KAWAI MUSICAL INSTRUMENTS MANUFACTURING CO.,LTD.

Business Details

The segment manufactures and sells pianos (grand and upright), digital pianos, electronic organs, wind and percussion instruments, and other instruments, in addition to operating Music School / Gymnastics School, providing Instrument Tuning & Repair Service, and publishing and selling sheet music and educational materials. Domestically, the business is conducted through directly operated stores and a network of sales agents, while overseas expansion is carried out globally through consolidated subsidiaries such as Kawai America, Kawai Europe, and Kawai Musical Instruments Manufacturing (China). Manufacturing bases include Indonesia (PT. Kawai Indonesia) and China (Shanghai Kawai Electronic). This core business accounts for approximately 78% of consolidated net sales.

Recent Overview

Both sales and losses worsened due to weak sales in Europe and China, while North America and Japan remained solid.

In the Musical Instrument Education Business for FY2026 (ending March 2026), net sales were ¥56,492 million (down ¥1,886 million year on year) and operating loss was ¥852 million (worsening by ¥150 million year on year). In China, demand declined due to the continuation of the "double reduction" policy, while in Europe, sales of entry-level upright pianos and digital pianos were sluggish amid intensified price competition caused by rising retail inventory. On the other hand, sales in North America remained solid due to brand awareness enhancement initiatives, and in Japan, the GX Series rebranding and the Shigeru Kawai Series performed well. The company opened new directly operated stores in Australia (Brisbane, Adelaide) and the United States (Denver, St. Louis) to expand sales channels. Brand value continues to rise, supported by the selection of the SK-EX at prestigious international competitions.

Key Products

Growth Drivers

• Solid trend in keyboard instrument sales in the North American market driven by brand awareness enhancement initiatives
• Strong sales of the domestic GX Series grand piano rebranding and the Shigeru Kawai Series
• High value-added strategy and market share expansion under the 8th Medium-Term Management Plan, "KAWAI's Ten-Year Plan"
• Expansion of sales channels through the opening of new directly operated stores in Australia and the United States (four stores opened between July 2025 and February 2026)
• Enhanced brand reputation from SK-EX selections at international competitions such as the Chopin, Paderewski, and Takamatsu International Piano Competitions
• Strengthened digital marketing and dealer development, including e-commerce channels
• Development of new markets such as Latin America

Risks

• Continuing downward trend in keyboard instrument demand in China due to the ongoing "double reduction" policy
• Intensified price competition in the European market amid rising retail inventory levels (particularly for entry-level upright pianos and digital pianos)
• Risk that the overall recovery pace of keyboard instrument sales falls short of expectations
• Profit pressure from rising material costs and changes in product mix
• Uncertainty over the global economic outlook due to U.S. tariff policy and geopolitical risks
• Weakening consumer sentiment and reduced demand due to rising prices
• International risks stemming from the prolonged Ukraine crisis and instability in the Middle East

Business Details

This segment consists of three businesses: manufacturing of Special-Profile Rolled Metal Products for Electronic/Electrical Components (Kawai Seimitsu Kinzoku Co., Ltd.), manufacturing of Materials for Automotive Parts (Kawai Hyper Wood Co., Ltd.), and manufacturing and sale of soundproof rooms and acoustic materials (Kawai Onkyo System Co., Ltd.). Products are basically sold to customers by the reporting company, and the segment plays a role in supporting the group's overall profitability while the Musical Instrument Education Business posts an operating loss. In FY2026 (ending March 2026), it continued to function as a profitable segment, but profit decreased year on year due to rising material prices and changes in product mix.

Recent Overview

Sales increased, but operating profit decreased ¥102 million year on year due to rising material prices and changes in product mix.

In the Materials Processing Business for FY2026 (ending March 2026), net sales increased to ¥10,343 million (up ¥613 million year on year), driven by strong performance in the metal business amid growing semiconductor demand and contributions from the acoustics business with solid soundproof room sales. On the other hand, operating profit came to only ¥756 million (down ¥102 million year on year) due to rising material prices and changes in product mix, and the operating margin declined from 8.8% in the prior period to 7.3%. The opening of the dedicated soundproof room showroom in Tokyo (October 2025) has contributed to an increase in orders.

Key Products

Growth Drivers

• Increased sales of metal material processed products for electronic/electrical components driven by growing semiconductor demand
• Strong sales of "Nasal" soundproof rooms and increased orders resulting from the opening of the Tokyo showroom
• Serving as the group's only stable operating profit segment, complementing profitability while the Musical Instrument Education Business posts an operating loss
• Development of new customers and expansion of sales channels in the acoustics business

Risks

• Profit pressure from rising material prices (a factor reducing operating profit by ¥102 million year on year in FY2026, ending March 2026)
• Risk of profitability fluctuations due to changes in product mix
• Uncertainty in order trends for automotive-related parts
• Risk of relative decline in contribution if losses in the Musical Instrument Education Business continue to expand, given the segment's expected role in supporting overall group profitability

Business Details

This segment engages in IT equipment sales and maintenance, computer software development and sales, financial services, and insurance agency business, among others. Its main customers are primarily corporate clients such as medical institutions. Although it accounts for a relatively small share of consolidated net sales (¥72,049 million), approximately 7.2%, it was elevated to an independent reporting segment from FY2025 (ended March 2025) due to its growing quantitative significance. In FY2026 (ending March 2026), the segment achieved increased sales and profit, primarily driven by increased orders for IT equipment sales to medical institutions.

Recent Overview

Achieved increased sales and profit driven by increased orders for IT equipment sales to medical institutions.

In FY2026 (ending March 2026), net sales reached ¥5,213 million (up ¥403 million year on year, +8.4% year on year), driven by increased orders for IT equipment sales to medical institutions, among other factors. Operating profit was ¥271 million (up ¥34 million year on year, +14.4% year on year), achieving increased sales and profit. Segment assets stood at ¥2,852 million, down ¥71 million from the prior period-end (¥2,923 million). The segment's share of consolidated net sales rose to approximately 7.2% from approximately 6.6% in the prior period, indicating a growing presence.

Key Products

Growth Drivers

• Continued sales growth driven by increased orders for IT equipment sales to medical institutions
• Strengthened management oversight resulting from the establishment as an independent reporting segment (from FY2025, ended March 2025) due to growing quantitative significance
• Expansion of the corporate customer base accompanying the broadening of the group's overall sales channels

Risks

• Orders for IT equipment for medical institutions are one-off and project-based, so fluctuations in order trends directly affect performance
• The segment's overall sales scale (¥5,213 million) is small, limiting its contribution to overall group performance
• Challenges in maintaining competitiveness amid intensifying competition in the computer software development business
• Risk of order fluctuations due to changes in the external environment (economic trends, investment restraint by medical institutions, etc.)