Uss Co., Ltd. · TSE:4732
Uss — Q2 FY3/2021 Earnings Presentation
36 slides from Uss's earnings presentation, November 2020
Slide 1: Consolidated Results of Operations, Second Quarter FY Ending March 31, 2021
Consolidated Results of Operations The Second Quarter, Fiscal Year Ending March 31, 2021 USS Co., Ltd. November 2020 1
Slide 2: Results of Operations Second Quarter Fiscal Year Ending March 2021
Results of Operations Second Quarter Fiscal Year Ending March 2021 2
Slide 3: Highlights of 1H FY3/2021
Highlights of 1H FY3/2021 ◼ Net sales ¥34.2 billion (up 5.6％ from the plan) Operating profit ¥15.9 billion (up 19.6% from the plan) • The downturn in auto auctions ended in 1Q and performance started 1H FY3/21 recovering in 2Q. Results • In the used vehicle purchasing and selling business, the numbe
Slide 4: 1H FY3/2021 – Summary of Consolidated Results of Operations
1H FY3/2021 – Summary of Consolidated Results of Operations ◼ Sales decreased 11.6% YoY to ¥34.27 billion, operating profit was down 11.2% to ¥15.90 billion, and profit attributable to owners of parent decreased 10.5% to ¥10.94 billion. ◼ Although COVID-19 reduced the number of vehicles consigned, a
Slide 5: 1H FY3/2021 – Reasons for Change in Operating Profit (Actual)
1H FY3/2021 – Reasons for Change in Operating Profit (Actual) Net sales Cost of sales SG&A expenses Decrease in vehicles consigned ▲3.91bn Decrease in cost of goods sold 1.48bn Decrease in goodwill amortization 0.11bn Used vehicle sales/purchases ▲0.74bn Decrease in cost of materials purchased 0.13b
Slide 6: 1H FY3/2021 – Business Segment Quarterly Performance (Year-on-year change)
1H FY3/2021 – Business Segment Quarterly Performance (Year-on-year change) USS Performance Auto Auction Segment Sales Operating profit Sales Operating profit (Million yen) 38,792 (Million yen) 40,000 31,773 34,277 30,000 28,246 30,000 19,861 18,931 20,000 16,358 17,524 20,000 18,221 17,907 15,415 14
Slide 7: Consolidated Balance Sheets and Statements of Cash Flows
Consolidated Balance Sheets and Statements of Cash Flows ◼ Cash used in investing activities increased due to the construction of a multi-level parking structure at the R-Nagoya auction site and other projects. ◼ In financing activities, dividend payments was major uses of cash. ◼ Equity ratio: 83.6
Slide 8: Automobile Market
Automobile Market New Car Registrations and YoY Changes Used Car Registrations and YoY Changes (Thousand vehicles) (Thousand vehicles) 3,000 40% 3,000 30% 20% 20% 8.1% 1,963 1,967 1,908 4.0% 10% 1,540 1.0% 1,609 1,648 1,673 1,609 1,704 1,672 1,720 1,627 1,705 1,528 1,557 1,500 1,278 1,371 0% 6.9% 1,
Slide 9: Auto Auction Segment (1)
Auto Auction Segment (1) ◼ Vehicles consigned decreased 15.3% YoY to 1,237 thousand; contract completions decreased 14.7% YoY to 765 thousand (contract completion rate: 61.9% against 61.4% in the previous fiscal year) ◼ Auction fees decreased primarily because of decreases in vehicles consigned. Aut
Slide 10: Auto Auction Segment (2) Monthly Data
Auto Auction Segment (2) Monthly Data Vehicles consigned Vehicles contracted Contract completion rate (Thousand vehicles) 400 80% 71.0% 69.4% 69.6% 327 65.7% 64.5% 60.8% 61.5% 61.6% 62.6% 61.9% 61.8% 62.8% 293 59.2% 60.5% 59.5% 58.7% 58.7% 55.9% 60% 262 60.4% 265 257 257 255 53.3% 248 249 252 251 22
Slide 11: Auto Auction Segment (3)
Auto Auction Segment (3) No. of Vehicles Consigned and Contract Completion Rate Vehicles Contracted Vehicles consigned Vehicles contracted USS Industry's average (excl. USS) (Thousand vehicles) 1,000 80% 784 752 814 771 756 72.0% 703 664 699 689 706 68.4% 631 605 70% 67.0% 69.9% 575 65.9%65.2% 66.3%
Slide 12: Auto Auction Segment (4) No. of Members and Off-site Ratio
Auto Auction Segment (4) Total Consignment Fees and Total Contract Completion Fees and Consignment Fee per Vehicle Contract Completion Fee per Vehicle Total consignment fees Fee per vehicle Total contract completion fees Fee per vehicle (Million yen) (yen) (Million yen) (yen) 8,503 9,000 5,000 5,357
Slide 13: Auto Auction Segment (5)
Auto Auction Segment (5) From April 1, 2020 to September 30, 2020 (Number of auctions held, Vehicles) Number of auctions Number of consigned vehicles Number of contract completions Contract completion rate 1H FY3/21 1H FY3/20 1H FY3/21 1H FY3/20 YoY change 1H FY3/21 1H FY3/20 YoY change 1H FY3/21 1H
Slide 14: Auto Auction Segment (6)
Auto Auction Segment (6) (Vehicles, %) Apr. May Jun. Jul. Aug. Sep. First Half Oct. Nov. Dec. Jan. Feb. Mar. Second Half Fiscal Year FY3/19 266,046 232,114 254,075 224,212 206,245 234,019 1,416,711 234,741 257,451 207,046 224,051 262,464 327,663 1,513,416 2,930,127 YoY 13.5 26.4 16.1 14.4 21.6 11.5
Slide 15: Used Vehicle Purchasing and Selling Segment
Used Vehicle Purchasing and Selling Segment ◼ At Rabbit, which purchases used vehicles, the gross profit per vehicle increased after the end of the state of emergency but sales and earnings were down due to a decline in the number of vehicles sold and other reasons. (Net sales decreased 20.5% YoY to
Slide 16: Other Segment
Other Segment ◼ In the recycle business, sales and earnings were down as the negative effect of a lower volume of materials handled outweighed the benefit of a recovery in the price of ferrous scrap. (Net sales decreased 7.2% YoY to ¥2,254 million, Operating profit decreased 80.2% to ¥38 million) ◼
Slide 17: Consolidated Forecast for FY3/2021
Consolidated Forecast for FY3/2021 17
Slide 18: FY3/2021 – Consolidated Forecast
FY3/2021 – Consolidated Forecast ◼ Backed by firm demand for used vehicles in Japan, the number of vehicles consigned and contracted is recovering. Revised the forecast upward. (Million yen) FY3/21 Initial plan FY3/21 Revised plan Revised plan vs FY3/20 (Actual) Change (Aug 3, 2020) (Nov. 9, 2020) F
Slide 19: 2H FY3/2021 – Reasons for Change in Operating Profit (Forecast)
2H FY3/2021 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in contract completion rate 1.25bn Decrease in cost of goods sold 0.45bn Decrease in goodwill amortization 0.13bn Decrease in vehicles consigned ▲2.99bn Decrease in purchases 0.23bn Decreas
Slide 20: FY3/2021 – Reasons for Change in Operating Profit (Forecast)
FY3/2021 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in contract completion rate 1.35bn Decrease in cost of goods sold 1.93bn Decrease in goodwill amortization 0.24bn Decrease in vehicles consigned ▲6.91bn Decrease in outsourcing expense 0.29bn
Slide 21: FY3/2021 – Forecast by Business Segment
FY3/2021 – Forecast by Business Segment (Million yen) FY3/21 Initial plan FY3/21 Revised plan Revised plan vs FY3/20 (Actual) Change (Aug 3, 2020) (Nov. 9, 2020) FY3/20 Net sales Auto auction 63,350 54,020 4,097 58,117 91.7% Used vehicle purchasing and selling 9,099 7,821 70 7,892 86.7% Other 5,692
Slide 22: Market Overview Strategy for Creating Value Over the Medium Term
Market Overview Strategy for Creating Value Over the Medium Term 22
Slide 23: Used Car Auction Market and USS Market Share
Used Car Auction Market and USS Market Share ◼ Maintained higher market shares and profit in the period of sluggish markets following the financial crisis of 2008-2009. ◼ The JAA acquisition significantly raised the USS Group’s market share 1990(CY) market share 2000(CY) market share 2019(CY) market
Slide 24: Basic Policy on Finance and Shareholder Distributions
Basic Policy on Finance and Shareholder Distributions Increase shareholder distributions while continuing investment for growth ◼Consolidated dividend payout ratio: Over 55% from FY3/2020 Consolidated dividend payout ratio 67.0% 70% Policy Actual 60% 51.5% 50.1% 50.1% 45.1% 45.1% 47.0% 50% 43.1% 44.
Slide 25: Earnings Distributions – Dividend Policy
Earnings Distributions – Dividend Policy ◼Increased the consolidated payout ratio (50% to 55%) from FY3/2020 ◼Plan to pay 55.5 yen dividend per share for FY3/2021 (up 0.1 yen) ◼ 21 consecutive years of dividend growth since listing DPS Consolidated payout ratio (Yen) 60 80% 55.4 55.5 50.4 50 47.8 46
Slide 26: Earnings Distributions – Total Payout Ratio
Earnings Distributions – Total Payout Ratio ◼Flexible stock repurchases while maintaining stable dividend. Dividend Paid Stock Repurchased Total Payout Ratio (Million yen) 30,000 120% 117.6% 111.4% 103.5% 104.0% 84.2% 20,000 80% 76.8% 59.3% 53.8% 50.1% 45.1% 52.1% 10,000 45.1% 40% 33.0% 16.7% 11.9%
Slide 27: Earnings Distributions – Return on Equity (ROE)
Earnings Distributions – Return on Equity (ROE) ◼No change in the medium-term ROE target of at least 15%. ROE 25% 19.5% 18.2% 16.5% 15.9% 15.8% 15.5% 15.3% 15.1% 14.5% 14.2% 14.7% 14.8% 14.5% 15% 16.0% 14.1% 13.7% 15.0% 10.9% 11.7% 11.9% 11.3% 10.4% 5% FY3/00 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05 FY3/0
Slide 28: Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions
Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions ◼Aim at increasing shareholder value by a two-pronged strategy of solid investments in growth and active shareholder distributions Leveraged Internet Increase in number of and IT members – users Rise in contract
Slide 29: Auto Auction Segment – New initiatives
Auto Auction Segment – New initiatives ◼ Started using new systems for vehicle inspections in order to find defects that are not readily visible Underbody imaging system Start of inspections using on-board This system is used to inspect underneath diagnostic system scans vehicles, including tires an
Slide 30: Contact Information
Contact Information Notes General Affairs Department, • This document has been translated from the Supervisory Office, original Japanese as a guide for non-Japanese USS Co., Ltd. investors. • Forward-looking statements in this material are based on information available to management at TEL : +81-52
Slide 31: Reference
Reference 31
Slide 32: History of USS Long-term Growth
History of USS Long-term Growth Before 2000 1982: Held the first auction with only 255 vehicles consigned 1988: Expanded the Nagoya Auction Site. The number of POS seats was 570 (the largest in Japan). Early nineties: Opened Kyushu and Tokyo Auction Sites 2017: Late nineties: Opened Okayama, Shizuok
Slide 33: Business Models for USS
Business Models for USS Used Ferrous vehicles Rabbit scrap End (Used vehicle ARBIZ Steel users purchases) makers Payment for Payments vehicles Payment Payments for vehicles Used Used vehicles vehicles Members Members submitting consigning vehicles Auto Auction successful bids (buyer) (seller） • • Us
Slide 34: Automobile Market and USS Revenue
Automobile Market and USS Revenue ◼ The number of vehicles consigned is correlated through trade-ins to (1) New car registrations and (2) Used car registrations ◼ Total demand comprises domestic demand (2) and overseas demand (3). In recent years, total demand has been driven mainly by overseas dema
Slide 35: New/Used Car Registrations and Auto Auction Market
New/Used Car Registrations and Auto Auction Market ◼ The auction market continued to expand till 2000 as the share of used vehicles sold through the auction market increased as a share of the total used vehicle market. Starting in the mid-2000s, older vehicles and vehicles with high mileage which wo
Slide 36: Corporate Governance
Corporate Governance ◼ The company’s governance organization has been improved in order to work toward the goal of increasing corporate value through continuing business growth ◼ Adopted the outside director system in FY3/2007 ◼ Strengthened the executive officer system in FY3/2013 ◼ Established vol