Hakuhodo Dy Holdings Incorporated · TSE:2433

Hakuhodo Dy — 1H FY2019 Earnings Presentation

38 slides from Hakuhodo Dy's earnings presentation, Nov 12, 2019

1. Slide 1: Consolidated Financial Highlights 1H of Fiscal Year Ending March 31, 2020

   Consolidated Financial Highlights １H of Fiscal Year Ending March 31, 2020 (1H of FY 2019) 2019.11.12

2. Slide 2: Cautionary statement concerning forward-looking statements, Note concerning audits

   Cautionary statement concerning forward-looking statements, Note concerning audits This presentation includes forward-looking statements concerning forecasts of operating results, business plans and policies, management strategies, goals, plans, numbers involving the future, views and evaluations of

3. Slide 3: Consolidated Financial Highlights for 1H of FY 2019

   Consolidated Financial Highlights for 1H of FY 2019

4. Slide 4: Consolidated Financial Highlights (1)

   Consolidated Financial Highlights （1） Change in Accounting Policy From this fiscal year, the accounting policies related to the recording of billings at certain subsidiaries has changed. Please be aware that figures for the same period of the previous fiscal year and the previous fiscal year-end hav

5. Slide 5: Consolidated Financial Highlights (2)

   Consolidated Financial Highlights （2） Despite top-line growth outpacing growth in the market, operating income declined due to the execution of strategic investments, although this decline was anticipated in our consolidated performance forecasts. The figures in parentheses below represent amount an

6. Slide 6: Consolidated Financial Highlights (3)

   Consolidated Financial Highlights （3） 【 Diffe re nce be t w e e n act ual 1 H re s ult s and As of Nov.11, 2019 fo re cas t anno unce d o n A ug . 9 ,2 0 1 9 】 FY2018 FY2019 YoY 1H Forecasts as Difference （％） （Millions of yen） (1H Result) (1H Result) change （％） of Aug. 9,'19 Billings 663,608 682,827

7. Slide 7: Consolidated Financial Highlights (4)

   Consolidated Financial Highlights （4） 【Excluding impact from Mercari】 FY2018 FY2019 YoY Operating income Revenue (Millions of Yen) (Millions of yen) （Millions of yen） (1H Result) (1H Result) change （％） 30,000 160,000 Billings 650,716 678,896 28,180 4.3% Revenue 142,598 150,189 7,590 5.3% 140,000 25,

8. Slide 8: Results by Region (1)

   Results by Region（1） FY2018 FY2019 YoY comparisons (Millions of yen) 1H 1H Change （%) Billings 595,755 613,666 17,910 3.0% Revenue 126,372 123,206 (3,165) -2.5% Japan (Gross margin) (21.2%) (20.1%) (-1.1%) Operating Income 39,979 29,150 (10,828) -27.1% (Operating margin) (31.6%) (23.7%) (-8.0%) Bill

9. Slide 9: Results by Region (2)

   Results by Region（2） 【Excluding impact from Mercari】 FY2018 FY2019 YoY comparisons (Millions of yen) 1H 1H Change （%) Billings 582,863 609,735 26,872 4.6% Japan Revenue 113,570 119,372 5,802 5.1% • Revenue increased 5.1% due to top-line growth in Internet media and Marketing / Promotion, etc. (Gross

10. Slide 10: Billings by Service Area (1)

    Billings by Service Area（1） FY2018 FY2019 YoY comparisons Share Share (Millions of yen) 1H 1H Change （%) Newspapers 21,270 3.9% 20,952 3.7% (317) -1.5% Magazines 8,602 1.6% 7,805 1.4% (797) -9.3% Radio 6,572 1.2% 6,878 1.2% 305 4.6% Television 206,850 37.8% 203,912 36.1% (2,938) -1.4% Mass media ser

11. Slide 11: Billings by Industry (1)

    Billings by Industry（1） FY2018 FY2019 YoY comparisons Share Share (Millions of yen) 1H 1H Change （%) Information/Communications 54,380 10.8% 59,265 11.6% 4,885 9.0% Automobiles/Related products 56,616 11.3% 61,397 12.0% 4,781 8.4% Beverages/Cigarettes/Luxury foods 64,250 12.8% 56,974 11.1% (7,276) -

12. Slide 12: Billings by Industry (2)

    Billings by Industry（2） Year-on-year changes for 1 H of FY2019 (Millions of yen) Government/Organizations M aj or C hang es ( Larg est Inc reases) Information/Communications 1H of Y o Y comparisons FY'19 (%) Change Automobiles/Related products Government/Organizations 11.0 +114.6% 5.8 Energy/Materia

13. Slide 13: Billings by Industry (3)

    Billings by Industry（3） Quarterly YoY Changes (1) Top 3 Largest Total (±) Changes by Industry（Millions of Yen） Government/Organizations Information/Communications Automobiles/Related products +8,000 +8,000 +8,000 +6,000 +6,000 +5,377 +6,000 +3,913 +3,764 +3,620 +4,000 +4,000 +3,147 +4,000 +1,961 +2,

14. Slide 14: Billings by Industry (4)

    Billings by Industry（4） Quarterly YoY Changes(2) Other Major Industries（Millions of Yen） Cosmetics/Toiletries Foodstuffs Transportation/Leisure +8,000 +8,000 +8,000 +6,000 +6,000 +6,000 +4,000 +4,000 +4,000 +2,477 +1,740 +2,000 +2,000 +2,000 +937 +530 +491 +232 +169 0 0 0 -103 -1 -166 -96 -75 -605 -

15. Slide 15: Changes in SG&A Expenses (1)

    Changes in SG&A Expenses（1） FY2018 FY2019 YoY comparisons (Millions of yen) 1H 1H Change （%) Personnel costs 81,235 89,112 7,877 9.7% Other Ｅxpenses (total) 40,513 44,668 4,155 10.3% Rent 8,078 8,710 631 7.8% Depreciation and 2,350 2,497 146 6.2% Ａmortization Amortization of 2,803 5,359 2,555 91.2%

16. Slide 16: Changes in SG&A Expenses (2)

    Changes in SG&A Expenses（2） (billions of yen) Change Factors in SG&A Expenses ↑0.8 ↑4.3 ↑2.6 ↑0.8 ↑1.5 133.7 ↑2.0 121.7 115 FY2018 Changes in Changes in Retirement Amortiza tion Personnel costs Others FY2019 consolidation consolidation benefit costs of goodwill (excl. factors (excl. factors (Persone

17. Slide 17: Non-Operating Items and Extraordinary Gains and Losses

    Non-Operating Items and Extraordinary Gains and Losses FY2018 FY2019 YoY comparisons (Millions of yen) 1H 1H Change （%） Non-operating income 2,228 1,948 (280) -12.6% Non-operating expenses 265 582 316 119.1% Total 1,962 1,365 (597) -30.4% *Net interest income (interest received – FY'18 +17 million F

18. Slide 18: Consolidated Balance Sheets

    Consolidated Balance Sheets Mar. 31, 2019 Sep. 30, 2019 Comparisons Sep.30, 2018 Share Share (Millions of yen) Amount Amount Change (%) Amount Share Current assets 610,251 67.7% 512,752 65.0% (97,499) -16.0% 525,024 63.8% Fixed assets 291,751 32.3% 275,874 35.0% (15,876) -5.4% 298,202 36.2% Total as

19. Slide 19: Consolidated Statements of Cash Flow

    Consolidated Statements of Cash Flow FY2018 FY2019 Y o Y comparisons (Millions of yen) 1H 1H Change Cash flow from operating activities (2,474) (18,842) (16,367) Cash flow from investing activities (9,313) 4,242 13,555 Cash flow from financing activities (19,569) (12,055) 7,513 Effect of exchange ra

20. Slide 20: Highlights of Operating Results at Major Subsidiaries

    Highlights of Operating Results at Major Subsidiaries FY2018 FY2019 YoY comparisons ◎ Billings rose 4.7%, or ¥20.9 billion. Billings increased in Information/Communications and 1H 1H Change (%) Automobiles/Related products (Millions of yen) Billings decreased in Beverages/Cigarettes/Luxury foods and

21. Slide 21: Consolidated Business Outlook for Fiscal 2019

    Consolidated Business Outlook for Fiscal 2019

22. Slide 22: Consolidated Business Outlook for Fiscal 2019 (1)

    Consolidated Business Outlook for Fiscal 2019（1） Overview of Previous Forecasts (As of August 9, 2019) Growth in the domestic advertising market expected to be around 1.5% In Japan, we aim for growth that surpasses market growth. Overseas, in addition to organic growth, we are incorporating the impa

23. Slide 23: Consolidated Business Outlook for Fiscal 2019 (2)

    Consolidated Business Outlook for Fiscal 2019（2） 【Consolidated Financial Highlights】 As of Nov.11, 2019 Difference between new FY2018 FY2019 YoY FY2018 FY2019 YoY FY2018 FY2019 YoY forecasts and previous forecasts （Millions of yen） (1H Result) (1H Result) change （％） (2H Result) (2H Forecasts) change

24. Slide 24: Consolidated Business Outlook for Fiscal 2019 (3)

    Consolidated Business Outlook for Fiscal 2019（3） 【Excluding impact from Mercari】 FY2018 FY2019 YoY FY2018 FY2019 YoY FY2018 FY2019 YoY （Millions of yen） (1H Result) (1H Result) change （％） (2H Result) (2H Forecasts) change （％） (Full Year Result) (Full Year Forecasts) change （％） Billings 650,716 678,8

25. Slide 25: Supplementary materials

    Supplementary materials

26. Slide 26: Consolidated Financial Highlights (5)

    Consolidated Financial Highlights （5） 【Excluding impact from Mercari】 FY2019 YoY FY2019 YoY FY2019 YoY （Millions of yen） (1Q Result) change （％） (2Q Result) change （％） (1H Result) change （％） Billings 330,345 18,650 6.0% 348,550 9,529 2.8% 678,896 28,180 4.3% Revenue 69,896 3,421 5.1% 80,292 4,169 5.5

27. Slide 27: Results by Region (3)

    Results by Region（3） 【Excluding impact from Mercari】 FY2019 YoY comparisons FY2019 YoY comparisons FY2019 YoY comparisons (Millions of yen) 1Q Change （%) 2Q Change （%) 1H Change （%) Billings 296,780 11,584 4.1% 312,955 15,287 5.1% 609,735 26,872 4.6% Revenue 54,752 1,213 2.3% 64,619 4,588 7.6% 119,3

28. Slide 28: Billings by Service Area (2)

    Billings by Service Area（2） FY2019 YoY comparisons FY2019 YoY comparisons FY2019 YoY comparisons (Millions of yen) 1Q Change （%) 2Q Change （%) 1H Change （%) Newspapers 10,003 (600) -5.7% 10,950 283 2.7% 20,952 (317) -1.5% Magazines 3,677 (365) -9.0% 4,129 (432) -9.5% 7,805 (797) -9.3% Radio 3,499 26

29. Slide 29: Billings by Industry (5)

    Billings by Industry（5） FY2019 YoY comparisons FY2019 YoY comparisons FY2019 YoY comparisons (Millions of yen) 1Q Change （%) 2Q Change （%) 1H Change （%) Information/Communications 28,578 3,147 12.4% 30,687 1,738 6.0% 59,265 4,885 9.0% Automobiles/Related products 28,051 1,161 4.3% 33,346 3,620 12.2%

30. Slide 30: Update on progress under the Medium-Term Business Plan

    Update on progress under the Medium-Term Business Plan Abbreviations within this document HC: Hakuhodo DY Holdings Inc. H: Hakuhodo Inc. D: Daiko Advertising Inc. Y: Yomiko Advertising Inc. MP: Hakuhodo DY Media Partners Inc. DAC: D.A.Consortium Inc. IREP: IREP Co., Ltd

31. Slide 31: Important indicators: Medium-Term Business Plan (FY2019-FY2023)

    Medium-Term Business Plan (FY2019-FY2023: 5-year plan) With sei-katsu-sha insight as our cornerstone, the Hakuhodo DY Group will combine its Core Medium- creativity, integrative capabilities, and data and technology utilization skills to play a leading role in evolving companies’ marketing activitie

32. Slide 32: Overview of progress in 1H of FY2019

    Overview of progress in 1H of FY2019  Revenue excluding investment projects and after adjustments increased 5.3%, with revenue growth both in Japan and overseas.  Efforts toward implementing the Medium-Term Business Plan (MTBP) intensified at each operating company. Adjusted* Revenue Efforts at ea

33. Slide 33: (Reference) Efforts toward implementing the Medium-Term Business Plan HAKUHODO DAIKO

    (Reference) Efforts toward implementing the Medium-Term Business Plan HAKUHODO DAIKO Respect and admiration for companies, clients, and society as a whole Business Ability to create and development deliver customer capabilities experiences Revamping of the corporate philosophy and VI and establishme

34. Slide 34: Main measures

    Key strengthening measures centered around the three fundamentals for growth  Strengthening of structures and response capabilities centered around the MTBP’s three fundamentals for growth. Main measures Establish a leading position in the broader digital domain Strengthen response capabilities for

35. Slide 35: Establish a leading position in the broader digital domain

    Establish a leading position in the broader digital domain  Continuous double-digit growth in billings from Internet media, driven by growth of next-generation digital agencies  Enhancement of sei-katsu-sha data utilization and progress in response to diversifying digital touchpoints Internet Medi

36. Slide 36: Strengthen response capabilities for borderless corporate activities

    Strengthen response capabilities for borderless corporate activities  Revenue from overseas businesses increased 6.2% year on year, with revenue levels in Asia and North America—where the scale of our operations is large—surpassing levels in the first half of the previous fiscal year. The ratio of

37. Slide 37: Accelerate innovation through external collaborations

    Accelerate innovation through external collaborations  We formed a new corporate venture capital fund to strengthen our foundation for external collaboration.  Operating companies stepped up their efforts to establish structures and enhance external collaboration toward new business creation. Fund

38. Slide 38: Tsutawaru Font note

    Text is this document is printed in “Tsutawaru Font,” an original font jointly developed by Hakuhodo Inc., TypeBank Co., Ltd., and Keio University. Developed based on the concept of universal design, the purpose of the font is to prevent reading errors and enhance the readability of the text.

Hakuhodo DY Holdings — 1H FY2019 Earnings Presentation on 6ix