Kyushu Railway Company · TSE:9142

Kyushu Railway — FY2017 Earnings Presentation

40 slides from Kyushu Railway's earnings presentation, May 12, 2017

  1. Slide 1: FY2017/3 Annual Investors Meeting

    FY2017/3 Annual Investors Meeting May 12, 2017 Kyushu Railway Company 11

  2. Slide 2: Contents

    Contents Ⅰ Financial results for FY2017/3 3 Ⅱ Forecasts for FY2018/3 14 Ⅲ Progress of the Medium-Term Business Plan 20 Ⅳ Individual business initiatives 25 Appendix 36 2

  3. Slide 3: Financial results for FY2017/3

    Ⅰ Financial results for FY2017/3 3

  4. Slide 4: Consolidated Financial highlights for FY2017/3

    Consolidated Financial highlights for FY2017/3 【Year on Year】 • Despite a decrease in revenues from railway passenger traffic resulting from the impact of the 2016 Kumamoto earthquakes, operating revenues increased due to higher revenues from condominium sales and from drugs stores and convenience s

  5. Slide 5: Consolidated Income Statements

    Consolidated Income Statements （Billions of yen） YoY FY2016/3 FY2017/3 Increase/ % Major factors (decrease) A B B-A B/A Increase in revenues in Retail and Restaurant ＋4.2 Operating revenues 377.9 382.9 4.9 101.3% Higher condominium sales +2.3 Depreciation cost (JR Kyushu) (22.3) Operating expenses 3

  6. Slide 6: Segment Information (Summary)

    Segment Information (Summary) (Billons of yen) YoY FY2016/3 FY2017/3 Increase / % (decrease) A B B-A B/A Operating revenues 377.9 382.9 4.9 101.3% Transportation 180.9 176.4 (4.5) 97.5% Construction 88.4 79.3 (9.0) 89.7% Real Estate 62.0 67.4 5.4 108.8% (Real Estate Lease) 43.2 46.3 3.1 107.2% Retai

  7. Slide 7: Segment Information ①

    Segment Information ① ◆ Transportation Segment (Billions of yen） YoY FY2016/3 FY2017/3 Increase/ % (decrease) A B B-A B/A Operating revenues 180.9 176.4 (4.5) 97.5% Operating income (10.5) 25.7 36.2 － EBITDA 27.0 28.5 1.5 105.7% ◆ Construction Segment (Billions of yen） YoY FY2016/3 FY2017/3 Increase

  8. Slide 8: Segment Information ②

    Segment Information ② ◆ Real Estate Segment (Billions of yen） YoY FY2016/3 FY2017/3 Increase/ % (decrease) A B B-A B/A Operating revenues 62.0 67.4 5.4 108.8% Operating income 20.4 22.6 2.2 110.9% EBITDA 28.4 31.1 2.7 109.6% (Reprint) Real Estate Lease (Billions of yen） YoY FY2016/3 FY2017/3 Increas

  9. Slide 9: Segment Information ③

    Segment Information ③ ◆ Retail and Restaurant Segment (Billions of yen） YoY FY2016/3 FY2017/3 Increase/ % (decrease) A B B-A B/A Operating revenues 96.2 100.4 4.2 104.4% Operating income 3.4 3.4 0.0 102.2% EBITDA 4.9 5.1 0.2 105.5% ◆ Other Segments (Billions of yen） YoY FY2016/3 FY2017/3 Increase/ %

  10. Slide 10: Financial Position and Status of Cash Flows (consolidated)

    Financial Position and Status of Cash Flows (consolidated) （Billions of yen） As of March As of March Increase/ Financial Position 31,2016 31,2017 (decrease) A B B-A Assets 646.6 676.6 29.9 Current assets 165.8 198.6 32.7 Non-current assets 480.8 478.0 (2.7) Liabilities 340.9 328.2 (12.7) Current ass

  11. Slide 11: Nonconsolidated Income Statements

    Nonconsolidated Income Statements （Billions of yen） YoY FY2016/3 FY2017/3 Increase/ % Major factors (decrease) A B B-A B/A Operating revenues 211.1 212.2 1.1 100.5% Higher condominium sales +2.3 (Revenue from Impact of the 2016 Kumamoto earthquakes, etc. (3.6) railwaypassenger travel) 150.1 146.4 (3

  12. Slide 12: Nonconsolidated Income Statements【Reprint】

    Nonconsolidated Income Statements【Reprint】 （Billions of yen） YoY FY2016/3 FY2017/3 Increase/ % (decrease) A B B-A B/A Operating revenues 169.1 164.9 (4.2) 97.5% business Railway Operating expenses 180.7 139.8 (40.8) 77.4% Operating income (11.5) 25.0 36.6 － Operating revenues 41.9 47.2 5.3 112.7% bu

  13. Slide 13: Income from Railway Passenger Traffic and Performance of Transportation Volume

    Income from Railway Passenger Traffic and Performance of Transportation Volume （Billions of yen） YoY Transportation Revenues FY2016/3 FY2017/3 Increase/ Major factors % (decrease A B B-A B/A Total 150.1 146.4 (3.6) 97.6% Decrease due to impact of the 2016 Kumamoto Shinkansen 51.6 50.1 (1.5) 97.0% ea

  14. Slide 14: Forecasts for FY2018/3

    Ⅱ Forecasts for FY2018/3 14

  15. Slide 15: Consolidated Financial highlights for FY2018/3

    Consolidated Financial highlights for FY2018/3 【Year on Year】 • Operating revenues are forecast to increase due to a rise in revenues from railway passenger traffic as the impacts of the 2016 Kumamoto earthquakes dissipate. • Despite higher taxes and depreciation costs in the railway business, net i

  16. Slide 16: Consolidated Financial Forecasts

    Consolidated Financial Forecasts （Billions of yen） YoY Results Forecasts Increase/ FY2017/3 FY2018/3 % (decrease) A B B-A B/A Operating revenues 382.9 396.3 13.3 103.5% Operating income 58.7 56.2 (2.5) 95.7% Ordinary income 60.5 57.6 (2.9) 95.1% Net income attributable to owners of the parent 44.7 4

  17. Slide 17: Consolidated Financial Forecasts【By segment】

    Consolidated Financial Forecasts 【By segment】 （Billions of yen） YoY Results Forecasts Increase/ FY2017/3 FY2018/3 % (decrease) A B B-A B/A Operating revenues 382.9 396.3 13.3 103.5% Transportation 176.4 181.1 4.6 102.7% Construction 79.3 83.8 4.4 105.6% Real Estate 67.4 66.2 (1.2) 98.1% Retail and R

  18. Slide 18: Nonconsolidated Financial Forecasts

    Nonconsolidated Financial Forecasts （Billions of yen） YoY Results Forecasts Increase/ FY2017/3 FY2018/3 % (decrease) A B B-A B/A Operating revenues 212.2 215.5 3.2 101.5% (Revenue from railway 146.4 149.5 3.0 102.1% Operating expenses 168.7 173.0 4.2 102.5% Personnel costs 53.1 51.3 (1.8) 96.6% Nonp

  19. Slide 19: Nonconsolidated Financial Forecasts【Reprint】

    Nonconsolidated Financial Forecasts 【Reprint】 （Billions of yen） YoY Results Forecasts Increase/ FY2017/3 FY2018/3 % (decrease) A B B-A B/A Operating revenues 164.9 169.0 4.0 102.4% business Railway Operating expenses 139.8 144.6 4.7 103.4% Operating income 25.0 24.4 (0.6) 97.3% Operating revenues 47

  20. Slide 20: Progress of the Medium-Term Business Plan

    Ⅲ Progress of the Medium-Term Business Plan 20

  21. Slide 21: Position of the Medium-Term Business Plan 2016–2018

    Position of the Medium-Term Business Plan 2016–2018 Aiming to be a kind and robust corporate group involved in comprehensive city-building  Actively promoting city-building through strong railway construction and diverse businesses and further solidifying business foundations in Kyushu  Steadily m

  22. Slide 22: Target Management Indicators

    Target Management Indicators ◆ Target Indicators (FY 2019/3) ＜ Operating revenues ＞ ＜EBITDA＞ ¥ Billions ¥Billions 400.0 78.0 4,000 396.3 800 80 74.8 400 382.9 377.9 73.2 69.1 3.3 2.7 3.3 5.1 5.4 4.9 3,000 300 600 60 Over 31.2 60.3％ 61.7％ 62.3％ 31.1 62% 28.4 2,000 200 400 40 5.1 6.8 6.7 1,000 100 200

  23. Slide 23: Target Management Indicators: Capital Investment Amounts

    Target Management Indicators ＜Capital Investment Amounts[Reference]＞ ¥ Billions 900 90 ¥190 billion 69.4 68.7 (FY 2017/3–2019/3 totals) 600 60 35.9 36.0 (Main details)  Investments to improve safety in the 300 30 railway business ¥65 billion 22.9 18.1 0  Growth investments ¥80 billion FY17.3 17.3期

  24. Slide 24: Returns to Shareholders

    Returns to Shareholders ◆ Dividend Policy Until FY 2019/3, we will aim for stable dividends per share with a consolidated payout ratio at a level of approximately 30% as the standard guideline. Note: Taking into account the fact that the period between the Company’s public listing and the year- end

  25. Slide 25: Individual business initiatives

    Ⅳ Individual business initiatives 25

  26. Slide 26: Creating Synergies Between Businesses through City-Building

    Creating Synergies Between Businesses through City-Building  Development of versatile businesses that leverages the security and trust and customer attraction capabilities cultivated in the railway business  Contribution of city-building to increased ridership and short-distance transportation in

  27. Slide 27: Strong Railway Business as the Foundation for All Business

    Strong Railway Business as the Foundation for All Business  Stable revenues from railway passenger traffic following establishment of position as an important transportation method connecting all of Kyushu  Strong JR Kyushu brand known for safety and reliability in Kyushu to be cultivated by opera

  28. Slide 28: Initiatives in the Railway Business ①: Bolstering Profitability

    Initiatives in the Railway Business ①: Bolstering Profitability  Further increase train usage and bolster profitability by encouraging the use of the “JR Kyushu Internet Reservation Service” and actively promoting policies focused on inbound demand ＜Number of Reservations through the ＜Internet Stra

  29. Slide 29: Initiatives in the Railway Business ②: Pursuing Efficient Business Operations

    Initiatives in the Railway Business ②: Pursuing Efficient Business Operations  Pursue technological innovation and efficient business operations to respond flexibly to rapidly changing operating environment and diversifying customer needs ＜Streamlining of Business Operation System＞  Expand Smart S

  30. Slide 30: Real Estate Segment Driving Growth and Evolution

    Real Estate Segment Driving Growth and Evolution  Important segment comprising real estate lease and sales operations and accounting for approximately 40% of consolidated EBITDA  Develops operations focused on station buildings and other commercial facilities, office buildings, and condominiums in

  31. Slide 31: Initiatives in the Station Building Business

    Initiatives in the Station Building Business  Carry out attractive and lively city-building centered on train stations and rooted in local communities  Maximize synergistic effects with the railway business with the aim of improving the value of our stations and station buildings ＜Performance of T

  32. Slide 32: Initiatives in the Apartment Business

    Initiatives in the Apartment Business ＜Rental Apartments＞ ＜Number of Units at Rental Apartments (Aggregate)＞  Secure stable profits by promoting new Units 4,000 business development Start of move-in Number Name Location availability of units 3,000 RJR Oita EkimaeⅡ(Provisional) Oita City FY2018.3 (s

  33. Slide 33: Ropponmatsu Development Project

    Ropponmatsu Development Project ◆ Overview of Ropponmatsu Development Project 【Artist rendition of building exteriors】*As seen from National Route 202 ＜SJR Ropponmatsu＞ ＜Ropponmatsu 421＞ ＜MJR Ropponmatsu＞ ・Location : Chuo Ward, Fukuoka City 1F–13F: Fee-based residential long- 3F–6F: Fukuoka City Sci

  34. Slide 34: Retail, Restaurant, and Hotel Businesses Pursuing Further Growth

    Retail, Restaurant, and Hotel Businesses Pursuing Further Growth ＜Retail and Restaurants＞ ＜Number of Stores in Retail and Restaurant Group＞  Aim to be industry’s leading company by accelerating Stores urban development projects centered on stations 750 700 650 750 600 693 665 550 584 500 0 FY12.3 1

  35. Slide 35: Pipeline Going Forward

    Pipeline Going Forward  Continue to strengthen profitability through large-scale developments  Without being limited to areas surrounding train stations, actively pursue development in urban areas as a “city-building” company  Promote expansion outside of the Kyushu area, including Tokyo and Okin

  36. Slide 36: Appendix

    Appendix 36

  37. Slide 37: EBITDA by Segment

    EBITDA by Segment ＜Transportation＞ ＜Real Estate ＞ ¥ Billions EBITDA EBITDAマージン margin ¥ Billions EBITDA margin EBITDAマージン 320 31.1 18% 320 31.1 31.2 50% 32 32 28.5 28.4 25.8 27.0 25.1 24.3 48% 240 17.2% 240 22.7 24 24 16% 47.1% 46% 16.2% 46.9% 160 160 46.2% 16 16 45.7% 45.8% 44% 14% 80 8 80 8 14.1%

  38. Slide 38: Major Properties

    Major Properties *As of March 2017 Timings Floor space / Units Tenant sales Asset type Name Location Major tenants (Opening / Acquisition) / Rooms (FY2017/3) Station Kokura Kita Ward, Kitta UNITED ARROWS, Francfranc, AMU PLAZA Kokura Mar. 1998 Approx. 48,500㎡ \12.0 billion building Kyusyu City etc.

  39. Slide 39: Overview of Major Development Pipelines

    Overview of Major Development Pipelines *As of March 2017 Name Location Timings Floor space / Lot area / Units / Rooms Additional comments (uses, etc.) Ropponmatsu Development － － － － Commercial facilities (Ropponmatsu Marche, TSUTAYA BOOKS, etc.）; Ropponmatsu 421, etc. Chuo Ward, Fukuoka Lot area:

  40. Slide 40: Forward-Looking Statements

    Forward-Looking Statements These materials contain forward-looking statements concerning business forecasts, targets, etc. of the JR Kyushu Group. The Company decided on these forward-looking statements based on the available information, as well as Company estimates and assumptions, at the time the

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