Hakuhodo Dy Holdings Incorporated · TSE:2433

Hakuhodo Dy — H1 FY2013 Earnings Presentation

38 slides from Hakuhodo Dy's earnings presentation, Nov 8, 2013

1. Slide 1: Consolidated Financial Highlights 1H of Fiscal Year Ending March 31, 2014

   Consolidated Financial Highlights １Ｈ of Fiscal Year Ending March 31, 2014 (１Ｈ of FY2013) 2013.11.08

2. Slide 2: Cautionary statement concerning forward-looking statements, Note concerning audits

   Cautionary statement concerning forward-looking statements, Note concerning audits This presentation includes forward-looking statements concerning forecasts of operating results, business plans and policies, management strategies, goals, plans, numbers involving the future, views and evaluations of

3. Slide 3: Consolidated Financial Highlights for 1H of FY 2013

   Consolidated Financial Highlights for １Ｈ of FY 2013

4. Slide 4: Consolidated Financial Highlights (1)

   Consolidated Financial Highlights （1） Despite the initial outlook of lower earnings on higher revenues, we achieved higher earnings on higher revenues in the first half, with first-half operating income setting a new record ◎Billings:¥505.3 billion, up 2.2% year on year Thanks to strong growth of bi

5. Slide 5: Consolidated Financial Highlights (2)

   Consolidated Financial Highlights （2） (Millions of yen) １Ｑ of ２Ｑ of １Ｈ of YoY comparisons YoY comparisons YoY comparisons FY2012 FY2013 FY2012 FY2013 FY2012 FY2013 Change (%) Change (%) Change (%) Billings 247,479 246,437 (1,042) -0.4% 246,856 258,912 12,056 4.9% 494,335 505,350 11,014 2.2% Revenue

6. Slide 6: Consolidated Financial Highlights (3)

   Consolidated Financial Highlights （3） 【Original forecasts as of May 9, 2013】 【Result for 1H of FY2013】 【Change between results and forecasts】 (Millions of yen) (Millions of yen) (Millions of yen) １Ｈ of １Ｈ of １Ｈ Original forecasts YoY comparisons FY2013 YoY comparisons Change (%) as of May 9, '13 Cha

7. Slide 7: Billings by Industry (1)

   Billings by Industry（1） (Millions of yen) (Millions of yen) 62,336 Automobiles/Related products Y o Y comparisons FY'13 56,820 １H of FY'13 58,975 Amount Change % Share Beverages/Cigarettes/Luxury foods 58,312 44,726 Automobiles/Related products 62,336 5,516 9.7% 14.3% Information/Communications 43,8

8. Slide 8: Billings by Industry (2)

   Billings by Industry（2） (Millions of yen) １Ｑ of YoY comparisons ２Ｑ of YoY comparisons FY2012 FY2013 YoY comparisons FY2013 Change （%) FY2013 Change （%) 1H Share 1H Share Change （%) Automobiles/Related products 29,085 1,275 4.6% 33,250 4,241 14.6% 56,820 13.0% 62,336 14.3% 5,516 9.7% Beverages/Cigare

9. Slide 9: Billings by Industry (3)

   Billings by Industry（3） Quarterly YoY Changes(±) (1) Top 3 Largest First-half Changes by Industry（Millions of yen） Automobiles/Related products Finance/Insurance Government/Organizations 6,000 5,516 6,000 6,000 5,000 5,000 5,000 4,241 3,905 4,000 4,000 4,000 2,765 2,847 3,000 3,000 3,000 2,313 2,000

10. Slide 10: Billings by Industry (4)

    Billings by Industry（4） Quarterly YoY Changes(2) Other Major Industries（Millions of yen） Beverages/Cigarettes/Luxury foods Information/Communications Cosmetics/Toiletries 6,000 6,000 6,000 5,000 5,000 5,000 3,890 4,000 4,000 4,000 3,000 3,000 3,000 2,000 2,000 2,000 903 1,000 663 1,000 1,000 293 370

11. Slide 11: Billings by Service Area

    Billings by Service Area (Millions of yen) １Ｑ of ２Ｑ of YoY comparisons YoY comparisons １Ｈ of FY2012 １Ｈ of FY2013 YoY comparisons FY2013 FY2013 Amount Change （%) Amount Change （%) Amount Share Amount Share Change （%) Newspapers 14,841 (1,036) -6.5% 15,191 156 1.0% 30,912 6.7% 30,032 6.5% (880) -2.8%

12. Slide 12: Changes in SG&A Expenses (1)

    Changes in SG&A Expenses（1） (Millions of yen) １Ｑ of YoY comparisons 2Ｑ of YoY comparisons １Ｈ of YoY comparisons FY2012 FY2013 Change （%) FY2012 FY2013 Change （%) FY2012 FY2013 Change （%) Personnel costs 24,556 25,598 1,042 4.2% 24,568 25,808 1,241 5.1% 49,124 51,407 2,283 4.6% Other Expenses (Total)

13. Slide 13: Changes in SG&A Expenses (2)

    Changes in SG&A Expenses（2） (billions of yen) Change Factors in SG&A Expenses ↑0.3 ↑2.3 74.3 ↓0.6 ↑1.1 71.2 70 FY2012 Changes in Retirement benefit Personnel costs Others FY2013 consolidation costs (excl. factors at (excl. factors at left) left) November 8, 2013 Consolidated Financial Highlights １Ｈ

14. Slide 14: Non-Operating Items and Extraordinary Gains and Losses

    Non-Operating Items and Extraordinary Gains and Losses (Millions of yen) １Ｑ of YoY comparisons 2Ｑ of YoY comparisons １Ｈ of YoY comparisons FY2012 FY2013 Change （%) FY2012 FY2013 Change （%) FY2012 FY2013 Change （%) Non-operating income 807 699 (108) -13.4% 592 516 (76) -12.9% 1,399 1,215 (184) -13.2%

15. Slide 15: Consolidated Balance Sheets

    Consolidated Balance Sheets (Millions of yen) (Millions of yen) Mar. 31, 2013 Sep. 30, 2013 Comparisons Sep. 30, 2012 Amount Share Amount Share Change (%) Amount Share Current assets 410,264 77.6% 379,555 75.5% (30,708) -7.5% 359,966 76.1% Fixed assets 118,270 22.4% 122,889 24.5% 4,619 3.9% 112,830

16. Slide 16: Consolidated Statements of Cash Flow

    Consolidated Statements of Cash Flow (Millions of yen) １Ｈ of YoY comparisons FY2012 FY2013 Change Cash flow from operating activities (7,948) (3,406) 4,542 Cash flow from investing activities (1,446) 2,150 3,597 Cash flow from financing activities (1,317) (2,512) (1,194) Effect of exchange rate chan

17. Slide 17: Highlights of Operating Results at Major Subsidiaries

    Highlights of Operating Results at Major Subsidiaries (Millions of yen) １Ｈ of YoY comparisons ◎Billings were up ¥9.0 billion, or 2.6%, year on year. FY2012 FY2013 Change (%) By client industry Increases: Automobiles/Related products, Finance/Insurance Decreases: Home electric appliances/AV equipment

18. Slide 18: Consolidated Business Outlook for Fiscal 2013

    Consolidated Business Outlook for Fiscal 2013

19. Slide 19: Consolidated Business Outlook for Fiscal 2013 (1)

    Consolidated Business Outlook for Fiscal 2013（1） No Changes in Rationale for the Consolidated Full-year Business Outlook, Despite Stronger-than-anticipated First-half Performance Our stronger-than-anticipated first-half performance was within the scope of assumptions for our full-year forecasts, and

20. Slide 20: Consolidated Business Outlook for Fiscal 2013 (2)

    Consolidated Business Outlook for Fiscal 2013（2） As of Nov. 7, 2013 （Millions of yen） 1H 2H Full Year FY2012 FY2013 YoY FY2012 FY2013 YoY FY2012 FY2013 YoY (Result) (Result) change （％） (Result) (Forecasts) change （％） (Result) (Forecasts) change （％） Billings 494,335 505,350 11,014 2.2% 551,096 581,65

21. Slide 21: Consolidated Business Outlook for Fiscal 2013 (3)

    Consolidated Business Outlook for Fiscal 2013（3） [Reference] “Approach Regarding Consolidated Business Outlook for Fiscal Year Ending March 31, 2014” (announced May 9, 2013) Medium-term Business Plan Final Year Target: Operating Income of ¥30.0 Billion ◎Macro environment: Growth in Japan’s advertisi

22. Slide 22: Consolidated Business Outlook for Fiscal 2013 (4)

    Consolidated Business Outlook for Fiscal 2013（4） [Reference] Consolidated Business Forecasts for Fiscal 2013(announced May 9, 2013) As of May 9, 2013 （Millions of yen） 1H 2H Full Year FY2012 FY2013 YoY FY2012 FY2013 YoY FY2012 FY2013 YoY (Result) (Forecasts) change （％） (Result) (Forecasts) change （％

23. Slide 23: Consolidated Business Outlook for Fiscal 2013 (5)

    Consolidated Business Outlook for Fiscal 2013（5） Revenue OperatingMargin marsin Operating Operating Income (Millions of yen) (Millions of yen) 18.0% 180,000 16.0% 16.2% 14.0% 150,000 15.0% 12.0% 12.3% 120,000 10.0% 90,000 9.4% 8.0% 6.0% 60,000 4.0% 30,000 4.3% 26,319 30,000 19,816 14,266 2.0% 6,136

24. Slide 24: MEMO

    ＜MEMO＞ November 8, 2013 Consolidated Financial Highlights １Ｈ of FY2013 23

25. Slide 25: Next Medium-Term Business Plan

    Next Medium-Term Business Plan 2013．11．8 24

26. Slide 26: Review of the Current Medium-Term Business Plan

    Review of the Current Medium-Term Business Plan

27. Slide 27: Review of the Current Medium-Term Business Plan

    Review of the Current Medium-Term Business Plan  Outlook for target indicators for the fiscal year ending March 31, 2014 Outlook Business Plan Target Operating ¥30.0 billion ¥28.0 billion Income Operating １6.2% 16.0% Margin Revenue ¥184.7 billion ¥175.0 billion  Changes in category structure FY200

28. Slide 28: Strengthening Priority Strategic Domains

    Strengthening Priority Strategic Domains FY2012 FY2013 Billings and Target 1H Billings Domain Achievement Rate （Target*） YoY Concrete measures so far （CAGR） • Expanded business at digital specialty companies Internet domain 97.6% (converted irep, UNITED, Inc. into a consolidated subsidiary) (More th

29. Slide 29: Next Medium-Term Business Plan

    Next Medium-Term Business Plan

30. Slide 30: Changes in the Group's Operating Environment

    29 Changes in the Group’s Operating Environment Changes in marketers’marketing activities due to progress in digitalization  Full-fledged data utilization  Increased utilization of contact with sei-katsu-sha (defined on p 30)  Necessity of advanced integrated marketing management in line with the

31. Slide 31: Core Mid-Term Strategy

    Core Mid-Term Strategy With our mission of serving as the best marketing partner for each one of our clients, the Hakuhodo DY Group stands as one of the world’s top advertising and marketing services groups. Our cutting-edge creative ideas and integrated marketing solutions create new markets, trend

32. Slide 32: Three Growth Drivers

    Three Growth Drivers Growth Driver Strengthening of sei-katsu-sha data-driven 1 marketing response capabilities Growth Driver Strengthening of business structures 2 in emerging markets, particularly in Asia Growth Driver Continuous enhancement of 3 specialization and innovation Proactive investment

33. Slide 33: Strengthening of sei-katsu-sha data-driven marketing response capabilities

    1. Strengthening of sei-katsu-sha data-driven marketing response capabilities  Build a sei-katsu-sha data management platform and further enhance the sei-katsu-sha insight concept  Provide sei-katsu-sha data-driven integrated marketing solutions Customer Product management development Execution ca

34. Slide 34: Strengthening of business structures in emerging markets, particularly in Asia

    ２．Strengthening of business structures in emerging markets, particularly in Asia  Acquire and expand local client business while strengthening our response to Japanese clients  Conduct proactive M&A and enhance framework for integrated marketing solution provision Local Japanese clients clients (1

35. Slide 35: Continuous enhancement of specialization and innovation

    ３．Continuous enhancement of specialization and innovation  Establish specialized marketing service business models and continuously enhance specialization and innovation  Satisfy advanced integrated marketing management needs through an optimum mix with conventional business Until now From now on

36. Slide 36: Growth Image and Medium-Term Business Targets

    Growth Image and Medium-Term Business Targets  The plan period is the 5 years from FY2014 to FY2018  Financial resources equivalent to the greater part of the cash generated during the plan period will be invested in the three growth drivers Growth image (Revenue based) M&A/Organic ratio of revenu

37. Slide 37: Growth Image and Medium-Term Business Targets (continued)

    Growth Image and Medium-Term Business 36 Targets (continued)  Medium-term business targets (FY2018) Operating income before amortization ¥45.0 billion of goodwill Important indicators Compound annual CAGR of More than＋７% growth rate for the revenue plan period Operating margin before amortization 1

38. Slide 38: Text is this document is printed in “Tsutawaru Font,” an original font jointly developed

    Text is this document is printed in “Tsutawaru Font,” an original font jointly developed by Hakuhodo Inc., TypeBank Co., Ltd., and Keio University. Developed based on the concept of universal design, the purpose of the font is to prevent reading errors and enhance the readability of the text.

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