Dentsu Soken Inc. · TSE:4812
Dentsu Soken — FY2023 Earnings Presentation
39 slides from Dentsu Soken's earnings presentation, Feb 14, 2024
Slide 1: Presentation Material of Financial Results for FY2023
Presentation Material of Financial Results for FY2023 (ended December 31, 2023) DENTSU SOKEN INC. February 14, 2024
Slide 2: Index
INDEX 01 Outline of financial results for FY2023 02 Forecasts for FY2024 03 Progress of Medium-term Management Plan 2
Slide 3: Index
INDEX 01 Outline of financial results for FY2023 02 Forecasts for FY2024 03 Progress of Medium-term Management Plan 3
Slide 4: Financial Highlights for FY2023
Financial Highlights for FY2023 Net sales and operating profit reached record highs for the sixth consecutive fiscal year. Strengthen shareholder returns based on performance trends and financial conditions. Net sales Operating profit +10.5％ +13.1％ Expansion in all segments Mainly the effect of
Slide 5: Consolidated Results
Consolidated Results (Unit: Millions of yen) vs. Forecasts YoY FY2023 (announced on July 31, 2023) (cumulative) FY2022 Variance % change Forecasts Variance % change (cumulative) Net sales 142,608 129,054 +13,554 +10.5 140,000 +2,608 +1.9 Gross profit 51,780 46,786 +4,994 +10.7 52,352 -572 -1.1 Gross
Slide 6: Factors for Increase/Decrease in Operating Profit (YoY)
Factors for Increase/Decrease in Operating Profit (YoY) Impact of increase in (Unit: 100 million of yen) gross profit margin +0.6 YoY Increase in SG&A +24.3 expenses -25.5 Effect of Increase in sales +49.2 Operating profit Operating Gross profit margin increased Increase mainly in personnel, 210.2 p
Slide 7: Factors for Increase/Decrease in Operating Profit (vs. Forecast)
Factors for Increase/Decrease in Operating Profit (vs. Forecast) (Unit: 100 million of yen) vs. Forecast +0.2 Effect of Increase Impact of decline in sales +9.7 in gross profit margin -15.5 Decline in SG&A expenses +6.0 Operating Operating profit profit 210.2 210.0 Decrease in personnel Gross profit
Slide 8: Net Sales and Operating Profit by Reportable Segment
Net Sales and Operating Profit by Reportable Segment (Unit: Millions of yen) vs. Forecasts FY2023 YoY (announced on July 31, 2023) Overview (cumulative) Variance % change Variance % change Net sales 30,598 +2,473 +8.8 Net sales and operating profit increased due +1,098 +3.7 to the expansion of the s
Slide 9: Ref.) Consolidated Results for the 4Q of FY2023
Ref.) Consolidated Results for the 4Q (Oct.-Dec.) of FY2023 Consolidated Results (Unit: Millions of yen) Reportable Segment (Unit: Millions of yen) 4Q of FY2023 YoY 4Q of FY2023 YoY (Oct.-Dec.) 4Q of FY2023 Variance % change (Oct.-Dec.) Variance % change Net sales 8,015 +601 +8.1 Net sales 37,340 35
Slide 10: Net Sales by Service Category and Dentsu Group
Net Sales by Service Category and Dentsu Group (Unit: Millions of yen) vs. Initial forecasts FY2023 YoY Service category (announced on July 31, 2023) (cumulative) Variance % change Variance % change Consulting Services 8,611 +1,193 +16.1 +31 +0.4 Custom System Development 30,913 -2,194 -6.6 -2,093 -
Slide 11: Net Sales by Industry
Net Sales by Industry (Unit: Millions of yen) FY2023 (cumulative) YoY Industry Net sales Composition ratio (%) Variance % change Banks 22,035 15.5 +2,433 +12.4 Other financial institutions 7,301 5.1 -894 -10.9 Financial 29,337 20.6 +1,540 +5.5 Transportation equipment 22,566 15.8 +4,110 +22.3 Electr
Slide 12: Consolidated Balance Sheets
Consolidated Balance Sheets (Unit: Millions of yen) As of As of Variance Main factors for increase/decrease Dec. 31, 2023 Dec. 31, 2022 Increase in trade receivables and contract assets (+5,060) Total current assets 114,813 103,099 +11,714 Increase in deposits paid(+3,560) Increase in advance paymen
Slide 13: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows (Unit: Millions of yen) YoY FY2023 Main factors FY2022 (cumulative) Variance (cumulative) Profit before income taxes (20,951) Depreciation (3,200) Increase in contract liabilities (1,416) Cash flows from operating activities 13,046 Income taxes paid (-5,693) 11,
Slide 14: Orders Received and Order Backlog
Orders Received and Order Backlog Orders received for the year were at a record, despite a reactionary decline in the 4Q due to the receipt of several large orders in the 4Q of the previous fiscal year. (Unit: Millions of yen) Orders received Order backlog 4Q of FY2023 YoY FY2023 YoY FY2023 YoY (O
Slide 15: Transition of Orders Received and Order Backlog
Transition of Orders Received and Order Backlog Orders in the second half declined YoY due to a reactionary drop but were up 21% from the second half of the year two years ago, maintaining the pace of growth. (Unit: 100 million of yen) 803 800 Net sales Orders received Order backlog 720 684 638 64
Slide 16: Year-End Dividend for FY2023
Year-End Dividend for FY2023 Strengthen shareholder returns in light of performance trends and current financial and investment conditions. Increased year-end dividend from 47 yen to 56 yen per share and dividend payout ratio from 40.3% to 44.4%. Interim Year-end Dividend payout Total dividend d
Slide 17: Index
INDEX 01 Outline of financial results for FY2023 02 Forecasts for FY2024 03 Progress of Medium-term Management Plan Note: Forecasts of business results in this document are based on judgments and assumptions made in light of industry trends, customer conditions, and other information currently avail
Slide 18: Earnings Forecasts for FY2024
Earnings Forecasts for FY2024 Net sales are targeted at 153 billion yen, exceeding the initial target of the medium-term management plan. Operating profit is targeted at 22.5 billion yen, as per the revised target, after taking into account an increase in salary levels. Operating margin is exp
Slide 19: Factors for Increase/Decrease in Operating Profit for FY2024
Factors for Increase/Decrease in Operating Profit for FY2024 (Unit: 100 million of yen) Impact of increase in gross profit margin +4.5 Increase in SG&A YoY Effect of Increase expenses -27.4 +14.8 in sales +37.7 Operating Operating Gross profit margin target 36.6% Personnel, recruiting, and education
Slide 20: Net Sales Forecasts by Reportable Segment/Service Category for FY2024
Net Sales Forecasts by Reportable Segment/Service Category for FY2024 Net Sales by Reportable Segment Net Sales by Service Category (Unit: Millions of yen) (Unit: Millions of yen) YoY YoY FY2024 FY2024 (cumulative) FY2023 (cumulative) FY2023 Variance % change Variance % change (cumulative) (cumulati
Slide 21: Earnings Forecasts for the First Half of FY2024
Earnings Forecasts for the First Half of FY2024 (Unit: Millions of yen) First half of YoY Ratio to full year FY2024 First half of Variance % change (%) (Jan. - Jun.) FY2023 Net sales 74,000 69,849 +4,151 +5.9 48.4 Operating profit 11,000 10,652 +348 +3.3 48.9 Operating margin (%) 14.9 15.3 -0.4p - -
Slide 22: Net Sales Forecasts by Segment/Service Category for the First Half of FY2024
Net Sales Forecasts by Reportable Segment/Service Category for the First Half of FY2024 Net Sales by Reportable Segment Net Sales by Service Category (Unit: Millions of yen) (Unit: Millions of yen) YoY YoY First half of First half of FY2024 First half FY2024 First half (Jan. - Jun.) Variance % chang
Slide 23: Dividend Forecast for FY2023
Dividend Forecast for FY2023 Plans to pay an annual dividend of ¥108 per share and a payout ratio of 44.8% in 2024, aiming to increase the dividend for the 12th consecutive year. Annual dividend per share (yen) Consolidated payout ratio 44.4% 44.8% 39.6% 40.3% 40.7% 40.8% 40.3% 39.1% 38.2% 34.6% 3
Slide 24: Index
INDEX 01 Outline of financial results for FY2023 02 Forecasts for FY2024 03 Progress of Medium-term Management Plan 24
Slide 25: Medium-term Management Plan (2022-2024)
Medium-term Management Plan（2022-2024） Medium-term Management Plan (2022–2024) —Strategic Framework— DENTSU SOKEN X(Cross) Innovation 2024 While accelerating growth through deepening X Innovation, we will build a new foundation for the DENTSU SOKEN Group focused on our long-term goal for 2030 Priori
Slide 26: Progress in Medium-term Management Plan 1. Overview
Progress in Medium-term Management Plan 1. Overview Both net sales and operating profit are expected to exceed the plan, maintaining a double-digit growth pace. Operating margin was slightly below the revised target, but this was mainly due to investment in human resources. ROE is expected to
Slide 27: Progress in Medium-term Management Plan 2. Reportable Segment
Progress in Medium-term Management Plan 2. Reportable Segment Financial Solutions, Business Solutions, and Manufacturing Solutions are expected to exceed the medium- term target, while Communication IT is expected to fall short of the mid-term target mainly due to the peak out for the Dentsu Group
Slide 28: Progress in Medium-term Management Plan Investments
Progress in Medium-term Management Plan Investments Human resources Technology Financing and M&A Further strengthen recruitment Toward the Next Medium-term No M&A results at this time, only through rebranding and personnel Management Plan, strengthen minority investments. system reform measures, etc
Slide 29: Progress on Priority Measures
Progress on Priority Measures A Business Domain Expansion (Hiraku ) C Earnings Model Innovation (Kasegu ) • Strengthen approach to large clients • Continued investment in POSITIVE, Ci*X, and iQUAVIS enhancements • Expand business in the area of customer contact reform • Strengthen partner network •
Slide 30: Measures for FY2024 1. Reform management structure
Measures for FY2024 1. Reform management structure Announced a renewal of the management team to accelerate a generational change in management and the implementation of the Group's growth strategy. Change of Representative Director (scheduled for March 22, 2024) Date of Birth President and Repr
Slide 31: Measures for FY2024 2. Reform organizational structure
Measures for FY2024 2. Reform organizational structure Building an organization to realize our business concept of "Contributing to Progress in Society." - Established Consulting Division and Innovation for Society Division (think tank function). - Established Project Creation Office to control pr
Slide 32: Measures for FY2024 3. Strengthen investment in human resources
Measures for FY2024 3. Strengthen investment in human resources Revision of non-consolidated personnel system from January 2024 to strengthen investment in employees, the most important management resources. Number of non-consolidated hires and average annual salary Average (Unit: people) （単位：名） 1
Slide 33: Measures for FY2024 4. Formulate next medium-term management plan
Measures for FY2024 4. Formulate next medium-term management plan Consideration of major organizational restructuring to build a structure to realize Vision 2030 - Further focus on priority customers, promotion of cross-selling across segments, etc. Targeting net sales of over 200 billion yen -
Slide 34: Appendix Commitment to Sustainability No.1
Appendix Commitment to Sustainability No.1 ISID Integrated Report 2023, our first integrated report, issued on November 30, 2023. https://pdf.irpocket.com/C4812/cXlT/jfO8/TrTd.pdf © DENTSU SOKEN INC. 34
Slide 35: Appendix Commitment to Sustainability No.2
Appendix Commitment to Sustainability No.2 Evaluation Index MSCI Japan Empowering Morningstar Japan ex-REIT S&P/JPX Carbon Women (WIN) Select Index Gender Diversity Tilt Index Efficient Index Certification 「Great Place To Work」 「Eru-boshi」 「Platinum Kurumin」 「Tomonin」 *For more information on the
Slide 36: Appendix Consolidated Financial Results
Appendix Consolidated Financial Results (Unit: Millions of yen) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Net sales 73,970 78,267 56,771 79,783 83,423 91,024 100,679 108,679 112,085 129,054 142,608 YoY 101.7% 105.8% 72.5% 140.5% 104.6% 109.1% 110.6% 107.9% 103.1% 1
Slide 37: Appendix Net Sales and Operating Profit by Reportable Segment
Appendix Net Sales and Operating Profit by Reportable Segment (Unit: Millions of yen) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Net sales 22,262 24,086 17,851 22,037 21,413 23,242 24,622 23,888 25,176 28,125 30,598 Financial Solutions Operating profit 1,813 1,447 1
Slide 38: Appendix Net Sales by Service Category
Appendix Net Sales by Service Category (Unit: Millions of yen) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Net sales 3,136 3,860 3,350 5,426 5,515 6,818 6,819 5,975 7,200 7,418 8,611 Consulting Services Composition 4.2% 4.9% 5.9% 6.8% 6.6% 7.5% 6.8% 5.5% 6.4% 5.8% 6.
Slide 39: Bi RST
Bi RST DENTSU SOKEN INC.