Kyushu Railway Company · TSE:9142
Kyushu Railway — H1 FY20.3 Earnings Presentation
43 slides from Kyushu Railway's earnings presentation, Nov 6, 2019
Slide 1: FY20.3 Semi-Annual Investors Meeting
FY20.3 Semi-Annual Investors Meeting November 6, 2019 Kyushu Railway Company
Slide 2: Contents
Contents Highlights 3 Ⅰ Financial Results for the Six-month Period Ended September 30, 2019 4 Ⅱ Forecasts for FY20.3 11 Ⅲ Status of Business Initiatives by Each Segment 15 Ⅳ Status of Consideration of Financial Strategy 28 APPENDIX 32 2
Slide 3: Highlights
Highlights Results Operating revenue up YoY due to increase in railway transportation revenue, etc. For Consolidated operating income, ordinary income, and net income attributable to owners of the FY20.3 2Q parent down due to elimination of special tax measures, higher depreciation in the railwa
Slide 4: Financial Results for the Six-month Period Ended September 30, 2019
Ⅰ. Financial Results for the Six-month Period Ended September 30, 2019 4
Slide 5: Consolidated Financial Highlights for the Six-Month Period Ended September 30, 2019
Consolidated Financial Highlights for the Six-Month Period Ended September 30, 2019 Operating revenue up for the third consecutive year (record high) Operating income down for the first time in seven years Net income attributable to owners of the parent down for the first time in three years
Slide 6: Consolidated Income Statements
Consolidated Income Statements （\bil） 6 months ended 6 months ended September, 30 September, 30 YoY Major factors 2018 2019 Operating revenue 210.2 212.8 2.6 101.3% Increase in revenue from railway transportation, etc. Elimination of special tax measures (JR Kyushu) Operating expense 176.9 182.6 5.6
Slide 7: Segment Information [Summary]
Segment Information 【Summary】 (\bill) 6 months ended 6 months ended 10 YoY Major factors September 30, 2018 September 30, 2019 Operating revenues 210.2 212.8 2.6 101.3% Transportation 88.1 90.5 2.3 102.7% Increase in revenue from railway transportation, increase due to change Railway Business (non-c
Slide 8: Balance Sheet and Cash Flow Statement
Balance Sheet and Cash Flow Statement Balance Sheet (\bil) 6 months ended FY19.3 September 30, Increase/(decrease) Major Factors 2019 Total Assets 801.4 806.9 5.4 Cash and time deposits 16.9 18.3 1.4 Short-tem securities 19.9 26.1 6.2 Money held in trust 56.9 42.8 (14.0) Decrease in redemption and s
Slide 9: Non-consolidated Income Statements
Non-consolidated Income Statements (\bil) 6 months 6 months ended ended YoY Major Factors September 30, September 30, 2018 2019 Operating revenues 106.6 107.5 0.9 100.9% Railway transportation Longer Golden Week holiday period, operations resumed on the Kyudai revenue 75.4 77.2 1.7 102.4% Main Line,
Slide 10: Railway Business
Railway Business Railway Transportation Revenue (\bil) 6 months ended 6 months ended YoY Major Factors September 30, 2018 September 30, 2019 Total 75.4 77.2 1.7 102.4% Commuter pass 16.6 16.8 0.1 101.1% Non-commuter pass 58.7 60.3 1.6 102.8% Shinkansen 27.5 28.1 0.6 102.3% ・Basic trend (approx. 101%
Slide 11: Forecasts for FY20.3
II. Forecasts for FY20.3 11
Slide 12: Consolidated Financial Highlights for FY20.3
Consolidated Financial Highlights for FY20.3 (\bil) Results Forecasts FY20.3 FY19.3 （8/5） （11/5） C-A C-B A B C Operating revenue 440.3 442.3 442.3 1.9 100.4% - Operating income 63.8 56.6 56.6 (7.2) 88.6% - Non-operating income and expense 66.5 57.2 57.2 (9.3) 86.0% - Net income attributable to 49.2
Slide 13: Consolidated Financial Forecasts (By Segment)
Consolidated Financial Forecasts (By Segment) (\bil) Results Forecasts FY20.3 Major Factors FY19.3 (8/5) (11/5) C-A C-B (C-B) A B C Operating revenues 440.3 442.3 442.3 1.9 100.4% - Increase in revenues from railway transportation, decrease in revenue from in Transportation 181.8 180.4 180.4 (1.4) 9
Slide 14: Non-consolidated Financial Forecasts
Non-consolidated Financial Forecasts (\bil) Forecasts FY20.3 Results FY19.3 C-A C-B （8/5） （11/5） A B C Operating revenues 221.9 220.4 221.1 (0.8) 99.6% 0.7 Railway transportation revenues 151.4 152.8 153.5 2.0 101.3% 0.7 Shinkansen 54.9 55.7 55.7 0.7 101.4% - Conventional Lines 96.5 97.1 97.8 1.2 10
Slide 15: Status of Business Initiatives by Each Segment
Ⅲ STATUS OF BUSINESS INITIATIVES BY EACH SEGMENT 15
Slide 16: Transportation Segment
Transportation Segment Transportation Segment performance In FY20.3, we are expecting growth in railway transportation revenue, and the method of recording revenue and expenses for station buildings, etc., has been changed. On the other hand, we expect compensated construction work revenue to declin
Slide 17: Initiatives in the Railway Business—Strengthening Earning Power
Initiatives in the Railway Business —Strengthening Earning Power Increasing Shinkansen earning power Accelerate shift toward Internet reservations Promoting use of Internet train reservation services by setting appealing prices Railway transportation revenue (Shinkansen), passenger load Yield (Com
Slide 18: Initiatives in the Railway Business—Strengthening Earning Power
Initiatives in the Railway Business —Strengthening Earning Power Increasing inbound tourism earning power Aggressive initiatives for inbound demand based on collaboration with external parties Sales Amount and Unit Sales of JR-KYUSHU RAIL PASS Collaboration with airlines Sales Amount Sales Amount
Slide 19: Initiatives in the Railway Business—Strengthening Earning Power
Initiatives in the Railway Business —Strengthening Earning Power Taking on the challenge of new mobility services (MaaS) Changes in the transportation services operating JR Kyushu Group Medium-Term Business Plan 2019-2021 environment • Increasing importance of public transportation (declining 2030 L
Slide 20: Status of Natural Disasters
Status of Natural Disasters July 2017 heavy Kumamoto Heavy rains and Recovery of Kyudai Main Line rain in northern earthquakes typhoons achieved on July 14, 2018 Kyushu Time of June 2019 to April 2016 July 2017 September 2019 occurrence Hitahikosan Line Approx. ¥9.0 billion Approx. ¥1.7 billion
Slide 21: Real Estate and Hotels Segment
Real Estate and Hotels Segment Real Estate and Hotels Segment performance In FY20.3, we have opened THE BLOSSOM HIBIYA and THE BLOSSOM HAKATA Premier, and the method of recording revenue and expenses for station buildings, etc., has been changed. As a result, we are forecasting higher revenue and lo
Slide 22: Implementing Strategic City-Building Initiatives in the Regions Around our Business
Implementing Strategic City-Building Initiatives in the Regions Around our Business Advancing initiatives to maximize city value through further development in the Hakata Station area Station building operation that leverages leasing capabilities Condominium business development that leverages b
Slide 23: Implementing Strategic City-Building Initiatives in the Regions Around our Business
Implementing Strategic City-Building Initiatives in the Regions Around our Business In Fukuoka Prefecture /City open recruitment, the Company Large-scale Fukuoka City project — was selected as a holder of preferred negotiating rights Hakata Connected Approximately 80 ha *Radius around Hakata Station
Slide 24: Status of Progress with Development Projects
Status of Progress with Development Projects Implementing active business development in the Growth and evolution in new areas Fukuoka Metropolitan Area Hakata Eki-mae 2-chome THE BLOSSOM HIBIYA Complex (THE BLOSSOM HAKATA Premier） Site area: approximately 1,590 m2; *Joint development with NTT Urban
Slide 25: Retail and Restaurant Segment
Retail and Restaurant Segment Retail and Restaurant Segment performance In FY20.3, we will strengthen initiatives for inbound demand, but we also anticipate increases in personnel costs, etc. Consequently, we are forecasting higher revenue and lower income. We will continue to implement profitabilit
Slide 26: Construction Segment
Construction Segment Construction Segment performance In FY20.3, the segment will benefit from higher demand due to favorable market conditions, and we will work to increase external sales. However, there are also a significant number of factors that will affect profits, such as higher prices for co
Slide 27: Other Segment
Other Segment Other Segment performance Caterpillar Kyushu, which was acquired by the Company, continues to record solid results, but in FY20.3 the forecast is for lower sales and profits due to a decline in construction material revenue from business related to elevated railway track construction a
Slide 28: Status of Consideration of Financial Strategy
Ⅳ STATUS OF CONSIDERATION OF FINANCIAL STRATEGY 28
Slide 29: Status of Consideration of Financial Strategy
Status of Consideration of Financial Strategy Background Since our listing, we have implemented a variety of initiatives in governance, financial strategy, and IR activities To further strengthen our management base, CFO role was clarified and additional outside directors were appointed in June
Slide 30: Revision of Shareholder Return Policy
Revision of Shareholder Return Policy Shareholder Return Policy (Before revision) JR Kyushu places importance on the stable provision of returns to shareholders over the long term Over the period to FY2022.3, we will aim for a total payout ratio of 35% while providing stable dividends and implementi
Slide 31: Share Repurchases
Share Repurchases Reasons for share repurchases In order to enhance shareholder returns and to increase capital efficiency under the new shareholder return policy Further enhancement of shareholder returns as one of the important management measures Aiming to achieve optimal capital structure by
Slide 32: APPENDIX
APPENDIX 32
Slide 33: Creation of 2030 Long-Term Vision
Creation of 2030 Long-Term Vision We created the 2030 Long-Term Vision in a management environment undergoing dramatic change. 2030 Long-Term Vision We will contribute to the sustainable development of Kyushu through city- building initiatives that leverage the distinctive characteristics of local
Slide 34: 2030 Long-Term Vision
2030 Long-Term Vision Negative factors Positive factors Elimination of special tax measures Marketing that leverages online sales data Increase in depreciation due to rebound from Fostering demand through dynamic pricing impairment processing of railway assets Utilizing D&S trains, etc.; e
Slide 35: Target Management Indicators (Consolidated)
Target Management Indicators (Consolidated) Operating revenue Operating income 500 70 (¥bil) (¥bil) 480.0 63.8 60 57.0 450 440.3 50 400 40 400 40 0 FY19.3 FY20.3 FY21.3 FY22.3 0 FY19.3 FY20.3 FY21.3 FY22.3 ［Reference］EBITDA ［Reference］ROE Approx. ¥85.4 billion ¥90.0 billion 12.4％ More than 8% (FY19.
Slide 36: Further Strengthen Our Management Foundation
Further Strengthen Our Management Foundation Establishment of the Nomination and Compensation Advisory Committee (announced March 19, 2019) The Compensation Advisory Committee was established in 2016 with the objective of enhancing the objectivity and transparency of procedures related to officer
Slide 37: Pipeline in the Medium-Term Business Plan
Pipeline in the Medium-Term Business Plan Medium-Term Business Plan Next Medium-Term Business Plan and thereafter FY20.3 FY21.3 FY22.3 FY23.3 and Beyond Business Railway Introduction of next-generation rolling stock (821 series), renewal of 811 series Introduction of next-generation rolling In
Slide 38: EBITDA by Segment
EBITDA by Segment Transportation Real Estate and Hotels (¥bil) (¥bil) EBITDA 34.3 34.4 34.3 20% 400 EBITDA 50% 40 35.6 350 35 EBITDAマージン EBITDA margin EBITDAマージン EBITDA margin 33.1 32.0 27.0 28.5 31.1 47% 25.8 28.4 280 28 18.9% 18% 300 30 25.1 18.7% 18.6% 46.9% 45.8% 46.2% 46.2% 45.6% 44% 210 21 16%
Slide 39: Real Estate and Hotel Business: Revenue, Occupancy Rates, Etc.
Real Estate and Hotel Business: Revenue, Occupancy Rates, Etc. Station Building Tenant Sales Hotel occupancy rates and average unit prices (¥) (¥bil) 2,500 250 ADR（左軸） ADR (left) 稼働率（右軸） Occupancy rates (right) Other major その他主要駅ビル JR博多シティ JR Hakata City 15,000 15,000 90% station buildings 203.0 13,
Slide 40: Changes in Cost Structure
Changes in Cost Structure Elimination of Special Tax Measures Elimination of special tax measures (special tax breaks implemented following the privatization of Japanese National Railways and provisions extending the period of these breaks) effective March 31, 2019 (period extending provisions eli
Slide 41: Sources/Uses of Funds, and Principal Management Indicators
Sources/Uses of Funds, and Principal Management Indicators Over the period of the medium-term business plan, we will aim for capital investment of ¥340.0 billion, which will exceed our cumulative consolidated operating cash flow. We will take a flexible approach to investment opportunities and work
Slide 42: JR Kyushu's Capital Structure
JR Kyushu’s Capital Structure Capital calculated as difference between assets and liabilities at time of privatization of Japanese National Railways in 1987 JR Kyushu established with excessive levels of capital (additional paid-in capital) due to low levels of liabilities Note: The three JR com
Slide 43: 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 FY20.3 Earnings Presentation on 6ix