Duskin Co., Ltd. · TSE:4665
Duskin — Q2 FY2022 Earnings Presentation
44 slides from Duskin's earnings presentation, Nov 22, 2022
Slide 1: Financial Results Presentation Material for the Second Quarter of FY2022
Financial Results Presentation Material for the Second Quarter of FY2022 （Year Ending March 31, 2023） Duskin Co., Ltd. November 22, 2022
Slide 2: Agenda
Agenda 1.FY2022 2Q Financial Results ・・・P2 2.Performance Review by Business Segment ・・・P7 3. FY2022 Full-Year Forecasts ・・・P15 4.Medium-Term Management Policy 2022 ・・・P17 Targets and Initiatives 5. Financial and Capital Policies ・・・P24 Appendix ・・・P28 © DUSKIN CO., LTD. All Rights Reserved. 1
Slide 3: Financial Results Summary
Financial Results Summary 1H operating ⚫ Net sales were higher year-on-year for every segment and mostly in line with the profit forecast. vs. forecast +32.5% ⚫ Profits were lower year-on-year but were higher than the forecast. ⚫ Taking into account the ongoing raw material price hike in the second
Slide 4: Financial Highlights (YoY change; comparison with forecast)
Financial Highlights (YoY change; comparison with forecast) Every segment recorded higher sales. Consolidated net sales were higher year-on-year, which was more or less the same as the initial forecast. Profits were lower year-on-year due to a higher cost ratio and increased expenses. Millions of ye
Slide 5: Factors Affecting Operating Profit Results (YoY Comparison)
Factors Affecting Operating Profit Results (YoY Comparison) Sales factors: +800 million yen due to higher gross profits accompanying higher sales Cost factors: -300 million yen due to a higher cost ratio Expense factors: -1,500 million yen due to higher expenses Millions of yen Higher cost ratio mai
Slide 6: Operating Profit Results vs. Forecast: Diverging Factors
Operating Profit Results vs. Forecast: Diverging Factors +100 million yen due to an improved cost ratio thanks to price revisions and a higher ratio of high value- added products sold. Operating profit was1,300 million yen higher than originally forecasted due to expense-cutting efforts including im
Slide 7: Consolidated Balance Sheet Summary
Consolidated Balance Sheet Summary Current assets: Cash and deposits increased 1,491 million yen; securities decreased 7,807 million yen due to redemption of bonds. Current liabilities: Income taxes payable, accounts payable and other current liabilities decreased, recording a total decrease of 4,89
Slide 8: Overview of Business Segments
Overview of Business Segments ▍1H FY2022 Results by Business Segment Net sales Millions of yen Operating profit Millions of yen Other businesses 8.2 Other businesses 5.6 Intersegment elm. % Intersegment elm. % and corporate exp. 8,000 400 26.1 -1,600 30.5 -2,600 Food Grp. Food Grp. % % 81,900 65.7 5
Slide 9: Direct Selling Group Business Performance Summary
Direct Selling Group Business Performance Summary (YoY change; comparison with forecast) Net sales increased 6 million yen year-on-year (+0.01%), profits declined 1,384 million (-21.4%). - Despite the negative impact of the end of Olympic-related orders, Clean Service and senior-care related busines
Slide 10: Direct Selling Group Net Sales by Business Segment
Direct Selling Group Net Sales by Business Segment (YoY Comparison) Millions of yen 1H FY2021 1H FY2022 Composition Composition Results Results YoY ratio ratio Clean Service 39,513 72.9% 40,020 73.9% 506（+1.3％） Care Service 6,932 12.8% 6,728 12.4% -204（-2.9%） Others 7,402 13.7% 7,105 13.1% -296（-4.0
Slide 11: Direct Selling Group Factors Affecting Operating Profit Results
Direct Selling Group Factors Affecting Operating Profit Results A decline of 500 million yen due to the raw material price hike and actions taken in response to product price revisions (the free distribution of kitchen sponges). Operating profit declined 1,400 million yen due to such factors as incr
Slide 12: Food Group Business Performance Summary
Food Group Business Performance Summary (YoY change; comparison with forecast) Net sales increased 1,443 million yen (+7.2%) and profit increased 679 million yen (+38.8%) year-on-year. - Mister Donut, the Food Group core business, has maintained solid performance even after the price revisions for s
Slide 13: Food Group Net Sales by Business Segment
Food Group Net Sales by Business Segment (YoY Comparison) Millions of yen 1H FY2021 1H FY2022 Composition Composition Results Results YoY ratio ratio 2,090 Mister Donut 18,403 92.4% 20,494 95.9% （+11.4%） -649 Others 1,505 7.6% 856 4.0% （-43.1%） Intersegment sales 1 7 0.0% 8 0.0% and Transfers （+23.5
Slide 14: Food Group Factors Affecting Operating Profit Results
Food Group Factors Affecting Operating Profit Results Higher gross profit generated by higher net sales and improved cost ratio resulted in an increase of 700 million yen in operating profit. Millions of yen Increase in 300 labor costs 100 700 -100 Decrease in promotional 400 expenses Increase in Gr
Slide 15: Other businesses Business Performance Summary
Other businesses Business Performance Summary (YoY change; comparison with forecast) Net sales increased 341 million yen (+4.4%) and profit decreased 94 million yen (-17.6%) year-on-year. - Overseas businesses, whose food businesses were greatly affected last year by the impact of the coronavirus pa
Slide 16: FY2022 Full-Year Forecasts
FY2022 Full-Year Forecasts Taking into account first-half results and the latest second-half forecast, we have updated some of our initial forecasts for nets sales and operating profit for each segment in the second half. The forecast for full-year net sales and consolidated operating profit remains
Slide 17: Financial Forecast by Segment
Financial Forecast by Segment Taking into account first-half results and the latest second-half forecast, we have updated some of our initial forecasts for nets sales and operating profit for each segment in the second half. The forecast for full-year net sales and consolidated operating profit rema
Slide 18: Medium-Term Management Policy 2022: Targets and Initiatives
Medium-Term Management Policy 2022: Targets and Initiatives © DUSKIN CO., LTD. All Rights Reserved. 17
Slide 19: Three Strategic Themes
Medium-Term Management Policy 2022 Three Strategic Themes Theme 1 Reforming our business portfolios Reforming our business portfolios to address the changing business climate and solve social issues Reforming and expanding existing businesses Investment in new growth opportunities Expanding our area
Slide 20: Initiatives: Direct Selling Group
Medium-Term Management Policy 2022 Initiatives: Direct Selling Group Theme 1 Reforming our business portfolios ⚫ Reforming and expanding existing businesses In line with our goal of helping customers fine-tune the rhythm of their daily lives and working environments, we place highest priority on hyg
Slide 21: Initiatives: Direct Selling Group
Medium-Term Management Policy 2022 Initiatives: Direct Selling Group Theme 1 Reforming our business portfolios ⚫ Reforming and expanding existing businesses Reinforce customer contacts by reforming information and distribution systems Location strategies Laundry and distribution strategies ・Care Ser
Slide 22: Initiatives: Food Group
Medium-Term Management Policy 2022 Initiatives : Food Group Theme 1 Reforming our business portfolios ⚫ Reforming and expanding existing businesses With the goal of creating shops where anyone and everyone can enjoy happy moments at any time, we seek to deliver enjoyment and tastiness to customers.
Slide 23: Initiatives: Food Group
Medium-Term Management Policy 2022 Initiatives : Food Group Theme 1 Reforming our business portfolios ⚫ Reforming and expanding existing businesses Expand sales opportunities by reforming information and distribution systems Shop opening strategies ・New shops opened in first half: 14 ・Number of stor
Slide 24: Medium-Term Management Policy 2022 Initiatives
Medium-Term Management Policy 2022 Initiatives Theme 1 Reforming our business portfolios ⚫ Investment in new growth opportunities Creating social values by contributing to the resolution of pending social issues Taking a more aggressive stance on M&As and R&D ▶ Duskin partners with Qracian Co., Ltd.
Slide 25: Financial and Capital Policies: Cash Allocation for 3 Years
Financial and Capital Policies We will make bold investments in new growth opportunities to rebuild our business portfolios. Cash Allocation for 3 Years Investment in maintenance Operating CF Investments needed to maintain the existing businesses 21,000 million yen More than 45,000 In order to creat
Slide 26: Capital Investment and Depreciation
Capital Investment and Depreciation Capital investment for the full year is expected to be 13,000 million yen (7,800 million yen for growth investment and 5,200 million yen for upkeep investment), compared to our initial plan of 14,400 million yen. DX investment including ongoing adoption of RFID el
Slide 27: Dividend Forecast
Dividend Forecast Year-end dividend amount for FY2021 was in line with our target consolidated dividend payout ratio of 50%. Starting in FY2022, dividend payout amounts will be based on a consolidated dividend payout ratio of 60% or a 2.5% DOE, whichever amount is higher. Yen Interim dividend Year-e
Slide 28: Shareholder Return: Stock Repurchase
Shareholder Return: Stock Repurchase ▍Details of the resolution passed at the meeting of the Board of Directors held on November 8, 2022 Decision on Matters Related to Stock Repurchase Total number of shares repurchasable: Up to 1,786,000 shares, cost of repurchase: 5,000 million yen (Percentage of
Slide 29: Appendix
Appendix © DUSKIN CO., LTD. All Rights Reserved. 28
Slide 30: FY2022 Price Revision
FY2022 Price Revision Having determined that it will be difficult for the company to make the adjustments needed to absorb higher costs resulting from the sharp rise in raw material prices, distribution expenses and the like, pricing was revised for certain products. ▍Clean Service revised pricing (
Slide 31: Direct Selling Group Operating Profit Results vs. Forecast
Direct Selling Group Operating Profit Results vs. Forecast: Diverging Factors Gross profit was 200 million yen lower due to lower net sales. Despite measures taken in regard to price revisions (free distribution of sponges) and the higher-than- expected spike in raw material costs, operating profit
Slide 32: Food Group Operating Profit Results vs. Forecast
Food Group Operating Profit Results vs. Forecast: Diverging Factors Higher gross profit due to net sales higher than the plan and an improved cost ratio generated +200 million yen. Efforts to reduce variable costs, including goods and commodities freight charges, and promotional expenses generated +
Slide 33: Direct Selling Group Net Sales and Operating Profit (Quarterly)
Direct Selling Group Net Sales and Operating Profit (Quarterly Results) Quarterly Results Net Sales Millions of yen FY2022 Millions of yen 28,237 25,595 26,699 26,576 27,605 27,904 27,089 27,099 1Q 2Q 3Q 4Q FY2023 24,807 25,041 Net sales 27,089 27,099 54,188 Operating profit 2,467 2,613 5,081 Operat
Slide 34: Food Group Net Sales and Operating Profit (Quarterly)
Food Group Net Sales and Operating Profit (Quarterly Results) Quarterly Results Net Sales Millions of yen FY2022 Millions of yen 12,243 1Q 2Q 3Q 4Q FY2023 11,659 10,716 10,642 10,434 10,183 9,856 10,058 Net sales 10,716 10,642 21,359 8,403 7,539 Operating profit 1,266 1,164 2,431 Operating margin 11
Slide 35: Other businesses Net Sales and Operating Profit (Quarterly)
Other businesses Net Sales and Operating Profit (Quarterly Results) Quarterly Results Net Sales Millions of yen FY2022 Millions of yen 3,886 3,811 3,825 3,863 3,720 4,006 3,954 4,074 1Q 2Q 3Q 4Q FY2023 3,554 3,799 Net sales 3,954 4,074 8,029 Operating profit 271 171 443 Operating margin 6.9 4.2 5.5
Slide 36: Customer-Level Sales (CLS) of Our National Chains
Customer-Level Sales (CLS) of Our National Chains 1H FY2021 1H FY2022 YoY change Millions of yen Direct Selling Group 133,499 134,436 936 Clean Service (Domestic): residential customer 41,009 40,970 -39 Clean Service (Domestic): commercial customer 44,852 45,700 848 ServiceMaster 16,547 16,373 -173
Slide 37: Number of Sales Units
Number of Sales Units No. of units 1H FY2021 1H FY2022 YoY change Direct Selling Group 5,661 5,693 32 Clean Service (Domestic) 1,864 1,843 -21 ServiceMaster 1,146 1,170 24 Merry Maids 769 782 13 Terminix 554 554 0 Total Green 146 157 11 Home Repair 95 98 3 Health & Beauty 464 460 -4 Azare Products G
Slide 38: Business Segments and Their Businesses
Business Segments and Their Businesses Direct Selling Group Direct Selling For residential customer market For commercial customer market ⚫ Clean Service • Dust Control [Mops and mats] ⚫ Clean Service • Dust Control [Mops and mats] • Air Control [Air purifiers] • Clean Service [Restroom products] (R
Slide 39: Dust Control Business Model
Dust Control Business Model Through our franchisees, we provide mops, mats and other cleaning and hygiene products for rent, for use both in the home and in business spaces. Duskin Production & Franchisees Customers logistics Delivery (Rental) Rental Products Collecting Returning used mops Sales uni
Slide 40: Care Service and Senior Care Business Models
Care Service and Senior Care Business Models Care Service Duskin Trademark granting; Franchisees ServiceMaster Customers (Number of locations) operational guidance; provision of chemicals, 1,170 nationwide equipment and Merry Maids materials; assistance in recruiting human resources 782 nationwide S
Slide 41: Mister Donut Business Models
Mister Donut Business Models To realize our goal of creating shops where every customer happens upon “something good” at any time, we make the Mister Donut experience fun and our products always delicious. Duskin Franchisees Customers Trademark granting; (Shops) operational guidance; provision of bu
Slide 42: Market Conditions
Market Conditions FY2019 FY2020 FY2021 1H FY2022 Authority Average rate during the fiscal 108.70 106.03 112.35 133.96 BOJ Main Time-Series Statistics, Tokyo foreign Exchange rate year exchange market dollar- (Yen/U.S. dollar) yen spot price at 5:00 Rate at the fiscal 107.42 108.70 118.54 143.09 p.m.
Slide 43: Market Data
Market Data Billions of yen 2017 2018 2019 2020 2021 CAGR Dust control market 287.6 283.6 278.8 272.3 266.9 -1.9% related to our Clean Service businesses Source: Japan Dust Control Association Home cleaning service market 162.0 170.0 176.0 182.0* - 4.4% related to our Care Service businesses Helper
Slide 44: Cautionary Note Regarding Forward-looking Statements
Cautionary Note Regarding Forward-looking Statements These materials contain forward-looking statements concerning forecasts, goals, strategies and other matters of the Company and its consolidated subsidiaries. These forward-looking statements are based on information currently available to the Com