MonotaRO Co., Ltd.pdf.irpocket.com/C3064/h8MH/tqMf/zyrf.pdf · 2014. 7. 31. · 2 MonotaRO Co., Ltd. MonotaRO means 1) Maintenance, Repair & Operation 2) “The sufficient number

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MonotaRO Co., Ltd.

MonotaRO Co., Ltd.

Q2, 2014（Jan. to Jun., 2014)

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MonotaRO Co., Ltd.MonotaRO means1) Maintenance, Repair & Operation2) “The sufficient number of products” in Japanese3) Fight with unfair old distribution system as “Momotaro”

Overview: MonotaRO provides MRO products through Internet and catalogs, targeting small to mid-sized domestic manufacturers which have not been treated well by conventional tool retailers

MRO products: Cutting tools/Safety products/Bearings/Fasteners/ Industrial equipment (# of SKUs in products lineup exceeds 7 million)

# of customers: 1.25 million and more throughout Japan

Date of foundation: October 19, 2000

Full-scale operation start date: November 13, 2001

Capital stock: 1.84 billion yen or 18.5million US dollars (U$1=JPY101.36)

# of employees: 865 including 229 regular employees (Jun., 2014 Consolidated)

Main Office: Amagasaki City, HyogoDistribution center: (1) Amagasaki City, Hyogo

(2) Tagajyo City, Miyagi

1. Company profile

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-Safety

-Packing, Material handling, Cleaning

-Cutting Tools, Abrasives ,Product Processing Tools

-Hand tools, Power tools, Pneumatics, Chemicals

-FA, Mechanical Parts

-Fasteners

-Electrical

-Auto/Cargo Truck Maintenance & Parts

-Motor Bike/Bicycle Maintenance & Parts

-Construction

-Laboratory

-Office supplies

-Agricultural equipment & supplies

-Kitchen equipment & supplies

２. Our Product Lineup

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3. Our Strength

-Efficient Sales through Internet Our sales through internet, targeting whole of Japan, realize economies of scale.Our promotions are efficient, leveraging IT and cutting-edge data-base marketing.

-One-Price PolicyWe present the same prices to all customers on our web site.Our customers trust in our open, fair and proper prices,and now they are free from bothers in asking quotes every time.

-Product AvailabilityWe sell 7.0 million items, our paper catalogues cover 301 thousand items and we provide 126 thousand items from our inventory.

-Private Label Brand and Direct Import ProductsWe introduce our private label brand and direct import products,so that our customers can choose a best one to meet their needs among quite a few options.

Conventional supplier:Labor Intensive, Localized, Small size

Conventional supplier:Individual and unclear price

Conventional supplier:Limited product availability, Small selection

Conventional supplier:Mainly sell expensive top brand products

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4. Our Marketing

1. Customer Acquisition• Search engine marketing (SEO and paid search)• Sending direct e-mail fliers and faxes to prospects

2. Website• Recommendations and personalized contents

3. Direct Email Fliers and Faxes• Semi-personalized contents

4. Direct Mail Flyers• Small batches of on-demand printed fliers with DTP

5. Catalog・ Split catalogs into 12 in 2013 for targeting better

6. Data Mining & Campaign Management

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5. Our Procurement

Enhancement of Product Sources・Developing new suppliers and new products through

various channels

Direct Import and Private Brand Products Sales・Higher Margin ・Higher inventory turnover・Unique competitive advantage

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6-1. Our Growth – Development Cycle

BroadenProduct Lineup

Sales Growth

IncreaseFrequentlyOrderedProducts

Increase customers

Broaden the potential marketMore keywords for internet search

More products in inventory

More PB products

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2002 Started with Small-to-Mid Manufacturing- Iron Works- Metal Working- Machine Assembly

2008 Automotive Aftermarket2009 Independent Contractor Market2010 Laboratory Products to Enter Large Accounts

US business : Introducing industrial MRO direct marketing in US through the Grainger’s subsidiary, “Zoro Tools”

2011 Small Retail Customers2012 API connection with Large size companies increased2013 South Korean business:

Established a subsidiary in January 2013Start business in April 2013

6-2. Our Growth- Industrial Beachhead Expansion

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◆Sales 21,051 million yen YonY +31.7%-No. of new customer acquisition per month increased by 18% YonY to 23,000.-Sales to the existing customers are also strong with incremental sales of

newly introduced NB products, supported by the steady market demand.-The factors in sales exceeding the original plan by 5.8%

1. The rush demand in March ahead of consumption tax hike and the expiration of the fiscal budget.

2. The sales expansion of the newly introduced NB products more than expected.3. The part of the royalty revenue from US has been accrued in the first half,

while it was expected to be accrued all at once in 4th quarter in the original plan.

◆Gross Profit 6,078 million yen YonY +23.7%-Gross profit rate is 28.9% as expected, but decreased by 1.8 points YonY due to

the weak yen and the product mix changed by the sales expansion of NB products.

◆SG&A Cost 3,730 million yen YonY +34.4%-SG&A cost ratio increased by 0.3 points YonY due to the increase of the rent and

the outsourced labor cost in relation to the new DC startup.

◆Operating Income 2,348 million yen YonY +9.8%

7-1. FY2014_2Q Financial Result – Outline-1/2(MonotaRO Non-consolidated)

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7-1. FY2014_2Q Financial Result – Outline-2/2(MonotaRO Non-consolidated)

Notes on B/S items

◆InventoryInventory has increased temporarily for the dual DC operation, but it will decreasegradually in value terms, while the number of SKUs in inventory is planned to expand.

Notes on C/F items(See 9-3.2014_2Q Financial Result-C/F –Consolidated)

◆Operating Cash FlowOperating cash flow is negative mainly because of the temporary increase of the inventory as mentioned above.

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7-2. 2014_2Q cumulative Financial Result – P/L (MonotaRO Non-consolidated)

2Q YTD, 2013 Result

2Q YTD, 2014 Result

Amount(million yen) Ratio to sales

Amount(million yen) Ratio to sales YonY

Sales 15,982 21,051 +31.7%

Gross Profit 4,914 30.7% 6,078 28.9% +23.7%

SG&A Exp. 2,774 17.4% 3,730 17.7% +34.4%Operating Income 2,139 13.4% 2,348 11.2% +9.8%Current Income 2,158 13.5% 2,372 11.3% +9.9%

Net income 1,403 8.8% 1,467 7.0% +4.6%

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7-3. 2014_2Q Financial Result - B/S (MonotaRO Non-consolidated)

Jun. Dec. Jun. 20142013 2013 Million Yen Ratio

AssetCASH 3,068 4,158 2,531 16.4%Accounts Receivable 3,087 3,757 4,138 26.9%

Inventory 3,160 3,211 3,936 25.6%Others 1,233 1,395 1,563 10.2%

Total Current Asset 10,550 12,522 12,169 79.1%

Tangible Fixed Asset 163 388 999 6.5%Intangible Fixed Asset 783 820 906 5.9%

Others 602 911 1,317 8.6%Total Fixed Assets 1,549 2,120 3,223 20.9%

Total Assets 12,099 14,643 15,393

Jun. Dec. Jun. 20142013 2013 Million Yen Ratio

LiabilitiesAccountsPayable 2,171 2,666 2,624 17.1%Short-term Debt 1,300 1,300 1,300 8.4%

Others 1,708 2,787 2,283 14.8%Total Current Liabilities 5,179 6,753 6,208 40.3%Long term Liabilities 147 359 506 3.3%

Total Liabilities 5,326 7,113 6,715 43.6%

Net AssetsShareholderʼs Equity 6,709 7,456 8,605 55.9%Others 63 73 72 0.5%Total Net Assets 6,773 7,530 8,677 56.4%Total Liabilities & Net Assets 12,099 14,643 15,393

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7-4 Operating Income Change Factors (Non-consolidated)

2Q YTD, 2013OP Yen2,139m

Yen678m

2Q YTD, 2014OP Yen2,348m

Sales increase

Improvement of the ratio of labor cost and outsourced labor cost.

GP ratio decrease1.8 point decrease due to the weak yen and the product mix. However, the sales expansion of NB products, which has worsened the average GP ratio, will be the positive factor for the mid to long term growth.

SG&A cost ratio increase

Yen75m Increased by 0.3 points for the new DC startup cost

Yen394m

73mTotal labor cost including the labor cost and the outsourced labor cost was improved by 0.3 point although the outsourced labor cost increased to deal with the sharp sales increase in March and DC transfer.

Favorable growth by the steady market demand, the strong new customer acquisition and the aggressive promotion for the incremental sales to existing customers

100m Increase in the rent and other cost including DC miscellaneous equipment.

New DC cost

Others 48m The promotion cost ratio increased for the aggressive investment including TV commercial. The mailing cost ratio decreased by the better efficiency. The depreciation cost increase will come up from the 3rd quarter.

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21,051

0

200

400

600

800

1,000

1,200

1,400

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Sales

No. of customers

8-1. Our Progress -Sales & Customers(MonotaRO Non-Consolidated)

Dec., 2013 1,122,291 Jun., 2014 1,254,462

No. of Customer (Registered Accounts)

44,684

Sal

es(M

illion

Yen

)N

o. of Custom

ers (Thousand)

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8-2. Our Progress -Gross Profit (MonotaRO Non-Consolidated)

Ratio to Sales

14.1%16.1%

19.9%

25.0% 25.3%26.4%

28.5% 27.9% 27.5% 28.1%28.5%

30.2%28.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

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8-3. Our Progress -Fixed Cost(MonotaRO Non-Consolidated)

Ratio to Sales

53.7%

26.9%

22.0%20.2%

22.0%20.2% 21.5% 20.1% 19.0% 18.4%

18.3%

17.7%

0%

10%

20%

30%

40%

50%

60%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014_2Q

Labor cost+Outsourcing

Rent

Promotion+Mailing

Depreciation

Others

Total

2014_2Q cumulativeExpense Breakdown

Labor cost 5.9％Outsourcing 2.4％Rent 2.0％Promotion 3.5％Mailing 1.1％Depreciation 1.0%Others 1.8％

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9-1.2014_2Q cumulative Financial Result-P/L(Consolidated)

2013_2Q YTDResult

2014_2Q YTDResult

Million yen Amount Ratio to Sales Amount Ratio to Sales YonY

Sales 15,991 21,305 +33.2%

Gross Profit 4,915 30.7% 6,130 28.8% +24.7%

SG&A Exp. 2,853 17.8% 3,911 18.4% +37.1%

OperatingIncome 2,061 12.9% 2,218 10.4% +7.6%

CurrentIncome 2,074 13.0% 2,243 10.5% +8.1%

Net Income 1,336 8.4% 1,338 6.3% +0.1%

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9-2.2014_2Q Financial Result-B/S(Consolidated)

Dec.,2013 Jun., 2014Million

Yen Ratio Million Yen Ratio

Asset

CASH 4,248 29.3% 2,891 19.0%Accounts Receivable 3,760 25.9% 4,158 27.3%

Inventory 3,242 22.4% 4,021 26.4%

Others 1,408 9.7% 1,595 10.5%Total Current Asset 12,660 87.3% 12,667 83.2%

Tangible Fixed Asset 404 2.8% 1,012 6.7%

Intangible Fixed Asset 870 6.0% 950 6.2%

Others 570 3.9% 589 3.9%

Total Fixed Assets 1,845 12.7% 2,552 16.8%

Total Assets 14,505 15,219

Dec.,2013 Jun., 2014Million

Yen Ratio Million Yen Ratio

LiabilitiesAccountsPayable 2,667 18.4% 2,684 17.6%Short-term Debt 1,300 9.0% 1,300 8.5%

Others 2,820 19.4% 2,335 15.3%Total Current Liabilities 6,787 46.8% 6,319 41.5%Long term Liabilities 361 2.5% 514 3.4%

Total Liabilities 7,149 49.3% 6,834 44.9%

Net AssetsShareholderʼs Equity 7,255 50.0% 8,274 54.4%

Others 100 0.7% 110 0.7%

Total Net Assets 7,355 50.7% 8,385 55.1%Total Liabilities & Net Assets 14,505 15,219

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9-3.2014_2Q Financial Result-C/F(Consolidated)

2013_２Q 2014_２Q（M Yen）Ⅰ Cash Flow from Operating Activity

Net Income before Tax 2,206 2,243Increase or Decrease in Accounts Receivable -236 -397Increase or Decrease in Inventory -50 -777Increase or Decrease in Accounts Payable -1 16Others -1,190 -1,642Total 728 -557

Ⅱ Cash Flow from Investing Activity

Acquisition of Tangible Assets -41 -131Acquisition of Intangible Assets -201 -255Others -136 -38Total -379 -426

Ⅲ Cash Flow from Financing Activity

Dividend -242 -364Others 44 -19Total -197 -384

Ⅳ Currency Exchange Adjustment -5 11Ⅴ Net Increase/Decrease of Cash and Cash Equivalent 145 -1,357Ⅵ Cash and Cash Equivalent at the beginning of the period 2,825 3,948Ⅶ Cash and Cash Equivalent at the end of the period 2,970 2,591

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10-1. FY2014 Revised Plan - Outline

-In addition to the sales growth in the first half exceeding the original plan, the strong sales of newly introduced NB products is expected to continue in the second half and the sales growth of the South Korean subsidiary is also expected.

◆Sales Yen44,684m +Yen2,037m from the original plan +29.3%YonY

-Gross Profit rate in FY2014 is expected to be lower than the original plan, given that the incremental sales mainly comes from NB products with the lower margin.-In 2H, Gross Profit rate will be lower than original plan because the part of the royalty revenue from US, which were to record all at once in 4Q in the original plan, was accrued in 1H. It will be also affected by the strong NB products sales with lower margin.

◆Gross Profit Yen12,910m +Yen488m from the original plan +24.0%YonY

◆SG&A Cost Yen8,582m +Yen370m from the original plan +31.5%YonY

◆Operating Profit Yen4,327m +Yen117m from the original plan +11.4%YonY

-In addition to the increase of the variable cost with the sales increase, the part of the incremental profit is to be allocated to the further growth and the more stable infrastructure, which include TV commercial in Tokyo metropolitan area and the additional investment to DC for the efficiency improvement and the inventory expansion.

-The double digit growth is expected even with the up-front investment.

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10-2. FY2014 Revised Plan – Consolidated

FY2013 Result FY2014Original PlanFY2014

Revised Planmillion Amount Ratio to Sales Amount Ratio to Sales Amount Ratio to Sales YonY

Sales 34,556 42,647 44,684 +29.3%

GrossProfit 10,410 30.1% 12,422 29.1% 12,910 28.9% +24.0%

SG&A Exp. 6,525 18.9% 8,212 19.2% 8,582 19.2% +31.5%

OperatingIncome 3,885 11.2% 4,210 9.9% 4,327 9.7% +11.4%

CurrentIncome 3,901 11.3% 4,197 9.8% 4,345 9.7% +11.4%

NetIncome 2,289 6.6% 2,444 5.7% 2,531 5.6% +10.6%

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10-3. FY2014 Revised Plan – MonotaRO non-consolidated

FY2013 Result FY2014Original PlanFY2014

Revised Planmillion Amount Ratio to Sales Amount Ratio to Sales Amount Ratio to Sales YonY

Sales 34,484 42,140 43,920 +27.4%

Gross Profit 10,403 30.2% 12,358 29.3% 12,824 29.2% +23.3%

SG&AExpense 6,325 18.3% 7,819 18.6% 8,169 18.6% +29.2%

OperatingIncome 4,077 11.8% 4,538 10.8% 4,654 10.6% +14.1%

CurrentIncome 4,104 11.9% 4,528 10.7% 4,672 10.6% +13.8%

Net Income 2,492 7.2% 2,776 6.6% 2,858 6.5% +14.7%

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11. FY2014 Business Strategy-2Q Update 1/3

＊New customer acquisition-Expansion of customer base has been accelerated by 23,000 per month. -TV commercial in Tokyo metropolitan area for 2 weeks in the Autumn for the further name recognition

＊New product categories, Agricultural equipment & supplies and Kitchen equipment & supplies-Set up 2 new product categories and started to expand the product lineup in the areas from May, 2014-The new product categories not only expand target customers, but also meet the potential demand of the existing customers and give the more convenient purchase platform as “one stop shopping”.

＊More products for the Subscription Order Service-The service was introduced in March, 2014 and more than 1,000 customers has registered the service.-No. of products available for this service increased to 47 from 11 in July, 2014.-The subscription order service encourages customers’ continuous usage of our service leveraged by the continuous purchase of consumables.

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＊New distribution center

＊Sales to large size companies

-Started the full-scale operation in July, 2014-The challenges are to improve the productivity and increase the number of SKUs in inventory to 200K by the end of this year.-The additional investment is planned in the revised budget to ensure the fulfillment of overcoming these challenges.

11. FY2014 Business Strategy-1Q Update 2/3

-Sales through API connection Increased by 109%YonY (more than double)No. of companies has increased to 150 in Jun., 2014 from 120 in Dec., 2013Started the API connection with Otsuka Corporation’s procurement ASP service.

-The development of our original procurement management system was completed in July, 201410 companies are studying to adopt the new system.

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＊Overseas business-The sales of the South Korean subsidiary expanded more than expected in 1H,

and the sales plan has been revised to 760 million yen.-Sales to Southeast Asian countries has increased steadily.-The consulting service

to US, the favorable growth. to Europe, EC website in Germany launched in July, 2014

11-1. FY2014 Business Strategy-2Q Update 3/3

Southeast Asian site http://www.monotaro.sg/ German site http://zorotools.de/

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Reference 1: Customer DemographicsSize

（number of employees） Industry

Ratio by sales amount in 2013

1‐21%

3‐55%

6‐1030%

11‐3027%

31‐5011%

51‐10011%

101‐5005% 501‐

10007%

Over 10013%

Manufacturing47%

Automotive after‐market

15%

Contractor17%

Others21%

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Reference 2 : Internet PO Ratio

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

OthersTELFAXWEB

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(M):Apr.[Year] to Mar.[Year+1] (F):Mar.[Year] to Feb.[Year+1] (D) Jan.[Year] to Dec.[Year]

Reference 3 :Other MRO Market Players

Ｗ：Wholesalesr

Upper：SalesChange Lower：Operating Profit (Yen M)

R：Retailer 2007 2009 2011 2013 2007 to 2013

Yuasa (8074) ‐ (M) W468,476 309,196 396,732 442,213 ‐5.6%8,254 204 6,634 9,517 +15.3%

Yamazen (8051) ‐ (M) W376,852 241,410 372,830 395,249 +4.9%11,518 836 10,528 9,562 ‐17.0%

Trusco (9830) ‐ (M) W134,430 99,201 129,912 145,882 +8.5%9,120 3,745 8,369 10,133 +11.1%

Misumi (9962) ‐ (M) R126,668 89,180 130,212 173,904 +37.3%16,317 8,408 16,646 18,989 +16.4%

Nichiden (9902) ‐ (M) W92,745 58,639 84,687 87,917 ‐5.2%5,533 1,283 3,978 4,304 ‐22.2%

NaITO (7624) ‐ (F) W51,479 26,256 36,837 36,601 ‐28.9%1,343 ‐668 269 234 ‐82.6%

Sugimoto (9932) ‐ (M) W・R41,461 24,724 30,477 31,356 ‐24.4%2,292 ‐84 929 1,212 ‐47.1%

Toba (7472) ‐ (M)  R25,800 11,438 19,180 16,333 ‐36.7%2,115 ‐28 1,077 627 ‐70.4%

Uematsu (9914) ‐ (M) R7,647 4,428 5,933 6,182 ‐19.2%190 ‐161 37 54 ‐71.6%

MonotaRO (3064) ‐ (D) R10,897 14,209 22,239 34,556 +217.1%

480 910 2,009 3,885 +709.4%

Contact Us

E-mail：[email protected]

TEL: 81-6-4869-7190FAX: 81-6-4869-7178

Cautionary Statement Concerning Forward-looking StatementsThis presentation may include forward-looking statements relating to our future plans, forecasts, objectives, expectations and intentions. Actual results may differ materially, for a wide range of possible reasons. In light of the many risks and uncertainties, you are advised not to put undue reliance on these statements.