The financial results briefing for the second quarter of the fiscal year ending December 31, 2023 was held online on August 9, 2023.
Speaker: Kohei Tanabe, President, Representative Director, and Kazuhiro Ogawa, Managing Executive Officer
Cautionary statement
This is a summary of the question-and-answer session at the financial results briefing.
This contains forward-looking statements concerning the financial forecasts, plans, strategies of the Company, which are not historical facts. They are based on management's assumptions made in accordance with information available at the time of the briefing (as of August 9, 2023) and are subject to risks and uncertainties. Actual results may differ materially from these forecasts.
Q1：In order to achieve the full-year performance targets, net sales of 32.5 billion yen and operating profit of 4.4 billion yen must be achieved in the second half of the year. How are you going to go about achieving this?
A1：Since January, we have been struggling with a shortage of parts amid a rush of new products. As of the second quarter, we started manufacturing products using alternative parts. In addition, the new building in the Thailand factory began operations in April, strengthening the production system. We have also been launching new products since July, and we aim to achieve the budget by making up for backorders and responding to full-scale sales of new products.
Q2. Production volume, including the backlog of orders, has exceeded the initial forecast. Are you able to handle this with your current production system?
A2：As you can see on slide 9, we achieved the highest quarterly amount of production value for our company in the second quarter. Behind this achievement was the resolution of almost all difficulties in procuring parts, the beginning of operations of the new building in the Thailand factory in April, and a resulting significant increase in production capacity. By responding to the full-scale launch of new products and eliminating the backlog of orders through a flexible production system, we expect production value in the third quarter to exceed that of the second quarter. We are already in the middle of the third quarter, and production is being carried out as planned, and we expect that it will continue to do so.
Q3. How much does a Roland DG Connect subscription cost? Also, how many paid users are you aiming for?
A3：There are two subscription plans: the Professional Plan ($30/month) and the Premium Plan ($50/month). The paid service functions are for power users who manage multiple devices, so the target users are limited, but we will continue to promote awareness and expand our services.
Q4. You fell short of your sales target by 3.8 billion yen. Specifically, what products and regions caused this?
A4：By category, VC-Other had the greatest impact, with a 1.4 billion yen shortfall due to difficulty in procuring parts for resin printers and UV printers. For VC-SOL, supply of the VG3/SG3 series was hindered. By region, sales in the US fell short by 2.2 billion yen. As the initial forecast amount was large, the impact was also large. The next biggest impact was in Europe, where sales fell short by 0.8 billion yen.
Q5. Whose technology is DIMENSE?
A5：It was VEIKA’s technology (before the wallpaper business was transferred). VEIKA, a company specializing in chemistry, entered the wallpaper market by developing a combination of ink and media based on our printers. However, when expanding globally, their own efforts proved to be insufficient. We decided to acquire VEIKA as a subsidiary because we can expect synergistic effects to arise from VEIKA’s technology and our sales network when developing the wallpaper market, which has the hidden potential of going from analogue to digital.
Q6. Embossed printing can also be done with UV printers, so please tell us how DIMENSE is different.
A6：When expressing embossed effects on a sheet-like material with a UV printer, it is necessary to pull back the media and layer the ink many times. DIMENSE expresses embossed effects by making a sheet printed only once foam using a special device. There is a big difference in productivity and speed.
Q7. What parts were in short supply during the first half of the year, and what is your outlook for parts procurement in the second half?
A7：There were shortages in power supply units—a part used for a range of products—which had a significant impact. We took measures to address this, such as adopting alternative parts and switching to procurement from multiple suppliers, and currently this problem has been resolved. Although there are still some parts for which procurement status needs to be closely watched, we expect to avoid concerns about parts procurement from the second half onward through close cooperation with our suppliers.
Q8. You have set a total return ratio of 50%. Are you planning to acquire treasury shares?
A8：At present, we have decided on an interim dividend of 55 yen per share. We anticipate a year-end dividend of 80 yen and a full-year dividend of 135 yen, with a payout ratio of approximately 30%. In addition, our company bought back its own shares in January and February of this year, resulting in a return ratio of approximately 10%. At present, we expect a total return ratio of around 40%, and regarding the remaining 10%, we will consider whether to buy back our own shares or distribute them as dividends, taking the situation into consideration.
