Uss Co., Ltd. · TSE:4732
Uss — Q1 FY3/2020 Earnings Presentation
34 slides from Uss's earnings presentation, August 2019
Slide 1: Consolidated Results of Operations, First Quarter FY Ending March 2020
Consolidated Results of Operations The First Quarter, Fiscal Year Ending March 31, 2020 USS Co., Ltd. August 2019 1
Slide 2: Disclaimer and reference materials
• This document has been translated from the original Japanese as a guide for non-Japanese investors. • Forward-looking statements in this material are based on information available to management at the time this material was prepared and assumptions that management believes are reasonable. These s
Slide 3: Results of Operations, First Quarter
Results of Operations First Quarter Fiscal Year Ending March 2020 3
Slide 4: 1Q FY3/2020 – Summary of Consolidated Results of Operations
1Q FY3/2020 – Summary of Consolidated Results of Operations ◼ Sales decreased 0.6% YoY to ¥19.86 billion, operating profit was down 4.1% to ¥9.18 billion, and profit attributable to owners of parent decreased 2.8% to ¥6.25 billion. ◼ The number of vehicles consigned and number of contract completion
Slide 5: 1Q FY3/2020 – Reasons for Change in Operating Profit (Actual)
1Q FY3/2020 – Reasons for Change in Operating Profit (Actual) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 0.34bn Increase in cost of goods sold ▲0.18bn Decline in sales commission 0.04bn Increase in sales of accident-damaged vehicles 0.08bn Increase in expenses for supplies
Slide 6: Net Sales and Operating Profit by Business Segment
Net Sales and Operating Profit by Business Segment (Million yen) Net sales 1Q FY3/2018 1Q FY3/2019 1Q FY3/2020 Year on year Auto auction 13,898 16,356 16,358 100.0% Used vehicle purchasing and selling 2,294 2,254 2,067 91.7% Other 1,445 1,377 1,434 104.2% Total 17,638 19,987 19,861 99.4% Operating p
Slide 7: Consolidated Balance Sheets and Statements of Cash Flows
Consolidated Balance Sheets and Statements of Cash Flows ◼ Cash used in financing activities increased mainly because of cash dividends paid and purchase of treasury shares. ◼ Equity ratio: 79.9% Consolidated Balance Sheets (Summary) (Million yen) FY3/2019 1Q FY3/2020 FY3/2019 1Q FY3/2020 Current as
Slide 8: Automobile Market
Automobile Market New Car Registrations and YoY Changes Used Car Registrations and YoY Changes (Thousand vehicles) (Thousand vehicles) 3,000 30% 3,000 30% 20% 20% 11.8% 2,008 1,963 1,967 4.9% 6.4% 10% 10% 2.8% 1,670 1,609 1,648 1,673 1,609 1,704 1,672 1,577 1,611 1,569 1,590 -1.9% -1.7%1,540 1,528 1
Slide 9: Auto Auction Segment (1)
Auto Auction Segment (1) ◼ Vehicles consigned increased 2.6% YoY to 771 thousand; contract completions decreased 1.0% YoY to 460 thousand (contract completion rate: 59.7% against 61.8% in the previous fiscal year) ◼ Purchase price increased because of the larger number of lower-priced vehicles purch
Slide 10: Auto Auction Segment (2)
Auto Auction Segment (2) No. of Vehicles Consigned and Contract Completion Rate Vehicles Contracted Vehicles consigned Vehicles contracted USS Industry's average (excl. USS) (Thousand vehicles) 1,000 80% 784 752 814 771 703 671 636 664 699 68.4% 593 70% 66.0% 66.3%65.9%66.4% 575 65.9%65.2% 529 559 4
Slide 11: Auto Auction Segment (3)
Auto Auction Segment (3) Total Consignment Fees and Total Contract Completion Fees and Consignment Fee per Vehicle Contract Completion Fee per Vehicle Total consignment fees Fee per vehicle Total contract completion fees Fee per vehicle (Million yen) (yen) (Million yen) （円） 5,000 5,500 6,000 5,000 8
Slide 12: Auto Auction Segment (4)
Auto Auction Segment (4) From April 1, 2019 to June 30, 2019 (Number of auctions held, Vehicles) Number of auctions Number of consigned vehicles Number of contract completions Contract completion rate 1Q FY3/20 1Q FY3/19 1Q FY3/20 1Q FY3/19 YoY change 1Q FY3/20 1Q FY3/19 YoY change 1Q FY3/20 1Q FY3/
Slide 13: Auto Auction Segment (5)
Auto Auction Segment (5) (Vehicles, %) Apr. May Jun. Jul. Aug. Sep. First Half Oct. Nov. Dec. Jan. Feb. Mar. Second Half Fiscal Year FY3/18 234,454 183,593 218,888 195,997 169,623 209,872 1,212,427 238,322 250,552 214,426 201,672 244,650 337,961 1,487,583 2,700,010 YoY 0.5 11.0 12.1 4.9 20.1 4.3 7.9
Slide 14: Used Vehicle Purchasing and Selling Segment
Used Vehicle Purchasing and Selling Segment ◼ Sales and earnings decreased at used vehicle purchasing subsidiary Rabbit due to a decline in selling prices caused by a smaller number of expensive vehicles purchased and to higher advertising expenses. (Net sales decreased 4.1% YoY to ¥1,282 million, O
Slide 15: Other Segment
Other Segment ◼ The recycle business posted higher sales and lower earnings as the volume of end-of-life vehicles handled increased but prices of metal scrap started to fall in April 2019. (Net sales increased 7.4% YoY to ¥1,291 million, Operating profit decreased 16.7% to ¥133 million) ◼ In the use
Slide 16: Consolidated Forecast for FY3/2020
Consolidated Forecast for FY3/2020 16
Slide 17: FY3/2020 – Consolidated Forecast
FY3/2020 – Consolidated Forecast ◼ New car registrations are expected to remain flat from FY3/2019. ◼ Replacement of auction systems, including renewal of auction sites, planned. (Million yen) FY3/20 (Forecast) FY3/18 (Actual) FY3/19 (Actual) VS. previous year (May 13, 2019) Net sales 75,153 79,908
Slide 18: FY3/2020 – Reasons for Change in Operating Profit (Forecast)
FY3/2020 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 1.25bn Decrease in depreciation 0.21bn Decline in sales commission 0.11bn Used vehicle sales/purchases ▲0.41bn Decrease in the cost of demolition 0.18bn Decrease in adver
Slide 19: FY3/2020 – Forecast by Business Segment
FY3/2020 – Forecast by Business Segment (Million yen) FY3/18 FY3/19 FY3/20 VS. previous (Actual) (Actual) (Forecast) year Net sales Auto auction 59,521 64,684 65,892 101.9% Used vehicle purchasing and selling 9,827 9,701 9,472 97.6% Other 5,805 5,522 5,435 98.4% Total 75,153 79,908 80,800 101.1% Ope
Slide 20: Market Overview, Strategy for Creating Value Over the Medium Term
Market Overview Strategy for Creating Value Over the Medium Term 20
Slide 21: Medium-term Market Outlook and USS's Strategy
Medium-term Market Outlook and USS’s Strategy ◼ New car sales in Japan: Unlikely to see significant growth over the medium term ⁃ USS’s Strategy 1) The JAA acquisition significantly raised the Osaka area market share. The goal is to increase the Tokyo area market share in order to have a market shar
Slide 22: Used Car Auction Market and USS Market Share
Used Car Auction Market and USS Market Share ◼ Maintained higher market shares and profit in the period of sluggish markets following the financial crisis of 2008-2009. ◼ The JAA acquisition significantly raised the USS Group’s market share 1990(CY) market share 2000(CY) market share 2018(CY) market
Slide 23: Basic Policy on Finance and Shareholder Distributions
Basic Policy on Finance and Shareholder Distributions Increase shareholder distributions while continuing investment for growth ◼ Consolidated dividend payout ratio: Over 50% since FY3/2017 The JAA acquisition will have no effect on the USS dividend policy of maintaining a consolidated payout ratio
Slide 24: Earnings Distributions – Dividend Policy
Earnings Distributions – Dividend Policy ◼Plan to pay 51.2 yen dividend per share for FY3/20 (up 0.8 yen) ◼ 20 consecutive years of dividend growth since listing DPS Consolidated payout ratio (Yen) 50.1% 50.1% 60 51.5% 50.1% 47.0% 51.2 45.1% 45.1% 50.4 50 43.1% 47.8 45% 46.4 40.8 40 37.7 30.5% 34.7
Slide 25: Earnings Distributions – Total Payout Ratio
Earnings Distributions – Total Payout Ratio ◼Flexible stock repurchases while maintaining stable dividend. (Scheduled to repurchase 5 million shares for 10 billion yen (maximum) in the period from February 13, 2019 to September 20, 2019. ) (Million yen) Dividend Paid Stock Repurchased Total Payout R
Slide 26: Earnings Distributions – Return on Equity (ROE)
Earnings Distributions – Return on Equity (ROE) ◼No change in the medium-term ROE target of above 15%. ROE 25% 19.5% 18.2% 16.5% 15.9% 15.8% 15.5% 15.3% 15.1% 14.5% 14.2% 14.7% 14.8% 14.5% 15% 16.0% 14.1% 13.7% 14.0% 15.0% 10.9% 11.7% 10.4% 5% FY3/00 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05 FY3/06 FY3/07
Slide 27: Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions
Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions ◼Aim at increasing shareholder value by a two-pronged strategy of solid investments in growth and active shareholder distributions Leveraged Internet Increase in number of and IT members – users Rise in contract
Slide 28: How USS Creates Social and Economic Value
How USS Creates Social and Economic Value ◼USS creates social and economic value by functioning as a platform for a used vehicle ecosystem. The used vehicle ecosystem The reuse cycle The new vehicle value chain Production Purchase of Used vehicle Steel Vehicle auctions Used vehicle and sale of used
Slide 29: Reference
Reference 29
Slide 30: History of USS Long-term Growth
History of USS Long-term Growth Before 2000 1982: Held the first auction with only 255 vehicles consigned 1988: Expanded the Nagoya Auction Site. The number of POS seats was 570 (the largest in Japan). Early nineties: Opened Kyushu and Tokyo Auction Sites 2017: Late nineties: Opened Okayama, Shizuok
Slide 31: Business Models for USS
Business Models for USS Used Ferrous vehicles Rabbit scrap End (Used vehicle ARBIZ Steel users purchases) makers Payment for Payments vehicles Payment Payments for vehicles Used Used vehicles vehicles Members Members submitting consigning vehicles Auto Auction successful bids (buyer) (seller） • • Us
Slide 32: Automobile Market and USS Revenue
Automobile Market and USS Revenue ◼ The number of vehicles consigned is correlated through trade-ins to (1) New car registrations and (2) Used car registrations ◼ Total demand comprises domestic demand (2) and overseas demand (3). In recent years, total demand has been driven mainly by overseas dema
Slide 33: New/Used Car Registrations and Auto Auction Market
New/Used Car Registrations and Auto Auction Market ◼ The auction market continued to expand till 2000 as the share of used vehicles sold through the auction market increased as a share of the total used vehicle market. Starting in the mid-2000s, older vehicles and vehicles with high mileage which wo
Slide 34: Corporate Governance
Corporate Governance ◼The company’s governance organization has been improved in order to work toward the goal of increasing corporate value through continuing business growth ◼Adopted the outside director system in FY3/2007 ◼Strengthened the executive officer system in FY3/2013 ◼Established volunta