Slide 1: FY12/2020 Financial Results Presentation
FY12/2020 Financial Results Presentation February 12, 2021 Roland Corporation “Facet Grand Piano” Concept model for the future electronic piano Presented at CES2020, the world's largest digital technology trade show
Slide 2: Agenda
1 Company Overview 2 Mid-Term Plan (FY12/2020 – FY12/2022) 3 FY12/2020 Results 4 FY12/2021 Guidance 5 Supplemental Information 2
Slide 3: Company Overview
1 Company Overview 2 Mid-Term Plan (FY12/2020 – FY12/2022) 3 FY12/2020 Results 4 FY12/2021 Guidance 5 Supplemental Information 3
Slide 4: The Only Pure Digital Musical Instruments Player with a Wide Range of Products
Company Overview The Only “Pure Digital” Musical Instruments Player with a Wide Range of Products Video & Pro Audio Keyboards Other Video Headphones and Speakers Electronic Electronic Equipment (V-MODA Brand) 4% Pianos Accordions 7% Creation-related 12% 28% Products & Services Sales 売上高 Arranger Key
Slide 5: High Market Share in Major Product Categories
Company Overview High Market Share in Major Product Categories Market Share by Product in the United States (2019) Electronic Drums Guitar Effector Electronic Piano Guitar Amp. 19% 16% 12% 58% #1 #1 #2 #2 5 Source: U.S. MI Sales Trak Report(2019)
Slide 6: Track Record of Game Changer Inventions
Company Overview Track Record of “Game Changer” Inventions Electronic piano Rhythm machine USB audio interface with touch sense with micro computer Guitar modeling system Electronic cajon “MIDI” the universal standard Desk top music Hard Disk Electronic Guitar Multi-Track Digital wind WADAIKO synthe
Slide 7: Established Value Creation Management through MBO
Company Overview Completely Retuned Organization through Management Buyout (MBO) Established Value Creation Management through MBO Faster Better Stronger Growth Profitability Management Sales CAGR1 OP Margin2 Financial Established Performance “Value Creation (Pre/Post MBO) -6.0% 6.0% 3.2% 11.1% Mana
Slide 8: Mid-Term Plan (FY12/2020 – FY12/2022)
1 Company Overview 2 Mid-Term Plan (FY12/2020 – FY12/2022) 3 FY12/2020 Results 4 FY12/2021 Guidance 5 Supplemental Information 8
Slide 9: Starting New Growth Phase Following Structural Reform & Growth Investment
Mid Term Plan (FY2020-2022) Starting New Growth Phase Following Completion of Structural Reform & Growth Investment Vision Bring the WAKUWAKU creative experience to everyone in the world Higher growth Quality Best in Class vs. market Profit Growth Capital Efficiency Target ROE (FY12/2022) Sales OP N
Slide 10: Why We Can Grow (1): Global Strong Footprint in Growing Overseas Market
Mid Term Plan (FY2020-2022) Why We Can Grow (1): Global - Strong Footprint in Growing Overseas Market North Japan Europe China Other America Market $0.9bn $8.8bn $3.7bn $1.9bn - Size1 What's growing? Market Growth Growth -6.2% +2.4% +1.1% +8.4% - Rate2 Overseas Sales Sales Roland Ratio 85% Sales by
Slide 11: Why We Can Grow (2): Pure Digital Focus on Expanding Electronic MI Market
Mid Term Plan (FY2020-2022) Why We Can Grow (2): Pure Digital - 100% Focus on the Expanding Electronic MI Market Electronic MI Acoustic MI What's growing? US market Piano1 +4.8% +0.7% Sales CAGR +4.0% Market Growth (2010-2019) Drums2 -1.2% Function Size, weight, volume control, etc. Why? Novelty Pro
Slide 12: Capture the Growing Market with Global × Pure Digital
Mid Term Plan (FY2020-2022) Capture the Growing Market with “Global × Pure Digital” ⚫ Musical instruments market had continued to grow steadily through 2019 ✓ Driven by overseas market ✓ Relatively higher growth in electronic instruments than acoustic How we see ⚫ While COVID-19 severely hampered th
Slide 13: Four Key Initiatives in the Mid-term Plan
Mid Term Plan (FY2020-2022) Four Key Initiatives in the Mid-term Plan 1. Produce Develop high value-added products and services that only we can provide Customer / market creation through continuous engagement with our 2. Reach enthusiastic fans -Marketing Driven Company- 3. Deliver Realize the worl
Slide 14: 1. Produce: Value-added Products & Services that Only Roland Can Deliver
Mid Term Plan (FY2020-2022) 1. Produce: Value-added Products & Services that Only Roland Can Deliver ✓ Create Game Changer Products leveraging deep knowledge of our customers ✓ Improve Competitiveness by utilizing the BMC common platform ✓ Extend Product Life by supplying apps & content and increase
Slide 15: 2. Reach: Creating Enthusiastic Fan Base
Mid Term Plan (FY2020-2022) 2. Reach: Creating Enthusiastic Fan Base - Marketing Driven Company - ✓ Upgrade Customer Engagement • Leverage digital marketing to maximize lifetime value • Establish global support system: ZENDESK • Shift to online events where people can easily participate ✓ Global Con
Slide 16: 3. Deliver: Aim at the World's Best Supply Chain
Mid Term Plan (FY2020-2022) 3. Deliver: Aim at the World’s Best Supply Chain to Minimize Shortage & Excess Inventories ✓Achieve the world's best SCM • Clarification and unified management of SCM-related data • Production planning linked to the fluctuations in demand • Develop logistics network to ba
Slide 17: 4. Support: Further Enhancement of Governance, Mieru-ka and HR System
Mid Term Plan (FY2020-2022) 4. Support: Further Enhancement of Governance, “Mieru-ka” and HR System ✓ Create environment where employees Engage and feel their development • HR system that promotes growth and career development • Enhance bonds by activating communication • Diversification of work sty
Slide 18: FY12/2020 Results
1 Company Overview 2 Mid-Term Plan (FY12/2020 – FY12/2022) 3 FY12/2020 Results 4 FY12/2021 Guidance 5 Supplemental Information 18
Slide 19: FY12/2020 Financial Results Overview
FY12/2020 Financial Results Overview Highlights Sales • Record-high sales for 2nd consecutive year 64.0bn • Tailwind from stay-at-home demand while facing supply side challenges (YoY ＋ 1.3%) • Piano & Keyboard and North America & Europe were strong Operating Profit • Managed to maintain gross profit
Slide 20: Consolidated Financial Results
FY12/2020 Financial Results Overview Consolidated Financial Results FY12/20191 FY12/20202 (JPY mn) Actual % of Sales Actual % of Sales YoY Sales 63,247 100.0% 64,044 100.0% +1.3％ Gross Profit 30,240 47.8% 30,379 47.4% +0.5％ SG&A 24,971 39.5% 23,264 36.3% -6.8％ Operating Profit 5,269 8.3% 7,115 11.1%
Slide 21: Sales: Managed to Record YoY Growth Despite Supply Side Challenges
FY12/2020 Financial Results Overview Sales: Managed to record YoY Growth Despite Supply Side Challenges 1Q 2Q 3Q 4Q Annual Demand remained strong throughout the year in all regions, supported by online sales Demand 64,044 63,247 Reviewed sales/inventory plans to Temporary factory shutdown by COVID-1
Slide 22: Sales by Category
FY12/2020 Financial Results Overview Sales by Category FY12/2019 FY12/2020 JPY mn YoY1 Actual % total Actual % total YoY w/o FX Increase/decrease factors Portable digital pianos continue to perform globally, due in Keyboards 17,104 27.0% 17,842 27.9% +4.3% +6.2% part to Stay-at-Home demand Percussio
Slide 23: Sales by Region
FY12/2020 Financial Results Overview Sales by Region FY12/2019 FY12/2020 JPY mn YoY1 Actual % total Actual % total YoY w/o FX Increase/decrease factors Electronic drums and videos increased. Mid/High-priced electric pianos Japan 9,237 14.6% 9,066 14.2% -1.9% -1.8% mainly sold at brick & mortar store
Slide 24: Consolidated Operating Profit
FY12/2020 Financial Results Overview Consolidated Operating Profit Changes (vs. previous year) Factors (JPY bn) • Sales increase Sales increase • Increase in marginal profit due to higher sales Margin decline (Sales growth w/o FX impact: +3.0%) Fixed cost reduction FX impact • Margin decline +0.02 •
Slide 25: Key Financial Indicators
Key Financial Indicators Shareholders Equity / Total Assets D/E Ratio ROE 70% 25.0% 0.7x 22.7% 60% 0.6x 20.0% 50% 0.5x 43% 0.5x 15.0% 40% 0.4x 30% 0.3x 10.0% 20% 0.2x 5.0% 10% 0.1x 0% 0.0x 0.0% 2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 Maintained sufficient Optimal cost of capital
Slide 26: FY12/2021 Guidance
1 Company Overview 2 Mid-Term Plan (FY12/2020 – FY12/2022) 3 FY12/2020 Results 4 FY12/2021 Guidance 5 Supplemental Information 26
Slide 27: FY12/2021 Full Year Forecast
FY12/2021 Full Year Forecast Highlights Sales • Record high sales for 3rd consecutive year as the electronic MI business1 • With new lifestyles post COVID-19, “People who want to start playing or 68.4bn resume playing" will expand the market size (YoY + 6.8%) • Year-on-year growth expected in all pr
Slide 28: Consolidated Financial Results Forecast
FY12/2021 Full Year Forecast Consolidated Financial Results FY12/20201 FY12/20212 (JPY mn) Actual % of Sales Actual % of Sales YoY Sales 64,044 100.0% 68,400 100.0% +6.8% Gross Profit 30,379 47.4% 33,000 48.2% +8.6% SG&A 23,264 36.3% 25,500 37.3% +9.6% Operating Profit 7,115 11.1% 7,500 11.0% +5.4%
Slide 29: Sales by Category Forecast
FY12/2021 Full Year Forecast Sales by Category FY12/2020 FY12/2021 JPY mn YoY1 Actual % total Actual % total YoY w/o FX Outlook and Initiatives Stay-at-Home demand to continue, and portable Keyboards 17,842 27.9% 18,800 27.5% +5.4% +6.2% electronic digital pianos keep performing strongly V-Drum Acou
Slide 30: Sales by Region Forecast
FY12/2021 Full Year Forecast Sales by Region FY12/2020 FY12/2021 JPY mn YoY1 Actual % total Actual % total YoY w/o FX Outlook and Initiatives Expand digital pianos to consumer electronics market. Japan 9,066 14.2% 9,200 13.4% +1.5% +1.5% Acquire new customers through digital marketing North Increase
Slide 31: Topics (1)
FY12/2021 Full Year Forecast Topics (1) Hot new product lines VAD Series ZENOLOGY V-Drums Acoustic Design Software Synthesizer Electronic drums that pursued acoustic-like appearance with a strong presence and performance feel ZENOLOGY makes it possible for hardware and software compatible with the Z
Slide 32: Topics (2)
FY12/2021 Full Year Forecast Topics (2) Good Design Award 2020 Online marketing activities Go:LIVECAST TAIKO-1 Held an online music event to show our support for instrumentalists, musicians, and event staff who are Livestreaming Studio for Smartphones Electronic Taiko Percussion forced to limit musi
Slide 33: Consolidated Operating Profit Forecast
FY12/2021 Full Year Forecast Consolidated Operating Profit Changes (vs. previous year) Factors (JPY bn) Sales increase • Sales increase Margin improvement • Increase in marginal profit due to higher revenue (Sales growth w/o FX impact: +7.5%) Fixed cost increase FX impact • Margin improvement • Alth
Slide 34: Capital Policy and Shareholder Returns
FY12/2021 Full Year Forecast Capital Policy and Shareholder Returns Healthy and efficient • Management with capital discipline, considering both healthy balance sheet and capital efficiency Balance Sheet • Maintain debt capacity (borrowing capacity) for future growth investments • Major investments
Slide 35: Supplemental Information
1 Company Overview 2 Mid-Term Plan (FY12/2020 – FY12/2022) 3 FY12/2020 Results 4 FY12/2021 Guidance 5 Supplemental Information 35
Slide 36: Supplementary Information
5 Supplementary Information 1 Company Overview 2 Our ESG Initiatives 3 Consolidated Financial Figures 4 Supplemental Materials for Mid-Term Plan 5 Market Data 36
Slide 37: Corporate Overview
Corporate Overview Established April 1972 Manufacturing, sales and import/export of electronic musical instruments, electronic Main business devices and related software Manufacturing facilities Japan, China1, Malaysia Sales JPY64,044million (FY12/2020) Number of employees 2,601(consolidated) (as of
Slide 38: Global Network
Global Network Development / production / sales Distribution management Production Japan Sales Regional headquarters 1 Roland Corporation Americas 2 Roland Corporation U.S. 3 V-MODA, LLC 4 Roland VS LLC 1 01 5 Roland Canada Ltd. 1 6 Roland Brasil Importação, 0 Exportação, Comércio, 0 1 Representação
Slide 39: Our ESG Initiatives
5 Supplementary Information 1 Company Overview 2 Our ESG Initiatives 3 Consolidated Financial Figures 4 Supplemental Materials for Mid-Term Plan 5 Market Data 39
Slide 40: Our ESG Initiatives
Our ESG Initiatives Music brings enrichment to the heart. We hope to enrich everyone through “Electronic musical instruments” so that people can enjoy music easily, without being restricted by time or place of performance. Theme (E/S/G) Roland's Approach Specific initiatives and measures Environment
Slide 41: Consolidated Financial Figures
5 Supplementary Information 1 Company Overview 2 Our ESG Initiatives 3 Consolidated Financial Figures 4 Supplemental Materials for Mid-Term Plan 5 Market Data 41
Slide 42: Key Consolidated Financials (PL)
Key Consolidated Financials（PL） (JPY mn) 12/2017 12/2018 12/2019 12/2020 Net sales 57,320 61,153 63,247 64,044 Cost of sales 30,587 31,536 33,006 33,664 Gross profit 26,733 29,617 30,240 30,379 Selling, general and 20,534 23,762 24,971 23,264 administrative expenses Operating profit 6,199 5,854 5,26
Slide 43: Key Consolidated Financials (B/S)
Key Consolidated Financials (B/S) (JPY mn) 12/2017 12/2018 12/2019 12/2020 Cash and deposits 12,387 9,052 8,815 10,832 Notes and accounts receivable - trade 8,531 8,065 8,913 5,930 Inventories 13,405 13,142 14,215 18,075 Other current assets 1,539 1,918 1,120 1,220 Total current assets 35,864 32,178
Slide 44: Key Consolidated Financials (CF)
Key Consolidated Financials (CF) (JPY mn) 12/2017 12/2018 12/2019 12/2020 Profit before income taxes 4,546 4,392 4,080 5,846 Depreciation 1,254 1,078 1,537 1,568 Amortization of goodwill 65 59 4 4 Decrease (increase) in trade receivables (172) (677) (846) 2,172 Decrease (increase) in inventories (64
Slide 45: Key Consolidated Financials (Sales by product / region)
Key Consolidated Financials (Sales by product / region) Ratio Product (JPY mn) 12/2017 12/2018 12/2019 12/2020 (12/2020) Keyboards 14,126 15,551 17,104 17,842 27.9% Percussion & Wind 12,363 14,351 14,205 14,620 22.8% Instruments Guitar-related Products 14,596 16,411 16,744 16,712 26.1% Creation-rela
Slide 46: Supplemental Materials for Mid-Term Plan
5 Supplementary Information 1 Company Overview 2 Our ESG Initiatives 3 Consolidated Financial Figures 4 Supplemental Materials for Mid-Term Plan 5 Market Data 46
Slide 47: Mid Term Plan (FY2020-2022)
Mid Term Plan (FY2020-2022) By Product Category By Region Operating Profit (JPY bn) North America (JPY bn) Sales increase (JPY bn) Keyboards Europe Margin improve Percussion & Wind Instruments Japan Fixed cost increase Guitar-related Products Creation-related China FX impact Products & Services Othe
Slide 48: Piano: Expanding market share of growing entry and mid/high-end models
Piano: Expanding market share of growing entry and mid/high-end models Growing Markets Market Creation Market Share Gain Growing electronic MI market (US)1 Roland's Strategy (USD mn) Harnessing stronger MI demand CAGR +4.8% CAGR +0.7% with “Stay-at-Home” 307 283 287 ✓ Gaining market share in portabl
Slide 49: Electronic Drums: Driving electronization as the market leader
Electronic Drums: Driving electronization as the market leader Growing Markets Market Creation Market Share Gain Electronization rate is only 15% (US)1 Roland’s Strategy 2010 2019 100% Driving the revitalization of the 80% electronic drums market 60% 89.6% 84.5% Acoustic ✓ Launch high value-added pr
Slide 50: Guitar-related: Expand market share through Game Changers
Guitar-related: Expand market share including customer creation through Game Changers Growing Markets Market Creation Market Share Gain Growing guitar market (US)1,2 Roland's Strategy (USD mn) CAGR +7.2% Activating sleeping players and promoting play at home 1570 Guitar Effector ✓ Expansion of stand
Slide 51: Developed Countries: Optimization of Customer Touch Points
Developed Countries: Drive Electronization & Expand Market Share through optimization of Customer Touch Points Growing Markets Market Creation Market Share Gain Track record of solid growth Roland’s Strategy Roland Sales (North America2+Europe3) (JPY mm) Superior value-proposition / CAGR +7.3% Brand
Slide 52: Emerging Countries: Targeting Double-digit Sales Growth
Emerging Countries: Targeting Double-digit Sales Growth by Market Development and Local Strategy Growing Markets Market Creation Market Share Gain High Sales Growth in China Roland’s Strategy (JPY mn) Roland Sales (China) Reap huge demand CAGR +26.4% (FY2016-19) ✓ Further Market Cultivation through
Slide 53: Market Data
5 Supplementary Information 1 Company Overview 2 Our ESG Initiatives 3 Consolidated Financial Figures 4 Supplemental Materials for Mid-Term Plan 5 Market Data 53
Slide 54: Musical Instrument Market by Region
Musical Instrument Market by Region (USD bn) 20 16.9 17.1 16.7 16.7 16.6 16.3 16.2 16.0 16.1 15.8 1.9 1.8 1.8 2.1 1.8 1.7 2.0 1.8 15 1.6 1.8 0.9 0.9 2.2 2.2 1.5 1.1 1.0 2.2 1.2 1.9 2.2 1.8 1.3 1.4 1.5 1.6 1.7 1.1 1.2 1.0 3.7 10 3.7 4.1 4.0 4.0 3.7 3.7 3.7 4.0 4.0 5 8.3 8.8 7.3 7.5 7.5 7.7 7.8 7.8 7.
Slide 55: Musical Instrument Market by Region (Local Currency basis)
Musical Instrument Market by Region (Local Currency basis1) CAGR CAGR (USD bn) (CY2010-CY2018) (EUR bn) (CY2010-CY2019) +2.4% +1.1% North America Europe 12 5 10 8.8 4 8.3 3.4 3.5 7.7 7.8 7.8 7.9 3.3 3.2 3.3 8 7.3 7.5 7.5 3.0 3.1 3.1 3.1 7.1 2.9 3 6 2 4 1 2 0 0 2010 2011 2012 2013 2014 2015 2016 2017
Slide 56: Electronic Ratio (U.S. Retail Musical Instrument market)
Electronic Ratio (U.S. Retail Musical Instrument market) CAGR (USD mn) (CY2010-CY2019) Piano1 600 536 535 550 554 591 100% 523 515 502 501 500 473 80% Electronic: 232 272 276 283 +4.8% 400 211 231 251 185 219 253 60% 300 49.1% 49.5% 49.8% 48.0% 40% 46.9% 42.1% 43.7% 44.1% 43.2% Acoustic: 200 39.2% 2
Slide 57: Forward-looking statements disclaimer
This material contains information that constitutes “forward-looking statements” of Roland Corporation. Statements other than those related to past or present facts are all statements that constitute forward-looking statements. Such forward-looking statements are based on our assumptions and decisio