Mitsubishi Research Institute · TSE:3636
Mitsubishi Research Institute — 1H FY2024/9 Earnings Presentation
34 slides from Mitsubishi Research Institute's earnings presentation, Apr 25, 2024
Slide 1: FY2024/9 1H Financial Results
FY2024/9 1H Financial Results April 25, 2024
Slide 2: Agenda
1 FY2024/9 1H Financial Results 2 FY2024/9 Full Year Forecasts Action to Implement Management 3 that is Conscious of Cost of Capital and Stock Price 4 Topics Copyright © Mitsubishi Research Institute 2 These materials are prepared for the purpose of providing reference information for making investm
Slide 3: Summary
Summary Decrease due to the impact of the fall off and downsizing of large projects of the previous fiscal year (including decrease in TTC outsourcing expenses, etc.) Progressed as planned at the beginning of the period, with both orders and order backlogs increasing YoY High targets for the s
Slide 4: (Reference) 1H Progress Rate
(Reference) 1H Progress Rate 1H progress rate at 56% for net sales and 93% *New revenue recognition standards (measure-of-progress method) adopted from for ordinary profit FY 9/2022 1H Progress Rate for Net Sales 1H Progress Rate for Ordinary Profit 【bil. yen】 ［％］ ［bil. yen］ ［％］ 95.4% 98.3% 140 10
Slide 5: 1H Consolidated Results <YoY>
1H Consolidated Results <YoY> 【mil. yen】 FY2023/9 FY2024/9 YoY change 1H (Oct.-Mar.) 1H (Oct.-Mar.) Amount Rate Net sales 73,325 66,534 -6,790 -9.3％ Gross profit 17,765 17,331 -434 -2.4％ Gross profit margin 24.2% 26.0％ +1.8P SG&A expenses 8,473 8,729 +256 +3.0％ Operating profit 9,291 8,601 -690 -7.4
Slide 6: Factors Behind Fluctuation of Ordinary Profit <YoY>
Factors Behind Fluctuation of Ordinary Profit <YoY> Compared to FY2023/9 1H ordinary profit of 9.8 billion, real i nc rease in TTC revenue a nd i m p ro v ement in profit m ar gi n (a), Decrease in expenses (b) due to the conclusion of unprofitable ITS projects , etc., and increase in non-operat
Slide 7: Think Tank & Consulting Services (TTC)
Think Tank & Consulting Services (TTC) 【mil. yen】 FY2023/9 FY2024/9 YoY change 1H (Oct.-Mar.) 1H (Oct.-Mar.) Amount Rate Net sales 36,236 30,433 -5,803 -16.0% Operating profit 5,705 5,659 -45 -0.8% Operating profit margin 15.7% 18.6% +2.9P Ordinary profit 6,102 6,233 +130 +2.1% Orders received ２3,89
Slide 8: IT Services (ITS)
IT Services (ITS) 【mil. yen】 FY2023/9 FY2024/9 YoY change 1H (Oct.-Mar.) 1H (Oct.-Mar.) Amount Rate Net sales 37,088 36,101 -987 -2.7% Operating profit 3,581 2,937 -643 -18.0％ Operating profit margin 9.7% 8.1% -1.6P Ordinary profit 3,728 3,104 -624 -16.7％ Orders received 34,936 35,559 +623 +1.8% Ord
Slide 9: Net sales by industry of customer <YoY>
Net sales by industry of customer <YoY> "General I ndustry" Increase (+9.7%) In "Government and Public Sector", e xcluding the impact of a de crease in outsourcing expenses (-6.8 billion), there was a real i ncrease in governmen t cloud, telecommunications and broadcasting-related b usinesses
Slide 10: (Reference) Net sales by segment and industry of customer <YoY>
(Reference) Net sales by segment and industry of customer <YoY> 【mil. yen】 FY2023/9 FY2024/9 YoY change 1H (Oct.-Mar.) 1H (Oct.-Mar.) Amount Rate Government and 28,705 22,442 -6,262 -21.8% public offices T Finance/credit card 1,885 1,288 -597 -31.7% T C General industries 5,645 6,702 +1,056 +18.7% T
Slide 11: Outlook and Progress for FY2024/9 by Business Segment as Set Out in MP2026
Outlook and Progress for FY2024/9 by Business Segment as Set Out in MP2026 1H progress in the Societal and Public Innovation, Digital Innovation, and Financial System Innovation businesses stands at 50-68% YoY change in Digital Innovation Business, which is striving for growth, is +10% Societal
Slide 12: Development in the GX area in MP2026
Development in the GX area in MP2026 In the GX (Green Transformation) field of the Societal and Publ ic Innovation Business, g rowth (12%) is expected to exceed the a verage g rowth rate (5.7%) (⇒P1 5 ) of t h e s a m e b u sin e ss 2023: 6 billion ⇒ 2026: 8.5 billion ‐ Capture new markets: Expa
Slide 13: Development of Human Resources and Education Areas in MP2026
Development of Human Resources and Education Areas in MP2026 Aim to grow the Digital Innovation business from 26 billion to 35 billion over the period of MP2026 (⇒P15) Progress up to 1H of FY2024/9 was steady in human resources, education, and management/DX consulting domains In the human reso
Slide 14: AI-related developments in MP2026
AI-related developments in MP2026 In the digital innovation business, we are strengthening our data analytics and AI business by leveraging our technological and skill strengths Regarding AI, we will conduct verification through application to our own think tank operations, and develop and deplo
Slide 15: (Reference) MP2026: Composition of Main Businesses
(Reference) MP2026: Composition of Main Businesses Business Portfolio and Business Scale Think Tank Function: Independent research pioneering major societal trends Societal and Public Innovation: Services for the public and private sectors based on our knowledge of policy Digital Innovation: D
Slide 16: (Reference) Cumulative net sales + order backlog
(Reference) Cumulative net sales + order backlog (portion expected to be posted this fiscal year) The total of 1H sales and the backlog of orders scheduled for sales in the current 【mil. Yen】 fiscal year is 87% of the full-year sales forecast Order backlog increased 5.1% YoY to 35.5 billion yen
Slide 17: Agenda
1 FY2024/9 1H Financial Results 2 FY2024/9 Full Year Forecasts Action to Implement Management 3 that is Conscious of Cost of Capital and Stock Price 4 Topics Copyright © Mitsubishi Research Institute 17 These materials are prepared for the purpose of providing reference information for making invest
Slide 18: FY2024/9 Full Year Forecasts
FY2024/9 Full Year Forecasts (no change from initial forecasts) 【mil. yen】 FY2023/9 FY2024/9 YoY change (Results) (Forecast) Amount Rate Net sales 122,126 118,000 -4,126 -3.4% TTC 50,462 46,000 -4,462 -8.8% ITS 71,663 72,000 +336 +0.5% Operating profit 8,688 8,400 -288 -3.3% Operating profit margin
Slide 19: FY2024/9 Dividend Forecast
FY2024/9 Dividend Forecast Based on the principle of paying dividends continuously and stably, we will determine Dividend dividends by comprehensively taking into account the balance between business Policy performance, future capital needs, and financial soundness. We aim for a payout ratio of 40%.
Slide 20: Agenda
1 FY2024/9 1H Financial Results 2 FY2024/9 Full Year Forecasts Action to Implement Management 3 that is Conscious of Cost of Capital and Stock Price 4 Topics Copyright © Mitsubishi Research Institute 20 These materials are prepared for the purpose of providing reference information for making invest
Slide 21: Evaluation of Current Status, Policies and Initiatives
Evaluation of Current Status, Policies and Initiatives • Although we recognize that our cost of capital is approximately 7% (CAPM), we estimate that the cost of capital current status Evaluation of required by the stock market is around 9% • As of FY2023/9, ROE is 9.8%, this exceeds Shareholder’s eq
Slide 22: ROE/PBR Trends and MP2026 Targets
ROE/PBR Trends and MP2026 Targets • As of FY2023/9, ROE is 9.8%, PBR 1.17. PBR exceeds 1, but needs further improvement • ROE improvement is essential for PBR to rise. Under MP2026, the company plans to increase ROE to 12% by improving profit margins ROE% PBR ROE PBR FY2023/9 FY2026/9 2023/9→ 2026/9
Slide 23: Initiatives to Improve ROE for MP2026
Initiatives to Improve ROE for MP2026 • Under the MP2026, MRI and DCS will work together to improve profitability by reorganizing the Group's cross-group strategic areas MP2026 Concepts Measures ROE Target • Reorganize strategic areas by business segment and Consolidated 5.1% (2023/9) improve profit
Slide 24: Executive compensation system linked to achievement of Medium-term management plan
Executive compensation system linked to achievement of Medium-term management plan • The Group's executive compensation system consists of base salary, short-term incentives, and long-term incentives • Long-term incentives to be shared by MRI and DCS at the start of MP2026 Composition Components Cal
Slide 25: Dialogue with Shareholders
Dialogue with Shareholders • To promote active dialogue with shareholders, investors, analysts, and other market participants to achieve sustainable growth and enhance the corporate value of the Group Dialogue Results Organization General Meeting of Shareholders/Shareholder Survey • IR Office (est
Slide 26: Agenda
1 FY2024/9 1H Financial Results 2 FY2024/9 Full Year Forecasts Action to Implement Management 3 that is Conscious of Cost of Capital and Stock Price 4 Topics Copyright © Mitsubishi Research Institute 26 These materials are prepared for the purpose of providing reference information for making invest
Slide 27: Topic: Service-based business in the GX sector Example - MPX
Topic: Service-based business in the GX sector Example 1 - MPX Capturing the power system reform and providing wholesale electricity trading price forecasting and distribution services ahead of the curve • April 2016, “full retail liberalization” due to electric power system reform led to wholesale
Slide 28: Topic: Service-based business in the GX sector Example - MERSOL
Topic: Service-based business in the GX sector Example 2 - MERSOL Support the use of distributed energy resources such as storage batteries and contribute to carbon neutrality • Battery storage and renewable energy sources are being utilized in many parts of Japan to achieve carbon neutrality by 205
Slide 29: Topics: Recent News Releases
Topics: Recent News Releases * All releases below are only in Japanese except for certain releases. Date Title [Related to Societal and Public Sector Innovation Business] ISO releases technical report on collision avoidance for unmanned aerial vehicles from April 22, 2024 Japan Mitsubishi Research I
Slide 30: Topics: Recent News Releases
Topics: Recent News Releases * All releases below are only in Japanese except for certain releases. Date Title [Related to Digital Innovation Business] Developed FAQ “summary answer” and “answer generation” technology using generative April 24, 2024 AI The miraicompass series, which has a 70% share
Slide 31: Topics: Recent News Releases
Topics: Recent News Releases * All releases below are only in Japanese except for certain releases. Date Title [Think Tank Business (Recommendations and Dissemination of Information)] [Global Business, etc.] Mitsubishi Research Institute and ASEAN Centre for Energy sign joint research March 25, 2024
Slide 32: Topics: Recent News Releases
Topics: Recent News Releases * All releases below are only in Japanese except for certain releases. Date Title Other Releases April 24, 2024 [DCS] Signed a location agreement with Kitakyushu City Mitsubishi Research Institute DCS × Sophia University × Fukusuke hold Industry- April 23, 2024 Universit
Slide 33: Notes concerning forward-looking statements
Notes concerning forward-looking statements This presentation contains forward-looking statements. These forward-looking statements, including forecasts, are based on the Company’s assumptions in light of information available at this moment. These statements do not guarantee future performance, and
Slide 34: Envisioning the future, leading change
Envisioning the future, leading change . Mitsubishi Research Institute
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