Kyushu Railway Company · TSE:9142
Kyushu Railway — H1 FY22.3 Earnings Presentation
44 slides from Kyushu Railway's earnings presentation, Nov 4, 2021
Slide 1: FY22.3 Semi-Annual Investors Meeting
FY22.3 Semi-Annual Investors Meeting November 4, 2021
Slide 2: Contents
Contents Ⅰ Financial Results for the First Six-Months of FY22.3 4 Ⅱ Full-Year Performance Forecasts and Dividend Forecasts for 8 FY22.3 Ⅲ Understanding of the Current Business Environment and 19 Strategic Direction APPENDIX 34 2
Slide 3: Highlights
Highlights Financial The COVID-19 infection had an influence, but consolidated operating revenues, results for the first six operating income, ordinary income, and net income attributable to owners of the months of parent all increased due to a gradual recovery in demand, etc. FY22.3 Accompanyin
Slide 4: Financial Results for the First Six-Months of FY22.3
Ⅰ Financial Results for the First Six-Months of FY22.3 4
Slide 5: Consolidated Financial Highlights for the Six-Month Period Ended September 30, 2021
Consolidated Financial Highlights for the Six-Month Period Ended September 30, 2021 （\bil） Operating revenue 6 months ended 6 months ended September 30,2020 September 30,2021 YoY Despite the continued influence of the COVID-19 infection and the change of JR Kyushu Drug Operating revenue 124.5 141.6
Slide 6: Results for the First Six Months of FY22.3 (by segment)
Results for the First Six Months of FY22.3 (by segment) （\bil） 6 months ended 6 months ended September September YoY Major factors 30,2020 30,2021 Operating revenue 124.5 141.6 17.0 113.7% Transportation 41.3 48.9 7.6 118.4% Railway Business (non-consolidated) 38.9 46.2 7.3 118.8% Increase due to mo
Slide 7: Results for the First Six Months of FY22.3 (non-consolidated)
Results for the First Six Months of FY22.3 (non-consolidated) (\bil) 6 months ended 6 months ended September September YoY Major Factors 30,2020 30,2021 Operating revenue 56.2 74.7 18.4 132.8% Railway transportation Increase due to moderate recovery in demand revenues 32.6 39.8 7.2 122.1% Shinkansen
Slide 8: Full-Year Performance Forecasts and Dividend Forecasts for FY22.3
Ⅱ Full-Year Performance Forecasts and Dividend Forecasts for FY22.3 8
Slide 9: Revision of Revenues Expectations in Each Business
Performance Forecasts for FY22.3: Revision of Revenues Expectations in Each Business With consideration for the influence of the lengthening of the customer restraint in going out / moving around due to the extension of the period of the state of emergency, we revised the assumptions for revenues ex
Slide 10: Major Factors for Operating Revenue and Operating Income
Performance Forecasts for FY22.3: Major Factors for Operating Revenue and Operating Income With consideration for first-half performance and current circumstances, we made downward revisions from the previous performance forecasts, centered on the railway business. Despite cost reductions, centered
Slide 11: Consolidated Financial Highlights for FY22.3
Consolidated Financial Highlights for FY22.3 Operating revenue (\bil) Due to such factors as the FY22.3 Difference decline in transportation Results Previous Current (Reference) YoY results from previous revenues resulting from the FY21.3 forecast forecast First-half (August 3) (November 2) Second-h
Slide 12: Consolidated Financial Forecasts for FY22.3 (by segment)
Consolidated Financial Forecasts for FY22.3(by segment) (\bil) FY22.3 Difference Results Previous Current YoY Major factors from previous FY21.3 forecast forecast forecast (August 3) (November 2) Operating revenue 293.9 344.2 315.8 21.8 107.4% (28.4) Transportation 95.2 127.5 109.9 14.6 115.3% Incre
Slide 13: Non-consolidated Financial Forecasts for FY22.3
Non-consolidated Financial Forecasts for FY22.3 (\bil) Forecasts Difference Results FY22.3 from Previous Current YoY Major factors FY21.3 previous forecast forecast (August 3) (November 2) forecast Operating revenue 144.7 177.2 161.5 16.7 111.6% (15.7) Railway transportation 76.3 106.0 91.0 14.6 119
Slide 14: FY22.3 dividend forecasts
FY22.3 dividend forecasts Shareholder return policy The Company views the return of profits to shareholders as one of its most important management tasks. Accordingly, the Company believes it is important to provide stable shareholder returns over the long term. (Policy up to FY22.3) ・Aim for a di
Slide 15: (Reference) Transportation Segment
(Reference) Transportation Segment 【Results】 【Forecasts】 （\bil） （\bil） 6 months ended 6 months ended FY22.3 Difference September September YoY Results Previous Current YoY results from previous 30,2020 30,2021 FY21.3 forecast forecast forecast (August 3) (November 2) Operating revenue 41.3 48.9 7.6
Slide 16: (Reference) Real Estate and Hotels Segment (1)
(Reference) Real Estate and Hotels Segment (1) Real estate leasing business 【Results】 （\bil） 【Forecasts】 （\bil） FY22.3 Difference 6 months ended 6 months ended Results Previous Current from September September YoY YoY results FY21.3 forecast forecast previous 30,2020 30,2021 forecast (August 3) (Nov
Slide 17: (Reference) Real Estate and Hotels Segment (2)
(Reference) Real Estate and Hotels Segment (2) Real Estate sales business 【Results】 （\bil） 【Forecasts】 （\bil） FY22.3 Difference 6 months ended 6 months ended Results Previous Current from September September YoY YoY results FY21.3 forecast forecast previous 30,2020 30,2021 forecast (August 3) (Novem
Slide 18: (Reference) Retail and Restaurant segment
(Reference) Retail and Restaurant segment 【Results】 （\bil） 【Forecasts】 （\bil） FY22.3 Difference 6 months ended 6 months ended Results Previous Current from September September YoY YoY results FY21.3 forecast forecast previous 30,2020 30,2021 forecast (August 3) (November 2) Operating revenue 29.4 19
Slide 19: Understanding of the Current Business Environment and Strategic Direction
Ⅲ Understanding of the Current Business Environment and Strategic Direction 19
Slide 20: Understanding of the Current Business Environment
Understanding of the Current Business Environment Dramatic change in the Group’s business environment due to COVID-19. In the current period, the Group is advancing initiatives to address its structural issues. Understanding of the current business environment ✔ Progression of the declining and agin
Slide 21: Influence of COVID-19 on Each Business
Influence of COVID-19 on Each Business Quarterly Trend Operating Income Trend Overview Revenues (vs. period before COVID-19) 取扱収入（対コロナ前） Commuter 定期(累計) 定期外 Non-commuter (¥bil) 81.5% 84.5% (cumulative) 82.6% 20.0 200 ・Number of passengers declined accompanying Railway 73.0% 70.3% 79.6% 75.8% 200 20
Slide 22: Business Structure and Strategic Direction
Business Structure and Strategic Direction With consideration for our business structure, we will further advance city- building initiatives, centered on mobility services in Kyushu, while strengthening our business portfolio and advancing reforms of existing businesses in preparation for the post C
Slide 23: New Businesses That Do Not Depend on the Flow of People
❶Strengthening the Business Portfolio: New Businesses That Do Not Depend on the Flow of People We will take on the challenge of making full use of the Group’s strengths and management resources in order to move forward in new business fields that do not depend on the flow of people. Participating in
Slide 24: Utilizing M&A and Specialized Regional Funds
❷Strengthening Business Portfolio: Utilizing M&A and Specialized Regional Funds In addition to conventional M&A, we will implement flexible, agile investment through specialized regional funds. In this way, we will rapidly strengthen the Group’s business portfolio and contribute to the sustained dev
Slide 25: Railway Business Cost Structure Reform
❷Existing Business Structural Reforms: Railway Business Cost Structure Reform Advancing BPR* initiatives to reduce fixed costs by ¥14.0 billion or more during the period of the next Medium-Term Business Plan. ＊Business Process Re-engineering Principal BPR initiatives to increase efficiency Aiming to
Slide 26: Hotel Business Cost Structure Reforms
❷Existing Business Structural Reforms: Hotel Business Cost Structure Reforms Lowering the break-even point by advancing cost-structure reforms, centered on fixed costs Details of major initiatives Results of initiatives Details of improvement* 1. Advancing multi-tasking 1. Fixed-cost reductions -25%
Slide 27: Advancing the Shift to On-Line Sales
❷Existing Business Structural Reforms: Advancing the Shift to On-Line Sales Existing Business Structural Reforms: Advancing the Shift to On-Line Sales Finished reevaluation of tickets for which the shift can be rapidly implemented Moving forward, we will further strengthen yield management in line w
Slide 28: Disclosing profitability by train line and utilization of train lines
Disclosing profitability by train line and holding meetings to consider issues related to the utilization of train lines Disclosing profitability for train lines with an average of less than 2,000 passengers per day Of these, in regard to those lines on which the average number of passengers has dec
Slide 29: Strengthening Mobility Services Through MaaS
Strengthening Mobility Services Through MaaS To invigorate the region, we will work to advance MaaS as new regional infrastructure and to achieve the “creation of mobility demand” and the “building of sustainable public transportation networks.” Strengthening cooperation among Strengthening collabor
Slide 30: City-Building Throughout Kyushu
❸Further Advancing City-Building Around Our Bases: City-Building Throughout Kyushu Favorable progress with pipeline development even in period before COVID-19 This year, we are planning the largest capital investment projects in our history, such as development in the areas surrounding stations (Kum
Slide 31: Initiatives in the Hotel Business
❸Further Advancing City-Building Around Our Bases: Initiatives in the Hotel Business With a focus on the recovery of travel demand in the future, we will advance development to capture domestic leisure demand and inbound demand. Major future development projects Hotel development by overseas New Jap
Slide 32: Cyclical Investment Model Through Private REITs
❸Further Advancing City-Building Around Our Bases: Cyclical Investment Model Through Private REITs Through re-investment via a cyclical investment model utilizing private REITs, we will aim for the sustainable development of Kyushu and for further growth in the real estate business. ❶Property sales
Slide 33: Financial Strategies
Financial Strategies • In FY21.3, with consideration for the rapid worsening of operating cash flow due to the influence of COVID-19, we implemented fund-raising with the highest priority on securing liquidity at hand. Challenging conditions continue this year, but at this point we have secured suff
Slide 34: APPENDIX
APPENDIX 34
Slide 35: Balance Sheet and Cash Flow Statement
Balance Sheet and Cash Flow Statement Balance Sheet （\bil） 6 months ended Results September YoY Major factors FY21.3 30,2021 Total Assets 891.3 861.2 (30.1) Cash and time deposits 22.9 32.8 9.9 Securities 42.0 8.0 (34.0) Decrease in negotiable certificates of deposit Property, plant and equipment 53
Slide 36: Railway business (transportation data)
Railway business (transportation data) Railway Transportation Revenues Passenger-Kilometers （Millions of passenger-kilometer) 6 months ended 6 months ended YoY September 30,2020 September 30,2021 Total 2,626 2,952 325 112.4% Commuter pass 1,792 1,900 107 106.0% Non-commuter pass 834 1,052 217 126.1%
Slide 37: EBITDA by Segment
EBITDA by Segment Transportation Real Estate and Hotels EBITDA EBITDAマージン EBITDA margin (¥bil) （億円） EBITDA EBITDAマージン EBITDA margin (¥bil) （億円） 40 400 35.6 356 60% 400 40 343 34.3 34.4 344 343 34.3 30% 32.0 33.1 331 285 28.5 295 29.5 31.1 311 320 30.5 305 30 300 30 300 50% 20% 20 200 22.2 222 100 10
Slide 38: Trends in the Railway Business
Trends in the Railway Business Railway transportation revenues (Shinkansen), passenger Internet train reservation services: (¥bil) （億円） (¥bil) load factor on the Kyushu Shinkansen (Hakata－Kumamoto) （10,000 reservations） Number of reservations, sales 800 80 Shinkansen Passenger load factor 55% 600 40
Slide 39: Trends in the Real Estate and Hotel Businesses
Trends in the Real Estate and Hotel Businesses Station building tenant sales Hotel occupancy rates and average unit prices （¥bil） （¥） （円） Occupancy 250 Other main station buildings JR Hakata City (left) ADR（左軸） 稼働率（右軸） Rates (right) 16,000 100% 13,877 203.0 202.6 13,103 195.8 200 187.7 11,987 12,179
Slide 40: Natural Disasters
Natural Disasters (influence of heavy rains in August 2021, heavy rains from typhoon No. 14) Damage from heavy rains in August Damage from typhoon No. 14 2021 (2021) Time of August 2021 Time of occurrence September 2021 occurrence Damage on multiple lines, including the Kyudai Main Line and the Sase
Slide 41: Pursuit of New Mobility Service with Bus Rapid Transit
Pursuit of New Mobility Service with Bus Rapid Transit Restoring the Hitahikosan Line through the construction of a Bus Rapid Transit (BRT) system Finalized the construction of a BRT system to restore the Soeda-Yoake segment, of which operation has been suspended since July 2017 In addition to t
Slide 42: Railway Business — Outline of Fares/Charges and Measures to Increase Revenues
Railway Business — Outline of Fares/Charges and Measures to Increase Revenues ●Fares/charges (¥bil) Operating income in the railway business 40 →Compensation for the use of facilities other than transportation and 28.2 26.7 Charges 25.0 for the provision of additional services 20.0 20 Fares →Compens
Slide 43: Overview of Major Development Pipelines
Overview of Major Development Pipelines Floor space/Lot area Name Location Schedule Notes (Uses, etc.) Units/Rooms Shimoori Onojo City, Fukukoka Winter 2019: Start of construction Integrated development incorporating commercial Lot area: Approx. 13,000㎡ development Prefecture Spring 2022: Planned op
Slide 44: 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
Kyushu Railway Company — H1 FY22.3 Earnings Presentation on 6ix