6th Medium-Term
Management Plan
Re s o n a t e 2 0 21
“Resonate 2021” represents a slogan for the 6th Medium-term Management Planfor the period from 2019 to 2021.

March 27, 2019

Kawai Musical Instruments Mfg. Co., Ltd.

Summary of Resonate 2018, the 5th Medium-Term Management Plan

Building
foundation

Key Strategies

Challenging for further
growing of core business

•
•
•
•

Expanded the sales of “Shigeru Kawai Grand Pianos”, a series of flagship models.
Established the stores in Dallas, Hamburg, and incorporated a wholesale company in France.
Renovated the stores in Fukuoka and Sendai, Relocated the store in Hamamatsu.
Built and promoted the foundation for medium- and long-term growth of business in China.
Created the CSCLF (China Soong Ching Ling Foundation) Kawai Music Welfare Fund and opened the Kawai Music Schools.
Concluded the basic agreement for cooperation in respect of piano technical service business between the China MusicalInstrument Association and KAWAI.

• Released high value added products of a new category, which include:
Manufacturing innovation“NOVUS NV10”, a hybrid digital piano“ AURES”, a hybrid upright piano

Expanding of material
processing business• Expanded an amount of orders for materials which correspond to parts used for CVT and semiconductors inmetal business.

Investment andcapitalization policy• Conducted the capital investments to improve productivity and enhance the distribution channel of stores
under direct management and so on.
• Conducted acquisition of treasury stocks.

Establishing the brand• Turkish pianist Can Çakmur won the first place playing a Shigeru Kawai SK-EX full concert grand piano at
the 10th Hamamatsu International Piano Competition.
• Released “CRYSTAL GRAND CR-1M” on the 90th anniversary of company.

Enhancing employeecompetence• Enriched the content and the extent of education and training depending on job careers, and facilitated jobrotation.
• Strengthened employee competence by sales organization reform.

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Copyright 2019 Kawai Musical Instruments2

Summary of Resonate 2018, the 5th Medium-Term Management Plan
4th

Business trend

5th Medium-term Management Plan

FY2016.3

FY2017.3

FY2018.3

FY2019.3[Unit: Billion yen]

Actuals

Plan

Actuals

Plan

Actuals

Plan

Prospect

Sales

69.25

68.00

66.54

71.00

70.79

74.00

72.50

Operating income

2.66

2.50

2.31

2.90

2.74

3.70

3.70

Operating income
margin

3.8％

3.7％

3.5％

4.1％

3.9％

5.0％

5.1％

Ordinary income

2.62

2.30

2.57

2.70

3.06

3.50

3.90

Current net income

1.79

1.60

1.63

2.05

1.95

2.10

2.10

ROE

9.3％

7.6％

7.6％

9.1％

8.6％

8.6％

8.7％

Sales andOperating income
trend[Unit: Billion yen]

Sales - Plan

Sales - Actual

Operating income - Plan

Operating income - Actual

80

4

60

3

40

2

20

1

0

0
FY2016.3 - ActualR e s o n a t e 2 0 21

FY2017.3 - Actual

FY2018.3 - Actual

FY2019.3 - Prospect
Copyright 2019 Kawai Musical Instruments

3Summary of Resonate 2018, the 5th Medium-Term Management Plan
Sales by businesscategories[Unit: Billion yen]

FY2016.3 - Actual

80.00
60.00

55.24

FY2019.3 - Plan

FY2019.3 - Prospect

60.70 59.07

40.00
20.00

10.28

9.88

10.08

3.72

3.42

3.35

0.00
Musical Instruments andEducation Related

Operating income
by businesscategories[Unit: Billion yen]

FY2016.3 - Actual

2.89

3.00

2.00

Material processing

FY2019.3 - Plan

1.89
0.88

0.89

0.88
-0.03 -0.03

0.00
Musical Instruments andEducation Related-1.00

FY2019.3 - Prospect

2.85

1.00

R e s o n a t e 2 0 21

OthersMaterial processing

0.02

OthersCopyright 2019 Kawai Musical Instruments

4Summary of Resonate 2018, the 5th Medium-Term Management Plan
(Billion yen)

Keyboard
instruments
Sales plan byregions

10.81

12
10

（%）

China
8.68

150

(Billion yen)

North America

10

100

8.03

7.80

2
50
FY2016.3 - Actual

150

12

5.29

6.16

125

100

4
75
2

75

(Billion yen)

Others050

FY2016.3 - Actual

150

Growth rate of
piano units sold

10

125

100

6
4

0

50

FY2019.3 - Prospect

FY2019.3 - Prospect

（%）

2.46

2.43

75

2

FY2016.3 - Actual

100

6

0

50
FY2016.3 - Actual

FY2019.3 - Prospect

Growth rate of digital
piano units soldRate

FY2016.3 Actual

FY2019.3 Prospect

$

121.1

110.4

€

134.3

130.4

8

6

R e s o n a t e 2 0 21

50
FY2019.3 - Prospect

12

10

6.49

6.02

125

2

FY2016.3 - Actual

（%）

10

4

0

FY2019.3 - Prospect

Europe

150

75
2

0

（%）

Japan

8
100

6

75

8

125

4

4

(Billion yen)
12

8

8

(Billion yen)

150

12

125

6

（%）

Foreign exchange fluctuations rate at strong yen[Operating income]$＋35 million yen/FY€▲27 million yen/FY
Copyright 2019 Kawai Musical Instruments

5

KAWAI’s Aims Management Philosophy• We create a rich, pleasant environment for living.
• We provide our products and services with our customers’satisfaction as the first priority.
• We carry out our corporate activities toward the future.
• We take good care of our employees and aim to make the
Corporation fair and open.
Aim to become the top brand of piano manufactures that is Kawai’s
foundation and origin of business. Continue to grow by improving thecorporate value and brand power through pursuing customer
satisfaction and development of music culture.
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Copyright 2019 Kawai Musical Instruments

6Long-Term Vision

 Further strengthen the Sales ability, the Competitiveness,
the Productivity, and the Organizational ability in order toenhance KAWAI brand power and enrich the profitability andcorporate value in a dramatic manner.
 Aim to become No.1 worldwide in piano market, andenhance the profitability from Musical Instruments andEducation Related Business that is the core business of
Kawai.

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Copyright 2019 Kawai Musical Instruments

7

Positioning of 6th Medium-Term Management Plan

2027 - the 100th
anniversary

2025-2027
8th Medium-term Management Plan
Evolving toward the future2022-2024
7th Medium-term Management Plan
Acceleration of growth

2019-2021
6th Medium-term Management Plan
Enhancing business foundation for further growth

2016-2018
5th Medium-term Management Plan
Improvement of profitability and achieving operating income margin of 5% (Plan)

R e s o n a t e 2 0 21

Copyright 2019 Kawai Musical Instruments

86th Medium-Term Management Plan “Resonate 2021”■ Basic Principles
Promote the prioritized strategies and businessstrategies for building the 100-year brand, andenhance business foundation for each business.

Productivity

Organizational ability

Competitiveness andEnhance further development of the prioritized businessservices

Sales ability■ Prioritized Strategies
Enhance “Sales ability”, “Competitiveness andservices”, “Productivity”, and “Organizational
ability” and unite them to aim the profitability fromMusical Instruments and Education Related
Business and the business expansion. And thenachieve the further growth of KAWAI.

■ Business Strategies

so that the medium and long term plan can be achieved.
• Overseas evolution of education and technical service
business.
• Material processing businessR e s o n a t e 2 0 21

Copyright 2019 Kawai Musical Instruments

9

Prioritized Strategies

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6th Medium-Term Management Plan Prioritized Strategies
 Enhancing Sales Ability
Trend in mature markets: the sales are expected to remain at the same level or grow slightly at the several percentage each year
in Japan, North America, and Europe.
• Enhance the sales of “Shigeru Kawai Grand Pianos”, a series of flagship models, and Hybrid Pianos that are with high value added.
• Enhance the sales channel.

Overseas markets

Japanese market• Expand the sales of the direct retail stores at Houston,
Dallas, and Hamburg, and the wholesale in France andRussia.

• Establish the system which direct sales, technical service, music
schools and wholesale divisions closely cooperate with one another,and aim to enhance the sale foundation by using this system andCRM (i.e. customer relationship management).
• Renovate the flagship stores and enhance the sales ability in Tokyo
Greater Area.

DirectSales
Technical
Service
HoustonDallasHamburg• Increase amounts of units sold and improve the profitability by enhancing
the customer’s reliance on the corporation.
• Expand Musical Instruments and Education Related Business by increasing
the number of students of piano lessons.

R e s o n a t e 2 0 21

Wholesale

KAWAI Omotesando

Music
Schools
Copyright 2019 Kawai Musical Instruments

116th Medium-Term Management Plan Prioritized Strategies
 Enhancing Sales Ability
Trend in the Chinese market: this is the largest market
worldwide, pricing range of which is wider as in Europe and US.
• Enhance business affiliated with the partners, covering theentire process from product planning to
manufacturing/distribution.
• Expand sales of digital piano.
• Enhance coordination between music schools business andtechnical service business to facilitate expansion of thesebusinesses.

Trend in emerging markets: Musical Instruments andEducation Related Business is growing steadily, and is
expected to continue to grow in the medium and long term.
• Accelerate expansion of instrument sales and establishmentof music schools in the South-east Asia.
• Promote market development in Central and South America,
Middle and Near East, and Africa.
Kolkata, India

R e s o n a t e 2 0 21

Copyright 2019 Kawai Musical Instruments

126th Medium-Term Management Plan Prioritized Strategies
 Enhancing the Competitiveness and Services• Continue to conduct material and fundamental
R&D in order to improve quality andcompetitiveness of pianos, including “Shigeru
Kawai”, and pursue enhanced customer
satisfaction.
• Enhance development of hybrid products anddigital pianos in pursuit of touch and sound.
• Establish the function of product planning anddevelopment in production department in order toaccommodate the market needs.

• Enhance product development targeting China.
• Increase the strength and speed of productdevelopment in order to carry out strategies forbusiness in areas with a weaker market share.

AURES

R e s o n a t e 2 0 21

NOVUS NV10
Copyright 2019 Kawai Musical Instruments

136th Medium-Term Management Plan Prioritized Strategies
 Enhancing the Competitiveness and Services• Improve the brand power by strengthening relation
with international piano competitions, pianists andartists.
• Train MPA (Master Piano Artisan) and enhance aftersales service in order to increase customer
satisfaction.
• Have an integrated management system in place
which covers product planning, designing andpromotion in order to enhance brandmarketing.

© Hamamatsu International Piano CompetitionR e s o n a t e 2 0 21

Copyright 2019 Kawai Musical Instruments

146th Medium-Term Management Plan Prioritized Strategies
 Enhancing Productivity
Enhance the global and flexible production systems, and make investments mainly on facilities in furtherance ofimprovement of QCD*. (* Quality, Cost, Delivery)

Piano• Succeed KAWAI’s only one technology to the next generations at Ryuyo
Factory, a mother factory of the Company, and progress the piano
production globally for building the 100-year brand.
• Enhance the innovation and capacity of the production line for Shigeru
Kawai Grand Piano.
• Introduce a new production system to promote cost management andoptimized production to deal with change of economic environments in atimely and flexible manner.

Digital piano• Enhance the production system to deal withincrease in sales worldwide, in particular in China.
• Create an in-house production process, andengage in continuous cost reduction activities.

R e s o n a t e 2 0 21

PT.Kawai Indonesia Plant 3

Copyright 2019 Kawai Musical Instruments

15

6th Medium-Term Management Plan Prioritized Strategies
 Enhancing Organizational Ability
Enhance the expertise and diversity of employees to lead KAWAI Group dynamic operation in
the medium and long term.
• Adopt and promote “Sound Governance (Health andProductivity Management)” wherein employees canwork lively.
• Enhance the expertise and ability by expanding
educational and training programs according to job
positions.
• Promote a support system and reform the work style so
women can both work and raise a family or provide
nursing care.
• Promote training of the employees who can engage inglobal business.

Enhancing business foundation• Enhance the cross-sectional organizational system for growth and the
management process.
• Improve the productivity throughout the corporation, and promote theefficiency of daily routine work.

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Copyright 2019 Kawai Musical Instruments

16

Business Strategies

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6th Medium-Term Management Plan Business Strategies
 Overseas Evolution of Music Education and Technical Service Business
Promotion of building foundation to increase the overall KAWAI’s brand power
China

South East Asia

Music schools business• Enhance affiliated business with the
China Soong Ching Ling Foundation.
• Develop lessons based on diversified
needs.
• Organize instructors certified by KAWAI.
• Expand regions of educational institutions
and musical instrument shops thatprovide lessons.

Technical service
business• Expand piano technician
training business incollaboration with China Music
Instrument Association.
• Expand services of contracting
technical service business.

VietnamThailand

Malaysia
China Soong Ching
Ling Foundation
CSCLF Kawai Music
Welfare Fund
The China Soong Ching
Ling Science & Culture
Centre For Young People

R e s o n a t e 2 0 21

China Musical Instrument
Association
Educational
institutions
and musicalinstrument
shops

CMIA & KAWAI PIANO TUNERFEDERATION
Training
business

Contracting
technical service
business

Singapore

PT. Kawai Music School Indonesia

Copyright 2019 Kawai Musical Instruments

18

6th Medium-Term Management Plan Business Strategies
 Material Processing Business
Metal Business

Finishing Business• Enhance the production system to adapt to increasedorders for CVT (Continuously Variable Transmission)
parts, which will require 1.8 billion yen capital investment(total for 3 years).
• Enhance development and distribution channel of new
products for adapting to EV (Electric Vehicle).

Develop unique finishing technologies, and expand orders
from customers by boosting the cost competitiveness.

R e s o n a t e 2 0 21

Copyright 2019 Kawai Musical Instruments

196th Medium-Term Management Plan Business Objectives
Business trend

FY2019.3 - Prospect

FY2020.3 - Plan

FY2021.3 - Plan

FY2022.3 - Plan

Sales

72.50

73.00

74.00

76.00

Operating income

3.70

3.10

3.60

4.20

Operating income margin

5.1％

4.2％

4.8％

5.5％

Ordinary income

3.90

3.10

3.60

4.20

Current net income

2.10

1.90

2.25

2.65

ROE

8.7%

7.5%

8.3%

9.2%

110.4 yen
130.4 yen

110.0 yen
125.0 yen

110.0 yen
125.0 yen

110.0 yen
125.0 yen

[Unit: Billion yen]Exchange rate

US$
EURO

The current net income is this term’s net profit attributed to the shareholders of the parent company.

Sales andOperating income
trend[Unit: Billion yen]

Sales

Operating income

80

5

60

4

3

40

2

20

1

0

0
FY2017.3 - ActualR e s o n a t e 2 0 21

FY2018.3 - Actual

FY2019.3 Prospect

FY2020.3 - Plan

FY2021.3 - Plan

FY2022.3 - Plan
Copyright 2019 Kawai Musical Instruments

20

6th Medium-Term Management Plan Business Objectives[Unit: Billion yen]

Sales bybusiness
categories

FY2019.3 Prospect

FY2022.3 - Plan

Sales growthrate in threeyears[Unit: Billion yen]

88

72.50

78

MusicalInstruments
and Education
Related

68

MusicalInstruments andEducation Related

59.07

62.65

+6.0%

+3.58

58

＋0.02

▲0.10

Material
processing

Others76.00

48

Material
processing

10.08

10.10

＋0.1%

Others

3.35

3.25

▲2.9%

38
28
列1 - Prospect 列2FY2019.3

列3

列4

列5 - Plan
FY2022.3[Unit: Billion yen]

Operatingincome bybusiness
categories

FY2019.3 Prospect

FY2022.3 - Plan

Sales growthrate in three
years

2.85

Material
processing

0.88

Others

0.02

▲0.02

－

Adjustments*

▲0.05

▲0.06

－

3.15

+10.5%

Others+0.30＋28.4%

3.80
3.70* “Adjustments” are elimination of inter-segment transactions, and whole company expense notdistributed to each segment.

[Unit: Billion yen]

▲0.01

4.20

Adjustments

4.00

Material
processing

3.90

1.13

▲0.04

4.20
4.10

MusicalInstruments andEducation Related

R e s o n a t e 2 0 21

+0.25

4.30

3.60
3.50
3.40

3.70
MusicalInstruments
and Education
Related

列1 - Prospect
列2
FY2019.3

列3

列4- Plan
列5 FY2022.3
列6Copyright 2019 Kawai Musical Instruments

21

6th Medium-Term Management Plan Business Objectives
China12.58(Billion yen)

Keyboard
instruments
Sales plan byregions

12

10.81

（%）
150

(Billion yen)

North America

125

100

6

7.80

7.86

2

100

6

50
FY2019.3 - Prospect

150

12

50

7.02

125

6.16

(Billion yen)

Others10050FY2022.3 - Plan

（%）
150

125

Growth rate of
piano units sold

Growth rate of digital
piano units soldRate

FY2019.3 Prospect

FY2022.3 Plan

$

110.4

110.0

€

130.4

125.0

8
100

6
4

75
2

100

6
4

2.43

2.91

75

2

0

50

FY2019.3 - Prospect

75

FY2019.3 - Prospect

FY2022.3 - Plan

12

10

100

6

2

FY2019.3 - Prospect

（%）

6.49

125

4

0

FY2022.3 - Plan

Europe

6.79

75
2

0

150

10

8

75

R e s o n a t e 2 0 21

125

4

4

（%）

Japan

(Billion yen)
12

10
8

8

8

150

12

10

(Billion yen)（%）

FY2022.3 - Plan

050
FY2019.3 - Prospect

FY2022.3 - Plan

Foreign exchange fluctuations rate at strong yen[Operating income]$＋34 million yen/FY€▲29 million yen/FY

Copyright 2019 Kawai Musical Instruments

22

6th Medium-Term Management Plan Enhance the Corporate Value Capital Investment[Unit: Billion yen]

Investment for growth in an active way
FY2019.3 - Prospect

FY2020.3 - Plan

FY2021.3 - Plan

FY2022.3 - Plan

Musical Instruments andEducation Related
Business

Production facilities, store
remodeling, and new music schools
establishment, and others.

1.00

1.15

1.00

1.33

Material Processing
Business

Metal business production facilities,
and others.

0.60

0.75

0.83

0.63

OthersIn-house information technology
investments, and others.

0.40

0.40

0.17

0.04

Total

2.00

2.30

2.00

2.00

Depreciation trend of capital investment[Unit: Billion yen]

Capital investment amount

Depreciation

3.00
2.00
1.00

2.03
1.58

1.71

2.00

2.30
1.75

1.90

2.00 1.95

2.00 1.95

FY2020.3 - Plan

FY2021.3 - Plan

FY2022.3 - Plan

1.20

0.00
FY2017.3 - ActualR e s o n a t e 2 0 21

FY2018.3 - Actual

FY2019.3 - Prospect

Copyright 2019 Kawai Musical Instruments

23

6th Medium-Term Management Plan Enhance the Corporate Value
 Return to Shareholders
Basic Principles

Target the total return ratio 30%.
Acquisition of treasury stock

Total dividend
Total return ratio[Unit: Billion yen]

0.5

21%

51%

25%

35%

23%

27%

63%

Total dividend

20%
30%
and
over

0.4

0.3
0.2
0.1
0.0

4 yen/
share

4 yen/
share

4.5 yen/share

45 yen/share*

48 yen/share

50 yen/share

50 yen/share

50 yen/share

FY2012.3 Actual

FY2013.3 Actual

FY2014.3 Actual

FY2015.3 Actual

FY2016.3 Actual

FY2017.3 Actual

FY2018.3 Actual

FY2019.3 Prospect

FY2020.3 Plan

*Based on a reverse stock split, 1 share is issued for 10 ordinary shares.

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Copyright 2019 Kawai Musical Instruments

246th Medium-Term Management Plan Enhance the Corporate Value Addressing ESG
KAWAI Group’s activities that contribute to creation of a sustainable society
Environments• Address actively procurement of materials and products that areless Substance of Concern, afforestation activities, and others forprotection of the environments and resources in a whole Kawai
group.

Society• Engaging in, as a musical instrument manufacturer, enhancing
and providing support to young musicians, through giving
opportunities such as Shigeru Kawai International Piano
Competition. Conducting music spread activities that contributemusical culture in each country.

Governance• Committing to building a highly transparent corporate governancesystem, and establishing the 100-year brand and achieving
continuous growth.

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Copyright 2019 Kawai Musical Instruments

25

In this document, the current plans and business prospects of KAWAI are based on information available as of the date hereof.
Please note that actual business results may vary substantially, depending on various factors, such as economic circumstances.