Hakuhodo Dy Holdings Incorporated · TSE:2433

Hakuhodo Dy — 1H FY2018 Earnings Presentation

36 slides from Hakuhodo Dy's earnings presentation, Nov 12, 2018

1. Slide 1: Consolidated Financial Highlights 1H of FY2018

   Consolidated Financial Highlights 1H of Fiscal Year Ending March 31, 2019 (1H of FY 2018) 2018.11.12

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 2018

   Consolidated Financial Highlights for 1H of FY 2018

4. Slide 4: Consolidated Financial Highlights (1)

   Consolidated Financial Highlights （1） Operating income of ¥33.5 billion due in part to the sale of operational investment securities The figures in parentheses below represent amount and percentage increases/decreases that exclude the impact from the sale of Mercari, Inc.’s shares (hereinafter, “imp

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 FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 Change (%) Change (%) Change (%) Billings 301,164 323,870 22,706 7.5% 309,780 339,504 29,724 9.6% 610,945 663,375 52,430 8.6% Revenue 58

6. Slide 6: Consolidated Financial Highlights (3)

   Consolidated Financial Highlights （3） 【Consolidated Financial Highlights】 【Impact from Mercari】 【Excluding impact from Mercari】 1H of 1H of 1H of YoY comparisons YoY comparisons YoY comparisons FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 (Millions of yen) Change (%) Change (%) Change (%) Billings 610,

7. Slide 7: Consolidated Financial Highlights (4)

   Consolidated Financial Highlights （4） 【 Dif f eren ces between actu al 1H resu lts an d f orecast an n ou n ced on Au gu st 7,2018 】 （Millions of yen） 1H 1H 1H Change between results and forecsts FY2017 FY2018 YoY FY2018 YoY Forecsts as of (Result) change （％） (Result) change （％） change （％） Aug. 7,'1

8. Slide 8: Results by Region (1)

   Results by Region （1） 1H of YoY comparisons FY2017 FY2018 (Millions of yen) Change （%) ■ Japan: Impact from Mercari ■ Billings 572,314 595,522 23,207 4.1% Revenue 107,998 126,234 18,236 16.9% ・Billings were up 1.8% excluding the impact from Mercari. Japan (Gross margin) (18.9%) (21.2%) (+2.3%) Opera

9. Slide 9: Results by Region (2)

   Results by Region （2） 1Q of 2Q of 1H of YoY comparisons YoY comparisons YoY comparisons FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 (Millions of yen) Change （%) Change （%) Change （%) Billings 282,676 297,370 14,693 5.2% 289,637 298,151 8,514 2.9% 572,314 595,522 23,207 4.1% Revenue 51,281 66,222 14,94

10. Slide 10: Billings by Industry (New compiling method) (1)

    Billings by Industry (New compiling method)（1） (Millions of yen) 1Q of YoY comparisons 2Q of YoY comparisons FY2017 FY2018 YoY comparisons FY2018 Change （%) FY2018 Change （%) 1H Share 1H Share Change （%) Automobiles/Related products 26,890 (212) -0.8% 29,726 (6,356) -17.6% 63,184 12.7% 56,616 11.3%

11. Slide 11: Billings by Industry (New compiling method) (2)

    Billings by Industry (New compiling method) （2） Year-on-year changes for 1H of FY2018 (Millions of yen) Restaurant/Services Major Changes (Largest Increases) Finance/Insurance 1H of Y o Y comparisons Beverages/Cigarettes/Luxury FY'18 (%) Change foods Restaurant/Services 24.1 +21.3% 4.2 Cosmetics/Toi

12. Slide 12: Billings by Industry (New compiling method) (3)

    Billings by Industry (New compiling method) （3） Quarterly YoY Changes (1) Top 3 Largest Total(±) Changes by Industry（Millions of Yen） Restaurant/Services Finance/Insurance Beverages/Cigarettes/Luxury foods +7,000 +7,000 +7,000 +5,000 +4,253 +5,000 +5,000 +3,674 +3,000 +2,386 +3,000 +3,000 +2,510 +2,

13. Slide 13: Billings by Industry (New compiling method) (4)

    Billings by Industry (New compiling method) （4） Quarterly YoY Changes(2) Other Major Industries（Millions of Yen） Information/Communications Foodstuffs Cosmetics/Toiletries +7,000 +7,000 +7,000 +5,000 +5,000 +5,000 +3,000 +2,274 +3,000 +3,000 +1,740 +1,636 +1,000 +341 +1,000 +491 +1,000 -164 -103 -1,

14. Slide 14: Billings by Industry (New compiling method) (5)

    Billings by Industry (New compiling method) （5） 【Reference: Results for FY2017 under the New Compilation Method】 (Millions of yen) １Ｑ of YoY comparisons 2Q of YoY comparisons ３Ｑ of YoY comparisons ４Ｑ of YoY comparisons Total of YoY comparisons FY2017 Change （%) FY2017 Change （%) FY2017 Change （%) FY

15. Slide 15: Billings by Service Area

    Billings by Service Area (Millions of yen) １Ｑ of 2Ｑ of １H of １H of YoY comparisons YoY comparisons YoY comparisons FY2018 FY2018 FY2017 FY2018 Amount Change （%) Amount Change （%) Amount Share Amount Share Change （%) Newspapers 10,603 (2,083) -16.4% 10,667 (1,100) -9.3% 24,452 4.5% 21,270 3.9% (3,182

16. Slide 16: 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 FY2017 FY2018 Change (%) FY2017 FY2018 Change (%) FY2017 FY2018 Change （%) Personnel costs 34,113 40,016 5,903 17.3% 35,256 41,218 5,961 16.9% 69,370 81,235 11,864 17.1% Other Ｅxpenses (to

17. Slide 17: Changes in SG&A Expenses (2)

    Changes in SG&A Expenses（2） (billions of yen) Change Factors in SG&A Expenses ↑2.8 ↑4.0 ↑1.0 ↓0.4 ↑11.3 121.7 103.0 90 FY2017 Changes in Retirement Amortization Personnel costs Others FY2018 consolidation benefit costs of goodwill (excl. factors (excl. factors at left) at left) November 12, 2018 Con

18. Slide 18: 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 FY2017 FY2018 Change (%) FY2017 FY2018 Change （%） FY2017 FY2018 Change （%） Non-operating income 1,251 1,674 423 33.9% 351 553 202 57.5% 1,602 2,228 625 39.1% Non

19. Slide 19: Consolidated Balance Sheets

    Consolidated Balance Sheets (Millions of yen) (Millions of yen) Mar. 31, 2018 Sep.30, 2018 Comparisons Sep.30, 2017 Amount Share Amount Share Change (%) Amount Share Current assets 538,905 67.5% 525,024 63.8% (13,881) -2.6% 462,569 67.8% Fixed assets 259,230 32.5% 298,202 36.2% 38,972 15.0% 219,919

20. Slide 20: Consolidated Statements of Cash Flow

    Consolidated Statements of Cash Flow (Millions of yen) 1H of Y o Y comparisons FY2017 FY2018 Change Cash flow from operating activities (10,665) (2,474) 8,191 Cash flow from investing activities (3,638) (9,313) (5,675) Cash flow from financing activities (8,571) (19,569) (10,997) Effect of exchange

21. Slide 21: Highlights of Operating Results at Major Subsidiaries

    Highlights of Operating Results at Major Subsidiaries (Millions of yen) 1H of YoY comparisons FY2017 FY2018 Change (%) ◎Billings rose ¥15.6 billion, or 3.6%, year on year. Client industries with billings increases: Restaurant/Services, Hakuhodo (＊) Finance/Insurance Client industries with billings d

22. Slide 22: Consolidated Business Outlook for Fiscal 2018

    Consolidated Business Outlook for Fiscal 2018

23. Slide 23: Consolidated Business Outlook for Fiscal 2018 (1)

    Consolidated Business Outlook for Fiscal 2018（1） ◎ Changed full-year forecast for the domestic adverting market in light of the market’s sluggish performance in the first half. (Around 2% ⇒ Around 1%) ◎ Downward revision made to full-year consolidated forecast for billings based on our performance i

24. Slide 24: Consolidated Business Outlook for Fiscal 2018 (2)

    Consolidated Business Outlook for Fiscal 2018（2） As of November 9, 2018 （Millions of yen） 1H 2H Full Year FY2017 FY2018 YoY FY2017 FY2018 YoY FY2017 FY2018 YoY (Result) (Result) change （％） (Result) (Forecasts) change （％） (Result) (Forecasts) change （％） Billings 610,945 663,375 52,430 8.6% 724,085 79

25. Slide 25: Consolidated Business Outlook for Fiscal 2018 (3)

    Consolidated Business Outlook for Fiscal 2018（3） 【Fu ll-Year Con solidated Perf orman ce Forecast （Compared with f orecasts an n ou n ced on Ju n e 11）】 （Millions of yen） Full Year Full Year Full Year Difference between new forecasts and forecasts FY2017 FY2018 YoY FY2018 YoY announced on June 11 （F

26. Slide 26: Update on progress under the Medium-Term Business Plan

    Update on progress under the Medium-Term Business Plan Abbreviations within this document HC: Hakuhodo DY Holdings Inc. H: Hakuhodo Inc. D: Daiko Advertising Inc. Y: Yomiko Advertising Inc. MP: Hakuhodo DY Media Partners Inc. HDYD: Hakuhodo DY digital Inc. DACHD: D.A.Consortium Holdings Inc. DAC: D.

27. Slide 27: Medium-Term Business Plan (FY2014–FY2018: 5-year plan)

    Medium-Term Business Plan (FY2014–FY2018: 5-year plan) 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 Core Medium-Term and marketing services groups. Strategy Our cutting-edge creative ideas an

28. Slide 28: Overview of progress during FY2018

    Overview of progress during FY2018 Actual basis (excluding temporary factors that had a positive impact) Excluding the temporary positive impact caused by the sale of Mercari shares, revenue on an actual basis has grown at an annual rate of 11.1% since the targets of the Medium-Term Business Plan we

29. Slide 29: Key strengthening measures centered around the three growth drivers

    Key strengthening measures centered around the three growth drivers  Strengthening of structures and response capabilities centered around the Medium-Term Business Plan’s three growth drivers. Main measures Strengthen sei-katsu-sha data-driven marketing response capabilities Strengthening of organi

30. Slide 30: Strengthening of sei-katsu-sha data-driven marketing response capabilities

    Strengthening of sei-katsu-sha data-driven marketing response capabilities November 12, 2018 Consolidated Financial Highlights 1H of FY2018 29

31. Slide 31: Strengthening of sei-katsu-sha data-driven marketing response capabilities

    Strengthening of sei-katsu-sha data-driven marketing response capabilities November 12, 2018 Consolidated Financial Highlights 1H of FY2018 30

32. Slide 32: Strengthening of sei-katsu-sha data-driven marketing response capabilities

    Strengthening of sei-katsu-sha data-driven marketing response capabilities  Positive effects emerged, such as the growth of billings from Internet media, which is closely related to sei-katsu-sha data-driven marketing response capability initiatives, at an annual 25.8% at advertising companies that

33. Slide 33: Strengthening of organizational structure in Asia

    Strengthening of organizational structure in Asia  Revenues in Asia grew significantly year on year, up 35.4%, thanks to the positive impact of M&A and other factors. Revenue rose above last year’s levels and is expanding steadily in all Asian regions, including Greater China and ASEAN.  Efforts w

34. Slide 34: Continuous enhancement of specialization and innovation

    Continuous enhancement of specialization and innovation  Revenue from kyu more than doubled the previous year’s level in the first half, increasing to ¥20.5 billion.  Since its establishment in May 2014, kyu has continued to incorporate unique, advanced companies from various domains, growing into

35. Slide 35: Initiatives for the Next Medium-Term Business Plan

    Initiatives for the Next Medium-Term Business Plan On October 31, 2018, D.A. Consortium Holdings Inc. became a wholly owned subsidiary. • Strengthen Group management foundations by accelerating the pace of decision making and increasing managerial freedom. • Flexibly utilize management resources fro

36. Slide 36: Text printed in Tsutawaru Font

    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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