Roland Corporation · TSE:7944
Roland — Q3 2022 Earnings Presentation
31 slides from Roland's earnings presentation, Nov 9, 2022
Slide 1: Financial Results Highlights FY12/2022 Q3
Financial Results Highlights FY12/2022 Q3 November 9, 2022 Roland Corporation 『SPDｰSX PRO』 TSE Prime : 7944 A flagship model for sampling pads that meets the high demands of the professional stage
Slide 2: Executive Summary
Executive Summary ⚫ We maintain our Full-Year Forecast, which was revised up in August ➢ In Q3 (July-September), the impact of the China lockdown continued and demand softened in Europe. ➢ Increased production is proceeding toward Q4, the period of maximum demand. Order backlogs also continued to im
Slide 3: Agenda: FY12/2022 Q3 Results
1 FY12/2022 Q3 Results 2 FY12/2022 Forecast 3 Supplemental Information 3
Slide 4: FY12/2022 Q3 Results
1 FY12/2022 Q3 Results 2 FY12/2022 Forecast 3 Supplemental Information 4
Slide 5: Note: Changes in the accounting standard
<Note: Changes in the accounting standard> • Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised on March 31, 2020, effective from April 1, 2021) is newly applied to our sales and operating profit from FY2022 • Accordingly, YoY changes for FY2022 (new standard) vs. FY2021 (ol
Slide 6: Q3 Financial Results Highlights
FY12/2022 Q3 Financial Results Highlights Sales • Continued strong performance in North America, the largest market 64.6bn • In July-September, demand for low-range products softened mainly in Europe YoY1：+7.6% • Sales increased YoY due to JPY depreciation Operating Profit • For July-September, Gros
Slide 7: Consolidated Financial Results
FY12/2022 Q3 Financial Results Consolidated Financial Results ⚫ FX effects contributed to an increase in Sales, but had a negative impact on Operating Profit. ⚫ OP Margin without FX and Accounting Change impacts was 12.8% FY12/2022 Q31 FY12/2022 Q32 New Standard Old standard (same as previous year)
Slide 8: Consolidated Operating Profit
FY12/2022 Q3 Financial Results Consolidated Operating Profit Changes (vs Previous year) Factors (JPY bn) • Sales Volume change Sales Volume change Selling Price / Cost ratio change ✓ China Lockdown SG&A change ✓ Demand softening in Europe FX impact ✓ Inventory Policy for 2020/Q4-2021/Q1 Accounting C
Slide 9: Gross Profit margin in real terms continues to improve
FY12/2022 Q3 Financial Results Gross Profit margin in real terms (w/o FX and accounting change) continues to improve ⚫ Recovery continues from this year because of price optimization. In real terms, the cost increase has been covered 2021 2022 50% 40% Cost increase Price optimization 30% Q1 Q2 Q3 Q4
Slide 10: Sales by Category
FY12/2022 Q3 Financial Results Sales by Category FY12/2021 FY12/2022 Q3 Q3 YoY2 JPY mn Actual Actual YoY1 w/o FX Comments Demand for electronic pianos is higher than before Covid. Low-priced Keyboards 18,584 20,820 +13.1% +2.2% pianos is declining due to inflation, especially in Europe. E-drums were
Slide 11: Sales by Region
FY12/2022 Q3 Financial Results Sales by Region FY12/2021 FY12/2022 Q3 Q3 JPY mn YoY2 Actual Actual YoY1 w/o FX Comments Supply of mainstay electronic piano products recovered. Demand was Japan 7,399 6,917 -6.5% -6.5% generally firm, but some store sales were affected in July-September due to an incr
Slide 12: Increased production for Q4: order backlog continues to improve
FY12/2022 Q3 Financial Results Increased production for Q4: maximum demand season. Order backlog continues to improve. Malaysia Plant Production Volume Order backlog transition ⚫ The worst is over and both procurement and ⚫ Order backlog steadily improved due to increased production are improving pr
Slide 13: Inventories
FY12/2022 Q3 Financial Results Inventories ⚫ Inventories: +JPY10.6bn vs. Q4 2021 (including +JPY5.1bn from FX impact) Main items ✓ Finished goods: Production recovered; product inventory secured to maximize sales in Q4 ✓ Raw materials: Increased except for some parts with strong restrictions, such a
Slide 14: Acquired shares of Drum Workshop
FY12/2022 Q3 Financial Results Acquired shares of Drum Workshop (announced on 9/12, completed on 10/3) ※For details, please refer to the 9/12 disclosure. About DW DW Sales Breakdown Main Brands 6.1% Gross Sales • Business: Manufacturer of acoustic drums and hardware (drum stands, pedals, thrones, et
Slide 15: Strong Synergy Expected Throughout the Value Chain
FY12/2022 Q3 Financial Results Strong Synergy Expected Throughout the Value Chain 1. R&D ➢ Game Changing Technology ➢ Access DW’s US Factory for 2. Production premium & customized products Synergies 3. Brand Power ➢ Leverage Roland & DW brand strength in the market ➢ Boost DW’s acoustic sales outsid
Slide 16: FY12/2022 Forecast
1 FY12/2022 Q3 Results 2 FY12/2022 Forecast 3 Supplemental Information 16
Slide 17: Full Year – Consolidated Forecast
FY12/2022 Full-Year Forecast Full Year – Consolidated Forecast (Disclosed on August 8, 2022) ⚫ Sales and Profits increase from the previous year even without FX impact ⚫ Consolidate Drum Workshop from Q4 due to the acquisition of its shares ⚫ Since the impact for the current year is negligible, the
Slide 18: Assuming a return to the pre-Covid seasonal trend
FY12/2022 Full-Year Forecast Assuming a return to the pre-Covid seasonal trend in the current year ①Before Covid: ②During Covid: ③Post Covid: (JPY mn) Sales are highest in Q4 (normal seasonality) Production restrictions Back to normal 30,000 ・Year-end sales ・Web sales in China 25,000 ・Many new produ
Slide 19: Measures to maximize sales and profits in high sales season
FY12/2022 Full-Year Forecast Measures are implemented to maximize sales and profits during the high sales season Q4 Actions Progress Outlook • Due to launch delays, ~50% of new product contributions in Q4 this. New Product • New products that generate demand will continue to be released in Launch th
Slide 20: FX impact
FY12/2022 Full-Year Forecast FX impact ⚫ The rapid USD appreciation contributes significantly to sales, while its contribution to profits is limited ⚫ As a result, profit margin to be lower after FX impact Actual rate (2021) Forex sensitivity USD/JPY ：109.81 <impact on sales> EUR/JPY ：129.93 Currenc
Slide 21: Full Year Consolidated Operating Profit
FY12/2022 Full-Year Forecast Full Year Consolidated Operating Profit Assumption as of August 8, 2022 (YoY) Environmental changes since August 8, 2022 (JPY bn) Sales Volume change Selling Price / Cost ratio change • Sales Volume SG&A change ✓ Demand softening in Europe, slow recovery in FX impact Chi
Slide 22: Outlook for the next fiscal year and beyond
FY12/2022 Full-Year Forecast Outlook for the next fiscal year and beyond ⚫ Aiming for continuous growth even in an uncertain environment Environment Our Approach New Product • Recession concerns increase globally Service • Temporary slowdown in demand especially in the low price range Demand Mieruka
Slide 23: Supplemental Information
1 FY12/2022 Q3 Results 2 FY12/2022 Forecast 3 Supplemental Information 23
Slide 24: Update on Roland Cloud
Supplemental Information Update on Roland Cloud ⚫ Providing total solutions for enjoying music not only to existing musicians but also to Potential Customers who want to start playing music ⚫ Aiming to become a Solution Provider that removes the various “Barriers” to enjoying music Mid to Long Term
Slide 25: Topics(1): Opened the Roland Store in London
Supplemental Information Topics(1): Opened the Roland Store in London, Roland's first directly managed store ⚫ Grand opening in August 2022 on Denmark Street, the historic musical instrument district of London, England ⚫ Plans to open stores in music business centers around the world ⚫ Create opport
Slide 26: Topics(2): Donated digital pianos to 97 elementary schools
Supplemental Information Topics(2): Donated digital pianos to 97 elementary schools to commemorate 50th anniversary ⚫ Roland has made "support for educational and artistic activities" an important theme under its policy of contributing to the improvement of sustainability in society ⚫ This is intend
Slide 27: Topics(3): 50th anniversary concept models
Supplemental Information Topics(3): Concept models commemorating 50th anniversary available on a special web page ⚫ Opened a special web page to introduce the history of our e-drums, e-pianos, and synthesizers, as well as the concept models we have created to commemorate our 50th year Roland 50th An
Slide 28: Full Year - Sales by Product Category
Supplemental Information Full Year - Sales by Product Category (Disclosed on August 8, 2022) FY12/2021 FY12/2022 JPY mn YoY2 Actual % total Forecast YoY1 w/o FX Keyboards 24,792 31.0% 30,900 +25.4% +15.0% Percussion & Wind Instruments 19,053 23.8% 19,800 +5.0% -4.4% Guitar-related Products 19,093 23
Slide 29: Full Year - Sales by Region
Supplemental Information Full Year - Sales by Region (Disclosed on August 8, 2022) 2021年12月期 2022年12月期 JPY mn YoY2 Actual % total Forecast YoY1 w/o FX Japan 9,666 12.1% 9,800 +1.4% +1.8% North America 25,959 32.4% 31,300 +22.5% +6.9% Europe 24,958 31.2% 27,600 +12.2% +7.1% China 8,673 10.8% 9,700 +1
Slide 30: Key Consolidated Financials (PL, B/S)
Supplemental Information Key Consolidated Financials（PL,B/S） FY2021 FY2022 As of Dec. As of Sep. (JPY mn) (JPY mn) Q3 Q3 31, 2021 30, 2022 Net sales 60,668 64,622 Cash and deposits 8,781 8,201 Cost of sales 32,538 38,106 Notes and accounts receivable - trade 7,444 11,746 Gross profit 28,130 26,515 I
Slide 31: 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