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ミズノ株式会社
22nd Quarter Financial Reportnd Quarter Financial Report
The 97th Period (Year ended March 31, 2010)The 97th Period (Year ended March 31, 2010)
This report includes forecasts based on our assumptions, outlook and plans for the future as of
November 12, 2009, which may substantially differ from the actual results due to risks and
uncertainties relating to the global economy, competitors' situations, changes in exchange rates, etc.
MIZUNO Corporation
2/22
ContentsContents
Q2 FY09 Business Results
Progress of Current Business Tasks
Business Status for the Period
Regional Highlights
FY09–FY11 Medium-Term Plan
3/22
Income StatementIncome StatementRevenues decreased due to shrinkage in golf product sales and also had a negative impact from exchange rate fluctuation. Net income declined despite reduction of fixed costs (ad expenses, etc.)
-17.2%2.42.9Ordinary profit
-34.0%2.23.4Operating profit
-31.8%0.91.3Net income (Loss)
-0.3P3.2%3.5%Ordinary profit ratio
-1.1P3.0%4.1%Operating profit ratio
-23.1%516.7A&P expenses
-4.5%9.810.3Salaries and bonus
-10.3%
-0.1P
28.7
37.9%
32.0
37.8%
SG&A expenses
SG&A expenses ratio
-1.2P40.7%41.9%Gross margin ratio
-12.6%31.035.5Gross margin
-10.1%76.284.7Revenues
Versus
2008
FY09-2Q
(6 months)
FY08-2Q
(6 months)(JPY billion)
132.71161.53JPY/1 EUR
150.26204.04JPY/1 GBP
95.29105.97JPY/1 USD
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Balance SheetBalance Sheet
Inventory reduction progressed in major consolidated companies.
This, along with the debt reduction, contributed to higher asset efficiency.
-0.38.48.7Investment in securities
-1.04.55.5Deferred tax assets
+1.010.69.6Short-term debt
-3.59.312.8Long-term debt
-5.775.981.6Net assets
-1.229.630.8Other liabilities
-3.749.553.2Total liabilities
-1.039.840.8Fixed assets
-4.523.528.0Inventories
-2.228.030.3Accounts receivable
+2.312.610.2Cash and cash equivalents
-9.4125.4134.8Total assets
+ / -September 30, 2009September 30, 2008(JPY billion)
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Q2 Accumulated Total Q2 Accumulated Total –– Outline of Business ResultsOutline of Business Results
Summary of financial results
Revenues JPY 76.2 billion −8.5 billion (−10.1%)Revenues JPY 76.2 billion −8.5 billion (−10.1%)
Operating profit JPY 2.2 billion −1.4 billion (−34.0%)Operating profit JPY 2.2 billion −1.4 billion (−34.0%)
Impact of exchange rate fluctuations −3.3 billion (−4.0%)
Increase/decrease excl. impact of exchange rate fluctuations −5.2 billion (−6.1%)
Sales of golf items ceased falling in Europe, though the decrease continued in the Americas and Japan.
Growth in footwear sales slowed due to a decline in average unit prices. Substantial sales decrease in China also
had a negative impact.
Due to the impact of decreased unit prices resulting from reduced inventory, etc., gross margin ratio fell 1.2% from the previous year.Due to the effect of cutbacks on fixed assets (advertising expenses, etc.), sales, general and administrative expenses maintained the previous year’s level.
Ordinary profit JPY 2.4 billion −0.5 billion (−17.2%)Ordinary profit JPY 2.4 billion −0.5 billion (−17.2%)
Net profit JPY 0.9 billion −0.4 billion (−31.8%)Net profit JPY 0.9 billion −0.4 billion (−31.8%)
Exchange rate losses from yen translation of European branch assets, etc. (Current term end: 144.07 JPY/GBP, 131.69 JPY/EUR; Previous term end: 140.521 JPY/GBP, 129.84 JPY/EUR)
Loss from write-downs of securities, etc. (0.17 billion yen) as extraordinary loss
Versus previous year
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FY09-2QFY08-2Q
58.9
56.7
6.5
5.3
12.6
9.7
6.6
4.4
Revenue Increase/Decrease Analysis Revenue Increase/Decrease Analysis –– by Regionby Region
Revenues by region without impact of exchange rates, and the impact of exchange rates
84.7
76.2
FY2008-2Q
FY2009-2Q
Europe-2.2 billion(96.2%)
-3.3 billion
-1.7 billion(86.7%)
+0.4 billion(106.5%)
Impact of
Exchange rate
-1.7 billion(73.8%)
Revenues o
f FY08-2
Q (6 m
onth
s)
Revenues o
f FY09-2
Q (6 m
onth
s)
Europe: -1.6
Americas: -1.2
Asia: -0.5Japan: Affected by decreased sales of golf items, decline of average
unit prices of footwear, etc.
Europe: Revenues decreased due to impact of exchange rate despite
growth in golf items, footwear and apparel
Americas: Affected by decreased sales of golf and baseball items
and decline in footwear unit prices
Asia/Aus:Sales decreased substantially partly due to receipt of distributed
stock resulting from elimination/consolidation of China stores*
(* Franchise stores switching to direct-control stores, etc.)
JapanIncl.export
Asia/Aus
Americas
(Unit: JPY billion)
JapanIncl.export
Europe Americas Asia/Aus
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FY09-2QFY08-2Q
21.3
20.4
17.4
15.1
16.1
14.4
15.0
11.8 14.5
14.9
Revenue Increase/Decrease Analysis Revenue Increase/Decrease Analysis –– by Productby Product
Increase/decrease in consolidated revenues by product, including impact of exchange rate
Others
-0.9 billion(95.8%) -2.3 billion
(86.3%)
-3.2 billion(78.7%)
-1.7 billion(89.3%)
-0.4 billion(97.5%)
Baseball Sporting footwear Golf Others
Apparel, footwearEurope: Marked a decrease due to impact of
exchange rates despite increase on a local currency basis.
Japan: Average unit prices fell.China:Sales decreased greatly.
Golf itemsEurope: Marked a decrease due to
impact of exchange rates though a steady level was maintained on a local currency basis.
Japan, Americas: Sales decreased, average unit prices declined.
(Unit: JPY billion)
84.7
Revenues o
f FY08-2
Q (6 m
onth
s)
76.2
Revenues o
f FY09-2
Q (6 m
onth
s)
Sporting Apparel
Sporting Footwear
Golf goods
incl. shoes, wear
Baseball goods
incl. shoes, wear
FY2009-2Q
FY2008-2Q
Sporting apparel
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Major Financial IndexesMajor Financial Indexes
Efforts to improve efficiency (Defense) in the shrinking phase including asset reduction have achieved specific results.
Tasks now include setting up growth strategies (Attack) to create high added value (explained in later pages).
-0.050.710.76Price book-value ratio (PBR)
-¥45.97¥608.09¥654.06Book-value per share (BPS)
-¥431¥496Price at the end of this period
+21.1P66.8%45.7%Dividend payout ratio
-¥3.47¥7.48¥10.95Earnings per share (EPS)
-60.4%60.4%Shareholder’s equity ratio
-0.5P1.2%1.7%Return on equity (ROE)
-0.7P1.9%2.6%Return on Asset (ROA)
+ / -FY09-2QFY08-2Q
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Current Business Tasks 1/3Current Business Tasks 1/3
Progress in golf business reforms
Market trends
Player population leveling off
Unit sales prices declining
Replacement cycles getting longer
Continue efforts to improve
functionality.
Procure high-performance
products at low prices.
Review costs in design stage.
Strengthen sales of irons.
Enhance Custom Fitting.
Increase business efficiency.
Cut costs.
Reduce inventory.
Reduce SKUs.
Establish Global Golf Planning & Development
Center (July 2009).
Integrate all processes from development to just
before mass production.
Focus on development of global models.
Strengthen Custom Fitting worldwide.
Europe & US: Introduce new fitting systems.
Japan: Launch Custom Fitting approach in
cooperation with large-scale golf retailers.
Status of cost-cutting/inventory reductions (based
on internal management data)
Expenses (consolidated): 82%, year-on-year
Inventory amount (consolidated): 80%, year-on-
year
Golf will be an Olympic event in 2016.
Expectation is rising toward invigorating golf as a
competitive sport.
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Current Business Tasks 2/3Current Business Tasks 2/3
Tasks in Chinese market development and future actions
Market trends
Chinese domestic brands' share is expanding.
Market continues with excess inventory.
Uncertain whether player population will increase.
For the time being, put more emphasis
on securing profits by improving gross
margin ratio and cost cuts, rather than
expanding sales.
Implement thorough inventory control.
Improve operational efficiency of existing
stores.
Reduce sales, general and administrative
expenses.
Seek higher functionality.
Differentiate from local brands.
Establish a brand image as the "brand
loved by players."
Responses to excess inventory
Disposal of accumulated inventory from
previous period is completed.
Compared year-on-year.
“Scrap & Build” stores
End of December 2008: 903 stores
End of June 2009: 731 stores
(Stores: New: 34, Closed: 206)
Marketing activities
Start trial sale of "BIO GEAR," high-
functional underwear series.
Hold trial hitting events in various
locations mainly for forged irons.
Hold badminton competitions in major
cities.
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Current Business Tasks 3/3Current Business Tasks 3/3
Return to proper inventory levels.
26.828.5 28.0 27.5
23.5
3.13.2
3.0
2.8
3.0
0
5
10
15
20
25
30
07/9E 08/3E 08/9E 09/3E 09/9E
2.6
2.7
2.8
2.9
3.0
3.1
3.2
3.3
Ending Balance Inventory turns
Early disposal of accumulated stock
Enhancement of purchasing control
Cut JPY 4.5 billion from year-on-year
total.Improvement of gross margin ratio is
expected from Q3 FY09.
Inventory Turns: Net Sales / Ave.(Beginning balance
+ Ending Balance of Inventory)
FY08-Sep Delta FY09-Sep
Japan 18.0 -1.5 16.5
Europe 1.5 -0.4 1.1
Americas 4.8 -1.3 3.5
Asia/Aus 4.6 -1.0 3.6
Adj. -0.9 -0.2 -1.1
Total 28.0 -4.5 23.5
Inventory
(JPY billion)
Inventory
Turns
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Business Status for the Period Business Status for the Period ––Technology/Product DevelopmentTechnology/Product Development
To become a brand that continues creating added value, backed by high product development capacity
[Design] Soccer shoes: Dual functions available for both spinning
and non-spinning kicks.
"Wave Ignitus MD“ -Improved control realized by a unique material, Bio control panel.
Golf clubs: 45 trajectory patterns realized.
"MP-630“ –
2 movable weights combined to enable easy
setting of the best trajectory.
[Materials] Artificial shuttlecock: aerodynamic structure + durability
"NS300" - Shuttlecock made with artificial feathers to increase durability
[Technology] Soft iron forging technology: realized incomparable hitting feeling
"MP Series Iron“ -
researched relation between hitting feeling and “sound” at hitting
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Business Status for the Period Business Status for the Period ––Technology/Product DevelopmentTechnology/Product Development
To become a brand that continues creating added value, backed by high product development capacity
[Evolution] Mizuno MP Series golf balls: quality performance for professional use
"MP 801" & "MP 801X" - long distance and improved controlby Mizuno’s original “cross core” technology and new outside coating material
[Comfort] 30% higher heat retention: heat generating material + heat reflecting material"Mizuno BREATH THERMO DOWN x REFLECTION GEAR Lightweight Jacket"
[Health] New products that take advantage of our R&D capacity
"Bio Gear Shisei Navi" - well-balanced standing position
"PuShutto“ - Pelvic exercise cushion
[Environment] Environment-conscious products: “Mister Donut Shop” uniform
"Semi-permanently recyclable“ - Teijin's polyester recycle system
"Mizuno's original DF cutting structure“ - Cutting technique enabling
smooth moves
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Business Status for the Period Business Status for the Period –– MarketingMarketing
Mizuno Victory Clinic, a grassroots sales promotion strategy
Training workshops with instruction by major players for junior/amateur players
- For various sports
– Soccer, walking, track-and-field, baseball, softball, etc.
- Development of fans through enhancement of gatherings with users
– Use of advisory staff and corporate players' networks
– "Promotion of sports," Mizuno's strength and origin
- 278 workshops were held between April and September 2009 (164 workshops in the same period of the previous year)
– Plans to hold 470 workshops annually
Running Marketing Offer test ride opportunities to allow customers to actually feel the performance and comfort
- US: Run With US Campaign
- Europe: Measure Up Campaign
- Japan: “Running Comfort Provision Base”
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Regional HighlightsRegional Highlights
Global Business Unit (global strategic decision-making unit)Q2 FY09 Sales outline (growth rate year-on-year) based on local currency without currency translation influence
EuropeEuropeJapanJapan AmericasAmericas Asia/AustraliaAsia/Australia
■ Sports apparel
■ Sports footwear■ Others
■ Golf products■ Others
Increasing more than 5%
-5% through 5%
Decreasing more than 5%
■ Baseball products■ Racket Sports, Judo
and others
■Wellness, Walking
■ Swimming■ Others
Footwear & Apparel
Business
Golf Business
Diamond Business
Wellness Business
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Regional Highlights Regional Highlights –– JapanJapan
Summary of resultsFY09-Q2 Results
Footwear & apparel business: Despite
increased footwear sales, greatly affected
by decline in unit sales price
Golf business: Responded to shrinking
market through cost cutting and inventory
reduction
Wellness business: Sales of walking
shoes leveled off
Exports: Exports to Korea were stagnant
Future actions/outlookDiamond sports business: Full-scale
launch of new brand (Global Elite)
Golf business: Continue enhancement of
iron sales through cooperation with large-
scale golf retailers on Custom Fitting.
Exports: Exports to Korea are likely to
recover.
(Unit: JPY billion)
(incl. Export to Asia)
57.0 57.660.5 58.9 56.7
2.2 2.02.6
2.0 2.2
0
20
40
60
80
FY05 FY06 FY07 FY08 FY09
0
2
4
6
8
10
Revenues
(JPY billion)
Revenues
Operating profit
Operating Profit
(JPY billion)
Note: Results by business are based on
in-house controlled data.
FY09-Q2 (6 months) Results by business
(For the wellness business, due to internal organizational changes, figures obtained were derived by adjusting sales figures for the same period of the previous year.)
-
5.3
Others
97%
8.8
Wellness
82%
7.6
Golf
100%95%96%vs FY08
21.513.556.7Revenues
DiamondFootwear
& ApparelTotal
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Regional Highlights Regional Highlights –– EuropeEurope
Summary of results FY09-Q2 ResultsOverall: Sales without currency translation influence exceeded those of previous year. Purchasing costs increased due to strong USD and weak GBP.
Footwear & apparel business:Recognition of high-function running shoes stabilized in the market, resulting in sales increase.
Golf business: Marked good results in British and Scandinavian markets thanks to fine reputation for new products.
Future actions/outlookFootwear & apparel business: Make effective use of Mizuno Running Series and introduce equipment for trial rides, with the aim of further sales expansion.
Golf business: Introduce new fitting system to strengthen sales of irons.
78%84%82%vs FY08
100%109%107%Currency
neutral basis
1.63.85.3Revenues
GolfFootwear
& ApparelTotal
4.4
5.4
6.6 6.6
5.3
0.24 0.30
0.500.58
0.19
0
1
2
3
4
5
6
7
8
FY05 FY06 FY07 FY08 FY09
0.0
0.5
1.0
1.5
2.0
Note: Results by business are based on
in-house controlled data.
FY09-Q2 (6 months) Results by business
(Unit: JPY billion)
Revenues
(JPY billion)
Revenues
Operating profit
Operating Profit
(JPY billion)
18/22
Regional Highlights Regional Highlights –– AmericasAmericas
Summary of results FY09-Q2 ResultsFootwear & apparel business: Revenues decreased slightly from previous year due to impact of decline in unit sales price, etc.
Diamond sports business: Revenues were lower than previous year because purchasing was limited by the supplier side.
Golf business: Shrinking trend in the iron market continued, causing stagnant sales. Gross margin ratio declined due to disposal of accumulated inventory.
Other: Costs for starting new distribution warehouse increased.
Future actions/outlookFootwear & apparel business: Continue grassroots sales promotion activities such as Run With US campaign, to increase recognition for our brands.
Promotion event for Breath Thermo products in Vancouver is planned.
Golf business: Return inventory levels to normal. Aim to improve sales/gross margin ratio by launching new products and introducing new fitting system.
63%80%86%77%vs FY08
71%90%97%87%Currency
neutral basis
2.23.93.69.7Revenues
GolfDiamondFootwear
& ApparelTotal
9.7
12.613.5
12.7
9.7
0.49
0.82
0.52 0.49
-0.02-2
0
2
4
6
8
10
12
14
FY05 FY06 FY07 FY08 FY09 -0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Note: Results by business are based on
in-house controlled data.
FY09-Q2 (6 months) Results by business
(Unit: JPY billion)
Revenues
(JPY billion)
Revenues
Operating profit
Operating Profit
(JPY billion)
19/22
Regional Highlights Regional Highlights –– Asia, Australia (excl. exports from Japan)
Summary of results FY09-Q2 ResultsChina: Sales unit price and gross margin ratio dropped due to early inventory reduction.
Taiwan: Both sales and profits exceeded those of previous year.
Production: Production management fees decreased along with inventory reduction at sales companies.
Future actions/outlookChina: Promote inventory reduction as planned. From next fiscal year, focus on improving gross margin ratio instead of expanding scale, to recover performance.
Australia: From FY10, start sales of various sports items including mainly running shoes, in addition to golf items.
Production: Implement China + One production base policy, to reduce manufacturing costs and diversify risks.
87%88%66%67%vs FY08
95%106%73%74%Currency
neutral basis
8.02.03.44.4Revenues
GolfDiamondFootwear &
ApparelTotal
4.0
5.0
6.36.6
4.4
0.500.64 0.68
0.42
0.04
0
2
4
6
8
FY05 FY06 FY07 FY08 FY09
0.0
0.5
1.0
1.5
2.0
Note: Results by business are based on
in-house controlled data.
FY09-Q2 (6 months) Results by business
(Unit: JPY billion)
Revenues
(JPY billion)
Revenues
Operating profit
Operating Profit
(JPY billion)
20/22
FY09FY09––FY11 MediumFY11 Medium--Term PlanTerm Plan
Revenues/Ordinary profits
160.0 166.0174.0
162.0172.0
4.5 5.0
7.4
1.5
6.0
0
50
100
150
FY07 FY08 FY09 Forecast FY10 Plan FY10 Plan
0
5
10
15
Ordinary Profit
(JPY billion)
Revenues
Ordinary profits
Medium-term plan released in May
2009
Revenues
(JPY billion)
JPY-1USD 117.82 103.68 100 Planned Rate for FY09
JPY-1GBP 229.27 175.25 150 (using the same rate for FY10-FY11)
JPY-1EUR 161.86 144.40 135
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FY09FY09––FY11 MediumFY11 Medium--Term PlanTerm Plan
Revenue breakdown
Revenues
(JPY billion)
Note: Revenues in Europe include some exports
from Japan to Europe.
17.9 16.8 17.3 17.6 18.0
37.4
29.325.1 26.1 27.5
49.5 48.6 49.1 50.3 51.456.5 55.2 56.0
59.061.7
0
10
20
30
40
50
60
70
FY07 FY08 FY09
Forecast
FY10 Plan FY11 Plan
Wellness Golf Diamond Footwear&Apparel
26.1 22.5 21.1 22.0 23.0
13.311.1 10.9 11.6 12.4
12.9
11.49.6
10.912.0
6.1
5.44.3
4.85.4
0
10
20
30
40
50
60
70
FY07 FY08 FY09
Forecast
FY10 Plan FY11 Plan
Americas Europe Asia/AUS Asia(Export)
33.6%31.1%
28.7%29.7%
30.7%58.4
50.445.9
49.352.8
By businessBy business Non-Japan revenues
(ratio of non-Japan revenues)
Non-Japan revenues
(ratio of non-Japan revenues)
Medium-term plan released in May
2009
Revenues
(JPY billion)
22/22
ClosingClosing
Company Policies for Fiscal 2009
Be Flexible and Push Through
Be Creative and Unique
Take Action with Guts
Attack & DefendUnder our business slogan for fiscal 2009, "Attack & Defend," we devoted
all our efforts to defensive actions in the first half of this year. For the
latter half of the year, though the market is still in a sluggish trend, we will
take aggressive actions for growth (attack) by launching attractive
products and implementing Mizuno's characteristic marketing activities.