets in the medium-term management plan in the next fiscal year, with ROE the only target expected not to be achieved. If the expected profits are generated, are such measures as returns to shareholders being considered to make up for the ROE deficit?
A3: Our first consideration is to build income through future measures and make it possible to reach 10%.
Q6: Last year, there was a ¥3.1 billion reduction in taxes, such as corporation tax due to the reporting of deferred tax assets. Is there a chance that similar reporting of deferred tax assets may be possible this year, which will mean that income will not decrease?
If so, are you considering adjusting the dividends per share, which are currently expected to be set as ¥27?
A6: This is reported based on the taxable income for the following fiscal year; so, we consider there to be a chance that assets will be reported if it can be confirmed that the income for next year will increase.
We also plan to deliberate on the dividend amount as a result of this if the net income for this fiscal year is positive. This will be deliberated according to our dividend policies, with such factors as our financial situation taken into account.
Q7: Please give us a breakdown of the ¥3.7 billion improvement in manufacturing costs stated on page 15 of the briefing materials.
A7: This amount comprises a ¥500 million improvement in productivity overseas, a ¥2.4 billion reduction in procurement costs at overseas factories, and an ¥800 million improvement as a result of consolidation of our production bases in Japan.
Q8: Page 17 of the briefing materials shows a two-digit increase for China and other regions in the third and fourth quarters compared to the previous fiscal year. What factors are expected to have caused this?
There remains a large distribution stock of pianos in the market, of which we have a high sales ratio. Therefore, while sales growth in the first and second quarters is expected to be low, we believe that the distribution stock level will decrease and sales will improve by the second half.
The sluggishness of sales in the third and fourth quarters of last fiscal year is considered to be another reason why the sales for the third and fourth quarters of this year are so much higher than the same period last year.
Sales for the third and fourth quarters of last year struggled even more greatly than in China. An increase in sales is expected this year due to a strengthening of our sales framework and network.