Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q2 FY2022 Earnings Presentation
29 slides from Aeon Financial Service's earnings presentation, October 2022
Slide 1: Results for the Second Quarter of FY2022: Script and the QAs
Results for the Second Quarter of FY2022: Script and the QAs Tomoyuki Mitsufuji, Director and Senior Executive Officer in charge of Group Corporate Management, AEON Financial Service Co., Ltd.
Slide 2: Briefing topics
・Today, Tomoyuki Mitsufuji in charge of Group Corporate Management will brief you on the following: First, the financial highlights of the second quarter; second, the overview of our domestic businesses; third, the overview of our global businesses; fourth, our earnings and dividend forecasts. Then
Slide 3: Consolidated results for the second quarter
・I would like to start by discussing the consolidated results for the second quarter. - Operating revenue was 221.5 billion yen, down 7% year on year. Please note that the year-on-year change is 0% when the effect of applying the Accounting Standard for Revenue Recognition is excluded. - Operating p
Slide 4: New AEON Card members by acquisition channel
・This graph shows the number of newly acquired members of the AEON Card program sorted by acquisition channel in Japan. ・We established our process for acquiring members online, which adds to the strength that the AEON Group has developed at its real stores. Consequently, the membership is almost ba
Slide 5: Shopping and cash advance transaction volumes and balances
・The left graph shows the volumes of shopping transactions and the balances of revolving credit receivables, and the right graph the volumes of cash advance transactions and the balances of receivables. ・With consumption picking up, the use of AEON credit cards for shopping continues to recover ahea
Slide 6: Domestic businesses operating profit breakdown
・Operating profit from the domestic businesses was down 5 billion yen from last year. I will provide a breakdown of the figures. ・In the credit card business, shopping transactions and the balance of revolving credit receivables recovered, with revenue from shopping transactions totaling 2.1 billion
Slide 7: Global businesses: Thailand measures
・This slide shows the measures that our global businesses have taken to meet consumption demand. ・In Thailand, as consumption recovered, we worked with a major supermarket named Big-C, and leading ecommerce websites such as Shopee and Lazada, to run enhanced sales promotions, which included cashback
Slide 8: Hong Kong credit card and personal loan growth
・In Hong Kong, credit card transactions and personal loans have been steadily growing, and the total volumes have surpassed the pre-COVID level in 2019. ・We launched AEON Card WAKUWAKU targeted at young adults. The number of the Cards issued has been on a steady rise owing to cashback benefits, and
Slide 9: Malaysia motorcycle financing and personal loans
・In Malaysia, the motorcycle market experienced inventory shortages because of lockdowns and floods. The shortages have been overcome. ・This recovery prompted us to work with the top 200 excellent member stores to run joint sales promotions that offered incentives according to how many customers the
Slide 10: Transaction volumes and receivables by area
・This table lists transaction volumes and outstanding receivables sorted by service and by area, namely the China, Mekong, and Malay areas. All areas enjoy steady business expansions. ・Finance receivables in particular amounted to 765.4 billion yen, which surpassed the figure for the first half of f
Slide 11: Receivables and NPL ratios by area
・With this situation in mind, I will explain changes in outstanding receivables and nonperforming loan (NPL) ratios in each area. ・From left to right, these charts show figures in the China, Mekong, and Malay areas, respectively. All areas show accelerated growth of operating loans and installment f
Slide 12: Earnings and dividend forecasts
・There were no changes to the figures for earnings and dividend forecasts that had been published in April. Regarding the dividend forecast, we are planning an ordinary dividend of 50 yen per year, 4 yen up from 46 yen in the previous year. ・ In addition to uncertainties of the economic climate, inc
Slide 13: CEO message: future directions
Kenji Fujita, President and CEO, AEON Financial Service Co., Ltd. ・It has been two years since I became the President. These years saw customers’ lifestyles and our competitive environment change increasingly fast, and we worked to offer greater benefits and functions by integrating loyalty points p
Slide 14: Restructuring of domestic businesses
・I will first discuss the restructuring of our domestic businesses. ・The restructuring announced today is tentatively scheduled to take effect during the first half of fiscal year 2023. Yet we should aim to launch it as the next fiscal year begins. ・AEON Financial Service is working to offer custome
Slide 15: Key initiatives to advance the payments business
・This slide shows key initiatives and measures scheduled for the second half of the fiscal year and thereafter in order to advance our payments business that lies at the core of AEON Financial Service. ・To continue creating new customers, AEON Financial Service should diversify its channels for memb
Slide 16: Expanding IDs and AEON Pay
・I will move on to our key measures. ・In regard to the expansion of the number of IDs, we acquired 880,000 members during the first half of the fiscal year, which indicates that our ability to win new members is growing. We aim to acquire more than 2 million members a year through stronger branding
Slide 17: Developing member stores outside AEON Group
From now onward, to develop member stores outside the AEON Group in addition to AEON Group stores, we should reallocate resources through the restructuring of our domestic businesses in order to strengthen our development structure for member stores. ・Our current member network consists of 900,000 s
Slide 18: Adapting to changes in the economic environment
・We will promote the use of our services by aptly adapting to recent changes in the economic environment. ・ While rising prices are driving customers to shop for daily necessities more consciously to maintain their standard of living, temporary consumer demand for travel, leisure, and events is reco
Slide 19: Cross-selling banking and insurance products
・We promote cross-selling of banking and insurance products and services mainly to members of the programs offered by our payment business. ・AEON Select Club offers a 5% discount to customers who have taken out a housing loan from AEON Bank when they pay with a Select Club Gold Card for their daily
Slide 20: Domestic digital transformation initiatives
・Next, I will discuss the initiatives for DX (digital transformation) we pursue to make the services we have presented so far will also be available online. ・AEON Bank plans to renew its computerized accounting system this month. This renewal involves a transition from the mainframe to an open envir
Slide 21: Global businesses: digital financial inclusion
・Now I will move on to discuss the future direction that our global businesses plan to take. ・ These global businesses pursue digital financial inclusion. We are working to improve accessibility to financial services for greater customer satisfaction, ensure proper granting of credit through advance
Slide 22: App enhancements and e-KYC
・We enhanced the functionality of the app in order to promote digital financial inclusion. ・In Malaysia, we have been working with AEON retail stores. AEON Malaysia offers an app called iAEON, which has a feature that allows users to request ACS Malaysia’s financial services. ・We believe that this f
Slide 23: Expanding the insurance business overseas
・The next topic is of our efforts to promote our insurance business to expand our business domain. ・In Thailand, we have begun to sell our insurance products at the Big-C Group stores. Now the products are available at 150 places. We also launched the sale of insurance products via the app in June a
Slide 24: Productivity gains from digital adoption
・Our global businesses have adopted digital technologies over the last two years at a faster pace than ever, as the pandemic brought home to us how essential DX is. ・As the chart shows, these global businesses’ labor cost ratio to operating revenue improved by two points from the pre-pandemic level,
Slide 25: Closing remarks on earnings forecasts
・Finally, the earnings forecasts are as Mr. Mitsufuji explained earlier. I hope that we will achieve greater results than the forecasts for the second half of the fiscal year by working steadily on the initiatives discussed in the presentation.
Slide 26: Questions and Answers
Questions and Answers ■Mr. Sato, analyst at Mizuho Securities (1) Q: Your performance has been going strong along the upper range, yet you left the earnings forecast unchanged. Why? Also, would you provide the reason why net profit has been progressing at higher rates than operating profit? A: (Nasu
Slide 27: Questions and Answers (continued)
Moreover, any sign of the yen’s rise may cause profit to decline. We should stay alert to these two possibilities. > As I understand it, you anticipate the possible adverse effect of the yen’s rise against Asian currencies, rather than the positive effect of the yen’s decline. Is this correct? A: (T
Slide 28: Questions and Answers (continued)
again, whereas cash advance transactions have not reached the planned level, though the figures turned out to be positive because we controlled costs. We hope to attain top-line growth during the second half of the fiscal year. > If profit begins to hover above projections owing to exchange rates an
Slide 29: Questions and Answers (continued)
Corporate Management) The transaction volumes look weaker than last year because we consciously planned not to join interest rate competition. We look to compete in areas other than that of interest rates through a revamp of Select Club and other actions, leveraging the AEON Group’s strengths. With
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