MonotaRO : Presentation Material for 2Q, 2020

Quarter 2, FY2020

(Jan. to Jun. 2020)

MonotaRO Co., Ltd.

www.monotaro.com

1. Company Profile

	•	Maintenance, Repair, and Operation
MonotaRO means	•	"The sufficient number of products" in Japanese
•	Like "Momotaro," fight against unfair-old
		distribution system	Image of "Momotaro"
			in Japanese folk tale

• Providing MRO products through Internet and catalogs,
  MonotaRO Business targeting small to mid-sized domestic manufacturers which are

not treated well by conventional retailers.

MRO products	•	Cutting tools/Safety products/Bearings/Fasteners/Industrial
	equipment (number of product SKU 18 million as of Jun. 2020)
Number of Customers	•	More than 4.8 million
Capital Stock
•	1.99 billion JPY or 18.4 million USD (USD1=JPY107.74)
Number of Employees	•	2,415 including 645 regular employees
	(as of Jun. 30, 2020 consolidated)
Head Office	•	Amagasaki-city, Hyogo Prefecture
Major Distribution	•	Amagasaki-city, Hyogo Prefecture
•	Kasama-city, Ibaraki Prefecture
Centers
•	Sapporo-city, Hokkaido Prefecture

2

2. Product Category

• Office Supplies, OA / PC, Battery
• Cutting Tools, Abrasives
• Piping, Pumps, Pneumatic / Hydraulic Equipment, Hose
• Automobile / Truck Supplies
• Construction Hardware / Material, Interior Painting
• Laboratory / Clean Room Supplies
• Safety Protection, Working Clothes, Safety Shoes
• Hand Tools, Power Tools, Pneumatics Tools
• Screws, Bolts, Nails, Materials
• Logistics, Storage / Packing Supplies / Tapes
• Motorcycle / Bicycle Supplies
• Control Equipment / Solder / Anti-static Goods
• Spray, Oil, Grease / Paint / Adhesion, Repair / Welding
• Air Conditioning, Electric Facilities, Piping, Plumbing
• Kitchen Equipment, Store Supplies
• Agricultural Materials, Gardening Supplies
• Bearings, Mechanical Parts, Casters
• Medical and Nursing Products
• Measuring and Surveying Products
• Office Furniture, Lighting, Cleaning Supplies
• Safety Supplies, Safety Signs

3

3. Strength

After (MonotaRO)

Before (Conventional Suppliers)

One-Price Policy

	Same price to all customers on web site.	 Different and unclear price to
each customer
	Customers trust in open, fair, and proper prices and are
	free from bothers in asking quotes every time.

Efficient Sales through Internet		 Labor oriented, small and
 Sales through internet, realizing economies of scale.
	localized markets
 Efficient promotions leveraging IT.
Database Marketing		 Sales based on experience of
 Replace sales representatives by utilizing huge data and
	sales representatives
with advanced database marketing.

Product Availability

• Selling more than 18 million items; 590 thousand items are available for same day shipment.
• 461 thousand items out of "same day shipment products" are in inventory.

Private Brand and Direct Import Products

• Importing competitive products directly from overseas.
• Providing optimal selection of products including private brand, so that customers can choose the best one out of huge variety to meet their needs.

• Limited product availabilities
• Sell mainly expensive national brand products

4

4. Marketing

1. Customer Acquisition
2. • Search engine marketing (SEO and paid search)
   • Sending direct e-mail, flyers, and faxes to prospects
   • Broadcasting CM
3. Website
4. • Recommendations and personalized contents
5. Direct e-mail, Flyers, and Faxes
6. • Semi-personalizedcontents
7. Direct Mail Flyers
8. • Small batches of on-demand printed flyers with DTP
9. Catalog
10. • 21 separate volumes for better targeting
11. Data Mining and Campaign Management
12. • Promotions optimized by industry categories for more effectiveness and efficiency

5

5. Procurement

• Enhancement of Product Sources
• • Developing new suppliers and new products through various channels
• Direct Import and Private Brand Product Development
• • Higher margin with national brand quality maintained
  • Unique-competitiveadvantage

6

6-1. Growth - Development Cycle

• More keywords for internet search
• Possibility of one-stop shopping increases (offering 18 million items)

Product

Lineup

Expand

• Expand lineup to peripheral products and categories

Customers	Scale ↑ ＝ Convenience ↑	Sales &
Increase	Profit Grow

• Acquire new customers
• • 725 thousand added
  • 4.8 million in total (2020/Q2 result)
• Sales frequency of long-tail items increases

Inventory Increase

• More inventories shorten lead-time, and customer convenience improves
• Development of new private brand products improves profit margin

7

6-2. Growth - Industrial Beachhead Expansion

2002

2008

2009

2010

2011

2013

2014

2015

2016

2017

• Started with small-to-mid sized manufacturing companies, iron works, metal works, and machine assembly companies
• Entered automotive aftermarket
• Entered independent contractor market
• Introduced laboratory products
• Started US business with providing consulting service to Zoro Tools
• Business with large corporations started to grow
• Established Tagajyo Distribution Center in Miyagi Prefecture
• Started South Korean business by establishing subsidiary NAVIMRO
• Established Amagasaki Distribution Center in Hyogo Prefecture
• Expanded product lineup: agricultural equipment and kitchen equipment
• Introduced "MonotaRO One Source" procurement system for large corporations
• Introduced medical & nursing care equipment category
• Started Indonesian business by acquiring majority (51%) of PT MONOTARO INDONESIA and consolidated to MonotaRO's in Q4
• Established Kasama Distribution Center in Ibaraki Prefecture
• Introduced simplified and easy-installation system "MonotaRO One Source Lite" for large corporations
• Closed Tagajyo Distribution Center
• Established Hokkaido Distribution Center

	• Established real shop in Saga Prefecture for demonstration experiment
2018	• Launched business in China by establishing subsidiary ZORO SHANGHAI
• Number of Accounts exceeded 3.3 million
	• Product lineup SKU exceeded 17 million
2019	• Product lineup SKU exceeded 18 million
• Completed 2nd phase expansion of facilities at Kasama Distribution Center

8

7-1.(Non-consolidated) 2020Q2 Financial Result P/L Outline

 Sales: 72,651 million JPY (YonY +20.0%, A/F +1.2%)

• Number of accounts acquired increased (725 thou.) due to success of new customer acquisition measures (listing advertisement, search engine optimization/SEO, etc.) and to increase in general individual customers searching for COVID-19 related products. Amount per order of three main industries (manufacturing, construction, automotive maintenance) slowed down; however, sales of COVID-19 related products purchased mainly by general individual customers increased. This resulted in increase in monotaro.com sales from last year.

• COVID-19 negatively affected business activities and caused sales of large corporate customers to go below plan; however, number and usage of large corporation customers increased, and hence sales exceeded last year.

Jan. - Jun. 2019 Result	Jan. - Jun. 2020 Plan		Jan. - Jun. 2020 Result
No.Corp.	Million JPY	YonY	/Total Sales	Million JPY	YonY	/Total Sales	No.Corp.	Million JPY	YonY	vs Plan	/Total Sales
708	9,200	+53%	15.3%	12,800	+38%	17.9%	958	12,100	+31%	△5%	16.8%

 Gross Profit: 20,661 million JPY (Sales Ratio 28.4%, YonY +18.8%, A/F +0.1%)

• Sales ratio (GP%) decreased from last year by 0.3 pt. Though sales ratio of large corporation business increased, product GP% increased due to product mix and strong JPY (+0.4 pt.). However, higher delivery cost ratio (△0.7 pt.) caused by delivery charge hike in July last year, etc., resulted in lower GP% than last year.

 SG&A Expense: 11,089 million JPY (Sales Ratio 15.3%, YonY +17.0%, A/F △2.3%)

• Sales ratio (SG&A%) decreased from last year by 0.4 pt. Despite increase in Outsourcing Expense ratio (+0.4 pt.) due to projects of Order Management System (OMS) and of Product Information Management System (PIM) and to increase in temp-staff related cost ratio for handling increased number of items per order, decrease in Advertising Expense ratio (△0.6 pt.) due mainly to suspension of broadcasting of TV ad., etc. resulted in lower SG&A% from last year.

 Operating Income: 9,572 million JPY (Sales Ratio 13.2%, YonY +21.0%, A/F +3.1%)

 Net Income: 6,662 million JPY (Sales Ratio 9.2%, YonY +21.4%, A/F +3.6%)

• Sales ratio (NI%) increased from last year by 0.1 pt. due mainly to increase in sales ratio of Operating Income (+0.1 pt.).

9

7-2.(Non-consolidated) Half Yr. Sales Growth % (by Sales Channel)

		 2020Q2/FH sales 1.2% higher than plan,
30.0%	Sales Total	and growth rate increased from plan +18.6% to
	actual +20.0%.
		• Due to effect of COVID-19, Q2/FH sales of large
25.0%		corporation customers went below plan.
	• Although orders of existing customers of
		monotaro.com for COVID-19 related products
		increased, sales per order from three industries
20.0%		(manufacturing, construction, automotive
		maintenance) decreased, and existing customer
		sales went slightly below plan. Among three
15.0%	monotaro.com: New Customer	industries, manufacturing customers' May sales
was in low trend, but amount per order and order
		frequency in next month June are in recovering
		trend. In Q2, active rate of customer improved
10.0%		due to increase in number of customers
		purchasing products through Internet.

monotaro.com: Existing Customer

• Registration of new general individual customers

5.0%

seeking COVID-19 related products increased.

Sales of new customers through monotaro.com

Large Corporation Business

largely exceeded plan, and overall sales

exceeded plan as result.

0.0%

2018FH

2011FH

2011LH

2012FH

2012LH

2013FH

2013LH

2014FH

2014LH

2015FH

2015LH

2016FH

2016LH

2017FH

2017LH

2018LH

2019FH

2019LH

2020FH

* Note 1: Half-year (first half and second half) year-on-year sales growth rate.

* Note 2: In 2020Q2/ FH, dotted line is plan, solid line is actual.

10

7-3.(Non-consolidated) 2020Q2 Effect of COVID-19 and Other

	2020Q2/FH		Effect of COVID-19		Other
	Plan	Actual
	(Sales Ratio)	(Sales Ratio)
Sales	71,819	72,651	 Refer to Page 10.
			 Order change after emergency declaration	 Increase in royalty received, etc.
			• △0.3pt.：Delivery cost ratio increased due to decrease in
				sales per order.
			• △0.1pt.：Change in ratio of product category sales
Gross	20,632	20,661		(Increase in Office supply & furniture, decrease in
Profit	（28.7%）	（28.4%）		Material handling & tool).
			• △0.1pt.：Increase in Credit card payment charge
			 Large corp. sales below plan
			• ＋0.1pt.：GP% increased due to decrease in ratio of large
				corporate sales.
			 Delay of OMS and PIM launch	 Recruitment behind plan
			• △0.1pt.：Decrease in software depreciation (Depreciation	•	△0.1pt.：Decrease in salary
				Expense).		(Labor Expense).
			• △0.1pt.：Decrease in system usage cost.	 Delay in DC maintenance contract
				(Other Expense)	•	△0.1pt.：Delay of DC maintenance
			 Avoidance of "3 Cs (Closed spaces, Crowded places,		(Other Expense).
				and Close-contact settings)"	 Other
			• △0.1pt.：Decreases in Travel & Training Expenses	•	△0.3pt.
SG&A	11,349	11,089		(Other Expense).
Expense	（15.8%）	（15.3%）	• ＋0.1pt.：Teleworking expense incurred
				(Mailing Exp., Equipment and System Usage Exp.).
			 Employee support incurred.
			• ＋0.1pt.：Special support and meal allowance
				(Labor Exp.) FH forecast 93 mil.⇒ Actual 77 mil.
			 Increase in general individual customers usage
				(COVID-19 related products).
			• ＋0.1pt.：Increase in DC temp-staff cost due to increase
				in number of item per order (Outsourcing Expense)
Op.	9,282	9,572	 Gross Profit %：△0.4pt.	 Gross Profit %：＋0.1pt.
	SG&A Expense %：0.0pt.		SG&A Expense %：△0.5pt.
Income	（12.9%）	（13.2%）
			(Contribution to profit：＋0.5pt.）
Net	6,430	6,662		Profit ratio improved due mainly to improvement of Operating Income ratio (＋0.3pt.).
Income	（9.0%）	（9.2%）

* Note: Due to rounding of sales ratio, difference between plan and actual GP% and SG&A % does not match plan/actual difference in Operating Income.

11

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

Op. Income

（Jan.-Jun.2019）

Sales Increase

Decrease of GP%

Improvement of SG&A

Expense Sales Ratio

• Increase of Outsourcing Exp. Sales Ratio
• Improvement of Ad. & Prom. Exp. Sales Ratio
• Improvement of Mailing Exp. Sales Ratio
• Improvement of Labor Exp Sales Ratio

• Other

Op. Income

（Jan.-Jun.2020）

7,911 mil.JPY

		 Sales of monotaro.com increased due mainly to increase in
			orders of COVID-19 related products from general individual
	+1,578mil.JPY		customers.
		Business activities slowed down in Q2, but due to increases in
			number of customers and in usage, sales of large corporation
			business increased from last year.
		 Despite sales ratio of large corporation business increased,
	△200mil.JPY		Product GP% increased due to product mix and strong JPY.
		However, higher delivery cost ratio caused by delivery charge
			hike in July last year, etc., resulted in lower GP% than last year.
	+283mil.JPY	 SG&A ratio improved due to following reasons
		• Projects of Order Management System and of Product
	△305mil.JPY		Information Management System and increase in temp-staff
		related cost ratio for handling increased number of items per
			order resulted in increase in Outsourcing Expense ratio.
	+449mil.JPY	• Suspension of TVCM and decrease in catalog expense ratio
		resulted in decrease in Ad. & Promotion Expense ratio.
	+59mil.JPY	• Decrease in catalog shipping expense ratio resulted in decrease
		in Mailing Expense ratio.
	+32mil.JPY	• Due to sales increase.
		• Decrease in travel expenses for domestic and international
	+47mil.JPY		business trips due to effects of COVID-19, etc. and to increase
			in sales.

9,572 mil.JPY（YonY：+1,661 mil.JPY, +21.0％）

• Amounts are effects on Operating Income by changes of rates, not actual amounts.

12

7-5.(Non-consolidated) 2020Q2 Financial Result P/L Outline

	Jan. - Jun. 2019	Jan. - Jun. 2020	Jan. - Jun. 2020
	Result	Plan		Result
	Amount	Ratio	Amount	Ratio	Amount	Ratio	YonY	vs
	(million JPY)	to Sales	(million JPY)	to Sales	(million JPY)	to Sales	Plan
Sales	60,564		71,819		72,651		+20.0%	+1.2%
Gross Profit	17,391	28.7%	20,632	28.7%	20,661	28.4%	+18.8%	+0.1%
SG&A Exp.	9,480	15.7%	11,349	15.8%	11,089	15.3%	+17.0%	△2.3%
Operating	7,911	13.1%	9,282	12.9%	9,572	13.2%	+21.0%	+3.1%
Income
Current	7,907	13.1%	9,265	12.9%	9,586	13.2%	+21.2%	+3.5%
Income
Net Income	5,490	9.1%	6,430	9.0%	6,662	9.2%	+21.4%	+3.6%
(Tax Rate)	(30.6%)		(30.6%)		(30.5%)

13

7-6.(Non-consolidated) 2020Q2 Financial Result B/S Outline

		Jun.	Dec.	Jun.
		2019	2019	2020
		Million JPY	Million JPY	Million JPY		Ratio
Assets
	Cash	8,890	9,958	10,027		15.0%
	Accounts	13,143	14,376	17,314		26.0%
	Receivable
	Inventory	10,573	11,094	11,734		17.6%
	Other	4,201	4,485	4,405		6.6%
Total Current Asset	36,808	39,914	43,481		65.2%
	Tangible Fixed	11,917	12,023	13,873		20.8%
	Asset
	Intangible	1,863	2,919	3,536		5.3%
	Fixed Assets
	Other	4,165	5,748	5,764		8.6%
Total Fixed Asset	17,946	20,691	23,174		34.8%
Total Assets	54,754	60,605	66,656

		Jun.	Dec.	Jun.
		2019	2019	2020
		Million JPY	Million JPY	Million JPY		Ratio
Liabilities
	Accounts	8,532	9,446	11,142		16.7%
	Payable
	Short-term	2,000	2,498	1,498		2.2%
	Debt & etc.
	Others	6,517	7,479	8,595		12.9%
Total	17,050	19,424	21,236		31.9%
Current Liabilities
Total Long term	2,672	2,180	1,671		2.5%
Liabilities
Total Liabilities	19,722	21,604	22,907		34.4%
Net Assets
Shareholder's	34,986	38,955	43,695		65.6%
Equity
Others	46	44	53		0.1%

Total Net Assets	35,032	39,000	43,749	65.6%
Total Liabilities &	54,754	60,605	66,656
Net Assets

Short-term Debt & etc. includes short-term debt & current portion of long- term debt.

14

7-7.(Non-consolidated) Progress - Sales & Customer

(Million JPY)		(Thousand Accounts)
150,000								5,027
						Sales 2020 Plan (left axis)	4,835
140,000
						Sales 2003-2020Q2 Actual (left axis)
130,000
						Number of Customers Registered 2020 Plan (right axis)	4,109
120,000							Number of Customers Registered 2003-2020Q2 Actual (right axis)
110,000								3,363
100,000
90,000								2,737

80,000													150,049
70,000												2,207
60,000												1,776	126,543
50,000												1,405	105,331
40,000											1,122		84,656
										892		67,105	72,651
30,000
								703			55,607
								572
20,000							454				44,057
									34,484
					342
					239				28,639
10,000	52	82	121	176			17,685	22,220
10,897 14,068 14,209
0	2,426	4,608	6,785	9,175

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

		Dec. 2019	Jun. 2020	Dec. 2020 (Plan)
	Number of Customers	4,109,701	4,835,382	+725,681	5,027,701	+918,000
	(Registered Accounts)	(vs. Dec. 2019)	(vs. Dec. 2019)

15

7-8.(Non-consolidated) Progress - Gross Profit

35.0%
								31.4%	31.0%
							30.0%
						29.6%		29.6%
30.0%
28.2%	27.5%		27.7%	28.0%	28.5%			28.5%	28.4%
	27.1%

25.0%

• Credit Card Payment Charge is reported as Cost of Sales from 2017 (this graph is adjusted retroactively to reflect effect of change).

20.0%

15.0%

10.0%

5.0%

0.0%

2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
												(Q2)

16

7-9.(Non-consolidated) Progress - SG&A Expense

30.0%					Expense Breakdown
		Labor & Outsourcing
					Jan.-Jun.Jan.-Jun.
		Facility Rent
					2019	2020
		Ad. Prom. & Mailing		Labor		4.5%	4.4%
25.0%		Depreciation		Outsourcing	2.5%	2.9%
		Facility Rent	1.3%	1.3%
		Others
			Ad. & Promotion	3.7%	3.1%
		Total
	21.1%		Mailing		0.8%	0.7%
				Depreciation	1.0%	1.0%
19.9%	19.7%
			Others		1.9%	1.9%
20.0%	18.6%
	18.0%		Total		15.7%	15.3%
	17.8%
	17.8%
			16.8%	16.8%	16.6%	16.0%
						15.6%	15.3%
15.0%

• Credit Card Payment Charge is reported as Cost of Sales from 2017 (this graph is adjusted retroactively to reflect effect of change).

10.0%

5.0%

0.0%

2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
												(Q2)

17

8-1. (Consolidated) 2020Q2 Financial Result P/L Outline 1/2

	Jan. - Jun. 2019 Jan. - Jun. 2020	Jan. - Jun. 2020
	Result	Plan			Result
	Amount	Ratio	Amount		Ratio	Amount	Ratio	YonY	vs
	(million JPY)	to Sales	(million JPY)		to Sales	(million JPY)	to Sales	Plan
Sales	62,970		74,744			75,281		+19.6%	+0.7%
Gross Profit	17,867	28.4%	21,310		28.5%	21,241	28.2%	+18.9%	△0.3%
SG&A Exp.	10,270	16.3%	12,384		16.6%	11,922	15.8%	+16.1%	△3.7%
Operating	7,597	12.1%	8,925		11.9%	9,318	12.4%	+22.7%	+4.4%
Income
Current Income	7,607	12.1%	8,934		12.0%	9,342	12.4%	+22.8%	+4.6%
Net Income	5,191	8.2%	6,099		8.2%	6,419	8.5%	+23.6%	+5.2%
(Tax Rate)	(31.8%)		(31.7%)			(31.3%)
Net Income	5,302	8.4%	6,239		8.3%	6,540	8.7%	+23.3%	+4.8%
attributable to owners
of the parent

18

8-2. (Consolidated) 2020Q2 Financial Result P/L Outline 2/2

 NAVIMRO (South Korea)

• Sales was slightly below plan, but profit was far beyond plan by improving profit ratio with increase in PB sales and pricing.

• Total item was expanded about to 2.6 mil. and inventory item was expanded about to 40 thou.

	Jan.-Jun. 2019 Result	Jan.-Jun. 2020 Plan		Jan.-Jun. 2020 Result
	Amount	YonY	YonY	Amount	YonY	YonY	Amount	YonY	vs Plan	YonY	vs Plan
	(mil.JPY)	(Local Currency)	(mil.JPY)	(Local Currency)	(mil.JPY)	(Local Currency)	(Local Currency)
Sales	2,250	+19.7%	+25.9%	2,530	+12.4%	+16.1%	2,410	+7.1%	△4.7%	+14.7%	△1.2%
Op.Income	△20	―	―	10	―	―	40	―	+370.5%	―	+387.8%
Net Income x Share（*1）	△20	―	―	10	―	―	40	―	+211.7%	―	+223.1%

 MONOTARO INDONESIA (Indonesia)

• Sales was over 30% below plan due to COVID-19 lockdown, but Op. Loss was within level of plan by controlling marketing expense.

• Continuing to expand product lineup and to strengthen supply chain.

	Jan.-Jun. 2019 Result	Jan.-Jun. 2020 Plan		Jan.-Jun. 2020 Result
	Amount	YonY	YonY	Amount	YonY	YonY	Amount	YonY	vs Plan	YonY	vs Plan
	(mil.JPY)	(Local Currency)	(mil.JPY)	(Local Currency)	(mil.JPY)	(Local Currency)	(Local Currency)
Sales	150	+31.7%	+33.4%	310	+99.1%	+99.1%	190	+23.9%	△37.8%	+28.9%	△35.3%
Op.Income	△140	―	―	△150	―	―	△160	―	―	―	―
Net Income x Share（*1）	△60	―	―	△70	―	―	△70	―	―	―	―

 ZORO SHANGHAI (China)

• Sales was over 40% below plan due to negative effects of COVID-19, Op. Loss was within plan.

• Effective customer acquisition method in China has not yet been established.

	Jan.-Jun. 2019 Result	Jan.-Jun. 2020 Plan		Jan.-Jun. 2020 Result
	Amount	YonY	YonY	Amount	YonY	YonY	Amount	YonY	vs Plan	YonY	vs Plan
	(mil.JPY)	(Local Currency)	(mil.JPY)	(Local Currency)	(mil.JPY)	(Local Currency)	(Local Currency)
Sales	10	(*2) ―	(*2) ―	80	+482.0%	+505.2%	50	+259.3%	△38.3%	+278.5%	△37.5%
Op.Income	△150	―	―	△210	―	―	△140	―	―	―	―
Net Income x Share（*1）	△90	―	―	△130	―	―	△90	―	―	―	―

*1： Calculated by multiplying Net Income by Share Ratio at the end of each fiscal year for reference.

*2： Business launched in June 2018.

*3: Sales and profit/loss less than 10 million JPY are rounded down as shown in explanation material in Japanese language.

19

8-3. (Consolidated) 2020Q2 Financial Result B/S Outline

	Jun.	Dec.	Jun.
	2019	2019	2020
	Million JPY	Million JPY	Million JPY	Ratio
Assets

Cash	9,834	11,155	10,804	16.5%
Accounts	13,247	14,472	17,443	26.7%
Receivable
Inventory	11,000	11,563	12,202	18.7%

	Other	4,266	4,581	4,533	6.9%
Total Current	38,349	41,771	44,984	68.8%
Asset
	Tangible	11,944	12,048	13,922	21.3%
	Fixed Asset
	Intangible	2,029	3,084	3,693	5.6%
	Fixed Assets
	Other	1,426	2,787	2,806	4.3%
Total Fixed	15,401	17,920	20,422	31.2%
Asset
Total Assets	53,750	59,691	65,407

		Jun.	Dec.	Jun.
		2019	2019	2020
		Million JPY	Million JPY	Million JPY	Ratio
Liabilities
	Accounts	8,827	9,829	11,479	17.6%
	Payable
	Short-term	2,000	2,498	1,498	2.3%
	Debt & etc.
	Others	6,627	7,644	8,756	13.4%
Total	17,455	19,973	21,733	33.2%
Current Liabilities
Total Long term	2,712	2,205	1,718	2.6%
Liabilities
Total Liabilities	20,168	22,179	23,451	35.9%
Net Assets
Shareholder's	33,229	37,062	41,679	63.7%
Equity
Others	353	450	275	0.4%
Total Net Assets	33,582	37,512	41,955	64.1%
Total Liabilities &	53,750	59,691	65,407
Net Assets

Short-term Debt & etc. includes short-term debt & current portion of long-term debt.

20

8-4. (Consolidated) 2020Q2 Financial Result C/F Outline

		Jan. - Jun. 2019	Jan. - Jun. 2020
		Result	Result
		Million JPY	Million JPY
Cash Flow from Operating Activity
	Net Income before Tax	7,608	9,343
	Increase or Decrease in Accounts Receivable (△ = increase)	△1,706	△2,977
	Increase or Decrease in Inventory (△ = increase)	△1,038	△662
	Increase or Decrease in Accounts Payable (△ = decrease)	526	1,668
	Tax payment	△2,721	△2,632
	Others	612	1,586
	Total	3,280	6,325
Cash Flow from Investing Activity
	Acquisition of Tangible Assets	△466	△2,368
	Acquisition of Intangible Assets	△754	△665
	Others	126	202
	Total	△1,094	△2,831
Cash Flow from Financing Activity
	Repayments of Long-term Loans	△1,000	△1,000
	Repayments of Lease Obligations	△2,140	△661
	Cash Dividends Paid	△1,613	△1,864
	Others	200	△68
	Total	△4,553	△3,594
Currency Exchange Adjustment	△35	△35
Net Increase or Decrease in Cash and Cash Equivalent (△ = decrease)	△2,402	△135
Cash and Cash Equivalent at Beginning of Period	12,040	10,746
Cash and Cash Equivalent at End of Period	9,637	10,610

21

9-1. 2020 Strategy & Plan: Domestic Business (1)

 BtoB Online E-commerce (monotaro.com)

•	Expanding Customer Base and Improving Customer Lifetime Value
	-	Registration of general individuals seeking COVID-19 related products increased in Q2,
	-	and new customer acquisition is exceeding plan (918 thou.) this year.
	Usage trend of general individual customers is lower than that of corporate customers
			in amount per order and in repeat rate, and there is no difference in behaviors observed
			before and after spread of COVID-19 infection. General individual customer registration
			is expanding at present, but MonotaRO continues to focus on BtoB business to improve
	-	customer lifetime value.
	Optimizing marketing resource allocation based upon customer lifetime value inferred
			by product search/purchase behavior trends, etc., and acquisition target is placed on
			high lifetime value customers.
•	Expanding Existing Customers' Sales
	-	Seeking "reducing time to find product" by optimizing product search function for each
			customer attribute and "shortening time to wait for arrival of product" by introducing
			system such as Order Management System and by developing logistic bases leads to
			increase in existing customers' usage.
 System Connection with Large Corporations
•	Contract Result
			Dec. 2019 End		Jun. 2020 End
			Result			Result
			No. Corp.		No. Corp.	vs Dec. 2019 End	Remarks
			Total number of corporations	817	958	+141
			One Source	14	14	+0	2 considering
			One Source Lite	363	465	+102	269 considering
•	Sales Base and Progress of Sales Target
	-	Large corporation business's 12.1 billion sales for 2020Q2/FH is below plan by △5%.
	-	Corporate sales activities that were conducted face-to-face are currently conducted by

utilizing web conference service, which is gradually spreading.

22

9-2. 2020 Strategy & Plan: Domestic Business (2)

• Consulting/Royalty Business
• • Grainger's Zoro business (US, UK, and Germany) is continuing to strengthen corporate customer acquisition by using SG&A expenses with investment prospect for sustainable growth, but Zoro's profits improved in Q2 by implementing appropriate promotions.
  • Amount of royalty in 2020Q2/FH increased from last year (impact of royalty on Sales and Gross Profit is becoming limited due to MonotaRO's higher Sales growth).
• Strengthening Marketing and System Development Skills based on Data Science
• • Recruiting of data-scientists and IT engineers at both Amagasaki/Hyogo and Tokyo offices is making progress almost as planned.
  • Newly joined data-scientists and IT engineers are working on advanced digital marketing and system development (Web site and backbone system).
• New IT Platform for Advanced Supply Chain (installation project in progress)
• • Introduction of Product Information Management System (PIM)
  • • System's initial function is answering to the diversification and enrichment of product info. by constructing and organizing master data base for products, suppliers, etc. for responding to expansion of product info. caused by increase in product lineup. In future, portal site for suppliers and workflows to improve efficiency of obtaining info. is developed, and this leads to reduction of costs and shortening of product introduction lead-time. In mid-term, product info. is prepared in multi-languages for international business.
    • Due to spread of COVID-19 infection, development project, carried out with external team, was changed, and releasing initial version was postponed from mid Q2 to late Q3.
  • Introduction of Order Management System (OMS)
  • • Selecting optimal shipment methods based upon various rules, thereby leveling shipment operations, reducing splits of shipments, optimizing shipment network further, and minimizing distribution related costs, and this leads to increase in sales with improved convenience realized through shortening delivery lead time.
    • For same reason of PIM, releasing initial version was postponed from mid Q2 to late Q3.

23

9-3. 2020 Strategy & Plan: (Non-consol.) 2020LH Affecting Factors

	2020LH Plan		Current Status
		Sales		YonY
		Ratio
					 BtoB Online E-Commerce (monotaro.com)
					• Amounts per order of 3 industry customers (manufacturing, construction, automotive maintenance)
					declined, but, after hitting bottom in Golden Week (holiday in late Apr. through early May in Japan), is
					on recovery trend. However, order amounts have not recoverd to last year end levels.
Sales	78,230	ー		18.6%	• Orders of COVID-19 related products from general individual customers continues.
	 System Connection with Large Corporation
				However, ratio of general individuals to new registrations is on shrinking now (Apr. to Jun.).
					• Plan was not attained in Q2, but business is on recovery trend after emergency declaration ended with
					diminishing gap between plan and actual sales.
					 Royalty Business
					• Royalty amount in FH was higher than plan (impact on total Sales was limited).
					 Product GP Ratio
Gross					• As activities declined due to COVID-19, replacement orders of high GP% category decreased.
22,535	28.8%		20.4%	 Delivery Cost Ratio
Profit		• Amounts per order in FH was lower than plan, but, as mentioned above, the ratio of general individual
				registration is currently shrinking.
					 Sales Ratio of Overseas Royalty
					• Royalty sales ratio in FH was above plan (impact on Gross Profit was also limited).
					 Effect of COVID-19
					• Costs of delayed OMS/PIM (System Usage/Depreciation) are increased and incurred late Q3 onward.
SG&A					• Equipment for teleworking was secured in FH, and additional expenses of avoiding "3 Cs" are limited.
12,567	16.1%		23.2%	• Ratio of costs related to staff at distribution operation is continuously increasing due to decrease in
Exp.		order unit price caused by increase in general individual customers. As mentioned above, share of new
					registrations of general individuals is also currently decreasing.
					 Other
					• DC repair expenses were delayed from FH to LH (up to 53 mil. JPY).
Op.	9,967	12.7%		17.0%	 There are both positive and negative factors in sales, GP, and SG&A ratios, and it's difficult to project
Income					impact of each factor.

There are factors, including those related to COVID-19, that cause actual sale and profit in LH to go up or down

from plan; however, fiscal year plan is not revised at this point based upon FH results(*)

*Note: Consolidated profit and loss results for 2020FH are within scope of forecast revise and disclosure rule.

Revision disclosure is prepared when the latest consolidated earnings forecast exceeds any of fluctuation ranges below; Consol. Sales: ±5%, Consol. Op. Income: ±10%, Consol. Ord. Income: ±10%, NI attributable to Parent Company Shareholders: ±10%

24

9-4. 2020 Strategy & Plan: (Non-consol.) P/L Plan Outline

	2019 Result	2020 Plan
	Amount (mil.JPY)	Ratio	Amount (mil.JPY)	Ratio	YonY
	to Sales	to Sales
Sales	126,543		150,049		+18.6%
Gross Profit	36,111	28.5%	43,168	28.8%	+19.5%
SG&A Exp.	19,681	15.6%	23,917	15.9%	+21.5%
Operating	16,430	13.0%	19,250	12.8%	+17.2%
Income
Current	16,444	13.0%	19,220	12.8%	+16.9%
Income
Net Income	11,309	8.9%	13,339	8.9%	+18.0%
(Tax Rate)	(29.9%)		(30.6%)

25

9-5. 2020 Strategy & Plan: (Consolidated) P/L Plan Outline

	2019 Result	2020 Plan
	Amount (mil.JPY)	Ratio	Amount (mil.JPY)	Ratio	YonY
	to Sales	to Sales
Sales	131,463		156,468		+19.0%
Gross Profit	37,095	28.2%	44,653	28.5%	+20.4%
SG&A Exp.	21,256	16.2%	26,084	16.7%	+22.7%
Operating	15,839	12.0%	18,569	11.9%	+17.2%
Income
Current	15,887	12.1%	18,584	11.9%	+17.0%
Income
Net Income	10,751	8.2%	12,703	8.1%	+18.2%
(Tax Rate)	(30.9%)		(31.6%)
Net Income	10,984	8.4%	12,997	8.3%	+18.3%
attributable to owners
of the parent

26

9-6. 2020 Strategy & Plan: (Overseas Subsidiary) P/L Plan Outline

 NAVIMRO (South Korea)

•	Increasing sales by expanding customer base, number of items sold, and inventory.
•	Expanding profit, which was first attained in 2019.
			2019 Result			2020 Plan
		Amount	YonY	YonY	Amount	YonY	YonY
		(mil.JPY)	(local Currency)	(mil.JPY)	(local Currency)
	Sales	4,510	+13.5%	+21.8%	5,400	+19.7%	+20.5%
	Op.Income	10	―	―	80	+412.6%	+415.9%
	Net Income x Share（*1）	20	―	―	90	+285.3%	+287.8%

 MONOTARO INDONESIA (Indonesia)

• Continuing to work on expanding business by increasing corporate customers, by increasing number of items sold and inventory, and by improving logistics.

		2019 Result			2020 Plan
	Amount	YonY	YonY	Amount	YonY	YonY
	(mil.JPY)	(local Currency)	(mil.JPY)	(local Currency)
Sales	380	+46.8%	+48.7%	750	+96.6%	+94.1%
Op.Income	△290	―	―	△310	―	―
Net Income x Share（*1）	△130	―	―	△140	―	―

 ZORO SHANGHAI (China)

• Increasing sales by expanding and improving items sold and by establishing effective measures to expand customer base.

		2019 Result			2020 Plan
	Amount	YonY	YonY	Amount	YonY	YonY
	(mil.JPY)	(local Currency)	(mil.JPY)	(local Currency)
Sales	60	（*2） ―	（*2） ―	250	+317.5%	+322.8%
Op.Income	△320	―	―	△450	―	―
Net Income x Share（*1）	△210	―	―	△300	―	―

*1： Calculated by multiplying Net Income by Share Ratio at the end of each fiscal year for reference.

*2： Business launched in June 2018.

*3: Sales and profit/loss less than 10 million JPY are rounded down as shown in explanation material in Japanese language.

27

9-7. 2020 Strategy & Plan: Logistics (1)

• Distribution-relatedCost Ratio 2020Q2/FH Result: 6.1％
• • As COVID-19 infection spread, number of general individual customers seeking COVID-19 related products has increased. This resulted in increase in number of items processed and hence in increase in work at distribution centers. Sales ratios of Personnel and Outsourcing Expenses related to distribution therefore increased from last year by 0.1 pt. and from plan by 0.2 pt.
• Inventory
• • As of Jun. 30, 2020: 461 thou. items.
  • Plan at Dec. 31, 2020: 500 thou. items.
• Delivery Status
• • Shipment ratio of Kasama DC with expanded facilities is increasing as planned.

	Jan.-Jun. 2019 Result	Jan.-Jun. 2020 Plan	Jan.-Jun. 2020 Result
	Amount (mil.JPY)	Ratio to Sales	Amount (mil.JPY)	Ratio to Sales	Amount (mil.JPY)	Ratio to Sales	YonY	vs Plan
Sales	60,564		71,819		72,651		+20.0%	+1.2%
(Non Consolidated)
Depreciation	384	0.6%	458	0.6%	448	0.6%	+16.7%	△2.3%
Labor & Outsourcing	1,982	3.3%	2,297	3.2%	2,438	3.4%	+23.0%	+6.1%
Facility Rent	712	1.2%	812	1.1%	821	1.1%	+15.4%	+1.2%
Others	572	0.9%	688	1.0%	702	1.0%	+22.7%	+1.9%
Total	3,651	6.0%	4,257	5.9%	4,410	6.1%	+20.8%	+3.6%

28

9-8. 2020 Strategy & Plan: Logistics (2)

• New Distribution Base Expansion Update

	Name (tentative)	Ibaraki Chuo SC		Inagawa DC
	Address	Ibaraki-machi, Higashi Ibaraki-gun,	Inagawa-cho,Kawabe-gun,
	Ibaraki Prefecture		Hyogo Prefecture
	Floor Size	About 49,000㎡	Total about 162,000㎡
	Inventory Capa.	20K-30K SKU, high demand products		Total 500K SKU
	Start Operation	Plan Apr. 2021	Phase 1 Plan Apr. 2022		Phase 2 Plan 2023Q3
	Shipping	About 30K lines/day	About 90K lines/day		About 90K lines/day added
	Capacity		(180K lines in total/day)
		Land	About 1.3 bil. JPY			―----
		Constr.	About 6.1 bil. JPY	Additional construction: about 1.3 bil. JPY
				Ph.1, 4 Floors: about 18.9 bil. JPY
	Invest/	Rent	―----	(2021-2031 including common service exp.)
			Ph.2: 1 Floor added: about 4.5 bil. JPY
	Rent			―----
					(2022-2031including common service exp.)
				About 7.4 bil. JPY		―----
		Facility	About 1.8 bil. JPY	(under examining)
				―----		About 6.6 bil. JPY (under examining)
			Main function is backyard.	Starting to rent 4 floors &	hazardous goods warehouse in 2022.
	Remark	Having also function of shipping	(* Renting 1 additional floor & hazardous goods warehouse resolved in Jun. 2020)
			high-demand products	From 2023, 1 floor added and total 5 floors rented.
	Pogress		Building under construction
			Progress Status			Progress Status
			Completion Image	Completion Image

29

Ref. 1. Customer Demographics

Industry

Construction

Other

31%

19%

Automotive
After market	Manufacturer
12%	38%

Ratio by sales amount in 2019

(Sales through Shopping website-excluding sales through API connection)

30

Ref. 2. Internet PO Ratio

100%
90%	Other
TEL
80%	FAX
	WEB
70%
60%
50%
40%
30%
20%
10%
0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

31

Ref. 3. Product Lineup & Inventory

(Thousand)																																																														(Thousand)
20,000								Number of Product Lineup (left axis)																																											461		500
18,000								Number of Inventory SKU (right axis)																																		461									450
																																																				411
16,000																																																																							400
14,000																																																					302																	350
																																															298
12,000																																																																							300
																																										256
10,000																																																																							250
																																		200																								18,000	18,000
8,000																																																			17,000			200
6,000																																																					13,000																150
																																	126
																																															10,000
4,000																																											9,000																			100
																																						8,000
2,000																																			5,000																																		50
0																																																																							0
2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016		2017		2018			2019	2020
																																																																			(Q2)

32

Ref. 4. Registered Customers & Sales Growth by Registered Year

(Growth Rate of Sales)										(Number of Registered Customers)
2.4																							840,000
						Number of customers registered in the year.
							Sales growth of customers registered in 2008.
							Sales growth of customers registered in 2009.
2.2							Sales growth of customers registered in 2010.																720,000
							Sales growth of customers registered in 2011.
							Sales growth of customers registered in 2012.
2.0							Sales growth of customers registered in 2013.																600,000
						Sales growth of customers registered in 2014.
							Sales growth of customers registered in 2015.
1.8							Sales growth of customers registered in 2016.																480,000
						Sales growth of customers registered in 2017.
							Sales growth of customers registered in 2018.
1.6							Sales growth of customers registered in 2019.																360,000
1.4																																240,000
1.2																																120,000

1.0 0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

• 1：Bar chart (right axis) shows number of 'monotaro.com' customers registered in each year based on status at end of 2019.
• 2：Line chart (left axis) shows sales growth ratio of customers registered each year by setting sales in registered year as '1'.
• 3：Above number of 'monotaro.com' registered customers and sales growth are updated retroactively at the end of 2019
  (large corporate sales not included).

33

Dividend & Shareholder Benefit

• Dividend
• • Dividend Policy: Distributing dividend consistent with stable and ongoing growth.
  • 2019 Dividend (Actual): 15 JPY/share (7.5 JPY/share interim, 7.5 JPY/share fiscal year end).
  • 2020 Dividend (Plan): 17 JPY/share.

(Dividend)			Dividend (JPY)	Dividend Payout Ratio (consolidated)		(Dividend Payout Ratio)
¥20									17	50%
								15
¥15			33.7%	33.3%	35.0%		13			40%
						32.5%
		31.8%		11
29.7%
28.4%
¥10									30%
					32.3%	33.9%	33.9%
			3.5		9
¥5		3							20%
2		6
1.4375

¥0											10%
2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
※ Amounts in graph above based upon share splits including one implemented in Oct. 2018.			(Plan)

• Shareholders' Benefit
• • Shareholders having held one or more unit (100 shares) of MonotaRO share for 6 months or longer on continuous basis as of Dec. 31 are eligible for benefit.
  • Eligible shareholders can choose products from
    MonotaRO's private brand as benefit, and amount of benefit varies in accordance with holding period (as in right chart).

Holding Period	Amount Benefit
6 months or more	3,000 JPY (excl. tax)
3 years or more	5,000 JPY (excl. tax)
5 years or more	7,000 JPY (excl. tax)

34

Other MRO Market Players

Upper: Sales				Fiscal Year				Change
Lower: Operating Income	2007	2017	2018	2019	2020		2007 to 2020
Yuasa (8074) - (M)	Wholesaler	468,476	461,749	493,627	491,348	450,000	△3.9%
8,254	11,402	12,517	11,871	9,250	+12.1%
Yamazen (8051) - (M)	Wholesaler	376,852	497,963	526,364	472,191	(*2)	―	(*2)	―
11,518	15,383	17,997	12,091	(*2)	―	(*2)	―
Trusco (9830) - (D)	Wholesaler	134,430	195,096	214,297	220,674	231,619	+72.3%
9,120	14,276	14,364	13,797	13,007	+42.6%
Misumi (9962) - (M)	Retailer	126,668	312,969	331,936	313,337	304,614	+140.5%
16,317	34,848	31,874	23,640	21,000	+28.7%
Nichiden (9902) - (M)	Wholesaler	92,745	119,712	124,604	112,334	(*2)	―	(*2)	―
5,533	6,051	6,595	5,154	(*2) ―	(*2) ―
NaITO (7624) - (F)	Wholesaler	51,479	46,587	50,014	46,467	(*2)	―	(*2)	―
1,343	728	928	836	(*2)	―	(*2)	―
Sugimoto (9932) - (M)	Wholesaler	41,461	44,315	45,417	43,890	(*2)	―	(*2)	―
Retailer	2,292	2,461	2,870	2,528	(*2)	―	(*2)	―
Toba (7472) - (M)	Retailer	25,800	28,500	29,066	26,197	(*2)	―	(*2)	―
2,115	1,774	1,895	1,328	(*2)	―	(*2)	―
Uematsu (9914) - (M)	Retailer	7,647	7,125	7,157	6,477	6,000	△21.5%
190	92	80	17	-17	△108.9%
MonotaRO (3064) - (D)	Retailer	10,897	88,347	109,553	131,463	156,468	+1335.9%
480	11,837	13,790	15,839	18,569	+3768.5%

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

*2: Forecasts are not disclosed because effects of COVID-19 on sales and profits can not be estimated.

*3: As of Jul. 30, 2020

35

Cautionary Statement concerning Forward-looking Statements

This 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.

Contact Us

TEL: [phone]

FAX: [phone]

E-mail：[e-mail]

IR information: https://corp.monotaro.com/en/ir/index.html

36