A1: Core operating profit is expected to increase due to foreign exchange gains. However, this increase will be offset by slightly lower sales of musical instruments and audio equipment, as well as deteriorating profitability in the others segment, primarily due to the discontinuation of the golf product business. Operating profit includes ¥2 billion in restructuring costs for the golf product business. Meanwhile, net profit is expected to benefit significantly from foreign exchange gains.
Q&A on the Performance Results through the Third Quarter of the Fiscal Year Ending March 31, 2026 (FY2026.3) (Held on February 4, 2026)
Q1: The full-year core operating profit forecast remains unchanged from previous guidance. However, operating income has been revised downward by ¥1 billion, while net income has been revised upward by ¥2 billion. Please explain the background of each revision.
Q2: Sales of acoustic pianos are weak. What is the current production capacity? Has the inventory adjustment for digital pianos been completed?
A2: The production capacity of acoustic pianos is returning to an appropriate level. Market inventory in China is decreasing, as is inventory at our Chinese subsidiary. As for digital pianos, global market inventory has normalizing.
Q3: I understand that the market inventory of acoustic pianos in China was quite high. Even with reduced production, the inventory decreased slowly. What is the current situation?
A3: Although demand remains low, we are controlling shipments from the company, and actual sales are stable. This has led to a steady decrease in market inventory, and dealers can now place new orders. Furthermore, with bids from music universities and similar institutions occurring from December through January, the market inventory is progressing toward normalization.
Q4: It seems that core operating profits for the audio equipment segment have declined across the consumer, professional, and mobility use businesses. When do you anticipate a recovery?
A4: For home audio products, for which we are implementing structural reforms, our goal is to achieve profitability by the third year of the current medium-term plan. For professional and mobility use, we expect orders to recover from the second to third year of the plan.
Q5: Sales of audio equipment for professional use appear weak in Europe. Should this be viewed as temporary, or does it indicate a change in the assumptions underlying the midterm plan?
A5: The trend of consumers prioritizing experiences over products continues, and the entertainment-related market itself remains robust. While there is strong growth in Latin America for audio equipment for professional use, we are currently observing some investment restraint and postponements in Europe due to uncertainty about the future outlook. However, we do not view this as long-term stagnation, but rather as a discrepancy in timing. Although the high demand for digital mixers has leveled off, we are committed to achieving our mid-term goals. We plan to focus on recovering this segment and growing the speaker market, including the NEXO brand, which is experiencing significant expansion.
Q6: Regarding the withdrawal from the golf products business, please explain the reasoning behind the decision to end operations at this time. Also, please explain the anticipated impact on future performance.
A6: The golf products business is projected to post a core operating loss of ¥1.6 billion this fiscal year, which would mark the third consecutive year of losses. Due to the current state of the industry and business structure, no improvement in performance is expected in the foreseeable future, which led to the decision to withdraw. Sales activities will continue through June. After that, operations will focus solely on after-sales service and product support for contracted professionals while gradually winding down activities. Consequently, profits are expected to improve starting next fiscal year.
Q7: Slide 7 shows a tariff impact of ¥9.1 billion and a recovery of ¥5.4 billion through countermeasures. A simple calculation suggests a recovery rate of approximately 60%, which indicates a low price pass-through rate. Which product categories are making progress in price pass-through, and which are lagging behind? Also, please explain your future pricing strategy.
A7: Recovery from tariff impacts remains incomplete. Price adjustments for musical instruments have progressed for keyboards and guitars, but wind instruments began slightly later due to adjustments starting in Q3. Audio equipment has seen relatively successful adjustments. We adjust pricing considering market conditions and competitor movements to balance sales volume and market share. We will continue to make appropriate decisions based on ongoing circumstances.
Q8: What is your approach to price adjustments outside of the U.S.?
A8: While the pace of price optimization slowed slightly in regions with weaker market conditions, as well as during our efforts to regain market share, the year-over-year effect was clearly positive. We will continue to advance this initiative steadily.
Q9: Please explain the impact of surging memory chip prices and tight supply and demand conditions on performance.
A9: There will be no impact on this fiscal year's performance. Although memory chips are heavily used in audio equipment and cost increases are a factor for next fiscal year, we are prioritizing securing components through advance procurement. We will provide an updated assessment of the impact in our guidance for the next fiscal year.
Q10: What is your view on the year-end inventory forecast of ¥152 billion?
A10: Year-end inventory is about ¥3 billion lower than the previous forecast, excluding the effects of foreign exchange. However, it is about ¥4.5 billion higher than the initial ¥140 billion projection from the beginning of the period, primarily due to increased production of digital musical instruments. We will continue to monitor the situation and respond flexibly by focusing on improving production efficiency and avoiding stock shortages.