Business Report April, 2016 to March, 2017 (FY 03/ 2017) Wacom Co., Ltd. (TSE Sec )

Transcription

1 Business Report April, 2016 to March, 2017 (FY 03/ 2017) Wacom Co., Ltd. (TSE Sec )

2 Contents Index 3-5 FY 03/2017 (April, 2016 to March, 2017) Results Overview 6-8 Consolidated P/L: Sales and Profit Comparison 9 Operating Expenses Comparison Business Segment: Sales and Profit Comparison Business Highlights Sales by Product Line Sales by Region, Sales Changes in Local Currencies Base Consolidated B/S, C/F New Products, etc FY 03/2018 Basic Strategies and Business Focus Financial Forecasts 47 Shareholders Return Policy Our Branding 51 Disclaimer All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 2

3 FY 03/17 Results Overview Operating environment The penetration of mobile products, cloud computing, and social networking services, and the emergence of new fields such as IoT and VR in the IT industry are effecting major changes in our business environment. Performance overview Consolidated net sales declined compared to the previous fiscal year due to the strong yen and decreased sales in the Brand Business during product lifecycle transitions. Operating loss was posted due to depreciation, and subcontractor expenses associated with global IT infrastructure. In March, we came to the conclusion that net loss was posted mainly due to the impairment loss for intangible assets related to the global IT system development. Sales in the Brand Business were weaker compared to the previous year. Creative Business shipments increased on a unit basis but overall sales decreased due to changes in the product mix, and the delay of new product launch. Consumer Business and Business Solution segments also struggled due to foreign exchange rates and changes in the market environment. Sales in the Technology Solution Business also declined compared to the previous year. The recall and cancellation of Samsung s Galaxy Note 7 in October led to significant sales drop for smartphones despite favorable shipments growth for tablets. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 3

4 FY 03/17 Results Overview Financial Summary Business Performance FY 03/17 YOY Change Net Sales bn -8.1% Operating Profit bn -- (Prev. FY: 3.66 bn) Ordinary Profit bn -- (Prev. FY: 3.78 bn) Net Profit aft. Tax bn -- (Prev. FY: 2.31 bn) Financial Indices FY 03/17 FY 03/2016 EPS BPS (Book Value per Share) (For reference) Average Forex rate FY 03/17 YOY Change 1 USD % (Strong JPY) 1 EUR % (Strong JPY) (Note) Net Profit is equivalent to net profit attributable to shareholders of Wacom Co., Ltd. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 4 (JPY)

5 FY 03/17 Results Overview (vs. forecast as of March 14) FY 03/17 (prev. forecast) FY 03/17 (result) Change 04/16-03/17 04/16-03/17 Amount Net Sales 71,500 71, Brand Business 45,700 43,874-1,826 Tech. Solution Biz. 25,100 26,758 1,658 Other Business Operating Profit , Ordinary Profit Net Profit aft. Tax -5,600-5, (Unit: Million JPY) Variance between the Forecast and Actual Results Net sales were in line with forecast. Sales in the Technology Solution Business exceeded forecast owing to additional orders from major customers. However, operating loss was higher than forecast due to lower than expected sales in the Brand Business, which has a higher profit margin compared to the Technology Solution Business, along with slow initial sales for new pen tablet models and the delay of the new display product launch. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 5

6 Consolidated P/L FY 03/16 FY 03/17 YOY Change 04/15-03/16 04/16-03/17 Amount Ratio Net Sales 77,568 71,314-6, % Gross Profit 30,736 27,566-3, % profit margin % 39.6% 38.7% SG&A 27,072 28,737 1, % Operating Profit 3,664-1,171-4, profit margin % 4.7% -1.6% Ordinary Profit 3, , Net Profit after Tax (Unit: Million JPY) 2,310-5,534-7, Effects of forex fluctuations The US dollar weakened by JPY11.13 Sales -5,510 mil*, OP -310 mil* *The impacts in the US dollar are including the effects of depreciation in Asian currencies (Sales -1,290 mill, OP -840 mil) The Euro weakened by JPY Sales -1,420 mil, OP -840 mil All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 6

7 Consolidated Sales Comparison (Unit: Million JPY) 70,000 60,000 50,000 77, , % 71, ,758 Change Ratio +3.0% 40,000 30,000 20,000 10, ,931 43,874 FY 03/16 FY 03/17 Brand biz Tech. Solution biz Other biz -4.3% (+5%*) -10.3% (-2%*) ( %*) growth excluding the effect of FX fluctuations All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 7

8 Consolidated Profit Comparison (Unit: Million JPY) 4,000 3,000 3,664 3,777 2,000 1,000 2, ,000-2,000-1, ,000-5,000-5,534-3,534 (Including impairment losses of -4,224 mil. for IT software -4,000 in intangible assets) FY 03/16 FY 03/17 Operating Profit Ordinary Profit Net Profit All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 8

9 Operating Expenses Comparison (Unit: Million JPY) FY 03/16 FY 03/17 YOY Change 04/15-03/16 04/16-03/17 Amount Ratio Personnel 9,404 9, % R&D 4,342 4, % Ad. & Promo. 3,699 3, % Others 9,627 11,104 1, % Total 27,072 28,737 1,665* 6.2% SG&A ratio % 34.9% 40.3% Key changes in SG&A Increase of depreciation (+480 mil) and subcontractor expenses (+760 mil) in Others and personnel expense for global IT infrastructure development*. *SG&A decreased by 1,800 mil due to the stronger yen for expenses incurred at subsidiaries. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 9

10 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: Signature Tablet, Pen Display, 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 2017 Wacom Co., Ltd. 10

11 Consolidated P/L by Business Segment (Unit: Million JPY) FY 03/16 FY 03/17 YOY Change 04/15-03/16 04/16-03/17 Amount Ratio Net Sales 77,568 71,314-6, % Brand Business 48,931 43,874-5, % Tech. Solution Biz. 27,974 26,758-1, % Other Business % Operating Profit 3,664-1,171-4, Brand Business 8,036 5,685-2, % Tech. Solution Biz 3,130 2, % Other Business Corp. and others -7,537-9,267-1, % profit margin % 4.7% -1.6% All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 11

12 Business Highlights: (Unit: JPY) Brand Business bn -10.3% Creative Business bn -7.4% Shipment increased by 5% in units driven by the emerging market. However, overall sales fell due to the strong yen and the impact of transitions to new models, despite the focus on the next generation products launch from 2H. Pen Tablet (subsection) bn -7.8% Shipment of Intuos Pro for professional creative users increased in units, but sales fell due to the strong yen and the impact of transition to new models. We introduced the next model Wacom Intuos Pro in January, which offers a new seamless paper-to-digital workflow. Sales of Intuos for consumer users decreased due to the prolonged IC supply problem caused by Kumamoto earthquake in New model for entry users in 3D modeling contributed to the sales. Shipment of the emerging market model increased by 40% in unit base, reflecting an increase in new customers in China, India, and South America. Emerging market model (One by Wacom) Intuos 3D All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 12

13 Business Highlights: (Unit: JPY) Brand Business Creative Business Mobile (subsection) 4.25 bn -4.6% Changes in the competitive environment driven by an increase of digital pen-adopted devices have given creative users more choices in the category. Demand continues for highly-featured creative tablets that support professional users' workflow. During 1H, demand for the existing model Cintiq Companion 2 slowed due to product life cycle transitions, and the strong yen led to sales decease. We introduced Wacom MobileStudio Pro in October as a new model, adding features such as next generation pen technology and advanced 3D and color management functions. Sales in 2H increased 60% comparing to the previous fiscal year. We continued to solidify our global market leadership. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 13

14 Business Highlights: (Unit: JPY) Brand Business Creative Business Display (subsection) bn -7.6% Shipment of display products expanded more than 5% in units. Introduced Wacom Cintiq Pro 13/16 as a next generation model with 4K high-resolution display and stronger color management. The shipment started from the 13 inch model, which contributed to the sales. However, the shipment of the 16 inch one was delayed until March. Sales of the existing models decreased due to product life cycle transitions. 13HD 27 QHD All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 14

15 Business Highlights: (Unit: JPY) Brand Business Consumer Business 1.32 bn -38.6% Sales of stylus products for ipad largely decreased due to changes in the competitive environment and a problem in product quality Sales of Bamboo Spark, the first model of digital stationery that transforms handwritten notes on paper into digital, decreased significantly. In September, we introduced the next models Bamboo Slate and Bamboo Folio to establish a category of digital stationery. We provided Wacom Cloud services to store and utilize digital ink through cloud services. Wacom Ink Layer Language Inkspace, Bamboo Paper Apps All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 15

16 Business Highlights: (Unit: JPY) Brand Business Business Solution 3.82 bn -23.0% Sales dropped largely in the Eurozone due to changes in the competitive environment such as availability of mobile devices as well as the strong yen. STU series increased demand for digital signature solutions for credit card transactions and over-the-counter services at retailers in Japan and public services in India. However, sales slightly decreased due to a drop of demand in the Eurozone. Sales of LCD signature tablets, the DTU series decreased due to a drop of the number of projects, despite DTU-1141 adoption by Citi Bank Korea. STU シリーズ STU-540/430 DTU-1141 DTU-1031 DTK-1651 DTH-2242 All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 16

17 Business Highlights: (Unit: JPY) Tech. Solution Business Pen Sensor System for Smartphones bn -19.2% bn -4.3% The recall of Samsung s Galaxy Note 7 led to discontinuance of production for the Note 7, which caused significant sales decrease. Shipment for Galaxy Note 5 remained stable, which contributed to sales. Continued pen technology development for the next generation model. Focused on automation of a new cartridge-type digital pen. Continued new customer development efforts. Smartphone models All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 17

18 Business Highlights: (Unit: JPY) Tech. Solution Business Pen Sensor System for Tablets bn +32.1% Sales of the Active ES pen solution increased with favorable demand from tablet PC manufacturers. Orders from Huawei also contributed to the sales growth. Successful products such as Lenovo Yoga Book increased demand for EMR pen. Developing a standard digital pen for Windows 10 OS tablets with Microsoft. Adoption of a pen sensor system was expanded for Google Chromebook. Making efforts to the business expansion for the digital stationery. Pen Sensor System for Notebook PCs 0.96 bn -54.3% Demand continued to shift from notebook PCs to 2in1 tablets. Tablet PC models All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 18

19 Business Highlights: (Unit: JPY) Other Business 0.68 bn +3.0% CAD software and others 0.68 bn +3.0% Sales of major product ECAD DCX series remained a favorable level. F&A (Corporate) We 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. Connected Ink events were held in Shanghai, Berlin, Tokyo and Las Vegas in May, September, October, 2016 and January, 2017 to promote digital ink. The Digital Stationery Consortium was established and started its operation in September. We announced New strategic initiative at Wacom: Shift focus to profitability, grow corporate value in the medium term after considering the performance below the growth targets for sales and profits published in our Strategic Business Plan SBP We also resolved to post the impairment losses for global IT infrastructure and to reduce directors remuneration on March 14. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 19

20 Sales by Product Line in Brand Business (Unit: Million JPY) 50,000 40,000 30,000 20,000 Creative biz 41,824 48,931 4,958 2,149 13,223 4, % Creative biz 38, % 43,874 3,816 1,321 12,223 4,247 Change Ratio -23.0% -38.6% -7.6% -4.6% -7.8% 10,000 24,148 22,267 0 FY 03/16 FY 03/17 Creative Pen tablet Consumer Creative Mobile Business Solution Creative Display All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 20

21 Sales by Product Line in Tech. Solution Business (Unit: Million JPY) 30,000 25, % 27,974 26,758 2, Change Ratio 20,000 9,532 12, % +32.1% 15, % 10,000 5,000 16,353 13,208 0 FY 03/16 FY 03/17 Pen for Smartphone Pen for Tablet Pen for Notebook PC, etc. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 21

22 Quarterly Trend by Product Line (Unit: Million JPY) 25,000 24,954 23,814 21,936 20,535 20,943 20,000 18,342 17,592 16,676 16,575 15,000 13,669 15,142 13,261 10,000 5, /4-6 14/7-9 14/ /1-3 15/4-6 15/7-9 15/ /1-3 16/4-6 16/7-9 16/ /1-3 Creative Consumer(Stylus, etc.) Business(VM) Tech. Solution CAD, etc. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 22

23 Sales by Region (Unit: Million JPY) 70,000 60,000 50,000 40,000 30,000 20,000 10, ,568 11,204 5,438 14,845 15, % 71,314 10,805 5,248 13,053 13,520 7,914 7,178 27,974 26,758 FY 03/16 FY 03/17 Tech. Solution Japan U.S. Germany Asia Oceania Change Ratio -3.6% ( +12.5%) -12.1% (-2.5%) -13.5% (-4.7%) -9.3% -4.3% (%) growth based on local currency Sales in China of Asia Oceania ( % growth based on CNY) (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 23

24 (Ref.) Sales Changes in Local Currency Base Region Japan (excluding Tech. Solution biz) Currency YOY Change Ratio JPY -9.3% U.S. USD -4.7% Europe EUR -2.5% China CNY +12.5% Korea KRW +10.6% Australia AUD -1.5% Singapore USD +8.8% Hong Kong USD -19.5% Taiwan NTD -3.5% India INR +33.0% All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 24

25 Quarterly Trend by Region (Unit: Million JPY) 25,000 24,954 23,814 20,000 15,000 13,669 18,342 17,592 15,142 21,936 16,676 13,261 20,535 20,943 16,575 10,000 5, /4-6 14/7-9 14/ /1-3 15/4-6 15/7-9 15/ /1-3 16/4-6 16/7-9 16/ /1-3 Tech. Solution Japan U.S. Germany Asia Oceania (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 25

26 Consolidated B/S End of Mar End of Mar (Unit: Million JPY) Change Current Assets 37,874 39,500 1,626 Non-current Assets 13,693 10,750-2,943 Total Assets 51,567 50,250-1,317 Current Liabilities 16,479 17, Non-current Liabilities 3,992 11,509 7,517 Total Liabilities 20,470 28,893 8,423 Minority Interest in Subsidiaries Net Assets 31,096 21,357-9,739 Total Liabilities and Net Assets 51,567 50,250-1,317 Equity Ratio 60.0% 42.2% -17.8% Key Changes Assets Decrease in intangible assets (impairment losses of global IT infrastructure) -3,819 Increase in inventories 1,567 (new product launch in Brand Business) Increase in notes and accounts receivable 607 Liabilities Increase in long-term loans 8,000 Net Assets Decrease in shareholders equity (impairment losses in intangible assets and dividends paid, etc.) -9,234 All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 26

27 Consolidated C/F C/F from operating activities C/F from investing activities C/F from financing activities Effect of change in exchange rate FY 03/16 FY 03/17 (Unit: Million JPY) YoY Change 04/15-03/16 04/16-03/17 Amount 2, ,887-4,878-3,480 1,398 1,209 3,299 2, Increase-decrease of cash & cash equivalent -2, ,162 Beginning balance of cash & cash equivalent 16,687 14,365-2,322 Ending balance of cash and cash equivalent 14,365 14, Major Activities in FY 03/17 C/F from operating activities Net loss before tax -5,691 Increase in inventories -1,791 Impairment losses 4,224 Depreciation 2,573 C/F from investing activities Purchase of fixed assets -3,967 (global IT infrastructure, etc.) Proceeds from sales of property 536 (sales of property in US subsidiary, etc.) C/F from financing activities Increase in long-term loans payable 8,000 Decrease in short-term loans payable -1,000 Cash dividends paid -2,958 Purchase of treasury stock -753 All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 27

28 New products in FY 03/17 Brand Product Business Creative Business 8mm thick and sleek design using premium materials 4 times higher pressure ranges with Wacom Pro Pen 2 Paper Edition offers a new paper-to-digital workflow with Finetip Pen or Ballpoint Pen All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 28

29 New products in FY 03/17 Brand Product Business Creative Business 13/16 13/16 Highest performance tablet with Intel i7 and GPU 4 times higher pressure ranges with Wacom Pro Pen 2 High resolution and high color precision 4K display Fully 3D design and modeling support with 3D camera All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 29

30 New products in FY 03/17 Brand Product Business Creative Business 3D 3D Modeling solution for beginners Integrated solution with 3D printing process Standard service of 3D printing and delivery All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 30

31 New products in FY 03/17 Brand Product Business Consumer Business Inkspace, Bamboo Paper All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 31

32 New products in FY 03/17 Brand Product Business Business Solution STU-540 DTK-1651 Other Business CAD Software ECAD DCX 2017 All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 32

33 Founding of Digital Stationery Consortium Started operation in September, 2016 Promotes WILL Wacom Ink Layer Language as new digital ink standard and development of new digital stationery market Connected Ink Las Vegas January 6, 2017 All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 33

34 FY 03/2018 Basic Strategies and Business Focus

35 Assumptions for FY 03/18 Business Environment The Global Economy The global economy is expected to expand driven by favorable growth in U.S. and sustaining growth in China. High uncertainty will be observed reflecting political developments such as a protectionist U.S. trade policy and instability in the EU. Geopolitical risk is expected to increase due to changing Middle East affairs and prolonged military tension in Far East. Instability in currency exchange rates is expected to persist. The IT Industry and our Business Environment The IT industry is set to shift to a new industrial platform based on cloud services, big data, mobile communication services, and SNS. 5G and virtualization technology will accelerate innovation. IoT, VR/AR, 3D printing, and security-related business will continue to be key to our business. Creative markets will continue to expand and competition increases among major global IT players. Mobility, education, enterprise, and emerging countries are new business growth segments. Digital stationery linked with cloud services is expected to gain broader category awareness. Digital ink adoption is expanding to Windows, Chrome, and the other OS platforms. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 35

36 Basic Strategies and Initiatives -1- Basic Strategy Recover profitability through optimization of our global organization and cost structure. Achieve sustainable growth by enhancing Wacom s leadership in the digital pen and ink market. Plan new medium-term strategies to evolve our business model under a new management team. Improve user experience, enhance the relationship with customers Key Initiatives Brand Product Business Extend 3D design functions and develop enterprise markets (3D, VR/AR, CAD, Multimedia, etc.). Build strong relationship with customers and communities by enhancing regional marketing functions. Promote creative workflow solutions from ideas on paper to digital design and contents. Develop and expand emerging market business (China, Asia/Pacific, LATAM). Expand the digital stationery market, and build brand awareness through collaboration with partners. Expand business solutions for enhancing efficiency in workflow and data security by digital signature technology All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 36

37 Basic Strategies and Initiatives -2- Technology Solution Business Establish the de-facto-standard of digital pen technologies with EMR and AES for tablets. Support the transition to Samsung s next-generation smartphone models. Develop and expand business opportunities through pen adoption for the education market with partner companies. Expand the digital stationery market in collaboration with various partner companies. Corporate Enhance global organization and optimize cost structure and organization. Promote WILL through DSC and establish effective business structure utilizing digital ink with partner companies. Risks and Opportunities Risk Brand Business: Slow sales, delay of development and launch, and quality issues of new products. Technology Solution Business: Slow sales for Samsung s next model smartphone. Opportunities Demand increase for new products and new technology (AES). Further progress in cost reduction. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 37

38 Assumptions for FY 03/18 Financial Forecast Reflected business update reviewing market trend as of mid April, Reflected changes in customer demand and market trend in Technology Solution Business. Actual results may materially differ from forecast in short term due to its business nature. Forex rate assumptions USD 1 = JPY 110 (YOY +0.9% weaker JPY) EUR 1 = JPY 118 (YOY -1.1% stronger JPY) Forex sensitivity: 12-month forecast Unit of sensitivity In case of stronger JPY 1.00 FY 03/18 (forecast) (for ref.) FY 03/17 (result) Currency USD EUR USD EUR Sales -520 (-410) (-380) -110 Operating Profit +30 (+100) (+50) -70 (Unit: Million JPY) Note: In case of the weaker JPY, read the above signs of plus and minus the other way round. USD sensitivity reflects exposure of Asia Pacific currencies supposing they synchronize with USD. Each figure in brackets above in USD shows sensitivity excluding exposure of Asia Pacific currencies, namely USD only. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 38

39 Summary for FY 03/18 Forecast Consolidated performance Sales growth of 8% owning to sales expansion in the Creative Business with the new products launched in the fiscal year ended March GP ratio will maintain at approx. 40% of the previous fiscal year. SG&A ratio will remain at approx. 37% by strategic increase of R&D expense in spite of reduction of expenses for global IT infrastructure etc. As a result, OP ratio will improve to the level of approx. 2%. Brand Product Business (All comparisons are with the previous fiscal year unless otherwise stated ) Growth recovery in Creative Business with new models for display and mobile products. ASP decline due to increase of sales of lower-end models in pen tablet products for emerging market. Recovery in Consumer Business driven by new products and new customers. Conservative forecast in Business Solution based on the competitive environment. Overall sales to grow by 12%. Technology Solution Business Robust shipment of pen system owing to increasing demand for pen-enabled tablet models in PC market with diversification of customers. Shipment of next-generation Galaxy Note, while negative impact from Note 7 remains. Sales to remain at the same level as the previous fiscal year. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 39

40 Summary for FY 03/18 Forecast (Unit: Million JPY) 1H FY 03/17 (rslt) 1H FY 03/18 (frct) YOY 04/16-09/16 04/17-09/17 Growth rate Sales 33,797 35,180 1,383 Operating Profit % % 428 Ordinary Profit -1, % % 521 Net Profit aft. tax -1, % % 1,126 We forecast a decrease in operating loss in 1H owing to the sales contribution of new products in Brand Product Business introduced in 2H for FY 03/17. FY 03/17 (result) FY 03/18 (forecast) YOY 04/16-03/17 04/17-03/18 Growth rate Sales 71,314 76,800 5,486 Operating Profit -1, % 1, % 2,971 Ordinary Profit % 1, % 2,610 Net Profit aft. tax -5, % 1, % 6,664 ROE % -- We forecast an YOY growth in operating profit in 2H owing to higher sales in both Brand Product and Technology Solution Businesses driven by new products and business seasonality. We forecast the growth both in sales and profits. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 40

41 Forecast by Business Segment (Note) Due to risks and uncertainties involved in the forecast of market and customer trends in Technology Solution Business, actual results may materially differ from forward-looking statements in the short term. (Unit: Mil JPY) FY 03/17 (rslt) FY 03/18 (fcst) YOY Change 04/16-03/17 04/17-03/18 Amount Ratio Net Sales 71,314 76,800 5, % Brand biz 43,874 49,200 5, % Tech. Solution biz 26,758 26, % Other biz % Operating Profit -1,171 1,800 2, Brand biz 5,685 8,100 2, % Tech. Solution biz 2,443 2, % Other biz Corp. and others -9,267-8, % profit margin % -1.6% 2.3% All Rights Reserved. Copyright 2017 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 71, ,758 43, % 76, ,900 49,200 Change Ratio +2.6% +0.5% +12.1% 10,000 0 FY 03/17 (result) FY 03/18 (forecast) Brand biz Tech. Solution biz Other biz All Rights Reserved. Copyright 2017 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 38,737 43,874 3,816 1,321 12,223 4, % Creative biz 43, % 49,200 4,100 1,730 14,140 5,800 22,267 23,430 (YOY change) Change Ratio +7.4% +31.0% +15.7% +36.6% +5.2% 0 FY 03/17 (result) FY 03/18 (forecast) Creative Pen tablet Creative Mobile Creative Display Consumer Business Solution All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 43

44 Sales Forecast by Product line in Tech. Solution (Unit: Million JPY) 25,000 26, % 26,900 (YOY change) Change Ratio 20,000 13,550 15, % 15, % 10,000 5,000 13,208 11,000 0 FY 03/17 (result) FY 03/18 (forecast) Pen for Smartphone Pen for Tablet, Others All Rights Reserved. Copyright 2017 Wacom Co., Ltd. (Note) For tablets, others is integrated with For notebook PCs categorized as a product line in FY03/17. 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 71, % 76,800 12,430 10,805 13,053 14,490 13,520 15,200 7,178 7,780 26,758 26,900 Change Ratio +15.0% +11.0% +12.4% +8.4% +0.5% 0 FY 03/17 (result) FY 03/18 (forecast) Tech. Solution Japan U.S. Germany Asia Oceania (Note) There are no regional segments in the Tech. Solution Biz. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 45

46 Investment, depreciation and R&D Capital expenditure 2.40 bn JPY (YOY -33.0%) Key items: Metallic mold for products in Brand Product Business and Technology Solution Business, etc. Depreciation 2.80 bn JPY (YOY +8.8% ) Key items: Depreciation of global IT infrastructure and metallic mold for products R&D expense 4.90 bn JPY (YOY +11.4%) Key items: New products development and next-generation technology research, etc. All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 46

47 Shareholders Return Policy for FY 03/18 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. Dividend per share JPY 6.00 JPY per share for FY 03/18 (JPY 6.00 for FY 03/17) Payout ratio 86.2% (--% for FY 03/17) All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 47

48 All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 48 4

49 our mission All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 49

50 our brand All Rights Reserved. Copyright 2017 Wacom Co., Ltd. 50

51 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