Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — FY2022 Earnings Presentation
36 slides from Aeon Financial Service's earnings presentation, Apr 11, 2023
Slide 1: Results for the FY2022: Script and the QAs
Results for the FY2022: Script and the QAs Date & Time: Tuesday, April 11, 2023, 17:00-18:15 Presenter: Kenji Fujita, President & CEO Tomoyuki Mitsufuji, Director and Managing Executive Officer in charge of Group Corporate Management
Slide 2: Today's explanation: agenda
・Today's explanation begins with Mr. Mitsufuji who is in charge of Group Corporate Management First, full-year financial highlights Second, earnings forecasts and dividend forecasts Next, from President & CEO Fujita, Third, Priority Initiatives to Improve Corporate Value
Slide 3: Key points of the consolidated results
・I would like to start by discussing the key points of the consolidated results. ・Thanks to the record high profit in the Global business, we were able to increase both revenue and profit and achieved the published targets. As such, we plan to increase the year-end dividend by three yen per share. ・
Slide 4: Consolidated results for the fiscal year
・Let me now discuss the consolidated results for the fiscal year. Operating revenue was 451.7 billion yen, down 4% from a year earlier. Excluding the effect of application of the accounting standard for recognition of revenues, however, operating revenue would have risen 4%. Operating profit was 58.
Slide 5: Consolidated results for the fourth quarter
・This slide shows the consolidated results for the three months over the fourth quarter. Operating revenue was 120.6 billion yen, down 1% from a year earlier. Excluding the effect of application of the accounting standard for recognition of revenues, however, operating revenue would have risen 8%. O
Slide 6: Overview of domestic businesses
・I will now discuss an overview of the domestic businesses. Operating profit for the fiscal year was down by 8.9 billion yen year-on-year. ・In the credit card business, in addition to the credit card shopping transaction volume, the revolving receivables balance increased, and operating profit from
Slide 7: Domestic business restructuring
・ There are three objectives in the domestic business restructuring: optimal allocation of management resources; faster decision-making; and group synergy; as shown on the right side of the slide. ・In Phase 1, we will integrate management with one of its subsidiaries, AEON Credit Service, effective
Slide 8: Results of international businesses
・I would now like to discuss the results of international businesses. ・The left column represents the China Area; the central, the Mekong Area; and the right, the Malay Area. The upper row shows operating profit, while the lower the balance of the receivables. In all the areas, operating profit exce
Slide 9: Outstanding receivables and NPL ratios by area
・The slide shows the outstanding receivables and nonperforming loan (NPL) ratios in China, Mekong and Malay Areas, from left to right. ・In the China Area, in line with the increase in the outstanding receivables, the Group worked to enhance the accuracy and speed of credit screening, and the NPL rat
Slide 10: Improved productivity of international businesses
・I would now like to discuss the improved productivity of international businesses. ・The graph on the left side of the slide shows the operating revenue of the Global business in the blue bar and the personnel costs ratio in the yellow polygonal line. ・At each of the Group companies in international
Slide 11: Subsidiary in Cambodia
・The next topic is the current situation surrounding the subsidiary in Cambodia. ・In Cambodia, the impact of the COVID-19 pandemic was huge on the business environment. Due partly to the lockdown, operating profit decreased to below 0.1 billion yen at one time, but in fiscal year 2022, it recovered
Slide 12: FY2023 business forecasts and expected dividends
・Lastly, I would like to discuss business forecasts and expected dividends for fiscal year 2023. ・In the domestic businesses, we will continue business restructuring to expand businesses and enhance productivity. This will pave the way for restoration of the earnings power, leading to growth again.
Slide 13: From operating profit to net profit
2022 and 23 remains below 40%. ・I would like to go into details of the calculation from operating profit and ordinary profit to net profit. ・In fiscal year 2022, when calculating ordinary revenue from operating profit, there were non-operating revenues such as foreign exchange gains and rent guarant
Slide 14: Key measures to enhance corporate value
・I am Kenji Fujita, and I would like to discuss key measures to enhance corporate value.
Slide 15: Business environment and customer trends
・Concerning the environment surrounding us, the overseas businesses are ahead in digitalization, and we will accelerate digitalization in Japan in the course of business restructuring. We are currently seeing higher prices and wages, changes in interest rates, and economic recovery from the COVID-19
Slide 16: Improving profitability of domestic businesses
・I will now discuss the improvement of profitability of the domestic businesses. ・First, concerning cashless payments, we will focus on AEON Card and e-money while promoting diversification of payment channels, including code payment. Concerning the polarization of consumption, we will deepen collab
Slide 17: Restructuring of domestic businesses and touchpoints
・The next topic is the restructuring of domestic businesses. ・ Currently, each Group company has various touchpoints. There are many duplicated roles and functions, not only at the counter in the AEON stores but also on websites and applications. It is time to improve the situation from the viewpoin
Slide 18: Promotion of cross-sales
・Next, I would like to discuss the promotion of cross-sales. ・As one of the medium-term targets, we plan to increase the number of customer IDs with a focus on AEON Card and other settlement services and to provide the optimal products and services to the customers when needed based on the IDs. ・We
Slide 19: Effect of cross-sales
・Let us now look at the effect of cross-sales. ・The slide shows the transaction amount with AEON Card by AEON Card members who are also using the Group’s housing loan, investment trust and insurance services. The average amount of credit card transactions jumps up thanks to cross-sales. ・ The Group
Slide 20: Strengthening sales capacity
・I would like to discuss specific measures for strengthening the sales capacity. ・We plan to significantly increase the number of new members from 1.81 million in fiscal year 2022 to 2.5 million in fiscal year 2023, accelerating the increase of IDs. ・ In fiscal 2023, we plan to start collaboration w
Slide 21: Membership expansion measures
・The next topic is about the measures for membership expansion. ・Increasing the number of young members has long been a challenge for us. However, our past measures, such as renewing card designs, strengthening online member solicitation and implementing campaigns for people entering a new life stag
Slide 22: Payment service infrastructure
・These are the measures taken to enhance the infrastructure for the payment service. ・We are also reviewing the applications on the smartphone as they are getting more and more important as touchpoints. The application that has the largest number of members in the domestic businesses is the wallet a
Slide 23: Revolving payment and cash advance transactions
・The next topic is about credit card shopping revolving payment and cash advance transactions. ・The environment is such that the needs for funds are increasing, and both the credit card shopping revolving payment and cash advance transactions are already in the expansion phase. ・As the graph on the
Slide 24: Credit card transaction volume targets
・With the measures explained in the previous slides for winning new card members and for promoting revolving payment and cash advance transactions, we seek to achieve eight trillion yen in credit card purchase transaction volume, up 23% from the previous fiscal year. ・We expect an increase of about
Slide 25: Housing loans
・The next topic is housing loans. ・The AEON Select Club benefit, which AEON Bank provides to the users of the Bank’s housing loan, has been enhanced since March 2023. ・The Select Club benefit offers to the users a five percent discount on purchases at AEON Group stores every day, a very attractive b
Slide 26: Global businesses
・Now, let us look at the Global businesses. ・Looking back at the Global business, the three listed subsidiaries in Hong Kong, Thailand and Malaysia have led the Global business. Over the past 10 years, the outstanding trade receivables grew 2.6 times, and the operating profit 3.1 times. All of them
Slide 27: Changing channels and processes through digitalization
・Next, I would like to discuss how we plan to change channels and processes through digitalization. ・ First, the touchpoints, which have mainly been real, are being shifted to applications. Against such a backdrop, we are launching new services such as BNPL (Buy Now, Pay Later) and nano-finance, whi
Slide 28: Digitalization success in Thailand
・Here are successful results of various measures. ・It is a case in Thailand. When the COVID-19 pandemic started, I was working as President of the Thai subsidiary. I took over the current position six months later, by the way. During the pandemic, the management environment overseas was harsher than
Slide 29: AI credit screening and receivables management
・Now, I would like to discuss the enhancement of credit screening and receivables management with AI technologies, which, by the way, was one of the topics of Nikkei Newspaper today. ・The most important element in credit business is credit screening and receivables management. This is an example in
Slide 30: Digital bank in Malaysia
・I would like to discuss the Group’s measures for the digital bank. ・The Group is in the process of commencing operations in January 2024, and I would like to introduce Ms. Raja, who is assigned as CEO of the digital bank. Ms. Raja has the experience of promoting Islamic finance and digitalization a
Slide 31: Maximizing the value of employees
・This slide shows the Group’s measures for maximizing the value of employees. ・The Group believes that the most important element in running a company is humans. The AEON Group has the concept that “education is the best welfare,” and, in order to meet the needs of employees for learning and to fost
Slide 32: FY2023 business forecast
・Lastly, back to the business forecast for fiscal year 2023. ・One of the matters not incorporated into the Medium-term Management Plan was the COVID-19 pandemic, and it took time to recover from the impact. Also, the Group has now started investing in new projects, such as the insurance and digital
Slide 33: Questions and Answers
Questions and Answers ■Mr. Sakamaki, Analyst, Nomura Securities (1) Q: May we understand that, under policy of the Company, the dividend amount is, in principle, based on net profit and that the dividend payout ratio of around 40% will continue in the future? A: Tomoyuki Mitsufuji Our basic policy i
Slide 34: Questions and Answers (continued)
shot up in the second half, we somewhat decreased the amount of securitization in consideration of the funding cost. Taking this fact into consideration, the amount of securitization may increase somewhat for the current fiscal year, but securitization income is expected to remain at a similar level
Slide 35: Questions and Answers (continued)
watch the effect of the increase in the number of young customers. ■Mr. Hara, Analyst, Nikko Securities (1) Q: In the plan for the current fiscal year, operating revenue of the Global businesses is expected to increase substantially, by 12%, while operating profit to increase only slightly. Will you
Slide 36: Questions and Answers (continued)
be the estimates of these expenses for the current fiscal year? A: Tomoyuki Mitsufuji The cost for issuing the credit cards is variable, in proportion to the number of transactions. As the number of transactions is increasing, the expense will also increase proportionately. Concerning major investme
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