Business Report April, 2016 to June, 2016 (Q1 of FY ending March 31, 2017) Wacom Co., Ltd. (TSE Sec )

Transcription

1 Business Report April, 2016 to June, 2016 (Q1 of FY ending March 31, 2017) Wacom Co., Ltd. (TSE Sec )

2 Contents Index 3-4 Q1 FY 03/17 (Apr. to Jun. 2016) Results Overview 5-6 Consolidated P/L, Operating Expenses Comparison 7-8 Consolidated Sales/Profit Comparison 9-10 Business Segment Sales/Profit Comparison Business Highlights Sales by Product Line Sales by Region, Sales Changes for Local Currencies Consolidated B/S, C/F FY 03/2017 Business Strategies FY 03/2017 Financial Forecast Shareholders Return Policy for FY 03/ Review of Wacom Strategic Business Plan SBP Our Branding 57 Disclaimer All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 2

3 Q1 FY 03/17 (Apr. to Jun. 2016) Results Overview Operating environment The recovery of global economy plateaued driven by growing uncertainties such as the slowdowns in Europe and China, a sluggish Japanese recovery, and UK s exit from the EU. Japanese Yen s appreciation against US Dollar and euro from the end of last year further accelerated from this April. Yen strengthened against emerging currencies such as Renminbi. In addition to the penetration of mobile products, cloud computing and SNS, the emergence of new fields such as IoT and VR in the IT industry is causing major changes in our business environment. Performance overview Consolidated net sales fell below the previous comparable fiscal period, due to the strong Yen and decreased sales in the Brand Business segment during product lifecycle transitions. We posted operating and net Losses due to higher R&D expenses for new products, and depreciation of global IT infrastructure. Sales in the Brand Business segment fell below the previous comparable fiscal period. Creative Business shipment increased in unit base but overall sales decreased due to the strong Yen, product mix change, and the transitions to new models. Consumer Business and Business Solution also struggled by foreign exchange rates and changes in the market environment. Sales in Technology Solution Business declined mainly due to the strong yen and the reduced tablet demand for Turkish government project even though the sales in smartphone category increased. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 3

4 Q1 FY 03/17 (Apr. to Jun. 2016) Results Overview Financial Summary Business Performance Q1 FY 03/17 YOY Change Net Sales 13,261 mil -12.4% Operating Income -1,447 mil -- ( Prev. 1Q: 29 mil ) Ordinary Income -1,481 mil -- ( 26 mil ) Net Profit aft. Tax -1,147 mil -- ( -235 mil ) Financial Indices Q1 FY 03/17 1Q FY 03/2016 EPS JPY JPY BPS (Book Value per Share) 153 JPY 181 JPY (For reference) Average Forex rate Q1 FY 03/17 YOY Change 1 USD JPY -10.1% (Strong JPY) 1 EUR JPY -8.5% (Strong JPY) (Note) Net Profit is equivalent to net profit attributable to shareholders of Wacom Co., Ltd. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 4 (JPY)

5 Consolidated P/L (Unit: Million JPY) Q1 FY 03/16 Q1 FY 03/17 YOY Change 04/15-06/15 04/16-06/16 Amount Ratio Net Sales 15,142 13,261-1, % Gross Profit 6,280 5,271-1, % profit margin % 41.5% 39.8% SG&A 6,251 6, % Operating Income 29-1,447-1, profit margin % 0.2% -10.9% Ordinary Income 26-1,481-1, Net Profit after Tax , Effects of forex fluctuations The US dollar weakened by JPY: Sales -1,200 mil*, OP -110 mil* The euro weakened by JPY: Sales -220 mil, OP -90 mil * The above FX impacts in the US dollar are including effects of depreciation in Asian currencies. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 5

6 Operating Expenses Comparison (Unit: Million JPY) Key changes in SG&A Q1 FY 03/16 Q1 FY 03/17 YOY Change 04/15-06/15 04/16-06/16 Amount Ratio Personnel 2,363 2, % R&D 1,019 1, % Ad. & Promo % Others 2,154 2, % Total 6,251 6, % SG&A ratio % 41.3% 50.7% Increase of depreciation(+190 mil) and subcontractor expenses(+190 mil)* in Others and personnel expense* for global IT infrastructure development. * SG&A including the above global IT infrastructure development decreased by 450 mil due to the stronger yen for expenses incurred at subsidiaries. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 6

7 Consolidated Sales Comparison (Unit: Million JPY) 15, % 15, ,241 13, Change Ratio 10,000 3, % -9.7% 5,000 10,760 9, % 0 Q1 FY 03/16 Q1 FY 03/17 Brand biz Tech. Solution biz Other biz All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 7

8 Consolidated Profit Comparison (Unit: Million JPY) ,000-1,147-1,500-1,447-1,481 Q1 FY 03/16 Q1 FY 03/17 Operating Income Ordinary Income Net Profit All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 8

9 Business Segment & Business Unit Brand Business Creative Business Consumer Business Makes daily lives more creative and enjoyable Product Lines: Digital Stationery, etc. Business Solution Serves the passion of professional and consumer creativity Product Lines: Pen Tablet, Mobile, Display Serves society by providing innovative solutions Product lines: Display, Signature Tablet, etc. Technology Solution Business Pen sensor systems for Smartphones and Tablets EMR, AES pen components & modules (feel TM ) Platform & applications Provides technology, apps and platforms Cloud Apps & Services WILL (digital Ink solution) Other Business Engineering Solution ECAD dio All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 9

10 Consolidated P/L by Business Segment (Unit: Million JPY) Q1 FY 03/16 Q1 FY 03/17 YOY Change 04/15-06/15 04/16-06/16 Amount Ratio Net Sales 15,142 13,261-1, % Brand Business 10,760 9,263-1, % Tech. Solution Biz. 4,241 3, % Other Business % Operating Income 29-1,447-1, Brand Business 1, % Tech. Solution Biz Other Business % Corp. and others -1,841-2, % profit margin % 0.2% -10.9% All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 10

11 Business Highlights: (Unit: JPY) Brand Business 9.26 bn -13.9% Creative Business 8.00 bn -13.4% Shipment increased more than 10% in unit base driven by the emerging market, but overall sales fell due to the strong yen, a change in product mix, and the impact of transitions to new models. We continued R&D for the next model. Pen Tablet (subsection) 4.56 bn -10.0% Shipment of Intuos Pro maintained the same level in unit base, but sales fell due to the strong yen. We plan to release the next model in Q4 after more than three years passed since current model launch. Intuos maintained the same level in unit base, but the proportion of lower-end models increased. Shipment of the emerging market model increased by more than 60% in unit base, acquiring new customers in China, India, and South America. Emerging market model (One by Wacom) All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 11

12 Business Highlights: (Unit: JPY) Brand Business companion 2 Creative Business Mobile (subsection) 0.75 bn -45.3% Creative users got more choices on tablet devices due to changes in competitive environment driven by an increase in digital pen-adopted devices. Demand for highly-functional creative tablets supporting user s workflow continued. Demand for Cintiq Companion 2 slowed due to product life cycle transitions and the impact of the strong yen. We plan to launch new models in Q3, adding features such as next generation pen technology, and advanced 3D and color management functions in order to solidify our global market leadership and realize growth recovery. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 12

13 Business Highlights: (Unit: JPY) Brand Business Creative Business Display (subsection) 2.70 bn -3.8% Shipment of Display products expanded more than 10% in unit base. Sales of Cintiq 27 QHD decreased due to strong yen and the impact from large sales in the previous quarter following its launch. Sales of Cintiq 22HD decreased, having been on the market for four years. Shipment of Cintiq 13HD increased, particularly in Asian countries. We continued R&D for the next model, and plan to launch the next model of all product lines in Q3 and Q4. 13HD touch 13HD 27 QHD 27 QHD touch 22HD touch All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 13

14 Business Highlights: (Unit: JPY) Brand Business Consumer Business 0.23 bn -17.8% Bamboo Spark, a digital stationery that transforms handwritten notes on paper into digital ink for editing and sharing, contributed to sales. We plan to launch the next model in Q2 after a year passed since its launch. Provided Wacom Cloud services to stores and utilized digital ink through cloud services. Sales of stylus products for ipad decreased due to intentional adjustment of shipment before new model launch. Wacom Ink Layer Language Bamboo Spark Bamboo Paper All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 14

15 Business Highlights: (Unit: JPY) Brand Business Business Solution 1.03 bn -17.0% Sales dropped in the Eurozone due to prolonged investment projects in the midst of economy uncertainties. STU series expanded in sales and shipment, owing to increased demand for digital signature at domestic retailers and public services in India, and for credit card transactions and over-thecounter services. LCD signature tablets, the DTU series, expanded widely in sales for over-the-counter use in the finance field, with DTU-1141 adopted by Citi Bank Korea. STU series STU-530/430 DTU-1141 DTU-1031 DTH-2242 All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 15

16 Business Highlights: (Unit: JPY) Tech. Solution Business Pen Sensor System for Smartphones 1.26 bn +12.2% Mass production of Samsung s next gen. model, Galaxy Note7 partially started from Q1. As a result, sales increased despite the strong yen. Sales of existing models such as Galaxy Note5 remained stable. Focused on development and automated production of new cartridge type digital pen Active development of new customer base bn -9.7% Smartphone models All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 16

17 Business Highlights: (Unit: JPY) Tech. Solution Business Pen Sensor System for Tablets 2.27 bn -10.5% Sales fell below the previous fiscal year due to the yen appreciation and discontinuation of orders of educational tablets for the government of Turkey. Sales of Active ES pen solution increased with favorable demand from tablet PC manufacturers, including steady orders from Huawei. Developing standardized digital pen for Windows OS tablets with Microsoft. Pen Sensor System for Notebook PCs 0.30 bn -48.5% Continued shift in demand from notebook PCs to 2in1 tablets Tablet PC models All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 17

18 Business Highlights: (Unit: JPY) Other Business 0.17 bn +20.2% CAD software and others 0.17 bn +20.2% Increased demand of ECAD dio 2016 for replacements. F&A (Corporate) Continued to invest in business infrastructure for growth and operational efficiency. Major projects include new SCM system for e-commerce and IT infrastructure for global integrated operations. Promoted WILL (Wacom Ink Layer Language) under our open partnership policy as a new framework to standardize digital ink and engaged in activities for partnership development. Made preparations for the establishment of Digital Stationery Consortium, by holding Wacom Connected Ink events in Las Vegas and Shanghai in January and May 2016 for digital ink experience. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 18

19 Sales by Product Line in Brand Business (Unit: Million JPY) 10,000 8,000 6,000 4,000 Creative biz 9,241 9,241 1, ,804 1, % Creative biz 8, % 8,004 1, , Change Ratio -17.0% -17.8% -3.8% -45.3% -10.0% 2,000 5,060 4,555 0 Q1 FY 03/16 Q1 FY 03/17 Creative Pen tablet Creative Mobile Creative Display Consumer Business Solution All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 19

20 Sales by Product Line in Tech. Solution Business (Unit: Million JPY) 4,000 3,000 2,000 4, % 3, ,540 2,273 Change Ratio -48.5% -10.5% +12.2% 1, ,118 1,255 Q1 FY 03/16 Q1 FY 03/17 Pen for Smartphone Pen for Tablet Pen for Notebook PC, etc. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 20

21 Quarterly Trend by Product Line (Unit: Million JPY) ,389 20,786 24,954 23,814 21, ,026 18,342 17,592 16, ,669 15,142 13, /7-9 13/ /1-3 14/4-6 14/7-9 14/ /1-3 15/4-6 15/7-9 15/ /1-3 16/4-6 Creative Consumer(Stylus, etc.) Business(VM) Tech. Solution CAD, etc. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 21

22 Sales by Region (Unit: Million JPY) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, ,142 2,765 1,369 2,717 3,739 1, % 13,261 2,773 1,296 4,241 3,828 (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 22 2,321 2,774 1,565 Q1 FY 03/16 Q1 FY 03/17 Tech. Solution Japan U.S. Germany Asia Oceania Change Ratio +0.3% ( +11.3%) -14.6% (-6.6%) -25.8% (-17.5%) -6.9% -9.7% ( ) % growth based on local currency Sales in China of Asia Oceania ( % growth based on local currency)

23 (For reference) Sales Changes in Local Currency Base Region Japan (excluding Tech. Solution biz) Currency YOY Change Ratio JPY -6.9% U.S. USD -17.5% Europe EUR -6.6% China CNY +11.3% Korea KRW +22.5% Australia AUD +9.2% Singapore USD +21.9% Hong Kong USD -34.2% Taiwan NTD +19.8% India INR % All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 23

24 Quarterly Trend by Region (Unit: Million JPY) 25,000 23,389 20,786 24,954 23,814 21,936 20,000 15,000 19,026 13,669 18,342 17,592 15,142 16,676 13,261 10,000 5, /7-9 13/ /1-3 14/4-6 14/7-9 14/ /1-3 15/4-6 15/7-9 15/ /1-3 16/4-6 Tech. Solution Japan U.S. Germany Asia Oceania (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 24

25 Consolidated B/S End of Mar End of Jun (Unit: Million JPY) Change Current Assets 37,874 34,733-3,141 Noncurrent Assets 13,693 13, Total Assets 51,567 47,958-3,609 Current Liabilities 16,479 15, Noncurrent Liabilities 3,992 6,878 2,886 Total Liabilities 20,470 22,717 2,247 Minority Interest in Subsidiaries Net Assets 31,096 25,242-5,854 Key Changes Assets Decrease in notes and accounts receivable -1,575 Decrease in cash and cash equivalents -1,428 Liabilities Increase in long-term loans 3,000 Decrease in notes and accounts payable -575 Net Assets Decrease in shareholders equity -4,400 (decrease with dividends paid, etc.) Total Liabilities and Net Assets 51,567 47,958-3,609 Equity Ratio 60.0% 52.3% -7.7% All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 25

26 Consolidated C/F C/F from operating activities C/F from investing activities C/F from financing activities Effect of change in exchange rate Q1 FY 03/16 Q1 FY 03/17 (Unit: Million JPY) YoY Change 04/15-06/15 04/16-06/17 Amount -2, ,893-1, , , ,047 Increase-decrease of cash & cash equivalent -1,570-1, Beginning balance of cash & cash equivalent 16,687 14,365-2,322 Ending balance of cash and cash equivalent 15,116 12,937-2,179 Major Activities in Q1 FY 03/17 C/F from operating activities Net profit before tax -1,515 Increase in inventories -458 Decrease in notes and accounts receivable-trade 1,097 Depreciation 621 C/F from investing activities Purchase of fixed assets -900 (global IT infrastructure, etc.) Proceeds from sales of property 533 (sales of property in US subsidiary, etc.) C/F from financing activities Increase in long-term loans payable 3,000 Cash dividends paid -2,664 Purchase of treasury stock -296 All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 26

27 FY 03/2017 Basic Strategies and Business Focus

28 Initial Assumptions of Business Environment for FY 03/17 Global Economy Modest growth trends will be supported by financial policies in each country. Destabilizing factors are increasing such as refugees in Europe, low oil prices and economic slowdowns in U.S. and China. Rapid appreciation of the Japanese Yen and the impact from the Kumamoto earthquake in April are concerns for the Japanese economic recovery. IT industry and our business environment 3D market growth accelerates triggered by 3D design, VR and 3D printing. Creative markets in emerging countries continue to expand in both professional and consumers segments. 2in1 tablet market starts to grow as the smartphone market at standstill. Tablet market for educational and enterprise sectors expand. Digital stationery creates new value through integration with Apps and Cloud services. Digital signature expands by improving workflow and security. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 28

29 Basic Strategies and Initiatives Expand Creative Business and enhance the market leadership. Extend 3D design and color management functions with the next generation of product lines. Accelerate the growth of Creative Business in emerging markets Establish a new consumer segment by integrating digital stationery and Cloud services. Promote standardization of digital ink by WILL (Wacom Ink Layer Language). Enhance paperless workflow and security business with digital signature. Promote standardization of digital pen and expand Technology Solution Business. Enhance the collaboration among global organizations and improve business efficiency by leveraging the new global IT infrastructure. Enhance corporate governance and processes for improving corporate value. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 29

30 Assumptions for FY 03/17 Financial Forecast Revised downward our consolidated financial forecast, based on our further market review in mid July, Reflected the yen appreciation, changes in market environment, and business progress in Brand Business. Reflected on changes in customer demand and market environment in Tech. Solution Biz. Actual results may materially differ from our latest financial forecast in the short term due to its business nature. Forex rate assumptions for FY 03/17, effective from August, USD = 103 JPY (YOY +12.7% stronger JPY) (prev. assumption 110 JPY) 1 EUR = 114 JPY (YOY +11.9% stronger JPY) (prev. assumption 125 JPY) Forex exchange sensitivity: 12-month forecast *Assumption: Asian currencies are pegged to USD. Unit of sensitivity Per 1 JPY in case of the stronger JPY (Unit: Million JPY) FY 03/17 (forecast) (for ref.) FY 03/16 (result) Currency USD EUR USD EUR Sales Operating Income All Rights Reserved. Copyright 2016 Wacom Co., Ltd. (Note) Each figure of the above sensitivities shows a opposite sign in case of the weaker JPY. 30

31 Summary for FY 03/17 Forecast FY 03/17 (prev.) FY 03/17 (rev.) Prev. vs. Rev. 04/16-03/17 04/16-03/17 Change Sales 82,000 77, % Operating Income 4, % 2, % -42.9% Ordinary Income 4, % 2, % -44.4% Net Profit aft. tax 3, % 1, % -46.0% FY 03/16 (rslt.) FY 03/17 (rev.) YOY 04/15-03/16 04/16-03/17 Growth rate Sales 77,568 77, % Operating Income 3, % 2, % -34.5% Ordinary Income 3, % 2, % -39.1% Net Profit aft. tax 2, % 1, % -29.9% ROE 7.1% 5.5% -1.6% (forecast comparison and YOY) (Unit: Million JPY) All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 31

32 Forecast by Business Segment (forecast comparison) (Note) Due to risks and uncertainties involved in the forecast of customer demand and market in Technology Solution Business, actual results may materially differ from forward-looking statements in the short term. (Unit: Mil JPY) FY 03/17 (prev.) FY 03/17 (rev.) Prev. vs. Rev. 04/16-03/17 04/16-03/17 Amount Change Net Sales 82,000 77,900-4, % Brand biz 56,200 53,200-3, % Tech. Solution biz 25,100 23,900-1, % Other biz % Operating Income 4,200 2,400-1, % Brand biz 11,400 9,660-1, % Tech. Solution biz 1,600 1, % Other biz 倍 Corp. and others -8,850-8, % profit margin % 5.1% 3.1% All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 32

33 Major Impacts on P/L Forecast Revision -1 Breakdown analysis of sales revision Previous forecast on May 11, ,000 mil. JPY (-) FX impact Brand Biz. (yen appreciation against multiple currencies) 3,100 mil. JPY (-) FX impact Technology Solution Biz. (yen appreciation against US dollar) 1,200 mil. JPY (+) Sales increase of Other Biz., etc. 200 mil. JPY 4,100 mil. JPY Revised forecast on August 5, ,900 mil. JPY All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 33

34 Major Impacts on P/L Forecast Revision -1 Breakdown analysis of sales revision Previous forecast on May 11, ,200 mil. JPY (-) FX impact Brand Biz. (yen appreciation against euro and Asian currencies) 1,000 mil. JPY (-) FX impact Technology Solution Biz. (yen appreciation against US dollar) (-) FX impact 200 mil. JPY COGS increase due to FX impact on inventory value by time lag between purchase and sales (yen appreciation against multiple currencies) 400 mil. JPY (-) Product mix change in sales, etc. 200 mil. JPY 1,800 mil. JPY Revised forecast on August 5, ,400 mil. JPY All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 34

35 Forecast of Results by Business Segment (All comparisons are with the same period of the previous fiscal year unless otherwise stated ) Brand Business Sales and profit were revised downward, mainly due to yen appreciation. However, sales and profit are expected to increase from prior fiscal year owing to new product launches in major product lines and cost efficiency improvement in Creative Business. As for pen tablets, next model for professionals are scheduled to launch in Q4. Meantime, middle and lower price model of pen tablets for emerging market are expected to contribute to overall sales until Q3 (foreseeing temporally lower ASP). As for mobile and display products, next models are scheduled to launch from Q3, adding features such as next generation pen technology, advanced functions of 3D and color management, to lift up competitive edge. As for Consumer Business, enhancement of line-up of digital stationery product and expansion of sales channels are expected in place. At the same time, we will pursue to stabilize customer demand for existing stylus products by sales and marketing effort. As for Business Solution, wider extension of workflow and security solutions utilizing digital signature is a key for recovery. While Asian market is expanding, we should take account of European market slowdown under economy uncertainties. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 35

36 Forecast of Results by Business Segment (All comparisons are with the same period of the previous fiscal year unless otherwise stated ) Technology Solution Business Technology Solution Business is expected to decrease in both sales and operating income from prior fiscal year due to the yen appreciation. Sales for Galaxy Note 7, a new smartphone model, are expected to remain the same level of the previous forecast, owing to full mass production, offsetting foreign exchange impact. As for tablets, customer base for Active ES pen solutions is expected to expand. However, sales are expected to decrease due to the yen appreciation and delay of shift to tablets from notebook PCs by a certain customer. Contribution from standardized pen for Windows tablets to financial results in this fiscal year is limited. Sales of educational tablet for Turkey government accounted in prior fiscal year are not expected in this fiscal year. Corporate and others An increase of depreciation expense is expected from prior fiscal year due to implementation of global IT infrastructure system. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 36

37 Sales Forecast by Business Segment (forecast change) (Unit: Million JPY) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 82, % 77, ,100 23,900 56,200 53,200 Change Ratio +14.3% -4.8% -5.3% 0 FY 03/15 (previous) FY 03/15 (revised) Brand biz Tech. Solution biz Other biz All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 37

38 Sales Forecast by Product line in Brand Product (Unit: Million JPY) 50,000 40,000 30,000 20,000 Creative biz 46,300 56,200 6,600 3,300 14,700 5, % Creative biz 44, % 53,200 6,500 2,500 14,600 5,800 (forecast change) Change Ratio -1.5% -24.2% -0.7% -1.7% -7.4% 10,000 25,700 23,800 0 FY 03/15 (previous) FY 03/15 (revised) Creative Pen tablet Creative Mobile Creative Display Consumer Business Solution All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 38

39 Sales Forecast by Product line in Tech. Solution (Unit: Million JPY) 25,000 20,000 15,000 10,000 25,100 2,100 9, % 23,900 2,300 8,600 (forecast change) Change Ratio +9.5% -12.2% -1.5% 5,000 13,200 13,000 0 FY 03/15 (previous) FY 03/15 (revised) Pen for Smartphone Pen for Tablet Pen for Notebook PC, etc. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 39

40 Sales Forecast by Region (forecast change) (Unit: Million JPY) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 82, % 77,900 13,240 12,490 17,170 16,190 17,410 16,010 9,080 9,310 25,100 23,900 Change Ratio -5.7% -5.7% -8.0% +2.5% -4.8% 0 FY 03/15 (previous) FY 03/15 (revised) Tech. Solution Japan U.S. Germany Asia Oceania (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 40

41 Forecast by Business Segment (YOY change) (Note) Due to risks and uncertainties involved in the forecast of customer demand and market in Technology Solution Business, actual results may materially differ from forward-looking statements in the short term. (Unit: Mil JPY) FY 3/16 (rslt.) FY 3/17 (rev.) YOY Change 04/15-03/16 04/16-03/17 Amount Ratio Net Sales 77,568 77, % Brand biz 48,931 53,200 4, % Tech. Solution biz 27,974 23,900-4, % Other biz % Operating Income 3,664 2,400-1, % Brand biz 8,036 9,660 1, % Tech. Solution biz 3,130 1,390-1, % Other biz Corp. and others -7,538-8,840-1, % profit margin % 4.7% 3.1% All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 41

42 Sales Forecast by Business Segment (YOY change) (Unit: Million JPY) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, % 77,568 77, ,974 48,931 23,900 53,200 Change Ratio +20.7% -14.6% +8.7% 0 FY 03/16 (result) FY 03/17 (forecast) Brand biz Tech. Solution biz Other biz All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 42

43 Sales Forecast by Product line in Brand Product (Unit: Million JPY) 50,000 40,000 30,000 20,000 10,000 Creative biz 41,824 48,931 4,958 2,149 13, % 53,200 6,500 2,500 14,600 4,453 Creative biz 5,800 44, % 24,148 23,800 (YOY change) Change Ratio +31.1% +16.3% +10.4% +30.3% -1.4% 0 FY 03/16 (result) FY 03/17 (forecast) Creative Pen tablet Creative Mobile Creative Display Consumer Business Solution All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 43

44 Sales Forecast by Product line in Tech. Solution (Unit: Million JPY) 25,000 20,000 15,000 27,974 2,089 9, % 23,900 2,300 8,600 (YOY change) Change Ratio +10.1% -9.8% -20.5% 10,000 5,000 16,353 13,000 0 FY 03/16 (result) FY 03/17 (forecast) Pen for Smartphone Pen for Tablet Pen for Notebook PC, etc. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 44

45 Sales Forecast by Region (YOY change) (Unit: Million JPY) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 77, % 77,900 11,204 12,490 14,845 16,190 15,631 16,010 7,914 9,310 27,974 23,900 Change Ratio +11.5% +9.1% +2.4% +17.6% -14.6% 0 FY 03/16 (result) FY 03/17 (forecast) Tech. Solution Japan U.S. Germany Asia Oceania (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 45

46 Investment, depreciation and R&D Capital expenditure 4.00 bn JPY (YOY -17.7%) (no revision) Key items: Mold for new products and global IT systems (mainly ERP), etc. Depreciation 2.80 bn JPY (YOY +39.7%) (previous forecast: 3.20 bn JPY) Key items: Depreciation of new global IT systems, etc. R&D expense 4.60 bn JPY (YOY + 5.9%) (previous forecast: 4.70 bn JPY) Key items: New products development in Brand Business, next generation ICs and basic technology research, etc. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 46

47 Shareholders Return Policy for FY 03/2017 Acquisition of own shares and Cancellation of treasury stock Acquire its own shares for the purpose of enhancing return to shareholders, improving capital efficiency, and ensuring a flexible capital policy management in response to changes in the Company s business environment. Execute cancellation of certain treasury stocks in accordance with acquisition. Acquisition of own shares Total number of shares to be acquired: Up to 5,000,000 shares (equivalent of 3.04% of outstanding shares) Total acquisition cost: Up to 2.0 bn JPY Acquisition period: From May 12, 2016 to March 31, 2017 (the extension of acquisition period was resolved on August 5) Cancellation of treasury stock Total number of shares cancelled: 2,500,000 shares (equivalent of 1.48% of outstanding shares) Date of cancellation: May 25, 2016 All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 47

48 Shareholders Return Policy for FY 03/2017 Dividend policy Continue steady dividend payout to shareholders while maintaining a stable financial base necessary for future business development. Target payout ratio maintains approximately 40% or more to attract global investment. Revised downward dividend forecast for FY3/17 to reflect our revised business forecast, and maintain sound financial base. Dividend per share JPY per share for FY 03/2017 (18.00 JPY for FY 03/2016) (previous forecast: JPY ) Payout ratio 121.3% (128.6% for FY 03/2016) (previous estimation: 98.7%) Total return ratio for shareholders Total return ratio: 244.8% (FY 03/2017 forecast) (previous estimation: 165.4%) (details) Payment of shareholders dividends 1.97 bn JPY (forecast) Acquisition of own shares Up to 2.00 bn JPY All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 48

49 Dividends per Share (Unit: JPY) % % 86.3% % 121.3% (revised) (revised) Payout ratio Special dividend per share Ordinay dividend per share 0.00 FY 03/13 FY 03/14 FY 03/15 FY 03/16 FY 03/17 (revised) All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 49

50 Wacom Strategic Business Plan SBP-2019 Evolve the business model toward mobile and Cloud for reaching new customers as well as expanding existing business. In addition, improve the speed and profitability by leveraging our global business infrastructure. Financial Goals by FY ending March, 2019 Consolidated sales: 120 billion JPY Consolidated operating profit margin: 12% Consolidated ROE: 20% or higher

51 Consolidated Sales (Unit: Million JPY) 120, ,000 Impact by FX changes Other biz Tech. Solution biz Brand biz 77,568 80,000 74, ,000 27,974 30,277 The target for FY 03/19 is maintained as we expect Brand Business to exceed the original plan excluding negative impact by FX changes, hedging risks of the underperformance of Tech. Solution Biz. (sales excluding negative impact of FX changes) 82, ,200 23,900 3, , ,000 1,000 43,700 CAGR Consolidated Sales 13% 10% 15% 40,000 20,000 43,625 48,931 53,200 75,300 0 FY 03/15 FY 03/16 FY 03/17 FY 03/18 FY 03/19 (result) (result) (revised (plan) (plan) forecast) All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 51

52 Consolidated Profits ( 単位 : 百万円 ) 15,000 Raise profitability by significant improvement of operational efficiency and quick decision-making through leveraging global IT Infrastructure. 14,400 CAGR 10,000 10,400 9,800 30% 5, ,143 3,473 3,664 (profits excluding negative impact of FX changes) 2,310 4,000 2,740 1,600 1,120 2,400 1,620 All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 52 7,070 FY 03/15 FY 03/16 FY 03/17 FY 03/18 FY 03/19 (result) (result) (revised (plan) (plan) forecast) 24%

53 SBP-2019 Basic Strategy Evolve the business toward mobile, Cloud and ecosystems. Accelerate the growth with a new global business organization and enhanced global integration. Accelerate creative business with mobile product line expansion, 3D penetration and emerging market investment. Reach new consumer users with Digital Stationery and Cloud. Expand the Technology Solution Business with AES and WILL (Wacom Ink Layer Language). Enhance business workflow and security solutions by leveraging WILL and digital signature solutions. Leverage global business system for efficiency, speed and profitability. All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 53

54 our vision All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 54

55 our mission All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 55

56 our brand All Rights Reserved. Copyright 2016 Wacom Co., Ltd. 56

57 Disclaimer Forward-looking statements regarding future events and performance contained in this presentation are based on currently available information and involve risks and uncertainties, including macroeconomic conditions, trends of the industry in which the company is engaged and progress in new technologies. Please note that actual results could materially differ from those expressed or implied by the forward-looking statements in this presentation due to these risks and uncertainties. Wacom Co., Ltd. Investor Relations Inquiries TEL: FAX: Wacom Co., Ltd. Sumitomo Fudosan Shinjuku Grand Tower 31F, Nishi-Shinjuku, Shinjuku-ku, Tokyo , Japan