Japan Post Holdings Co., Ltd. · TSE:6178
Japan Post — 1H FY3/2016 Earnings Presentation
53 slides from Japan Post's earnings presentation, Nov 20, 2015
Slide 1: 1H FY3/2016 Results Briefing
1H FY3/2016 Results Briefing November 20, 2015
Slide 2: Contents
Contents Highlights P2 1 Overview of 1H FY3/2016 results P3 2. Full-year FY3/2016 business forecasts and dividend policy P 11 3 Group strategy P 15 4 Japan Post Co. business strategy P 19 APPENDIX P 38 Copyright © 2015 JAPAN POST GROUP. All Rights Reserved. 1
Slide 3: Highlights
Highlights 1. Progress versus FY3/2016 forecast largely on track (1H net income: ¥213.3bn, 57.7% of full-year forecast) Earnings at major subsidiaries Japan Post Co. (consolidated) Postal and logistics business segment: operating income up ¥35.3bn YoY to ¥868.1bn on growth in volumes for Yu-Pack
Slide 4: Overview of 1H FY3/2016 results
1 Overview of 1H FY3/2016 results Copyright © 2015 JAPAN POST GROUP. All Rights Reserved. 3
Slide 5: 1-1 Results summary
1-1 Results summary Japan Post Group (consolidated): 1H net income down ¥3.7bn YoY to ¥213.3bn, mainly due to the impact of persistently low interest rates at Japan Post Bank; good progress versus forecast, with 1H net income equating to 57.7% of full-year forecast. Japan Post Co.: 1H operating
Slide 6: Results by major subsidiary - Japan Post Co. (consolidated)
1-2-1 Results by major subsidiary Ð Japan Post Co. (consolidated) Postal and logistics business: operating income up ¥35.3bn YoY to ¥868.1bn on growth in volumes for Yu-Pack, EMS and other products, net operating loss improved by ¥3.2bn YoY to ¥46.3bn. International logistics business (Toll): op
Slide 7: Japan Post Co. - Postal and logistics business
1-2-2 Results by major subsidiary Ð Japan Post Co. (consolidated) Ð Postal and logistics business Operating income up ¥35.3bn YoY to ¥868.1bn, reflecting growth in Yu-Pack volume due to expansion of e-commerce market and stepped up marketing targeting small and medium business users, as well as hi
Slide 8: Japan Post Co. - International logistics business
1-2-3 Results by major subsidiary Ð Japan Post Co. (consolidated) Ð International logistics business Global logistics company Toll handles the Group’s international logistics business. It has a strong operating base in Australia and provides forwarding and contract logistics services (3PL) in the
Slide 9: Japan Post Co. - Post office business
1-2-4 Results by major subsidiary Ð Japan Post Co. (consolidated) Ð Post office business Operating income rose ¥37.1bn YoY to ¥666.3bn on growth in financial services commissions, merchandising, real estate development and third-party financial product agency services. Net operating income incre
Slide 10: Results by major subsidiary - Japan Post Bank
1-3 Results by major subsidiary Ð Japan Post Bank Results of operations for 1H FY3/2016 Overview (Billions of yen, %) Increase 1H FY3/2016 1H FY3/2015 (Decrease) Gross operating profit declined ¥61.9bn YoY to ¥759.4bn. Gross operating profit 759.4 821.4 (61.9) Net interest income fell YoY, while n
Slide 11: Results by major subsidiary - Japan Post Insurance
1-4 Results by major subsidiary Ð Japan Post Insurance(consolidated) Net income amounted to ¥48.5 billion, a 4.5% decrease year on year. However, 57.8% of the full-year forecast has been achieved, signifying steady progress. Annualized premiums from new policies for individual insurance amounted
Slide 12: Full-year FY3/2016 business forecasts and dividend policy
2. Full-year FY3/2016 business forecasts and dividend policy Copyright © 2015 JAPAN POST GROUP. All Rights Reserved. 11
Slide 13: 2-1 FY3/2016 business forecasts
2-1 FY3/2016 business forecasts We forecast net ordinary income of ¥860bn, mainly reflecting the impact of a decline in net interest income in the banking business segment. We forecast FY3/2016 net income of ¥370bn, mainly due to maintenance costs (extraordinary losses) to repair aging post offi
Slide 14: 2-2 Progress in 1H FY3/2016
2-2 Progress in 1H FY3/2016 We made steady progress in the first half of the fiscal year, with 1H net ordinary income and net income both equating to over 50% of full-year forecasts. However, profits may fluctuate significantly from 3Q due to (1) the exclusion of the two financial companies from
Slide 15: 2-3 FY3/2016 shareholder returns
2-3 FY3/2016 shareholder returns Dividend policy We are targeting a year-end dividend payout ratio of 25% or higher (equating to a projected dividend of ¥23 per share) * Our post-IPO dividend policy is to return 50% or more of net income to shareholders through interim and year-end dividends combi
Slide 16: Group strategy
3 Group strategy Copyright © 2015 JAPAN POST GROUP. All Rights Reserved. 15
Slide 17: 3-1 Group structure and business overview
3-1 Group structure and business overview Merchandise business International Logistics Real estate development Postal and Logistics business Approx. 31mn deliveries per day Life Insurance Banking No. of policies in force Ordinary deposit customers Approx. 32.82mn Approx. 120mn Business alliance with
Slide 18: 3-2 Overview of Group strategy (medium-term business plan)
3-2 Overview of Group strategy (medium-term business plan) FY3/2018 targets for each business strategy Business strategy FY3/2018 targets Roughly 680mn Yu-Pack items, 4.1bn Yu-Mail and Yu-Packet Turn round the postal and logistics business items Grow merchandise business to ¥150bn, real esta
Slide 19: 3-3 Group investment strategy
3-3 Group investment strategy Investment Topics Our Achievements and Future Direction Expand logistics operations Reorganize postal and logistics network (planned through FY3/2019) Strengthen Postal Invest in related areas of postal and logistics business (e.g. JP Biz Mail) Improve productivity
Slide 20: Japan Post Co. business strategy
4 Japan Post Co. business strategy Copyright © 2015 JAPAN POST GROUP. All Rights Reserved. 19
Slide 21: 4-1-1 Postal and logistics business (consolidated) Review
4-1-1 Postal and logistics business (consolidated) < Review > Operating income up ¥35.3 bn YoY to ¥868.1 bn, reflecting growth in Yu-Pack volume due to expansion of e-commerce market and stepped up marketing targeting small and medium business users, as well as higher EMS volumes. Despite effort
Slide 22: 4-1-2 Initiatives to make Yu-Pack profitable (1)
4-1-2 Initiatives to make Yu-Pack profitable (1) Yu-Pack volumes rose a solid 7.7% YoY, supported by growth in the e-commerce market and stepped up marketing activities targeting small and medium business users. We adjusted basic pricing plans for Yu-Pack on August 1, 2015 to lift average unit p
Slide 23: 4-1-3 Initiatives to make Yu-Pack profitable (2)
4-1-3 Initiatives to make Yu-Pack profitable (2) Service flow Hako Post ➢Customers can select Hako Post delivery lockers as their Specify which Hako Post you would like to receive your purchase in preferred delivery method when they make a purchase from online retailers.* The parcels can then be p
Slide 24: 4-1-4 Reorganize postal and logistics network (1)
4-1-4 Reorganize postal and logistics network (1) North Tokyo Post Office established (operational from May 4, 2015) < Overview > (1) Location: Wako-shi, Saitama Prefecture (2) Area: Land area roughly 32,320 m2, floor area, roughly 78,000 m2 (Including roof, slopes, etc.) (3) Structure: Six steel-
Slide 25: 4-1-5 Reorganize postal and logistics network (2)
4-1-5 Reorganize postal and logistics network (2) New regional sorting offices Approximate Scheduled completion Catchment area Location land area date Higashikariki-cho, Higashi-ku, Sapporo-shi, Hokkaido (Stage 2 redevelopment Central Hokkaido 51,000 m2 FY2016 (winter) zone, Higashikariki, Sapporo
Slide 26: 4-1-6 My Number notification card handling volumes
4-1-6 My Number notification card handling volumes As of November 18, 2015, Japan Post had received 46,225,000 My Number notification cards (preliminary data), accounting for 81.5% of the projected total number of cards. In the first stage of deliveries, 17,665,000 notification cards have been s
Slide 27: 4-2-1 International logistics business (consolidated) Review
4-2-1 International logistics business (consolidated) < Review > Global logistics company Toll handles the Group’s international logistics business. It has a strong operating base in Australia and provides forwarding and contract logistics services (3PL) in the Asia Pacific region. Toll’s operat
Slide 28: 4-2-2 Summary of Toll
4-2-2 Summary of Toll Businesses: Provides a wide range of logistics services, from resources and government logistics and domestic freight forwarding in Australia, to global contract logistics, forwarding and express freight shipping Aims of acquisition: Toll was acquired as a platform company
Slide 29: 4-2-3 Expansion of international business with Toll as a platform (1)
4-2-3 Expansion of international business with Toll as a platform (1) Toll is a global company providing freight forwarding, contract logistics and other services via its network of roughly 1,200 offices in more than 50 countries worldwide. Expanded global presence through acquisition of Toll Copy
Slide 30: 4-2-4 Toll as a Platform for International Business Expansion (2)
4-2-4 Toll as a Platform for International Business Expansion (2) Targeting freight transactions in Asia, we aim to capture demand from customers in Japan and other parts of Asia by leveraging Toll’s freight forwarding and contract logistics capabilities and Japan Post’s solid customer base. Syner
Slide 31: 4-3-1 Post office business (consolidated) Review
4-3-1 Post office business (consolidated) < Review > Operating income rose ¥37.1bn YoY to ¥666.3bn on growth in financial services commissions, merchandising, real estate development and third-party financial product agency services. Net operating income increased ¥7.9bn YoY to ¥21.6bn. < Breakd
Slide 32: 4-3-2 Changes in post office business segment earnings structure
4-3-2 Changes in post office business segment earnings structure Financial services commissions from Japan Post Bank and Japan Post Insurance increased ¥5bn and ¥4.1bn YoY, respectively. Other operating income rose ¥26.4bn YoY, reflecting growth in catalog sales and expansion in the real estate
Slide 33: 4-3-3 Status of Merchandise Business and Expansion Policies
4-3-3 Growing new sources of earnings Ð Status of Merchandise Business and Expansion Policies Unique business model in the mail order industry where store-based support, acceptance and settlement are the focus in post offices nationwide. Expand sales through various measures such as the strength
Slide 34: 4-3-4 Development of Real Estate Business through Idle Property
4-3-4 Growing new sources of earnings Ð Development of Real Estate Business through Active Use of Idle Property Major Rental Buildings Total Floor Book Land Area (As of the end of Title Space Value Share (’000 m2) Land Building Financial (Real Estate) FY3/2015) (’000 m2) (¥mn) JP Tower Approx. 11 Ap
Slide 35: 4-3-5 Expanding third-party financial product agency services
4-3-5 Growing new sources of earnings Ð Expanding third-party financial product agency services Expansion of Product Line-up through Tie Ups Third Party Financial Products Operational tie up with Aflac in third-sector insurance (July 2013) Product types Service Providers Insurance Cancer insurance A
Slide 36: 4-3-6 Optimizing post office locations
4-3-6 Strengthening the post office network Ð Optimizing post office locations New post office openings 8 openings planned for FY3/2016 (total of 21 post offices opened between FY3/2008 and FY3/2015) < Examples > Tsukuba Science City Post Office (Ibaraki Prefecture): Nogata Yunohara Post Offic
Slide 37: 4-3-7 Creating welcoming post offices
4-3-7 Strengthening the post office network Ð Creating welcoming post offices Post offices paired with convenience stores, other formats We are opening post offices in large shopping centers and next to sites such as convenience stores, which (Example of convenience store post office) have high cu
Slide 38: 4-3-8 Trial use of tablet PCs for senior citizens
4-3-8 New initiatives Ð Trial use of tablet PCs for senior citizens Japan Post Group teamed up with IBM and Apple on April 30, 2015 to carry out proof-of-concept trials using tablet PCs to provide lifestyle services for senior citizens. The trials will launch in 2H FY3/2016. Starting on October
Slide 39: APPENDIX
APPENDIX 38
Slide 40: Highly Experienced Management with Large Proportion of Outside Directors
Highly Experienced Management with Large Proportion of Outside Directors President and CEO Executive Senior Vice President Outside Director (Representative Executive (Representative Executive Officer) Haruo Kasama (Attorney-at-Law) (Former Prosecutor General) Officer) Yasuo Suzuki (Former Vice Minis
Slide 41: Simultaneous Listings of Japan Post Holdings, Bank and Insurance
Simultaneous Listings of Japan Post Holdings, Japan Post Bank and Japan Post Insurance As an initial matter, Japan Post Holdings aims to dispose of its holdings in Japan Post Bank and Japan Post Insurance (“Two Financial Subsidiaries”) in multiple stages until its ownership of each is reduced to a
Slide 42: Main Additional Regulations and other Rules at the Japan Post Group
Main Additional Regulations and other Rules at the Japan Post Group Activity Description Approval of the Minister of Internal Affairs and Communications (a new business must be one which is necessary with regard to the Japan Post Holdings purposes of the company (oversight of Japan Post Co. and supp
Slide 43: Universal Services
Universal Services Universal services offered in post offices Japan Post Holdings and Japan Post Co. have been obligated to enable integrated use of postal services, postal savings, remittances and settlement of loans services and easy-to-use life insurance services at post offices through means con
Slide 44: Investment Strategy
Investment Strategy Basic stance towards investments Ð Promote infrastructure development to enhance management base such as customer satisfaction, marketing strength and efficiency Ð Drive real estate development projects (Nagoya, Hakata) Ð Utilize proceeds from the sale of the Two Financial Subs
Slide 45: Number of Employees / Personnel Expense
Number of Employees / Personnel Expense Introduction of “new general employee” in 2014 as a new job category. Aim to secure resources after retirement of regular employees. Japan Post’s workforce is growing as our business expands, but we aim to control costs by actively using the new general em
Slide 46: Market Overview of Postal and Logistics Business
Market Overview of Postal and Logistics Business Average Annual Decline in Mail Volume Details of Business Market Trend Correspondence Mail Market Share1 by Country Germany -1.8% Domestic/Inter- national UK -2.3% Postal services business markets Japan -2.5% 45 in decline United States -3.1% France -
Slide 47: Number of postal items and other items received
Number of postal items and other items received (millions of items) Yu-Mail Yu-Pack Postal items (FY) Annual totals 25,004 24,819 24,677 24,522 23,930 23,387 22,780 22,363 22,346 22,324 22,036 (YoY change) (-2.3%) (-0.7%) (-0.6%) (-0.6%) (-2.4%) (-2.3%) (-2.6%) (-1.8%) (-0.1%) (-0.1%) (-1.3%) * Yu-P
Slide 48: Yu-Pack volumes
Yu-Pack volumes (millions of items) (FY) YoY change, volume +33 +32 +21 +4 +5 -13 +83 +36 -1 +46 +57 (YoY change, %) (+17.8%) (+14.9%) (+8.6%) (+1.4%) (+2.0%) (-4.7%) (+31.4%) (+10.5%) (-0.3%) (+12.1%) (+13.2%) * Yu-Pack volumes include EXPACK. Copyright © 2015 JAPAN POST GROUP. All Rights Reserved.
Slide 49: Yu-Mail volumes
Yu-Mail volumes (millions of items) (FY) YoY change, volume +699 +613 +221 +207 +169 +116 +81 +251 +229 +223 +38 (YoY change, %) (+135.6%) (+50.5%) (+12.1%) (+10.1%) (+7.5%) (+4.8%) (+3.2%) (+9.6%) ( 8.0%) (+7.2%) (+1.1%) Copyright © 2015 JAPAN POST GROUP. All Rights Reserved. 48
Slide 50: Regulations under the Postal Act
Regulations under the Postal Act Regulations concerning postage charges Level of services for universal coverage Postage charges (Postal Act, Article 3) Installation of "posts" (mailboxes) as an easy way to drop off mail at any time Charges for postal services must be based on efficient management <
Slide 51: Stable Income Structure of Post Office Business
Stable Income Structure of Post Office Business Income Structure of Post Office Business1 Commissions paid by Japan Post Bank (JPY bn) Commissions from financial 1,200 subsidiaries are calculated based on operating results, and does not rely on capital relationships Banking Counter Component2 1,052.
Slide 52: Post offices providing third-party financial product agency services
No. of post offices that provide third-party financial product agency services / sell investment trusts Variable annuities Third-sector insurance We sell variable annuities to provide a wider choice of We sell cancer insurance and medical insurance with eased underwriting life planning / wealth buil
Slide 53: Disclaimer
Disclaimer This document contains forward-looking statements such as business forecasts and targets for the Japan Post Group and its Group companies. These forward-looking statements are based on certain assumptions and information available to the Japan Post Group at the time the document was creat
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