A1: In the fiscal year ended March 31, 2022, we incurred a cost increase of about ¥12 billion, of which a little more than half was passed on to retail prices. For the fiscal year ending March 31, 2023, we expect an additional cost increase of approximately ¥5-6 billion, and we plan to pass on all costs to prices, including those costs carried over from the previous fiscal year.
Q&A on the Performance Results for the Fiscal Year Ended March 31, 2022 (FY2022.3)
Q1: Please tell us about the results of the previous fiscal year and the plan for the current fiscal year regarding the status of cost increase and cost pass-through.
Q2: What are the trends in demand in the musical instruments market? Are you aware of the reactionary decline in the category that had active stay-at-home demand and what is the status of the recovery in demand for wind instruments?
A2: We do not think there will be a significant turnaround after the stay-at-home demand. We see that demand is still strong due to the large backlog of orders and the fact that there are not many cancellations. As for wind instruments, Japan is struggling, but is recovering in other regions, with the United States at the forefront of recovery, and we believe growth can be expected.
Q3: Your view on the impact of semiconductor procurement difficulties seems to have changed since the last time. What are these changes and what is the background?
A3: As for musical instruments, we have almost completed design changes and the parts replacement, and expect that there will be minimal impact this fiscal year. On the other hand, for audio equipment, we had previously expected the impact to last until the first half of the current fiscal year. But we think that the impact will remain throughout this fiscal year and even into the first half of next fiscal year, depending on the parts, due to the increasing number of parts that are difficult to procure. We have revised our forecast as some parts have improved against the forecast, while others have been newly informed by the vendors that they cannot be delivered. In particular, LSIs for communication have been tight in demand, and in addition, because it is difficult to change the design, the impact continues for these parts.
Q4: I know that many of your instruments are made of wood. In addition to the impact of COVID-19, have you seen any impact from the global shortage of lumber, such as difficulties in exporting Russian lumber?
A4: The impact is beginning to appear. As for Spruce, a softwood that comes from Canada, the U.S., Russia, and Europe, we expect procurement of Russian lumber to become more difficult. As logging in Canada and other countries is decreasing, we are taking measures such as gradually switching to European lumber. However, the impact of both of these factors is minimal as we still have inventory for the current fiscal year, and we are in the process of taking measures for the next fiscal year.