FY2024.3 (97th Term)

Financial Results
Briefing Material
May 23, 2024

Kawai Musical Instruments Manufacturing Co., Ltd.

Today’s Message■Consolidated performance for the previous FY2024.3✓

Both revenue and profit declined due to lower sales of musical instruments as a result of stay-athome demand’s calming down and changes in the economic environment, as well as production cuts
aimed at reducing inventories■Outlook for consolidated performance for the current FY2025.3✓✓

Operating profit decreased significantly due to the impact of production cuts aimed at bringing
inventories to an appropriate level before the end of the current fiscal year (operating profit in thenext period and onward is expected to recover significantly due to the elimination of the impact of
production cuts for bringing inventories to an appropriate level)
Accelerate investment for significant growth toward the next medium-term management plan

■Policy of the next Medium-Term Management Plan “KAWAI 10-Year Vision”✓

To achieve “net sales of 110,000 millions of yen, operating profit of 10,000 millions of yen, and ROE of12%” by FY2035.3■Shareholder return✓✓✓

Dividends for FY2024.3 increased to 95 yen per share, with dividend payout ratio of 29.5%
Dividends for FY2025.3 are to be determined. To be disclosed after assessing performance trend
To achieve total return ratio of 50% in FY2028.3
Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

2

FY2024.3:

Consolidated Performance

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

3

FY2024.3: Consolidated Performance - Summary
Both revenue and profit declined due to a decrease in sales of musical instruments andorders received for the precision metal business[Millions of yen]

FY2024.3
FY2023.3 fullyear results

Plan

Results

Diff.
from
prior
periodvs. priorperiod
(%)

Diff.
from
plan

vs. plan

Net sales

87,771

82,70080,192-7,578-8.6%-2,508-3.0%

Operating profit

5,045

4,500

3,255

-1,790-35.5%-1,245-27.8%(Operating profit margin)(5.7%)(5.4%)(4.1%)

Ordinary profit

5,639

5,000

4,201

-1,437-25.5%-799-16.0%(Ordinary profit margin)(6.4%)(6.0%)(5.2%)

Profit

3,672

3,200

2,782

-890

-24.2%-418-13.1%(Profit margin)(4.2%)(3.9%)(3.5%)

Exchange rate
US$
Euro

131.4 yen
138.0 yen

140.6 yen
152.0 yen

－ ±0.0 yen－ ±0.0 yen－－

140.6 yen +9.1 yen
152.0 yen +14.0 yen*Profit for the fiscal year under review is profit attributable to owners of parent.

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Performance by Segment
In the musical instrument education business, both revenue and profit declined due to a decrease in sales and an increase inproduction costs despite sales of grand pianos remaining firm. The precision metal business saw both sales and profit decline
due to a decrease in orders received owing to inventory adjustments by customers and other factors[Millions of yen]

FY2024.3
FY2023.3 fullyear results

Musicalinstrument
education

Diff.
from
plan

vs. plan

72,92769,00065,668-7,258-10.0%-3,332-4.8%

Operatingprofit

3,857

3,600

2,353

-1,503-39.0%-1,247-34.7%(Operating profit
margin)(5.3%)(5.2%)(3.6%)

10,450

9,320

9,540

-910

-8.7%

+220

+2.4%

Operatingprofit

1,166

790

753

-412

-35.4%-37-5.1%(Operating profit
margin)(11.2%)(8.5%)(7.9%)

4,394

4,380

4,984

+590

+13.4%+604+13.7%

Operatingprofit

143

190

246

+103

+72.1%+56+26.3%(Operating profit
margin)(3.3%)(4.3%)(4.9%)Net sales
Other

Resultsvs. priorperiod(%)

Net sales

Net sales
Precision
metal

Plan

Diff.
from
prior
periodFinancial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Musical Instrument Education Business –Factors for Changes in Operating Profit
Adjusting pricing to an appropriate level allowed us to cover soaring material and other costs;
however, profit declined due in part to production cuts
Adjusting pricing
Decline in
to anappropriate level
sales

60.0

+1,140[Millions of yen]

-1,932

50.0

40.0

3,857

FX impact+178

Sharp rise
Impact of
in material
Improvement production
costs
in cost of sales
cuts
-960
+827
-1,33830.0

Decrease in
SG&A
expenses
+581

2,353

20.0

10.0

-1,5040.0
Prior
periodFY2023.3

FX impact
Adjusting pricing to an appropriate
Declinelevelin sales

results

Financial Results Briefing for FY2024.3

Sharp rise

ImprovementImpact of production cuts

Costs

Current
periodFY2024.3

results

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Trend in Consolidated Performance (Past 10 Years)
Net sales and operating profit had been growing steadily; however, due in part to special factors (stay-athome demand due to the COVID-19 pandemic and a decline on its rebound), profit declined for two
consecutive periods[Millions of yen]
90,0009%80,19280,0008%70,000 66,342

7%60,000

6%

50,0005%
4.1%

40,00030,00020,000

3%

2%

2.4%

10,000

0

4%

3,255

1,556
FY15.3

1%

0%
FY16.3

FY17.3

Net sales

Financial Results Briefing for FY2024.3

FY18.3

FY19.3Operating profit

FY20.3

FY21.3

FY22.3

FY23.3

FY24.3Operating profit margin

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Consolidated Financial Position
Assets grew due to an increase in inventories and other factors, and liabilities decreased due
to factors such as repayment of loans
Net assets increased due to the impact of exchange rates, profit and other factors[Millions of yen]

FY2023.3
results

FY2024.3
results

Year-onyear

Assets70,81873,538+2,720Liabilities

32,35730,396-1,961

Net assets

38,46143,141+4,680Shareholders’equity ratio

54.0%

58.4%

+4.4

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3:

Keyboard MusicalInstruments Performance

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Keyboard Musical Instruments Sales Record by Region
Japan

North America

Europe[Millions of yen]

[Millions of yen]

[Millions of yen]

16,00016,00016,00014,00014,00012,00012,00010,00010,000

8,216

7,697

FX impact: +424

10,64414,000

9,242

8,000

6,000

6,000

6,000

4,000

4,000

4,000

2,000

2,000

2,000

0

0
2023年3月期
2024年3月期
FY2023.3
FY2024.3
results
results

2023年3月期
2024年3月期
FY2023.3
FY2024.3
results
results

China

Other

[Millions of yen]
16,00014,00012,000

10,25810,000

8,000

8,000

FX impact: +658

12,0009,280

02023年3月期
2024年3月期
FY2023.3
FY2024.3
results
results[Millions of yen]

14,29516,000FX impact: +154

14,00010,76412,00010,00010,000

8,000

8,000

6,000

6,000

4,000

4,000

2,000

2,000

0

0
2023年3月期
2024年3月期
FY2023.3
FY2024.3
results
results

Financial Results Briefing for FY2024.3

FX impact: +57

4,804

4,402

Exchange
rate

FY2023.3
results

FY2024.3
results

$

131.4

140.6

€

138.0

152.0

Impact of 1-yen depreciation against the
dollar [operating profit]

2023年3月期
2024年3月期
FY2023.3
FY2024.3
results
results$-48 million yen for full year€

+27 million yen for full year

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Trend in Piano Sales by Region
While sales of grand pianos remained firm, those of upright pianos, especially in China,
have declined significantly

32,649

Japan
-3

North
America-928[Millions of yen]

Europe-664

China-3,362

300.0

Other
-88

27,604

Other

Current
periodFY2024.3

250.0

200.0

-5,045150.0
Prior period
FY2023.3
results

Financial Results Briefing for FY2024.3

Japan

North America

EuropeChina

results

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Trend in Digital Piano Sales by Region
Sales decreased in all regions due to a deterioration in market conditions,
intensifying price competition, and other factors

15,505

Japan
-527

150.0

North
America-474[Millions of yen]

Europe
-314

China
-169

140.0

Other
-315

13,706

130.0

120.0

110.0

100.0

-1,79990.0

80.0
Prior period
FY2023.3
results

Financial Results Briefing for FY2024.3

Japan

North America

Europe

China

Other

Current
periodFY2024.3

results

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2024.3: Keyboard Musical Instruments Sales by Region - Overview

Japan-6.4% year-on-year

North America-13.2% year-on-year

Europe-9.5% year-on-year

China-24.7% year-on-year

Other-8.4% year-on-year

Financial Results Briefing for FY2024.3• Sales of upright pianos declined as stay-at-home demand due to the COVID-19 pandemic
subsided• Sales of digital pianos also declined mainly in the affordable price range• Sales of grand pianos such as “Shigeru Kawai” have been strong on the back of growing
reputation at the competitions• There was an increase in sales due to those recognized at the beginning of the previous
period which were supposed to be recognized during the period preceding the previous
period owing to disruptions in maritime transportation, which is a negative factor for thecurrent period when compared with the prior period• While consumer spending has been expanding with services such as dining and lodging
performing well, spending on hobbies, sports equipment and musical instruments is
experiencing negative growth• Since the Ukraine crisis, consumer sentiment has been increasingly cooling due to soaring
prices• Grand pianos perform firmly, and digital pianos are on a recovery trend• Deterioration in the economic situation and the Double Reduction Policy resulted in lower
sales in upright pianos in the affordable price range, in particular• Grand and digital pianos saw relatively small declines• In Australia, Taiwan and South Korea the performance of upright pianos and digital pianos in
the affordable price range was weak
• Record net sales in India and Brazil

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3:

Consolidated Performance Plan

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

14

FY2025.3: Consolidated Performance Plan - Summary
Both sales revenue and profit declined due to deteriorating market conditions in major markets and production cuts
aimed at reducing inventories
Accelerated investment for significant growth during the period of the next medium-term management plan
[Millions of yen]

FY2024.3 full-year
results

FY2025.3 full-year
outlook

Diff. fromprior period

vs. priorperiod (%)

Net sales

80,19277,500-2,692-3.4%

Operating profit

3,255

1,000

-2,255-69.2%(Operating profit
margin)(4.1%)(1.3%)

Ordinary profit

4,201

1,000

-3,201-76.2%(Ordinary profit margin)(5.2%)(1.3%)

Profit2,782

400-2,382-85.6%(Profit margin)(3.5%)(0.5%)

Exchange rate
US$
Euro

140.6 yen
152.0 yen

153.0 yen
164.0 yen

+12.4 yen
+12.0 yen

*Profit for the fiscal year under review is profit attributable to owners of parent.

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3: Performance Plan by Segment
In the musical instrument education business, both revenue and profit decreased due to lower sales andproduction cuts aimed at reducing inventories. The precision metal business saw both revenue and profit decline
as a result of customers’ making adjustments to their inventory level; however, a recovery in the second half isplanned[Millions of yen]Musicalinstrument
education

Precision
metal

Other

FY2024.3 fullyear results

FY2025.3 fullyear outlook

Diff. fromprior period

vs. priorperiod (%)

65,6682,353

64,300300-1,368-2,053-2.1%-87.2%(Operating profit
margin)(3.6%)(0.5%)Net sales
Operating profit

9,540
753

8,600
550

-940
-203

-9.9%
-26.7%(Operating profit
margin)(7.9%)(6.4%)Net sales
Operating profit

4,984
246

4,600
190

-384
-56

-7.6%
-20.8%(Operating profit
margin)(4.9%)(4.1%)Net sales
Operating profit

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3: Musical Instrument Education Business –Factors for Changes in Operating Profit
Operating profit is expected to decrease mainly due to the impact of production cuts
Operating profit is expected to recover significantly in the next period and onward, once production cuts
result in inventories being at an appropriate level
To reduce SG&A expenses to allocate actively to advertising and human resources investment to raise
brand recognition
40.0

Adjustingpricing to an
appropriate
level
+819

30.0

2,353

FX impact-161

Decline in
sales
-460

[Millions of yen]

Sharp rise in
Impact ofmaterial costs
Improvement production-718
in cost of sales
cuts
+349
-1,51020.0

Increase in
SG&A
expenses
-372

10.0

-2,053

300

0.0
Prior
periodFY2024.3

FX impact
Adjusting pricing to an appropriate
Declinelevelin sales Soaring cost ofImprovement
sales
in costImpactof salesof production cuts

results

Financial Results Briefing for FY2024.3

Costs

Current
periodFY2025.3

outlook

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3: Capital Investment Plan
Plan to invest in improving the production efficiency and quality of musical instruments
and precision metal[Millions of yen]

FY2023.3
full-year
results

FY2024.3
full-year
results

FY2025.3
full-year
outlook

1,331

1,326

1,700

Precision metal

208

362

360

117

74

140

Other

2,200
Depreciation expences
1,762

Refurbishment of
production equipment
and stores, etc.

Investment in information
infrastructure, etc.

Capital investment amount

2,000Musical instrument
education

Production equipment forthe metal business, etc.

[Millions of yen]

1,656 1,651

1,700
1,603

1,000

0
Total

Financial Results Briefing for FY2024.3

1,656

1,762

2,200

FY2023.3

FY2024.3

FY2025.3

results

results

outlook

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3:

Keyboard MusicalInstruments Sales Plan

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3: Keyboard Musical Instruments Sales Plan by Region
Japan

North America[Millions of yen]

[Millions of yen]

14,00014,00012,00012,00010,00010,000

7,697

8,070

Europe[Millions of yen]

9,242

8,540

12,000

8,000

8,000

6,000

6,000

6,000

4,000

4,000

4,000

2,000

2,000

2,000

0

0
2024年3月期
2025年3月期
FY2024.3
FY2025.3
results
plan

China

Other

14,00014,00012,00010,0000
2024年3月期
2025年3月期
FY2024.3
FY2025.3
results
plan[Millions of yen]
FX impact: +396

12,00010,764

8,600

8,000

6,000

6,000

4,000

4,000

2,000

2,000

0

0

Financial Results Briefing for FY2024.3

2024年3月期
2025年3月期
FY2024.3
FY2025.3
resultsplan

Exchange
rate

FY2024.3
results

FY2025.3
outlook

$

140.6

153.0

€

152.0

164.0

10,0008,000

2024年3月期
2025年3月期
FY2024.3
FY2025.3
results
plan

10,250

9,280

10,0008,000[Millions of yen]

FX impact: +642

14,000FX impact: +551

FX impact: +109

4,402

4,260

Impact of 1-yen depreciation against the dollar[operating profit]$-44 million yen for full year€

+28 million yen for full year

2024年3月期
2025年3月期
FY2024.3
FY2025.3
resultsplan
Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3: Piano Sales Plan by Region
China is expected to see a large decline in upright pianos, with North America
likely to decline as well
Japan and Europe are set to expand

27,605

Japan
+105

North
America-896

Europe+539

China-1,687[Millions of yen]

Other
+54

25,720Other

Current
periodFY2025.3

250.0

200.0

-1,885150.0
Prior period
FY2024.3
results

Financial Results Briefing for FY2024.3

Japan

North America

Europe

China

plan

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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FY2025.3: Digital Piano Sales Plan by Region
Plan to see a recovery in sales in Japan, North America and Europe, despite a large
decline in China

145.0
143.0

Japan
+274

141.0
139.0
137.0

North
America+193

Europe
+431

China
-478

[Millions of yen]

Other
-196
13,93013,706

135.0
133.0
131.0

129.0

+224

127.0
125.0
Prior period
FY2024.3
results

Financial Results Briefing for FY2024.3

Japan

North America

Europe

China

Other

Current
periodFY2025.3

plan

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Progress in the 7th MediumTerm Management Plan
Resonate 2024

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Path to Corporate Value GrowthWith large room for profit improvement in the keyboard musical instruments market, to invest in
the musical instrument business on a priority basis to increase corporate value

High

Business growth potential

Increase inprofitability

Musicalinstruments

IT andother

precisionmetal

Investment
Education

Low
Low

Financial Results Briefing for FY2024.3

Profitability

High

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Key Strategies
In order to grow steadily in a new business environment that has changed
significantly due to the COVID-19 pandemic, we will focus on the following:

Evolving customer touch points
Implement promotional measures tailored to changes incustomer purchasing behavior

Strengthening domains of growing demand
Broaden the lineup of product categories in particularwhose demand has grown due to changes in lifestyles,
and expand and reinforce their production system

Handling cost increases
Improve productivity and set appropriate prices
in order to address soaring costs, resulting fromsurges in the cost of materials, such as
semiconductors, and overseas transportation
fees

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Evolving Customer Touch Points
Accelerate the improvement of brand recognition by fusing “real” and “digital” measures

Raise recognition inphysical space

Raise recognition indigital space

Strengthen artist
relations

Enhance digitalcontent

Elevate presence
at international
competitions

Financial Results Briefing for FY2024.3

Expand recitals
and other events

Strengthen
connections withcustomers
through social
media

Improvewebsites

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

26

Evolving Customer Touch Points“SK-EX” was chosen as the official
piano for the Gurwitz 2024 International
Piano Competition

Special program featuring Shigeru
Kawai was broadcast on TV Asahi’s“Untitled Concert”

Ms. Yungyung Guo (China), Gold Prize winner

The Gurwitz 2024 International Piano Competition
was held in the United States from January 26 toFebruary 4, and the Shigeru Kawai “SK-EX” fullconcert piano was chosen as the only official piano
for the competition

Financial Results Briefing for FY2024.3

In November 2023, “A holiday to visit the factory
for the world’s finest piano ‘Shigeru Kawai’ chosen
by the finalists” featuring Shigeru Kawai wasbroadcast on TV Asahi’s program “Untitled
Concert”

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Evolving Customer Touch Points
Launched “Global Branding PJ” with
Ogilvy, a globally renowned branding
company

Opened a store at AEON MALL
Deltamas, one of the largest shopping
malls in Indonesia

Launched a global branding project in 2024 incollaboration with Ogilvy, one of the world’s leading
branding companies with 132 offices in 83
countries, with the aim of increasing brandrecognition globally

Opened a musical instrument store and a music
school at one of the largest shopping malls inIndonesia, in the city of Deltamas, a rapidly
developing area that combines industrial
complexes, residential districts, commercial
districts, and administrative, educational, andmedical institutions

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Evolving Customer Touch Points
Collaboration with Tsuchiya Kaban,“KAWAI meets grirose”

Model change of the crystal grandpiano to launch “CR-45”

KAWAI mini pianos produced in collaboration with
Tsuchiya Kaban which develops leather products
such as school bags and other bags, “KAWAI
meets grirose,” were displayed at our directly
managed stores from January to February 2024

Since its launch in 1971, crystal grand pianos,
which had been attracting many people with theircrystal brilliance and transparent appearance,
were redesigned to further enhance the beauty of
the crystal piano, with the length of keys extended,
improving playability

Financial Results Briefing for FY2024.3

Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Strengthening Domains of Growing Demand
Build a system to expand production lines in
response to increasing demand for “Shigeru
Kawai”

Launch increasingly popular limitededition models of mini grand pianos“Shigeru Kawai” grand piano SK-2

Grand piano GX-1 LE[Limited production of 50 units: Kawai’s
directly managed stores only]

Ryuyo Plant (Iwata City, Shizuoka Prefecture)
Financial Results Briefing for FY2024.3

Equipped with a soundboard made ofpremium wood from the Fiemme valley in Italy
which was used in world’s famous
Stradivarius violins
Featuring an ornate and stretching tone
Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Strengthening Domains of Growing Demand
Expand the lineup and color variations through the launch of new digital piano products“CA901”
Premium Satin White Finish“CA701”Natural Walnut Finish“CA401”
Premium Rosewood Finish*Launched in October 2023

*Launched in March 2024

*Launched in March 2024

Equipped withwooden keyboard

CA Series“CA901”“CA701”“CA501”“CA401”*Launched in June 2023

*Launched in June 2023

Entry model

Portable model

CN Series

ES Series“CN301”

Financial Results Briefing for FY2024.3“CN201”“ES120”
Copyright 2024 Kawai Musical Instruments Mfg. Co., Ltd.

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Handling Cost Increases
Adjust pricing as needed to maintain appropriate pricing in light of the
impact of various cost increases and local market conditions■In Japan
For orders received in April
2023 and laterGrand pianos
Upright pianos

14 models
26 modelsPrice increase by approx. 7 to 17%
Price increase by approx. 8 to 14%

For orders received in
November 2023 and later“Shigeru Kawai” grand pianos

5 models

Price increase by approx. 8 to 10%

FY2024.3■Overseas

FY2024.3

From shipment inApril 2023 and later

Price increase by 3 to 10% depending on regions/items

FY2025.3

From shipment inApril 2024 and later

Price increase by 2 to 10% depending on regions/items

Financial Results Briefing for FY2024.3

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Progress of the 7th Medium-Term Management Plan Resonate 2024
Net sales and operating profit as well as ROE are expected to fall short of the medium-term management
plan targets due to lower sales as a result of the normalization of instrument inventories and growthinvestment for the period of the next medium-term management plan

Trend in net sales[Millions of yen]

Trends in operating profit and ROE
Target:90,00090,000[Millions of yen]

Target:
6,800

7,000

10%
Target:10.0% or more

6,000

85,000

Forecast:
77,50080,000

8%

5,000
4,000

6%

75,0003,000

4%70,000

Forecast:
1,000

2,000
65,0001,000

60,0000FY23.3
results

FY24.3
results

FY25.3

FY25.3Medium- forecast
TermManagement
Plan0%
FY23.3
results

FY24.3
results

FY25.3 FY25.3
Medium- forecast
TermManagement
Plan■■ Operating Profit

Financial Results Briefing for FY2024.3

2%

Forecast:
1.0%

― ROE

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Shareholder Return
Dividend per share at the end of FY2024.3 is 95 yen, an increase of 10 yen
Dividend at the end of FY2025.3 will be disclosed after assessing the performance trend due to a number of
uncertainties in market conditions<Basic Policy>
Taking into account the business environment going forward and business development as well as business performance of each fiscal
year, the Company’s basic policy is set as providing shareholder returns aimed at delivering stable dividends to shareholders inaccordance with its consolidated business performance while securing internal reserves to stabilize the management base.

[Yen]

95

100

40%

35%
29.5%

80

30%
25%

60

20%
15%

40

10%
20

5%
0

0%
FY15.3

FY16.3

FY17.3

FY18.3

FY19.3

Dividends per share

Financial Results Briefing for FY2024.3

FY20.3

FY21.3

FY22.3

FY23.3

FY24.3

Dividend payout ratio

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ESG and Sustainability
Initiatives

Financial Results Briefing for FY2024.3

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Environmental and Social Initiatives
Environment

Society■Environmental management
Developed environmental conservation activities
based on the Global Environment Charter■Human resource development and diversity
Initiatives to empower diverse employees toleverage their individuality and demonstrate theirabilities■Reduction of environmental load
Initiatives to prevent global warming, etc.

■Climate change
Disclosed information based on TCFD
recommendations■Resource recycling and afforestation activities“Kawai-no-mori” afforestation activities■Work-life balance
Creating an environment where employees canwork comfortably■Social and cultural contribution activities
Hosted more than 2,000 sessions of “Kawai
Concert”
Has been hosting the “Shigeru Kawai International
Piano Competition” since 2017 to nurture the next
generation of pianists

For information on environmental and social initiatives, please refer to “KAWAI Report 2023”▶︎
https://www.kawai.co.jp/csr/report/
Financial Results Briefing for FY2024.3

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Measures to Realize Management
Conscious of Capital Costs andShare Prices

Financial Results Briefing for FY2024.3

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Analysis of Current Status (Trends in Capital Profitability,
Cost of Equity and PBR)
✓ Return on equity (ROE) has not been able to sufficiently exceed the cost of equity (estimated at approx.
7%), except during periods of stay-at-home demand✓ Meanwhile, the price-to-book ratio (PBR) of the Company has been below 1 for 7 of the past 10 periods

ROE, average ROE and cost of equity
18%
16%
14%
12%

ROE 10y average

10%
8%

9%

Cost of equity

6%

7%

ROE

4%
2%
0%

FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 FY20.3 FY21.3 FY22.3 FY23.3 FY24.3

PBR(times)

1.07

0.85

0.94

1.30

0.99

0.81

1.08

0.84

0.69

0.72

Cost of equity of the Company (estimated) = risk-free rate + beta  market risk premium = approx. 7%(CAPM)
Financial Results Briefing for FY2024.3

0.9 to 1.0% 0.9 to 1.0 6.0 to 6.5%
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Analysis of Current Status (Balance Sheet and Net Cash Trends)✓ Net cash balance had been on an increasing trend, but decreased in the most recent two periods. Net
cash balance is not at a sufficient level in light of major risks✓ There are neither material idle fixed assets nor unnecessary assets held

Net cash trend[Millions of yen]
14,00012,00010,000

8,000
6,000
4,000
2,000
0

FY15.3

FY16.3

FY17.3

FY18.3

FY19.3

FY20.3

FY21.3

FY22.3

FY23.3

FY24.3*Net cash = Cash and deposits − Interest-bearing debt

Financial Results Briefing for FY2024.3

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Analysis of Current Status (Level of Shareholder Return andDisclosure of IR Information)✓ As for shareholder return, our dividend payout ratio is below the average of other companies in thesame industry and that of companies in the manufacturing industry listed on TSE Prime✓ Disclosure of IR information is not sufficient

Trend in dividend payout ratio

Status of IR activities

100%
80%

Item

Assessment

Remarks

Website△ (slightly
inadequate)

Insufficient content andalmost no information in
EnglishFinancial results
briefings△ (slightly
inadequate)

Physical meetings only

Individualinterviews〇 (good)

All requests are
accepted, with officers
also attending uponrequests

IR events forindividual
investors△ (slightly
inadequate)

Insufficient number of
eventsPlant tours for
institutional
investors



Not implemented, to beplanned in the future

60%
40%
20%
0%
FY2019FY2020

FY2021

FY2022

Kawai
Manufacturing industry average
Musical instrument company A
Musical instrument company B* Manufacturing industry average = Average ofmanufacturing companies listed on TSE Prime
Financial Results Briefing for FY2024.3

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Results of Analysis of Current Status, Issues and Countermeasures<Results of analysis of current status>✓ ROE over the past 10 years has been approx. 9%, exceeding the cost of equity (estimated at approx. 7%)✓ Meanwhile, PBR of the Company has been below 1 for 7 of the past 10 periods✓ Net cash balance had been on an increasing trend, but decreased in the most recent two periods. Net
cash balance is not at a sufficient level in light of major risks✓ With no material idle fixed assets, there are no unnecessary assets held
✓ As for shareholder return, our dividend payout ratio is below the average of other companies in the same
industry and that of companies in the manufacturing industry listed on TSE Prime✓ Disclosure of IR information is not sufficient

IssuesCountermeasures

1. Need to improve ROE to alevel expected by the market

Present a growth strategy that shareholders will find attractive in the next 8th MediumTerm Management Plan(including a capital allocation policy)

2. Insufficient shareholder return

Aim for dividend payout ratio of 30% in FY2025.3
Aim for total return ratio of 50% in FY2028.3

3. Insufficient disclosure of IR
information

Expand the types of IR information to be disclosed (including information in English) andthe means for disclosing IR information(such as participation in IR fairs for individual investors and plant tours for institutional
investors)

Financial Results Briefing for FY2024.3

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Initiatives Implemented and Future Plans (as of May 2024)
1. Formulation of a capital allocation policy✓ Determined the required level of cash after taking into account major risks and formulated a capital
allocation policy under the current 7th Medium-Term Management Plan, which was disclosed in
November 2023

2. Improvement in the level of shareholder return✓ Disclosed our target of achieving a dividend payout ratio of 30% in FY2025.3, the final year of the current
Medium-Term Management Plan, and improved the dividend payout ratio to 29.5% in FY2024.3 through adividend increase from 20% in the prior period✓ Aim for total return ratio of 50% in FY2028.3
3. Strengthening of IR activities (reducing information asymmetry)✓ Participated in an event for individual investors for the first time in FY2024.3, and actively responded tomeetings with institutional investors (+14 events, 24% increase from the prior period)✓ Hosted the financial results briefing for FY2024.3 online as well, our first such attempt✓ Enhanced disclosure in English by improving the IR website and providing a summary of consolidated
financial results for FY2024.3 in English✓ We will continue to take measures to reduce information asymmetry through effective disclosure of
information and to improve the level of confidence of shareholders and investors in the Company’s
growth potential (see the next slide for the status of dialogue with shareholders, etc.)
Our basic policy is to obtain appropriate evaluation of the Company’s growth potential from shareholders
and investors through these initiatives, and we will strive to achieve a PBR of at least 1 early.
Financial Results Briefing for FY2024.3

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42

Dialogue with Shareholders

Financial Results Briefing for FY2024.3

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43

Status of Dialogue with Shareholders, Etc. (April 2023 to March 2024)✓ Set out the “Policy on Constructive Dialogue with Shareholders” in the Corporate Governance Basic
Policy, and implemented constructive dialogue through shareholder meetings, financial results briefings,
and individual IR meetings✓ Hosted two financial results briefings, held 73 individual IR meetings in total, and participated in an online
event for individual investors for the first time
✓ Reported regularly the content of dialogue with shareholders and investors to the Board of Directors toshare information<Main themes of dialogue, opinions from shareholders and investors>
ThemesOpinions

Strengthening of IR
activities

Request the Company to explain its growth strategy in an easy-to-understand mannerfrom an investor’s perspective, thereby improving its share price, without leaving its shares
priced at a discount. In addition, disclosure in light of TSE request (management consciousof capital costs and share prices) should be made as soon as possible.

Dividend payout ratio

The Company targets a dividend payout ratio of 30% in the final year of the current
Medium-Term Management Plan, but that is not enough as a target. Please aim for 30%,
starting from the current fiscal year.

Financial results briefings

Please make use of the Internet to help people from abroad participate.

Anti-takeover measures

Should be abolished because they have a negative impact on share prices.

Financial Results Briefing for FY2024.3

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Key Achievements of the Dialogue
Themes

Details of measures implemented

Strengthening of IR
activities• Disclosed the “Measures to Realize Management Conscious of Capital
Costs and Share Prices” in response to the TSE request (November 2023
and May 2024)• Launched an IR website for individual investors (January 2024)• Participated in an IR fair for individual investors (online event) for the firsttime (January 2024)• Expanded the scope of financial results materials published on IR website(May 2024)• Launched a corporate website in English and disclosed the summary of
consolidated financial results in English for the first time (May 2024)• Disclosed dialogue with shareholders (May 2024)

Dividend payout ratio• Dividends for FY2024.3 increased 10 yen to 95 yen per share from 85 yen,
improving dividend payout ratio to 29.5% from 20% in the prior period• Aim for total return ratio of 50% in FY2028.3

Financial results
briefings• Hosted financial results briefing sessions for the 97th Term physically aswell as online for the first time (May 2024)

We will continue to engage in constructive dialogue with shareholders, investors, and others
to gain an understanding of specific management strategies and plans, take appropriate
measures to respond to opinions received, and work to enhance corporate value
Financial Results Briefing for FY2024.3

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Policy of the Next MediumTerm Management Plan
<Note>The next medium-term management plan will be officiallyannounced in March 2025, and only an overview is provided today

Financial Results Briefing for FY2024.3

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Policy of the next Medium-Term Management Plan
“KAWAI 10-Year Vision”
Reason for making the next medium-term management plan a 10-year plan
✓ Although there is considerable room for earnings growth in the musical instrument education
business, which is our main business, it is not realistic to achieve significant growth over the periodof three years, as in the previous medium-term management plans, because it takes time to expand
market share in mature markets and develop emerging markets✓ Therefore, by steadily and continuously implementing the growth strategy presented on the next
slide, we will realize significant growth over the next 10 years from the next fiscal year (andaccelerate growth investment starting from this fiscal year)
Target for the first year (FY2026.3)✓ ROE 5% or more (to get ROE back to 5% or more as early as possible)* The target values for FY2035.3 are subject tochange at the time of the announcement of thenext medium-term management plan

10-year targets (up to FY2035.3)(Millions of yen)

FY2024.3

FY2025.3

FY2035.3*(actual)(forecast)(targets)

Net sales

80,19277,500110,000

Operatingprofit

3,255

1,000

10,000

ROE

6.9%

1.0%

12%

Dividend
payout ratio

29.5%

TBD

Financial Results Briefing for FY2024.3

50%(Total return ratio)

To achieve 50%
by FY2028.3

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Growth Strategy of “KAWAI 10-Year Vision”
Key strategies

Strategy aimed at achieving the “10-year targets”
Strengthening investment in the musical instrument education business will
make it possible to achieve the 10-year targets

Strengthen investment in the musical instrument education business: Growth by“producing the world’s finest pianos”✓ Increase value added and expand market share by “improving quality,” “raising brand recognition,”and “expanding sales channels” for keyboard musical instruments (strengthening investment inoverseas markets, in particular)<Improving
quality> “World’s finest pianos,” “digital pianos that are closest to grand pianos,” andImproving
Producingthe “world’s
finest pianos,”producing“digitalthat are closest to grand pianos,”qualityincreasing
the numberof tuners
sentpianos
overseasand increasing the number of tuners sent overseas<Raising
brand
recognition>
Raisingbrand
Use of branding companies, strengthening relationships with artists, andUserecognitionof branding companies
and strengthening
ties withartists
and individual piano instructors
strengthening
ties with individual
piano
instructors<Expanding sales channels>
Expanding sales
Expand a network of dealers and strengthen sales staff education
channels
Investin expanding a network of dealers and strengthen sales staff education✓ Expand the product lineup of keyboard musical instruments✓ Cultivate/expand overseas emerging markets✓ Optimize organization/staffing and strengthen human capital investment to enable the above

Financial Results Briefing for FY2024.3

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Growth Strategy of “KAWAI 10-Year Vision”
Strategies to goeven further

Strategies aimed at growth exceeding even the “10-year targets”
Serve as a backup plan for key strategies as well

Strengthen investment in other than the musical instrument education business
Precision
metal

Increase in new projects by strengthening sales
capabilities

Educational
toys

Strengthen product branding, develop new products, andexpand overseas

IT services

Increase orders received for system construction
projects for medical institutions and develop new
software packages, by expanding and reinforcing humancapitalStrengthen the development of new services
M&A and business alliances to accelerate and strengthen the implementation ofvarious strategies
Financial Results Briefing for FY2024.3

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49

The Company’s earnings forecasts and future predictions described in this document are based on information available to the Company atthe time of preparation. Actual results and achievements may differ materially from these forecasts due to changes in various external andinternal factors, such as economic conditions, the intensification of selling competition and risks associated with intellectual property rights.