Tsuzuki Denki Co., Ltd. · TSE:8157

Tsuzuki Denki — FY2023 Earnings Presentation

48 slides from Tsuzuki Denki's earnings presentation, May 12, 2023

Slide 1: Financial Results for the Year Ended March 31, 2023
Tsuzuki Denki Co., Ltd Financial Results for the Year Ended March 31, 2023 May 12, 2023 Tsuzuki Denki Co., Ltd Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 4: Highlights
Highlights Net sales: JPY123,899mn, an increase of JPY4,582mn (+3.8% YoY) Operating income: JPY5,118mn, an increase of JPY1,105mn (+27.6% YoY) Achieved a record profit Information Network Solutions (INS) - Customer ICT capital investment became even stronger from 2H onward - Impact of delivery delay
Slide 5: Statement of Income
Statement of Income (Millions of yen) FY03/22 FY03/23 Change (amount) Change (YoY) Net sales 119,316 123,899 4,582 +3.8% Gross profit 22,511 24,178 1,667 +7.4% (Cost ratio) (81.1%) （80.5%）（-0.6pp）－ SG&A expenses 18,498 19,060 561 +3.0% Operating income 4,012 5,118 1,105 +27.6% (Operating margin) (
Slide 6: Factors Affecting Sales
Factors Affecting Sales ++3.0 (Billions of yen) 123.8 ++3.0 -1.5 YoY +4.5 119.3 (+3.8%) FY03/22 Growth in service Special demand for ・Decrease in Development & FY03/23 Sales business*1 and equipment Electronic Devices Construction Sales sales*2 (accelerated shift to cloud services) ・LCM service expi
Slide 7: Factors Affecting Operating Income
Factors Affecting Operating Income (Millions of yen) + 802 5,118 YoY + +1,105 - (+27.6%) FY03/22 Improvement in cost FY03/23 Effects of sales Unprofitable projects* Higher SG&A Operating ratio Operating increase expenses income (+0.6pp YoY) income Positive factors Negative factors Effects of sales i
Slide 8: Results by Segment
Results by Segment (Millions of yen) Net sales Operating income Change Change Change Change FY03/22 FY03/23 FY03/22 FY03/23 (amount) (YoY) (amount) (YoY) Information Network 92,319 93,905 1,586 +1.7% 3,400 4,155 754 +22.2% Solutions Electronic Devices 26,996 29,993 2,996 +11.1% 592 954 361 +61.1% Co
Slide 9: Results by Business Model (Net sales)
Results by Business Model (Net sales) YoY (Millions of yen) Ratios in parentheses 120,004 119,316 123,899 +3.8% 37,127 37,943 +2.2% Equipment 44,207 （30.6%）（36.8%）（31.1%） Development 13,840 -4.6% 14,501 （11.2%） 14,518 （12.2%） & （12.1%） Construction 40,690 42,121 +3.5% 39,122 （34.0%） Service （34.1%
Slide 10: Results by Business Model (Orders/Order backlog)
Results by Business Model (Orders/Order backlog) Orders Order backlog (Millions of yen) 134,688 130,559 (+3.2% YoY) 44,499 121,655 (+32.0% YoY) 38,620 45,068 Equipment 43,733 33,710 17,442 Development 15,342 14,039 10,318 & 14,296 22,467 4,670 Construction 4,472 3,744 41,046 43,382 8,825 2,484 39,10
Slide 12: FY03/24 Consolidated Earnings Forecast
FY03/24 Consolidated Earnings Forecast Projecting higher sales and profits driven by high order backlogs in addition to anticipated expansion of ICT investment by customers in line with the normalization of economic activities (Millions of yen) FY03/23 FY03/24 Change Change (YoY) results Forecast (a
Slide 14: Shareholder Return
Shareholder Return FY03/23 dividend at JPY61; Payout ratio at 30.9% Dividend yield FY03/24 dividend at JPY76 (provisional) Year-end price Planning to raise the dividend payout ratio to 40% to JPY1,100 Year-end Year-end price price ensure stable dividends and substantially boost dividend JPY1,657 JPY
Slide 15: Bring to society “yohaku”
Bring to society “yohaku” filled with possibilities, through people, insight, and technology, together.
Slide 16: Medium-term Management Plan “Transformation 2026”
Medium-term Management Plan “Transformation 2026” The 1st stage toward achieving our long-term vision May 12, 2023 Tsuzuki Denki Co., Ltd. Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 17: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” Table of Contents 02 Long-term Vision 03 New Medium-term Management Plan "Transformation 2026" 16 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 18: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” Table of Contents 02 Long-term Vision 03 New Medium-term Management Plan "Transformation 2026" 17 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 19: Review of Innovation 2023
Review of Innovation 2023 High achievement across all targets except sales thanks to proactive efforts to promote key priorities Management targets FY03/20 FY03/23 Revised target Initial target Results Initial target (announced May 13, 2022) Results achievement rate Net sales JPY125.3bn JPY126.0bn J
Slide 20: Results of Key Priorities and Key Points for the Next Medium-Term Plan
Results of Key Priorities and Key Points for the Next Medium-Term Management Plan Significant achievements at both the business and corporate level. Steady progress in service and DX business sales expansion and human resource development Key points for next medium- Key priority Results term plan ⚫
Slide 21: Understanding of Current Situation to Enhance Corporate Value
Understanding of Current Situation to Enhance Corporate Value Three years of efforts have been successful and return on capital has steadily improved, but there are still issues with market valuation ROE Market valuation As of March 31, 2023 10.2% 10.4% 8.8% 7.7% P/E ROE P/B 7.9x × 10.4% ＝ 0.8x 21/3
Slide 22: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” 02 Long-term Vision 03 New Medium-term Management Plan "Transformation 2026" 21 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 23: Long-term Performance
Long-term Performance JPY31.5bn Corporate value has grown substantially over the past two medium-term management plans 10.8% 10.4% 8.7% 7.9% 7.7% Market JPY12.4bn capitalization 5.9% 5.9% 4.1% 3.4% 3.6% 3.4% 2.8% 2.7% ー ROE 2.3% 2.0% 2.3% ー Operating margin 1.7% 1.4% 125,366 123,899 118,872 120,004
Slide 24: Understanding of the Environment
Understanding of the Environment Social and business environments have changed drastically in the wake of the COVID-19 pandemic We will strive to engage in corporate activities that create a sustainable society while keeping up with changes in ICT needs Changes in the Social Environment Changes in t
Slide 25: Long-term Vision
Long-term Vision Become the preferred corporate group that drives customer growth Bring to society “yohaku” filled with possibilities, through people, insight, and technology, together. Growth Navigator 10-year Vision An organization that navigates growth and grows together with stakeholders Purpose
Slide 26: To Enhance Corporate Value
To Enhance Corporate Value We aim to achieve a P/B ratio of over 1.0x quickly, while continuing to further enhance corporate value Improve Strengthen Business capital management growth capital efficiency Operating income: JPY10.0bn ROE 15% Enhance non-financial value EPS growth rate: 7% ✓ Proactive
Slide 27: Basic Approach to Business Growth
Basic Approach to Business Growth Actively cultivate growth areas/new business areas by drastically changing our approach to management resources Maintain profitability in existing areas by closely monitoring market trends Expand Information Network Solutions business Past Future New areas by incorp
Slide 28: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” 02 Long-term Vision Table of Contents 03 New Medium-term Management Plan "Transformation 2026" ❶ Business Strategies ❷ Financial Strategies ❸ Management Base Reinforcement 27 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 29: Positioning of the Medium-Term Management Plan
Positioning of the Medium-Term Management Plan First stage: Shift resources and put growing businesses on track to achieve our long-term vision 100th Anniversary 1st Stage 2nd Stage 3rd Stage Growth Navigator Operating income: JPY10.0bn Shift resources to growth areas Scale growth areas Make growth
Slide 30: Overview of New Medium-term Management Plan Transformation 2026
Overview of New Medium-term Management Plan Transformation 2026 ～ Shift resources to growth areas FY03/23 FY03/26 targets results Expand growth areas （vs. FY03/23） 1. Business Increase profitability of existing businesses Strategies Restructure business portfolio and group companies Net sales Net sa
Slide 31: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” 02 Long-term Vision Table of Contents 03 New Medium-term Management Plan "Transformation 2026" ❶Business Strategies ❷ Financial Strategies ❸ Management Base Reinforcement 30 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 32: Basic Policies by Segment
Basic Policies by Segment Achieve profitable growth mainly in the Information Network Solutions (INS) business FY03/26 Targets Policies Key priorities Sales Operating income (vs. FY03/23) (vs. FY03/23) Operating margin Information Network (1) Promote collaboration with other companies by leveraging
Slide 33: Strengthen Six Growth Areas: 1
Information Strengthen Six Growth Areas: 1 Network Solutions Become the market leader by leveraging our strength in voice platform technology to expand our two communication businesses 1. Contact Center System ２．Cloud Communication • Growing trend toward using services rather than owning them as ass
Slide 34: Strengthen Six Growth Areas: 2
Information Strengthen Six Growth Areas: 2 Network Solutions Expand sales in our four strong areas by leveling up our technological capabilities through human resource development and expanding our service lineup 3. Security 4. DX Consulting • Cybersecurity risks are becoming more serious • Continue
Slide 35: Improve Profitability in Existing Areas
Information Improve Profitability in Existing Areas Network Solutions Pursue fair profit with a multifaceted approach 1. Strengthen product portfolio management under 3. Reorganize business formation the concept of TSF Pursue overall optimization by reviewing functional responsibilities among group
Slide 36: Electronic Devices Business Strategy
Electronic Electronic Devices Business Strategy Devices Improve profitability by focusing on small and medium-sized customers, creating new products, and transforming our sales approach 1. Improve gross profit margin for existing devices and systems business 2. Expand business by creating new soluti
Slide 37: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” 02 Long-term Vision Table of Contents 03 New Medium-term Management Plan "Transformation 2026" ❶ Business Strategies ❷ Financial Strategies ❸ Management Base Reinforcement 36 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 38: Basic Policy
Basic Policy Maintain financial soundness while ensuring ROE of 10% or more through appropriate capital controls Key priorities Details Cost of shareholders’ equity is estimated at around 9% • Set based on figures from multiple prediction models and 1. Cost of capital our share price Capital allocat
Slide 39: Strategic Investments
Strategic Investments Proactively invest in growth with a focus on capital efficiency and profitability Category Amount Details R&D investment (implementation of advanced technology, advancement of development Technology technology) Service product development Boosting the added value of existing se
Slide 40: Shareholder Return
Shareholder Return Achieve stable dividends and large dividend increases by raising the dividend payout ratio and introducing a dividend on equity (DOE) metric Dividend per share Until FY03/23 From FY03/24 Raise dividend payout ratio to 40%* Payout ratio of about 30% (Minimum dividend payout ratio o
Slide 41: Table of Contents
01 Review of Medium-term Management Plan “Innovation 2023” 02 Long-term Vision Table of Contents 03 New Medium-term Management Plan "Transformation 2026" ❶ Business Strategies ❷ Financial Strategies ❸ Management Base Reinforcement 40 Copyright © 2023 Tsuzuki Denki Co., Ltd.
Slide 42: Initiatives to Enhance Human Capital
Initiatives to Enhance Human Capital Double the investment from previous medium-term plan to approx. JPY1.0bn and promote measures to enhance performance and engagement of personnel, our source of growth Key measures through Key priorities Basic policy FY03/26 Target Amount ⚫ Three pillars Recruitme
Slide 43: Strengthen Governance
Strengthen Governance Steadily implement measures to enhance the effectiveness of the medium-term plan Key priorities Basic policy ⚫ Establish group infrastructure to execute business strategies (group reorganization) Group ⚫ Build an effective group management system for rapid decision-making and i
Slide 44: Dialogue with Shareholders in FY03/23
Dialogue with Shareholders in FY03/23 Take a proactive approach to deepen the dialogue, both in terms of frequency and substance Category Overview Main correspondents President, Managing Executive Officer of Management Planning (IR), and IR Manager Overview of ● Investment style: Domestic active inv
Slide 45: Strengthen Sustainability Activities
Strengthen Sustainability Activities Further strengthen efforts to improve sustainability through our business Basic Sustainability Policy We will create a sustainable society by embodying our purpose 1. We will develop an environment that fosters "people, insight, and technology" and strive to prov
Slide 46: In Conclusion
In Conclusion We will pursue growth by transforming our business model We will strive to improve return on capital through strategic capital control We will continue to invest in our people, the source of our growth, and enhance our human capital We will strive to further enhance our corporate value
Slide 47: Contact
Contact Tsuzuki Denki Co., Ltd. Contact Management Planning Office Address 6-19-15 Shinbashi, Minato-ku, Tokyo 105-8665, Japan (Tokyo Art Club Building) Phone: 050-3684-7780 ir-tantou@tsuzuki.co.jp https://www.tsuzuki.co.jp/ Disclaimer The forward-looking statements, including earnings forecasts, co
Slide 48: Bring to society “yohaku”
Bring to society “yohaku” filled with possibilities, through people, insight, and technology, together.

Tsuzuki Denki — FY2023 Earnings Presentation on 6ix

Tsuzuki Denki — FY2023 Earnings Presentation

Slide 1: Financial Results for the Year Ended March 31, 2023

Slide 2: Table of Contents

Slide 3: FY03/23 Results

Slide 4: Highlights

Slide 5: Statement of Income

Slide 6: Factors Affecting Sales

Slide 7: Factors Affecting Operating Income

Slide 8: Results by Segment

Slide 9: Results by Business Model (Net sales)

Slide 10: Results by Business Model (Orders/Order backlog)

Slide 11: FY03/24 Consolidated Earnings Forecast

Slide 12: FY03/24 Consolidated Earnings Forecast

Slide 13: Shareholder Return

Slide 14: Shareholder Return

Slide 15: Bring to society “yohaku”

Slide 16: Medium-term Management Plan “Transformation 2026”

Slide 17: Table of Contents

Slide 18: Table of Contents

Slide 19: Review of Innovation 2023

Slide 20: Results of Key Priorities and Key Points for the Next Medium-Term Plan

Slide 21: Understanding of Current Situation to Enhance Corporate Value

Slide 22: Table of Contents

Slide 23: Long-term Performance

Slide 24: Understanding of the Environment

Slide 25: Long-term Vision

Slide 26: To Enhance Corporate Value

Slide 27: Basic Approach to Business Growth

Slide 28: Table of Contents

Slide 29: Positioning of the Medium-Term Management Plan

Slide 30: Overview of New Medium-term Management Plan Transformation 2026

Slide 31: Table of Contents

Slide 32: Basic Policies by Segment

Slide 33: Strengthen Six Growth Areas: 1

Slide 34: Strengthen Six Growth Areas: 2

Slide 35: Improve Profitability in Existing Areas

Slide 36: Electronic Devices Business Strategy

Slide 37: Table of Contents

Slide 38: Basic Policy

Slide 39: Strategic Investments

Slide 40: Shareholder Return

Slide 41: Table of Contents

Slide 42: Initiatives to Enhance Human Capital

Slide 43: Strengthen Governance

Slide 44: Dialogue with Shareholders in FY03/23

Slide 45: Strengthen Sustainability Activities

Slide 46: In Conclusion

Slide 47: Contact

Slide 48: Bring to society “yohaku”