COMPANY RESEARCH AND ANALYSIS REPORT

MonotaRO Co., Ltd.
3064
Tokyo Stock Exchange First Section

19-Oct.-2021
FISCO Ltd. Analyst

Hideo Kakuta

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. FY12/21 2Q non-consolidated results. . .. ......................................................................................................

01

2. Consolidated outlook for FY12/21...............................................................................................................

02

3. Established a specialist organization for business with large companies and strengthened thestructure. Is maintaining the excellent 1H results.........................................................................................

02■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 03■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 05■Topics------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 07
1. Strengthened the structure by establishing the Enterprise Business specialist organization forbusiness with large companies. . ............ ......................................................................................................

07

2. The Ibaraki Chuo Satellite Center (SC) has made a steady start. Succeeding in maintaining the
distribution cost ratio at 6.1%, the same level YoY......................................................................................

08■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 09

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/█ SummaryIn FY12/21 2Q, net sales and every profit item grew by more than
20% YoY. For corporate customers, the sales price per order, thepurchase frequency, and the number of customers all increased.
Established a specialist organization for business with large
companies and strengthened the structure
MonotaRO Co., Ltd. <3064> (hereinafter “the Company”) is headquartered in Amagasaki, Hyogo Prefecture. The
Company conducts online direct marketing of maintenance, repair, and operating (MRO) products* for production
plants and construction work and automobile upkeep through the internet.
*	Maintenance, repair and operating (MRO) products refer to products used in the manufacturing process such as abrasives,
drills, and work gloves, which are for internal use by companies and not for resale. The nature of such materials is highly
individual for each industry.

A key characteristic of the Company’s business model is that it sells MRO products at a single price. This policy
has won the Company strong support mainly from small and medium-sized companies, which are usually forced toaccept unfair prices from sellers in a conventional market. In this way, the Company has established a solid position
as a unique online direct marketing operator in a niche market. In recent years, business with large companies has
been growing rapidly. The Company handles more than 18 million items for a customer base of 6,153,000 accounts(as of June 30, 2021) and sells about 610,000 items with same-day shipment (including roughly 479,000 items forwhich the Company has its own inventories).
1. FY12/21 2Q non-consolidated results
In the FY12/21 2Q non-consolidated results, net sales increased 21.7% year on year (YoY) to ¥88,448mn, operating
income rose 26.1% to ¥12,071mn, ordinary income grew 26.4% to ¥12,120mn, and net income increased 26.1%
to ¥8,401mn, so net sales and every profit item maintained growth of over 20%. In both the mainstay online direct
marketing business for companies and the purchase management system business, the sales price per order, thepurchase frequency, and the number of customers all increased. In the same period in the previous fiscal year,
while there was an increase in individuals wanting to buy sanitation products due to the novel coronavirus pandemic(hereinafter, COVID-19), sales to companies, including in the three main industries (manufacturing, construction andengineering work, and vehicle maintenance) were limited. However, a rebound at the beginning of FY12/21 saw
both the sales price per order and the purchase frequency rise. Operating income increased 26.1% YoY because
the growth of gross profit exceeded the growth of SG&A expenses, and the operating income margin rose 0.4 of apercentage point (pp). The impact of COVID-19 continued, including the declaration of a state of emergency, but theCompany succeeded in increasing sales from corporations (in the main industries and large companies), increasing
royalties, and appropriately controlling costs of sales and SG&A expenses, which led to the strong increase in profits.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/

Summary

2. Consolidated outlook for FY12/21
The outlook for FY12/21 full-year consolidated results are for net sales to increase 23.4% YoY to ¥194,220mn,
operating income to rise 25.9% to ¥24,678mn, ordinary income to grow 25.8% to ¥24,738mn, and net income
attributable to owners of the parent to increase 25.4% to ¥17,273mn. As such, the Company expects net sales andall profit line items to grow more than 20%. If it achieves these forecasts, sales will increase for the 20th consecutive
period and profits for the 12th consecutive period. In the online direct marketing business for companies, it is working
to expand the customer base and to improve customer lifetime value, and the target for acquisitions of new accounts
is 1,421,000 accounts, which is higher than the number acquired in FY12/20 (1,391,000 accounts). With respect
to growing sales to existing customers, the Company has set “expanding one-stop shopping,” “reducing time tofind products,” and “reducing time to wait for product arrivals” as key themes, and is advancing these themes
through newly operating systems and the development of distribution centers. In the purchase management systembusiness, the FY12/21 net sales forecast is ¥34,680mn (up 32.6% YoY) for higher growth than in FY12/20. The
progress rate up to the 2Q toward the full-year forecast for net sales for FY12/21 was 47.3% (47.8% in the same
period in the previous fiscal year), so it was at around the same level as in FY12/20. In a typical year, customers
tend to accumulate and results grow from the 1Q to the 4Q. At FISCO, we think that the Company will benefit froma rebound increase from the stagnation of demand due to COVID-19 and the digital shift of small and medium-sizedcompanies, so its business environment will improve.
3. Established a specialist organization for business with large companies and strengthened the structure. Is
maintaining the excellent 1H results
Sales to large companies contribute more than 17% of total net sales (FY12/20) and it is a field with high growthpotential, so the Company has newly established the Enterprise Business Department. Against the backdrop of thegrowth of sales to large companies, in addition to increasing the number of companies with which the Company
does business, related aspects include increases to the number of bases that can use services within thesecompanies, the number of accounts, and the usage by each account, and therefore it became necessary to havea detailed support structure. Even among the Company’s businesses, the purchase management system businesshas high growth potential and its results have grown. We can expect responsive and specialized activities from thisestablishment of an independent organization.
Key Points
In FY12/21 2Q, net sales and every profit item grew by more than 20% YoY. For corporate customers, the sales
price per order, the purchase frequency, and the number of customers all increased• Expecting sales and profits to increase for the 12th consecutive period for the full year of FY12/21. Made steadyprogress toward the full-year operating income forecast of 48.2% by the 2Q• Established a specialist organization for business with large companies and strengthened the structure. Is
maintaining the excellent 1H results•

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/

Summary

Trends in net sales and operating income (consolidated)
Sales (left)(¥mn)

Operating income (right)(¥mn)

200,000

32,00024,678150,000

24,00019,607
15,83913,790100,000

194,220

11,837

16,000157,337
131,463
50,000109,553

8,000

88,34700
FY12/17

FY12/18

FY12/19

FY12/20

FY12/21 E

Source: Prepared by FISCO from the Company’s financial results█ Results trends
In FY12/21 2Q, net sales and every profit item grew by more than
20% YoY. For corporate customers, the sales price per order, thepurchase frequency, and the number of customers all increased
In the FY12/21 2Q non-consolidated results, net sales increased 21.7% YoY to ¥88,448mn, operating income grew
26.1% to ¥12,071mn, ordinary income rose 26.4% to ¥12,120mn, and net income increased 26.1% to ¥8,401mn.
So net sales and every profit item maintained growth of more than 20%.
For net sales, the sales price per order, the purchase frequency, and the number of customers all increased bothin the mainstay online direct marketing business for companies and the purchase management system business.
In the same period in the previous fiscal year, while there was an increase in individuals wanting to buy sanitation
products due to COVID-19, sales to companies, including in the three main industries (manufacturing, constructionand engineering work, and vehicle maintenance) were limited. However, a rebound at the beginning of FY12/21 saw
both the sales price per order and the purchase frequency rise. The Company also made steady progress for new
customer acquisitions, acquiring 653,000 accounts. In the purchase management system business (business withlarge companies), the number of companies with which it does business increased by 312 companies compared tothe end of the previous period. Also, within the existing customer companies, there was internal growth (the numberof accounts rose and net sales per company increased), so net sales were 7.1% higher than the initial forecast,increasing 46.3% YoY to ¥17,811mn. However, net sales were 2.5% lower than the Company-wide forecast, but thiswas because the forecast was created during the period of recovery from COVID-19 (December 2020 and January2021), so it is thought that this was a bias factor.

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/

Results trends

The gross profit margin increased 0.6pp YoY to 29.0%. The sales ratio of business with large companies increased (afactor causing the gross profit margin to decline), but the sales ratio of PB and imported products rose, while the yen
was strong on a cost-of-sales basis, and these were the main reasons for the increase in product gross profit. The
increase in the amount of royalties received also contributed. The SG&A expenses ratio rose 0.1pp YoY to 15.4%,
including from the effects of the increase in the ratio of distribution base preparation and maintenance costs (up0.2pp), including preparations for the operations of the Ibaraki Chuo SC, and the decrease in personnel expenses(down 0.2pp), mainly due to a decline as a ricochet to the disaster allowance in the previous period. As a result,operating income increased 26.1% YoY and the operating income margin rose 0.4pp. The impact of COVID-19
continued, including the declaration of a state of emergency, but the Company succeeded in increasing sales from
corporations (in the main industries and large companies), increasing royalties, and appropriately controlling costsof sales and SG&A expenses, which led to the strong increase in profits.
Non-consolidated income summary for FY12/21 2Q(¥mn)
FY12/20 2Q

FY12/21 2Q

Results

vs. sales

Forecasts

Results

vs. sales

YoY

72,651100.0%

90,74288,448100.0%

21.7%

Reasons for change

Compared toforecasts[Online direct marketing business for companies (monotaro.com)]
Net sales-2.5%• The sales price per order, the purchase frequency, and the number ofcustomers all increased[Purchase management system business (business with large companies)](within which, businesswith large companies)

12,173

16.8%

16,635

17,811

20.1%

46.3%

7.1%

• Business with large companies benefitted from a rebound to the decline indemand in the previous period due to COVID-19, and is maintaining highgrowth (up 46.3% YoY)
• Gross profit ratio increased 0.6pp YoY

Gross profit

20,661

28.4%

26,202

25,664

29.0%

24.2%

-2.1%

• Product gross profit increased, mainly as the sales ratio of PB andimported products rose and the yen was strong on a costs-of-sales basis• The amount of royalties received increased, etc.
• The SG&A expenses ratio rose 0.1pp YoY• The ratio of distribution base preparation and maintenance costs

SG&A expenses

11,08915.3%

13,965

13,592

15.4%

22.6%

-2.7%

increased (up 0.2pp), including preparations for the operations of the
Ibaraki Chuo SC• Personnel costs decreased, mainly due to a decline as a ricochet to thedisaster allowance in the previous period (down 0.2pp)• The gross profit margin improved and the operating income margin rose

Operating income

9,572

13.2%

12,237

12,071

13.6%

26.1%

-1.4%

Ordinary income

9,586

13.2%

12,226

12,120

13.7%

26.4%

-0.9%

• Increased 0.5pp YoY

Net income

6,662

9.2%

8,487

8,401

9.5%

26.1%

-1.0%

• Increased 0.3pp YoY

0.4pp YoY

Source: Prepared by FISCO from the Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.

19-Oct.-2021

3064 Tokyo Stock Exchange First Section

https://www.monotaro.com/main/ir/english/

Results trends

Monthly sales
FY12/20 (left)

FY12/21 (left)

YoY change (right)(¥mn)
18,00016,00014,00012,000180.0%

16,843
14,642

13,909 13,639

127.4%

10,000118.7%

15,84315,01913,568127.8%

160.0%

14,120140.0%
120.0%

120.1% 118.8% 117.8%

112.6%

119.1%

100.0%

8,000
6,000

80.0%
10,914 11,492

13,177

12,193 11,424

13,447 13,336

11,85912,99913,980 13,128 13,842

60.0%

4,000

40.0%

2,000

20.0%

0

0.0%
Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Source: Prepared by FISCO from the Company’s news releases█ Business outlook
Expecting sales and profits to increase for the 12th consecutive
period for the full year of FY12/21. Made steady progress toward thefull-year operating income forecast of 48.2% by the 2Q
For the FY12/21 full-year consolidated results, the Company has left its initial forecasts unchanged, including net
sales to increase 23.4% YoY to ¥194,220mn, operating income to rise 25.9% to ¥24,678mn, ordinary income togrow 25.8% to ¥24,738mn, and net income attributable to owners of the parent to increase 25.4% to ¥17,273mn.
So the forecasts are for net sales and every profit item to grow by more than 20%. If these forecasts are achieved,
sales will increase for the 20th consecutive period and profits for the 12th consecutive period.

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/

Business outlook

In FY12/20, net sales increased 19.7% YoY, while in FY12/21, they are forecast to grow 23.4%. In the online direct
marketing business for companies, the Company is working on polices to expand the customer base and toincrease customer lifetime value, as well as to grow sales from existing customers. It is thought that it will continue
to invest in acquiring new customers, mainly targeting corporate customers that have high customer lifetime value.
The target for acquisitions of new accounts is 1,421,000 accounts, which is higher than the number acquired in
FY12/20 (1,391,000 accounts). Up to FY12/21 2Q, it had newly acquired 653,000 accounts (progress rate: 46.0%)
and customer numbers are steadily increasing. To increase sales from existing customers, the Company has set thethemes of “expanding one-stop shopping,” “reducing time to find products,” and “reducing time to wait for productarrivals,” and it is advancing these themes through newly operating systems and the development of distribution
centers. In the purchase management system business, the FY12/21 net sales forecast is ¥34,680mn (up 32.6%YoY)
for higher growth than in FY12/20. In FY12/21 2Q, sales increased 46.3%, so progress made was higher thanforecast. For overseas royalties, sales of the Zoro business in the US and Europe are growing and the gross profit
margin and the SG&A expenses ratio are expected to improve, while royalties received are also forecast to be higher
than in the previous period. The progress rate up to the 2Q toward the full-year forecast for net sales for FY12/21
was 47.3% (47.8% in the same period in the previous fiscal year), so it was around the same level as in FY12/20.
The annual gross profit margin is forecast to be 28.6% (up 0.2pp), mainly due to the increase in royalties andthe improvement to the delivery cost ratio because of the recovery of the sales price per order, while the SG&A
expenses ratio is expected to be 15.9%, the same level as in the previous period. As a result, the forecasts are foran operating income margin of 12.7% (up 0.2pp YoY) and operating income to increase 25.9% YoY. The progress
rate up to the 2Q toward the full-year forecast for operating income for FY12/21 was 48.2% (47.5% in the same
period in the previous fiscal year), so steady progress was made. In a typical year, customers tend to accumulate
and results grow from the 1Q to the 4Q. At FISCO, we think that the Company will benefit from a rebound increase
from the stagnation of demand due to COVID-19 and the digital shift of small and medium-sized companies, so its
business environment will improve.
FY12/21 consolidated business forecasts(¥mn)
FY12/20

FY12/21YoY

2Q progress
rates

Results

vs. sales

Forecasts

vs. sales

Net sales

157,337

100.0%

194,220100.0%

23.4%

47.3%

Gross profit

44,69428.4%

55,565

28.6%

24.3%

47.5%

SG&A expenses

25,08615.9%

30,887

15.9%

23.1%

46.9%

Operating income

19,607

12.5%

24,678

12.7%

25.9%

48.2%

Ordinary income

19,671

12.5%

24,738

12.7%

25.8%

48.4%

Net income attributable to owners of
the parent

13,771

8.8%

17,273

8.9%

25.4%

48.3%

Source: Prepared by FISCO from the Company’s financial results summary

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/█ Topics
Established a specialist organization for business with large
companies and strengthened the structure. Is maintaining theexcellent 1H results
1. Strengthened the structure by establishing the Enterprise Business specialist organization for businesswith large companies
The Company newly established the Enterprise Business Department. Previously, the Customer Support Department
carried out tasks such as acquiring large companies as customers and following up with them. But sales to large
companies contribute more than 17% of total net sales (FY12/20) and it is a field with high growth potential, so theCompany newly established the Enterprise Business Department in order to strengthen the structure for it. We can
expect responsive and specialized activities from this establishment of an independent organization. Against the
backdrop of the growth of sales to large companies, in addition to increasing the number of companies with which
the Company does business, related aspects include increases to the number of bases that can use services withinthese companies, the number of accounts, and the usage by each account, and therefore it become necessary tohave a detailed support structure.
Diagram of the Enterprise Business specialist organization

Source: Reprinted from the Company’s website

Even among the Company’s businesses, the purchase management system business has high growth potential
and its results have grown. Its average annual growth rate for net sales for the five fiscal years from FY12/14 to
FY12/19 was 54.8%. Growth has slowed during the COVID-19 pandemic and in FY12/20, net sales grew 29.8%.
In particular, sales slumped during the 2Q and the 3Q of FY12/20. This was the period of the first declaration of astate of emergency, and companies were forced to respond to it with remote working, which caused confusion in
the supply chains of various industries and delays to production and investment. But the situation changed from the
4Q and sales growth in the purchase management system business recovered, and this trend continued in FY12/21
1H as well. The changes to workstyles in response to COVID-19 have been completed, and it is considered that
this will be reflected in the recoveries in production and investment.

We encourage readers to review our complete legal statement on “Disclaimer” page.

07 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.
3064 Tokyo Stock Exchange First Section

19-Oct.-2021
https://www.monotaro.com/main/ir/english/

TopicsTrend in net sales of business with large companies
Net sales of business with large companies (left)
Number of companies with which the Company does business (right)(¥100mn)
100

2,000

Period of sluggish growth

90

1,549

80

50
639

755

708

45

817

875

1,200

958

1,000

91

86

76

30

20

1,400

1,094

60

52

47

57

64

64

57

1,800
1,600

1,400

1,237

70

40

(Companies)

800
600

400

10

200

0

0
1Q

2Q

3Q

4Q

1Q

2Q

2019

3Q
2020

4Q

1Q

2Q
2021

Source: Prepared by FISCO from the Company’s financial results summary

2. The Ibaraki Chuo Satellite Center (SC) has made a steady start. Succeeding in maintaining the distribution
cost ratio at 6.1%, the same level YoY
In March 2021, the Ibaraki Chuo SC began operations. It was originally planned to start operating in April 2021,
but because of the steady progress made for its preparations, its start of operations was pushed forward by one
month. This distribution center will mainly function as the backyard of the Kasama Distribution Center (DC), whichis responsible for shipments in eastern Japan. It also has functions for shipments of high-demand products andhas the capacity for shipments with an annual sales scale of around ¥30bn. Before the start of operations of the
Ibaraki Chuo SC, the combined shipment capacity of the Amagasaki DC and the Kasama DC was approximately¥160bn in total. But the Company’s FY12/21 non-consolidated net sales forecast is ¥186.7bn, which will require
an expansion in capacity. Just as at the Kasama DC, the Ibaraki Chuo SC has installed state-of-the-art systems,
including the small, unmanned Racrew transportation robot, and it is expected to be highly productive. In FY12/21
1H, the distribution cost ratio was 6.1% (6.1% in the same period in the previous fiscal year, 1H forecast 6.2%),
and the center is succeeding in controlling distribution costs. It is currently already functioning as the Kasama DC’s
backyard, while going forward, it will enter a phase of increasing shipments. In order to respond efficiently to thecontinuing increase in the volume of shipments, the Company’s main strategy is to establish distribution bases and to
optimize scale. In April 2022, it plans to start the first phase of operations of the Inagawa DC, which will be the next
period’s main distribution base for the Kansai region, and the construction work is said to be progressing steadily.

We encourage readers to review our complete legal statement on “Disclaimer” page.

08 09

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

MonotaRO Co., Ltd.

19-Oct.-2021

3064 Tokyo Stock Exchange First Section

https://www.monotaro.com/main/ir/english/█ Shareholder return policy
In FY12/21, will increase the dividend by ¥2.5 to ¥11.5 per share(already paid 1H dividend of ¥5.75). High profit growth rate will make
rapid acceleration in dividend increases possible
The Company adheres to a policy of paying a stable dividend in line with earnings. It has delivered dividend increases
since FY12/13 (dividend of ¥3.0 per share) and maintained a dividend payout ratio in the range of 32–35%. In
FY12/21, as initially forecast, it will pay an annual dividend of ¥11.5 per share (up ¥2.5 YoY; already paid 1H dividendof ¥5.75, period-end dividend forecast of ¥5.75) for a forecast dividend payout ratio of 33.1%. As the Company’s
profit growth rate is high, we can expect dividends to increase at a rapid pace in the future. Also, to increase theliquidity of its shares and expand the investor base, the Company executed a 2-for-1 stock split in April 1, 2021.
The Company offers shareholder benefits in the form of private-brand product gifts for each shareholder holding
100 or more shares for at least six months at the end of the fiscal year (December 31) (worth ¥3,000 for six months
or longer, ¥5,000 for three years or longer, and ¥7,000 for five years or longer). The Company says that the rate ofconversion to products has also been favorably received.

Dividends and consolidated dividend payout ratio
Annual dividend per share (left)
Consolidated dividend payout ratio (right)
(¥)
14.0

32.3%

33.9%

33.9%

32.4%

33.1%

35.0%

12.0

30.0%

10.0

25.0%

8.0

20.0%

6.0

11.5

4.0
2.0

5.5

6.5

7.5

9.0

15.0%

10.0%
5.0%

0.0

0.0%
FY12/17

FY12/18

FY12/19

FY12/20

FY12/21 E

Note: Conducted a 2-for-1 stock split in FY12/18 and FY12/21. Figures shown have been retroactively adjusted
Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

09 09

Disclaimer
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