Q&A on the Performance Results for the Fiscal Year Ended March 31, 2026 (FY2026.3) (Held on May 11, 2026)

A1: While North America performed quite well in both the Musical Instruments and Audio Equipment segments, Europe fell short of expectations, particularly in grand pianos, digital musical instruments, and audio equipment for professional use. The weak performance of high-margin product lines led to a deterioration in the product mix. Changes in the regional mix also negatively impacted profits. Additionally, in North America, where sales significantly exceeded expectations, sales-related expenses—such as sales representative bonuses and logistics costs—increased. Discounts offered in Europe, where sales were sluggish, also contributed to the decline in profits. The Other Businesses segment posted a loss due to the impact of the discontinuation of the golf product business.

A2: The ¥7.7 billion increase in costs reflects price hikes for memory chips, non-ferrous metals, resins, and other materials. Memory chips have the greatest impact on this figure because they are used in digital musical instruments and audio equipment. Resins are used in musical instruments and audio equipment, while non-ferrous metals are used primarily in wind instruments. The increase in sales and production, as well as the model mix improvements, reflect price adjustments to account for U.S. tariffs and cost increases. They also reflect revenue growth driven by firm market conditions, and an improved model mix resulting from increased sales of entertainment PA equipment and other products. We have assumed a 10% tariff rate; however, the negative impact will be offset by the full-year contribution of price adjustments implemented since last year. Regarding cost increases, our basic policy is to pass them on to prices.

A3: We have secured the necessary supplies for production in the first half of the fiscal year, but we are currently coordinating with suppliers for the period beyond that. Given the difficulty in establishing a long-term outlook, we have factored a certain degree of risk into our earnings forecast for this fiscal year.

A4: Although piano sales in China continued to decline, they began to recover in the second half of the last fiscal year. Although sales-through sales bottomed out early last year, we are currently restricting sales-in to normalize inventory levels in the market. We expect growth in guitars and wind instruments this fiscal year.

A5: Key markets such as India and the Philippines are growing as expected. However, we have factored in certain risks regarding sales in the Middle East.

A6: Since announcing our mid-term management plan, we have continued to face a highly uncertain environment, including additional U.S. tariffs and escalating tensions in the Middle East. However, our core priorities remain largely unchanged. We believe it is crucial to steadily advance structural reforms in our piano and home audio businesses, which face challenges in terms of profitability. In the previous fiscal year, we were unable to increase profit margins as planned due to a slight delay in adjusting prices to appropriate levels. Although we have adjusted prices in the past in response to competitors, cost fluctuations are expected to become even more volatile in the future. Therefore, we will proactively implement price adjustments and aim to catch up during the current and next fiscal years.

A7: The piano business in China is in the process of normalizing, so inventory levels there remain higher compared to other regions. However, there are no other regional imbalances.

A8: We anticipate a 2% increase in production of musical instruments and a 4% increase in production of audio equipment.