Hakuhodo Dy Holdings Incorporated · TSE:2433

Hakuhodo Dy — FY2023 Earnings Presentation

69 slides from Hakuhodo Dy's earnings presentation, Jun 4, 2024

Slide 3: FY2023 Income Statement Highlights
FY2023 Income Statement Highlights ⚫ The results for FY2023 landed at a level comparable to the revised guidance (announced on February 20, 2024). • Billings decreased by 3.4% YoY, and revenue decreased by 4.5% YoY. • Operating income decreased by 38.1% to ¥34.2 billion. Ordinary income decreased by
Slide 4: FY2023 Results (Excluding Investment Business) 1
FY2023 Results (Excluding Investment Business) 1 • Billings decreased by 3.4% YoY. Gross profit increased by 2.3% YoY. Gross margin improved by 0.3pt. • SG&A expenses increased by 3.3% YoY. Operating income decreased by ¥20.4 billion YoY to ¥27.7 billion. • Operating income before goodwill decreased
Slide 5: FY2023 Results (Excluding Investment Business) 2
FY2023 Results (Excluding Investment Business) 2 ⚫ The first half (H1) saw a decline in both billings and profit, but despite the significant BPO's backlash in the second half (H2), while the decline in billings persisted, we turned a profit. Changes from H1 to H2 (YoY Comparison) H1 (April - Septem
Slide 6: FY2023 Results (Excluding Investment Business) 3
FY2023 Results (Excluding Investment Business) 3 ⚫ The operating income in H2 increased by 2.7% YoY. • Japan: while affected by the BPO’s backlash, gross profit increased in areas other than BPO. With the effect of cost control, we secured operating income at the same level as the previous year. • O
Slide 7: FY2023 Results (Excluding Investment Business) 4
FY2023 Results (Excluding Investment Business) 4 ⚫ The main factors contributing to the increase in operating income in H2 • The growth in billings/gross profit excluding BPO (Japan) - The domestic billings (excluding BPO) in H2 increased by 5.4% YoY, while the gross profit (excluding BPO) increased
Slide 9: Guidance for FY2024
Guidance for FY2024 ⚫ The guidance for FY2024 (ending March 2025) is as follows. • The current forecast does not incorporate significant extraordinary incomes or losses. Guidance for FY2024 （Millions of JPY） Forecast YoY Billings 1,675,000 +6.1% Revenue 1,000,000 +5.6% Operating Income 36,000 +5.0%
Slide 11: Financial Policy
Financial Policy ⚫ Financial Policy • Dividend Policy: Our basic policy is to consistently pay stable dividends. The dividend amount will be determined after comprehensively taking into account capital supply and demand, the maintenance of sufficient internal reserves, and other factors, with a Divi
Slide 12: Dividend forecast
Dividend forecast ⚫ Dividend forecast • The dividend forecast for FY2023 (ending March 2024) will be ¥32 per share annually, including the interim dividend already paid. • The dividend forecast for FY2024 (ending March 2025) will be ¥32 per share annually. Ⓒ HAKUHODO DY Holdings Inc, All Rights Rese
Slide 13: Cautionary Statements Concerning Forward-looking Statements, Change in accounting standards & Note Concerning Audits
Cautionary Statements Concerning Forward-looking Statements, Change in accounting standards & Note Concerning Audits （Cautionary Statements Concerning Forward-looking Statements） This presentation includes forward-looking statements concerning forecasts of operating results, business plans and polic
Slide 15: Interim Income Statements
Interim Income Statements Japanese GAAP-basis Interim Income Statements for FY2023 YTD（12-Month） by Quarter（3-Month）（Millions of JPY） Actual YOY Q1 YOY Q2 YOY Q3 YOY Q4 YOY Billings 1,579,350 -54,989 -3.4% 354,422 +1.5% 343,432 -7.3% 419,839 +3.7% 461,655 -9.5% Revenue 946,776 -44,360 -4.5% 201,466
Slide 16: Results Excluding Investment Business
Results Excluding Investment Business FY2023 YTD（12-Month） by Quarter（3-Month） Results Excluding Investment Business （Millions of JPY） Actual YOY Q1 YOY Q2 YOY Q3 YOY Q4 YOY Billings 1,571,546 -54,602 -3.4% 348,568 +0.8% 343,007 -7.2% 419,261 +4.2% 460,707 -9.3% Revenue 938,972 -43,973 -4.5% 195,612
Slide 17: Results by Region
Results by Region FY2023 （Millions of JPY） Actual YOY Japan Billings 1,346,044 -45,185 -3.2% Revenue 713,471 -34,556 -4.6% Gross Profit 297,685 -9,851 -3.2% SG&A 224,210 +3,352 +1.5% Operating Income 73,474 -13,204 -15.2% Overseas Billings 249,989 -3,034 -1.2% Revenue 249,989 -3,034 -1.2% Gross Prof
Slide 18: Results by Region (YTD, by Quarter)
Results by Region(YTD, by Quarter) FY2023 YTD（12-Month） by Quarter（3-Month） Japan (Excluding Investment Business) （Millions of JPY） YTD Actual YOY Q1 YOY Q2 YOY Q3 YOY Q4 YOY Billings 1,338,240 -44,798 -3.2% 297,790 -0.2% 287,738 -8.0% 362,124 +5.9% 390,586 -9.2% Gross Profit 290,730 -9,436 -3.1% 62
Slide 19: Results by Region (Japan: Excluding Investment Business)
Results by Region (Japan: Excluding Investment Business) FY2023 (Millions of JPY) Actual YOY Gross profit & Operating Income before amortization of goodwill by quarter Billings 1,338,240 -44,798 -3.2% （Millions of JPY） Revenue 705,666 -34,169 -4.6% Gross Profit 290,730 -9,436 -3.1% Gross Margin 21.7
Slide 20: Results by Region (Overseas)
Results by Region (Overseas) FY2023 (Millions of JPY) Actual YOY Gross profit & Operating Income before Billings 249,989 -3,034 -1.2% amortization of goodwill by quarter （Millions of JPY） Revenue 249,989 -3,034 -1.2% Gross Profit 108,164 +6,114 +6.0% Gross Margin 43.3% +2.9pt SGA 116,689 +7,730 +7.1
Slide 21: Billings by Service Category
Billings by Service Category Composition FY2023 (Millions of JPY) Actual YOY Ratio Newspapers 32,136 -1,734 -5.1% 2.5% Magazines 7,392 -621 -7.8% 0.6% Radio 9,905 -1,466 -12.9% 0.8% Television 384,946 +3,162 +0.8% 29.4% Trad-Media Service Subtotal 434,381 -659 -0.2% 33.2% Internet Media 354,900 +18,
Slide 22: Billings by Service Category (YTD, by Quarter)
Billings by Service Category (YTD, by Quarter) FY2023 YTD（12-Month） by Quarter（3-Month）（Millions of JPY） YTD Actual YOY Q1 YOY Q2 YOY Q3 YOY Q4 YOY Newspapers 32,136 -1,734 -5.1% 7,130 -2.0% 6,917 -2.5% 8,443 -8.5% 9,643 -6.1% Magazines 7,392 -621 -7.8% 1,690 +8.8% 1,876 -9.4% 2,113 -14.6% 1,712 -1
Slide 23: Billings by Clients' Industry
Billings by Clients’ Industry FY2023 （Millions of JPY） Actual YOY Composition Information/Communications 128,111 -13,953 -9.8% 11.6% Beverages/Cigarettes/Luxury foods 116,176 +147 +0.1% 10.5% Automobiles/Related products 108,981 +4,592 +4.4% 9.9% Foodstuffs 80,461 +1,218 +1.5% 7.3% Restaurant/Servic
Slide 24: Billings by Clients' Industry
Billings by Clients’ Industry ⚫ Positive Industries Transportation/Leisure FY2023 Actual ¥ 50.4bil YoY +¥ 10.5bil (+26.4%) Distribution/Retailing ¥ 61.6bil +¥ 5.2bil ( +9.2%) ⚫ Negative Industries Government/Organizations FY2023 Actual ¥47.8bil YoY -¥70.0bil (-59.4％) Information/Communications ¥128.
Slide 29: Selling, General & Administrative Expenses
Selling, General & Administrative Expenses FY2023 （Millions of JPY） Actual YOY Major Change Factors in SG&A (Millions of JPY) Personnel 238,507 +7,586 +3.3% FY22 SG&A 348,154 Rent 20,767 +958 +4.8% +3,323 Change in scope of consolidation Depreciations 10,095 +1,823 +22.0% -198 Amortization of goodwi
Slide 30: Other Income & Extra-ordinary Items
Other Income & Extra-ordinary Items FY2023 Other Income/Loss （Millions of JPY） Actual YOY Non-operating Income 9,264 +1,807 Interest Income 486 +51 Dividend Income 2,277 +54 FOREX 1,358 +413 Change in fair value of contingent considerations 3,379 +1,695 Non-operating Expenses 5,737 +3,250 Interest E
Slide 31: Balance Sheets
Balance Sheets （Millions of JPY） As of March 2024 Change * Composition Current Assets 690,388 9,659 66.7% Cash & Deposits 184,527 21,545 Accounts Recievable 402,158 -8,949 Non-current Assets 344,625 -1,061 33.3% Tangible Assets 60,968 2,548 Intangible Assets 104,482 -3,984 Goodwill 65,075 -6,603 Inv
Slide 32: Cash Flow Statements
Cash Flow Statements FY2023 （Millions of JPY） Actual YOY Cash Flows from Operating Activities 9,883 -28,152 Cash Flows from Investing Activities 6,329 +39,121 Purchase of property, plant and equipment -6,738 +265 Purchase of intangible assets -10,228 +674 Purchase of investment securities -5,086 -73
Slide 33: Hakuhodo DY Group New Medium-Term Business Plan
Hakuhodo DY Group New Medium-Term Business Plan Abbreviations HC: Hakuhodo DY Holdings, H: Hakuhodo, D: Daiko Advertising, Y: YOMIKO ADVERTISING, MP: Hakuhodo DY Media Partners, DAC: D.A.Consortium, SO: SoldOut Ⓒ HAKUHODO DY Holdings Inc, All Rights Reserved
Slide 35: Medium-Term Business Plan (Revised: FY2021–FY2023)
Medium-Term Business Plan (Revised: FY2021–FY2023) *Initial plan With sei-katsu-sha insight as our cornerstone, the Hakuhodo DY Group will combine our creativity, integrative Core Medium-Term capabilities, and data and technology utilization skills to play a leading role in evolving companies’ marke
Slide 36: Review of medium-term business targets
Review of medium-term business targets ⚫ Although gross profit growth exceeded the target, operating income before amortization of goodwill fell short of the initial target of ¥65 billion. Medium-term target FY2023 Operating income before amortization At least ¥50 billion ¥50.1 billion of goodwill M
Slide 37: Review of medium-term business targets: Target levels for core domains
Review of medium-term business targets: Target levels for core domains ⚫ With the increase in gross profit, each of the three core domains recorded a double-digit growth. Gross profit after adjustments Core domains Target level Actual level 387,220 Marketing execution domain CAGR of gross +10％ +11.9
Slide 39: Business environment: Megatrends
Business environment: Megatrends Changing society Changing shopping behavior Changing economy/technology Urbanization Healthy lifestyles Rise of emerging economies Sustainability Intensified global Longevity consciousness competition Increased Advancement Changing role importance of of of women bran
Slide 40: Situational awareness: Changing society "with S"
Situational awareness: Changing society “with S” ⚫ Advent of a full-fledged sei-katsu-sha-driven society where sei-katsu-sha (S) are at the center of everything we do. ⚫ A generalized consciousness of sustainability (S) will be a defining factor for the activities of sei-katsu-sha and businesses. Ap
Slide 41: Situational awareness: Changing technology "beyond Tech"
Situational awareness: Changing technology “beyond Tech” ⚫ The rapid advancement of technology is effectively redefining the industrial/business structure and the role of humans. ⚫ Human-tech co-creation to augment creativity and shape a new world. Jobs that can be automated with AI Human-tech co-cr
Slide 42: Situational awareness: Changing business needs "beyond ads"
Situational awareness: Changing business needs “beyond ads” ⚫ Amid market maturity and disruptive innovation, companies are increasingly committed to radical business transformation. ⚫ Attention needs to be focused on questions like “what value to create” and “how to maintain connection with sei-kat
Slide 44: Formulation/internalization of our Global Purpose
Formulation/internalization of our Global Purpose ⚫ A purpose formulation/internalization project was implemented with the participation of all Group employees. ⚫ The project served to reflect on the raison-d’être of the Hakuhodo DY Group and the meaning of work, aiming to place the purpose at the c
Slide 45: Our Global Purpose (our raison-d'être)
Our Global Purpose (our raison-d’être) When asked to draw the future on a blank sheet of paper, we start by drawing a person in the center. What hopes and dreams does this person, this sei-katsu-sha, hold dear? What moves them? What matters to them? What excites them? In Japanese we call these deep
Slide 46: Our goal
Our goal From “a group of advertising companies” to With sei-katsu-sha-centered creativity as our edge, the Hakuhodo DY Group aims to be a group that creates the future by connecting sei-katsu-sha, organizations and society to generate new relational value. Ⓒ HAKUHODO DY Holdings Inc, All Rights Res
Slide 48: Six business domains of our creativity platform
Six business domains of our creativity platform Consulting business Technology business Content business Incubation business Marketing business Integrated marketing Digital marketing Commerce business Global business Ⓒ HAKUHODO DY Holdings Inc, All Rights Reserved 47
Slide 49: Business structure reform
Business structure reform ⚫ The three years of the new Medium-Term Business Plan will serve to restructure existing core business and create new growth options. ⚫ The subsequent five years will be focused on the overhaul of the Group’s profit-making structure. FY2023 FY2026 FY2031 Up until now Mediu
Slide 50: 3-year reform of business structure to enhance profitability and create growth options
3-year reform of business structure to enhance profitability and create growth options Consulting business Technology business Content business Incubation business Marketing business 1 2 Integrated marketing Digital marketing Commerce business Restructuring of Creation of new marketing business grow
Slide 51: (1) Restructuring of marketing business
(1) Restructuring of marketing business ⚫ Enhance growth domains of digital marketing and commerce business. ⚫ Promote marketing sophistication/efficiency based on a proprietary integrated marketing platform. Integrated marketing Digital marketing Commerce business Integrated marketing platform (Lev
Slide 52: (1) Restructuring of marketing business: Digital marketing
(1) Restructuring of marketing business: Digital marketing ⚫ Launch of Hakuhodo DY ONE, a new company integrating the best of the Group’s resources and knowhow. ⚫ Over 200 employees, including frontline personnel, joined from Hakuhodo and MP, ensuring that the company has the highest degree of exper
Slide 53: (1) Restructuring of marketing business: Commerce business
(1) Restructuring of marketing business: Commerce business ⚫ Aim to be a shopping experience-centered 360 business transformation partner from both shopper and seller perspectives. ⚫ Form a business unit, including specialized frontline organizations, in Hakuhodo capable of providing full service in
Slide 54: (1) Restructuring of marketing business: Integrated marketing platform
(1) Restructuring of marketing business: Integrated marketing platform ⚫ Roll out Creative Engine Bloom in steps to drive the sophistication/efficiency of integrated marketing. ⚫ Aim to provide five modules combining AI technologies to augment creativity. Human-Centered AI 機能 Ⓒ HAKUHODO DY Holdings
Slide 55: (2-1) Creation of new growth options: Consulting business
(2-1) Creation of new growth options: Consulting business ⚫ Establishment of ENND PARTNERS, a new company offering unique human- and creativity-centered professional services. ⚫ Aim to improve Group competitiveness by combining the expertise and innovativeness of kyu and the Hakuhodo Group in partic
Slide 56: (2-2) Creation of new growth options: Technology business
(2-2) Creation of new growth options: Technology business ⚫ Create a technology business related to client marketing leveraging technology infrastructure and resources. ⚫ Build a sei-katsu-sha-centered marketing SI/SaaS business to serve as a new revenue source. Up until now Expand business in two d
Slide 57: Use of AI
Use of AI ⚫ A laboratory launched in April 2024 for advanced R&D on AI technology with a human-centered approach. ⚫ Results of research on AI that reflects creative knowhow , as well as research that will contribute to augmenting human creativity, to be adopted in tools for the integrated marketing
Slide 58: (2-3) Creation of new growth options: Content business
(2-3) Creation of new growth options: Content business ⚫ Build infrastructure to invest in IP and to acquire ID data, including forming alliance with external players. ⚫ Develop an IP/ID-based content ecosystem to expand profit-making opportunities. Up until now Expand profit-making opportunities ce
Slide 59: (2-4) Creation of new growth options: Incubation business
(2-4) Creation of new growth options: Incubation business ⚫ Leverage the Group’s creativity and networks to make a new, socially impactful business a pillar for our profitability in the future. Up until now Develop core business for the next generation Scheme development Building of foundations for
Slide 60: (3) Remodeling of global business
(3) Remodeling of global business ⚫ Enhance collaboration between strategic operating unit kyu and regional teams centered around Hakuhodo to form a unique network. ⚫ Aim for double-digit operating margin before amortization of goodwill in three years by improving profitability. Formation of a uniqu
Slide 62: Sustainable management
Sustainable management ⚫ The Hakuhodo DY Group aims to create social value with human-centered sustainable management. Meet environmental challenges including climate change • Halve CO2 emissions by 2030 and achieve zero emissions by Pursue compliance awareness and integrity 2050. • Ensure complianc
Slide 63: Actions to ensure compliance
Actions to ensure compliance ⚫ Control compliance activities through the Group Compliance Committee, chaired by the President & CEO of Hakuhodo DY Holdings and with membership including the President & CEOs of major Group companies. ⚫ Enforce robust compliance in each Group company, appointing its P
Slide 65: Medium-term business targets
Medium-term business targets FY2023 FY2026 FY2031 Up until now Medium-Term Business Plan period: 3 years Focused on marketing business Future outlook (particularly advertising) Enhance profitability and create growth options CAGR of operating income after adjustments*6 and At least +10％ before amort
Slide 66: Indicators to be monitored
Indicators to be monitored ⚫ Monitor the restructuring of the existing core business and the creation of new growth options for three years to FY2026. Consulting business Technology business Content business Incubation business 1 Restructuring of marketing business 2 Creation of new growth options M
Slide 67: Future outlook
Future outlook ⚫ Transform into a business structure in which six different business domains interact to drive new growth and profitability. ⚫ Aim for a structure in which the growth domains*6 generate approximately 50% of the Group’s operating income before amortization of goodwill. New Medium-Term
Slide 68: Extension of relationship value created by the Hakuhodo DY Group
Extension of relationship value created by the Hakuhodo DY Group ⚫ The scope of relationship value created by the Group will expand further through connections to the wider world facilitated by the Creativity Platform. Consulting business Clients Ventures Incubation business Marketing business Media

Hakuhodo DY Holdings — FY2023 Earnings Presentation on 6ix

Hakuhodo Dy — FY2023 Earnings Presentation

Slide 1: Consolidated Financial Highlights FY2023 (April-March 2024)

Slide 2: Highlights of Consolidated Results for FY 2023

Slide 3: FY2023 Income Statement Highlights

Slide 4: FY2023 Results (Excluding Investment Business) 1

Slide 5: FY2023 Results (Excluding Investment Business) 2

Slide 6: FY2023 Results (Excluding Investment Business) 3

Slide 7: FY2023 Results (Excluding Investment Business) 4

Slide 8: Guidance for FY2024

Slide 9: Guidance for FY2024

Slide 10: Financial Policy/Shareholder Returns

Slide 11: Financial Policy

Slide 12: Dividend forecast

Slide 13: Cautionary Statements Concerning Forward-looking Statements, Change in accounting standards & Note Concerning Audits

Slide 14: Supplements

Slide 15: Interim Income Statements

Slide 16: Results Excluding Investment Business

Slide 17: Results by Region

Slide 18: Results by Region (YTD, by Quarter)

Slide 19: Results by Region (Japan: Excluding Investment Business)

Slide 20: Results by Region (Overseas)

Slide 21: Billings by Service Category

Slide 22: Billings by Service Category (YTD, by Quarter)

Slide 23: Billings by Clients' Industry

Slide 24: Billings by Clients' Industry

Slide 25: Billings by Clients' Industry (by Quarter) 1

Slide 26: Billings by Clients' Industry (by Quarter) 2

Slide 27: Billings by Clients' Industry (by Quarter) 3

Slide 28: Billings by Clients' Industry (by Quarter) 4

Slide 29: Selling, General & Administrative Expenses

Slide 30: Other Income & Extra-ordinary Items

Slide 31: Balance Sheets

Slide 32: Cash Flow Statements

Slide 33: Hakuhodo DY Group New Medium-Term Business Plan

Slide 34: Review of FY2021–FY2023 Medium-Term Business Plan

Slide 35: Medium-Term Business Plan (Revised: FY2021–FY2023)

Slide 36: Review of medium-term business targets

Slide 37: Review of medium-term business targets: Target levels for core domains

Slide 38: New Medium-Term Business Plan

Slide 39: Business environment: Megatrends

Slide 40: Situational awareness: Changing society "with S"

Slide 41: Situational awareness: Changing technology "beyond Tech"

Slide 42: Situational awareness: Changing business needs "beyond ads"

Slide 43: Our Global Purpose and Our Goal

Slide 44: Formulation/internalization of our Global Purpose

Slide 45: Our Global Purpose (our raison-d'être)

Slide 46: Our goal

Slide 47: Six Business Domains

Slide 48: Six business domains of our creativity platform

Slide 49: Business structure reform

Slide 50: 3-year reform of business structure to enhance profitability and create growth options

Slide 51: (1) Restructuring of marketing business

Slide 52: (1) Restructuring of marketing business: Digital marketing

Slide 53: (1) Restructuring of marketing business: Commerce business

Slide 54: (1) Restructuring of marketing business: Integrated marketing platform

Slide 55: (2-1) Creation of new growth options: Consulting business

Slide 56: (2-2) Creation of new growth options: Technology business

Slide 57: Use of AI

Slide 58: (2-3) Creation of new growth options: Content business

Slide 59: (2-4) Creation of new growth options: Incubation business

Slide 60: (3) Remodeling of global business

Slide 61: Sustainable Management

Slide 62: Sustainable management

Slide 63: Actions to ensure compliance

Slide 64: Medium-Term Business Targets

Slide 65: Medium-term business targets

Slide 66: Indicators to be monitored

Slide 67: Future outlook

Slide 68: Extension of relationship value created by the Hakuhodo DY Group

Slide 69: Ⓒ HAKUHODO DY Holdings Inc, All Rights Reserved