Q&A on the Performance Results through the First Quarter of Fiscal Year Ending March 31, 2027 (FY2027.3) (Held on August 4, 2026)

A1: We got off to a solid start, partly due to the launch of new products. New products such as the B Series upright pianos and digital musical instruments contributed to revenue, with Electone performing well in Japan and portable keyboards performing well in emerging countries. The improvement in core operating profit was driven by two factors. First, the core operating profit margin deteriorated in the first quarter of the previous year due to a temporary suspension of shipments to avoid high U.S. tariffs. Second, there were improvements in the product mix this quarter due to the impact of new products and price optimization.

A2: There have been no major changes in the market, and demand for musical instruments remains stable. We believe our revenue growth is primarily attributable to the impact of new products and price optimization. In North America, both sell-in and sell-through are strong. In China, the economic slowdown continues, leading to weak demand for guitars; there are also signs of weakness in upright pianos, where there remains a sense of excess inventory in the market. However, grand pianos and digital musical instruments are performing well, and we believe that, for musical instruments as a whole, we can still achieve full-year revenue growth. For digital musical instruments, there is no sense of excess inventory in any region, and thanks to the impact of new products, sales are solid across all regions and are exceeding our plans. We plan to launch 31 new musical instrument models starting in the second quarter and expect to maintain this upward revenue trend going forward.

A3: In the consumer use, revenue was strong in North America, and in the professional use, it was strong in Japan; however, in Europe and China, both segments struggled due in part to the economic downturn. In the mobility use, revenue grew in Japan and others regions. The audio equipment segment features many new products launched in June, and with the impact of new products such as digital mixers and speakers, we expect both revenue and core operating profit to increase going forward.

A4: The breakdown of the cost increases in the initial assumptions was approximately 700 million yen in labor costs and approximately 7 billion yen in increased procurement costs for components such as memory chips, resins, and non-ferrous metals. Currently, memory chip prices are rising even more sharply, and we expect procurement costs to gradually increase going forward, potentially swelling to about 10.5 billion yen year-on-year for the full year. Although we have secured the necessary volume of memory chip components for this fiscal year, it remains the primary driver of the cost increase. In addition, we anticipate additional burdens of approximately 400 million yen due to new U.S. tariffs and about 1 billion yen due to increased logistics costs; however, we intend to absorb all of these through price optimization.

A5: Originally, we anticipated offsetting the cost increases through model mix and price optimization, and price adjustments of approximately 1.3% for musical instruments and 1.7% for audio equipment are proceeding as planned. However, costs have since risen further, and we now anticipate that an additional adjustment of nearly 2% will be necessary. While there may be a slight time lag, the adjustment will not be uniform. We will carefully examine each model based on its specific characteristics—including price points even within the same product group—and take early action to secure the originally planned core operating profit while considering the impact on sales volume.

A6: We applied for a refund of $46 million; of that amount, approximately $27 million (4.3 billion yen) has been confirmed, while approximately $19 million remains pending. At this time, we are recognizing only the confirmed portion as other income. We generally intend to use these funds for growth investments, including sales promotion initiatives.

A7: We are currently working to establish a framework for systematically executing strategic investments. We will swiftly put in place a governance framework covering areas such as project management and investment evaluation so that we can move forward with investments at an early stage and share our progress with you all.