H2O Retailing Corporation · TSE:8242
H2O Retailing — Q2 FY2023 Earnings Presentation
24 slides from H2O Retailing's earnings presentation, November 2022
Slide 1: 2Q of FY2023 Presentation Materials
2Q of FY2023 Presentation Materials H2O RETAILING CORPORATION
Slide 2: Topics
Topics Ⅰ. Consolidated Financial Results Ⅱ. Forecast of FY2023 Ⅲ. Supermarket business as a second core Ⅳ. Capital efficiency and shareholder returns Copyright © H2O Retailing Corp. All Rights Reserved. 2
Slide 3: Ⅰ. Consolidated Financial Results
Ⅰ. Consolidated Financial Results １．Consolidated Financial Results ２．Results by segment ３．Department store business ４．Supermarket business ５. Extraordinary income and losses ６. Capital Investment Copyright © H2O Retailing Corp. All Rights Reserved. 3
Slide 4: Ⅰ－１. Consolidated Financial Results
Ⅰ－１. Consolidated Financial Results ▶ Sales increased especially in department store business despite the impact of the seventh wave of COVID-19 infection spread ▶ Operating profit returned to the black due to sales recovery, and exceeded the forecast due to controlled SG&A expenses. ▶ Net income ex
Slide 5: Ⅰ－２. Results by segment
Ⅰ－２. Results by segment ▶ Department store : Profit recovery due to significant sales growth, exceeding forecasts ▶ Supermarket : Despite sales increase due to newly consolidated Kansai Supermarket, operating profit decreased due to the reaction to the previous year’s eating at home demand, higher p
Slide 6: Ⅰ－２. Results by segment
Ⅰ－２. Results by segment Factors of Increase/Decrease in Operating Profit (YoY, versus forecast) (billions of yen) YoY 1H of FY2023 Versus forecast Forecast 1H of FY2022 6.3 2.1 (5.1) 1.1 (1.0) Consolidation Consolidation adjustment adjustment Other (0.3) (0.2) 0.0 Other SC SM SM SC 0.8 1.0 0.9 (1.4)
Slide 7: Ⅰ－３. Department store business
Ⅰ－３. Department store business ▶ Sales growth at urban area stores due to easing of the impact of the COVID-19 infection spread (previous year, temporary closure for about 1.5 months) Sales also exceeded forecasts, despite the impact of the re-expansion of infection that began in late July ▶ Decreas
Slide 8: Ⅰ－３. Department store business
Ⅰ－３. Department store business ▶ Increase in gross profit due to higher sales exceeded increase in expenses Factors of Increase/Decrease in Operating Profit (YoY) (billions of yen) 1H of FY2022 YoY 1H of FY2023 5.7 (4.1) 1.6 Decline in Decrease in amount gross margin transferred to extraordinary los
Slide 9: Ⅰ－３. Department store business
Ⅰ－３. Department store business ▶ Since the beginning of the period, domestic sales at existing stores have generally remained at before COVID-19 levels(versus FY2019) ▶ Sales trend fell due to the rapid re-expansion of the infection from July, but the impact was not as strong as last fiscal year (Do
Slide 10: Ⅰ－４. Supermarket business
Ⅰ－４. Supermarket business ▶ Supermarket : Sales increased and profit decreased -Sales increased from newly consolidated Kansai Supermarket and existing store sales decreased. -SG&A expenses were controlled through cost reductions (1% reduction of the previous year) despite cost increase factors such
Slide 11: Ⅰ－５. Extraordinary income and losses
Ⅰ－５. Extraordinary income and losses ▶ Completed relocation of H2O and Hankyu Hanshin Department Store headquarters office in September 2022 Sold the former headquarters office and recorded a gain of 5.0 billion yen on the sale Amount Major contents Extraordinary Gain on sales of non- former headqua
Slide 12: Ⅰ－６. Capital Investment
Ⅰ－６. Capital Investment ▶ Upfront investments in IT infrastructure and growth with funds generated through earnings recovery and asset sales ▶ Stores and major facilities … Renovation of Kobe Hankyu, rebuilding of Hanshin Umeda main store, supermarket opening and renovation ▶ IT/DX investment … Infr
Slide 13: Ⅱ. Forecast of FY2023
Ⅱ. Forecast of FY2023 ▶ Revised forecast of operating profit upward based on progress in 1Q and 2Q results ▶ Net profit has also been revised upward, taking into account the sale of Takashimaya shares. 1H 2H FY2023 Versus Amount YoY Forecast YoY Forecast YoY forecast (billions of yen) in May 34.1％ 1
Slide 14: Ⅱ. Forecasts of FY2023 by segment
Ⅱ. Forecasts of FY2023 by segment ▶ Department store : revise upward for the full year based on progress through 2Q ▶ Supermarket : revise downward due to lower-than-expected results, but expect profit improvement in 3Q/4Q due to thorough chain operations. ▶ Shopping center : expect to improve stead
Slide 15: Ⅱ. Forecast of FY2023 - Capital Investment
Ⅱ. Forecast of FY2023 - Capital Investment ▶ As planned at the beginning of the term, invest aggressively in high-priority projects ▶ Stores and major facilities … Remodel of Kobe Hankyu and Takatsuki Hankyu, acquisition of new logistics center for department stores, renovation of supermarkets ▶ IT/
Slide 16: Ⅲ. Supermarket business as a second core
Ⅲ. Supermarket business as a second core １．Mid and long term strategy of supermarket business as a second core ２．Profit improvement by thorough chain operations ３．Integration of Izumiya and Hankyu Oasis ４．Long-term policy of Supermarket business Copyright © H2O Retailing Corp. All Rights Reserved. 1
Slide 17: Ⅲ－１. Mid- and long-term strategy of supermarket business
Ⅲ－１. Mid- and long-term strategy of supermarket business as a second core Supermarket business as a second core ◼ On track to become a "second core business" in terms of both sales and OP through integration of Kansai Super Market. Operating Profit Supermarket business Department store business FY20
Slide 18: Ⅲ－２. Profit improvement by thorough chain operations
Ⅲ－２. Profit improvement by thorough chain operations ➤ Gross Profit Improvement Plan of profit increase Increase sales and improve gross profit margin by restructuring merchandising Total 144 measures ● Optimal store design and product lineup for the market and sales area After verifying the effect
Slide 19: Ⅲ－２. Profit improvement by thorough chain operations
Ⅲ－２. Profit improvement by thorough chain operations ▶Despite an increase in SG&A expenses due to higher utility costs, chain operations (gross profit improvement and SG&A cost reduction) to improve profit margin generate 2.9 billion yen of profit in 2H. Izumiya and Hankyu Oasis OP Factors of incr./
Slide 20: Ⅲ－３. Integration of Izumiya and Hankyu Oasis
Ⅲ－３. Integration of Izumiya and Hankyu Oasis ▶ Until FY2023 : Promote common organization and structure for integration ▶ From FY2024 : Operate as “One company“ after integration ～FY2023 FY2024～ Preparation for Integration Integration ● SM strategic functions consolidated in Organization H2O Food Gr
Slide 21: Ⅲ－３. Integration of Izumiya and Hankyu Oasis
Ⅲ－３. Integration of Izumiya and Hankyu Oasis As “One company,“ further speed up management decision-making and further improve management efficiency ■ Effect of integration H2O ①Governance and Decision making ・Organizational unification Kansai Food H2O Food ②Personnel unification Qanat Market Group
Slide 22: Ⅲ－４. Long-term policy of Supermarket business
Ⅲ－４. Long-term policy of Supermarket business Until FY2026 Profit margin to 3% level Integration of Kansai Supermarket, thorough chain operations, integration of Izumiya and Hankyu Oasis, group synergies of supermarket business From FY2031 Expand sales and maintain profit margin to 3% level Resume n
Slide 23: Ⅳ. Capital efficiency and shareholder returns
Ⅳ. Capital efficiency and shareholder returns ▶ Improve capital efficiency and execute major investment in mid-term Management Plan ●Real estate sale：Sale of properties less efficient, mainly non-store ⇨ 3-years amount : ¥30 bn. ●Stock sale：Gain of ¥ 6.5bn. Recorded in FY2022 ●Major investment：Maint
Slide 24: The information contained in this material reflects judgments made by H2O Retailing at the
The information contained in this material reflects judgments made by H2O Retailing at the time of preparing this material, and no guarantees are provided concerning the accuracy of the information. The information is also subject to change without prior notice. H2O and the information providers ass