Uss Co., Ltd. · TSE:4732
Uss — Q3 FY3/2020 Earnings Presentation
34 slides from Uss's earnings presentation, February 2020
Slide 1: Consolidated Results of Operations, Third Quarter FY Ending March 2020
Consolidated Results of Operations The Third Quarter, Fiscal Year Ending March 31, 2020 USS Co., Ltd. February 2020 1
Slide 2: Notes and reference materials
• This document has been translated from the original Japanese as a guide for non-Japanese investors. • Forward-looking statements in this material are based on information available to management at the time this material was prepared and assumptions that management believes are reasonable. These s
Slide 3: Results of Operations Third Quarter
Results of Operations Third Quarter Fiscal Year Ending March 2020 3
Slide 4: 3Q FY3/2020 – Summary of Consolidated Results of Operations
3Q FY3/2020 – Summary of Consolidated Results of Operations ◼ Sales decreased 0.3% YoY to ¥58.18 billion, operating profit was down 1.3% to ¥26.74 billion, and profit attributable to owners of parent decreased 1.1% to ¥18.27 billion. ◼ The number of vehicles consigned and number of contract completi
Slide 5: 3Q FY3/2020 – Reasons for Change in Operating Profit (Actual)
3Q FY3/2020 – Reasons for Change in Operating Profit (Actual) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 0.93bn Increase in purchase of goods ▲0.28bn Decrease in sales commission 0.10bn Increase in CIS (Internet) 0.17bn Decrease in contract completion rate ▲0.87bn Decrease
Slide 6: Net Sales and Operating Profit by Business Segment
Net Sales and Operating Profit by Business Segment (Million yen) Net sales 1-3Q FY3/18 1-3Q FY3/19 1-3Q FY3/20 Year on year Auto auction 42,509 47,277 47,133 99.7% Used vehicle purchasing and selling 7,049 6,951 6,703 96.4% Other 4,444 4,109 4,347 105.8% Total 54,003 58,339 58,184 99.7% Operating pr
Slide 7: Consolidated Balance Sheets and Statements of Cash Flows
Consolidated Balance Sheets and Statements of Cash Flows ◼ Cash used in investing activities increased mainly due to the rebuilding of the JAA auction site. ◼ Cash used in financing activities increased mainly because of cash dividends paid and purchase of treasury shares. ◼ Equity ratio: 87.2% Cons
Slide 8: Automobile Market
Automobile Market New Car Registrations and YoY Changes Used Car Registrations and YoY Changes (Thousand vehicles) (Thousand vehicles) 3,000 30% 3,000 30% 20% 20% 11.8% 2,008 1,963 1,967 4.9% 6.4% 10% 10% 2.8% 1,670 1,609 1,648 1,673 1,609 1,704 1,672 1,720 1,627 1,577 -1.7%1,540-1.1% 1,528 1,396 1,
Slide 9: Auto Auction Segment (1)
Auto Auction Segment (1) ◼ Vehicles consigned increased 2.4% YoY to 2,167 thousand; contract completions decreased 0.8% YoY to 1,319 thousand (contract completion rate: 60.9% against 62.9% in the previous fiscal year) ◼ Auto auction fees decreased due mainly to decline in the contract completion rat
Slide 10: Auto Auction Segment (2)
Auto Auction Segment (2) 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% 784 752 814 771 671 636 703 664 699 689 706 68.4% 70% 66.3%65.9%66.4% 67.0% 559 575 65.9%65.2% 6
Slide 11: Auto Auction Segment (3)
Auto Auction Segment (3) 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) 5,000 5,500 5,362 5,394
Slide 12: Auto Auction Segment (4)
Auto Auction Segment (4) From April 1, 2019 to December 31, 2019 (Number of auctions held, Vehicles) Number of auctions Number of consigned vehicles Number of contract completions Contract completion rate 1-3Q FY3/20 1-3Q FY3/19 1-3Q FY3/20 1-3Q FY3/19 YoY change 1-3Q FY3/20 1-3Q FY3/19 YoY change 1
Slide 13: Auto Auction Segment (5)
Auto Auction Segment (5) (Vehicles, %) Apr. May Jun. Jul. Aug. Sep. First Half Oct. Nov. Dec. Jan. Feb. Mar. Second Half Fiscal Year FY3/18 234,454 183,593 218,888 195,997 169,623 209,872 1,212,427 238,322 250,552 214,426 201,672 244,650 337,961 1,487,583 2,700,010 YoY 0.5 11.0 12.1 4.9 20.1 4.3 7.9
Slide 14: Used Vehicle Purchasing and Selling Segment
Used Vehicle Purchasing and Selling Segment ◼ Sales and earnings decreased at used vehicle purchasing subsidiary Rabbit due to a decrease in the number of vehicles sold and higher advertising expenses. (Net sales decreased 7.2% YoY to ¥3,715 million, Operating profit decreased 31.9% to ¥86 million)
Slide 15: Other Segment
Other Segment ◼ The recycle business posted higher sales but lower earnings as the volume of plant demolition work increased but declining metal scrap prices from April weighed on earnings.(Net sales increased 8.3% YoY to ¥3,931 million, Operating profit decreased 31.7% to ¥266 million) ◼ In the use
Slide 16: Consolidated Forecast for FY3/2020
Consolidated Forecast for FY3/2020 16
Slide 17: FY3/2020 – Consolidated Forecast
FY3/2020 – Consolidated Forecast ◼ No revisions to the FY3/20 forecast announced on November 11, 2019. (Million yen) FY3/20 Initial plan FY3/20 Revised plan Revised plan vs FY3/19 (Actual) Change (May 13, 2019) (Nov. 11, 2019) FY3/19 Net sales 79,908 80,800 ▲1,100 79,700 99.7% Gross profit 48,516 49
Slide 18: 2H FY3/2020 – Reasons for Change in Operating Profit (Forecast)
2H FY3/2020 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 0.27bn Decrease in depreciation 0.11bn Decrease in advertising expenses 0.09bn Decrease in fee rates ▲0.32bn Decrease in cost of goods sold 0.09bn (Billion yen) 20 ▲0.
Slide 19: FY3/2020 – Reasons for Change in Operating Profit (Forecast)
FY3/2020 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 1.07bn Decrease in depreciation 0.34bn Decrease in sales commission 0.12bn Decrease in fee rates ▲0.64bn Increase in expenses for supplies ▲0.12bn Decrease in contract co
Slide 20: FY3/2020 – Forecast by Business Segment
FY3/2020 – Forecast by Business Segment (Million yen) FY3/20 Initial plan FY3/20 Revised plan Revised plan vs FY3/19 (Actual) Change (May 13, 2019) (Nov. 11, 2019) FY3/19 Net sales Auto auction 64,684 65,892 ▲934 64,957 100.4% Used vehicle purchasing and selling 9,701 9,472 ▲367 9,104 93.9% Other 5,
Slide 21: Market Overview Strategy for Creating Value Over the Medium Term
Market Overview Strategy for Creating Value Over the Medium Term 21
Slide 22: 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 23: 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 60% 55.1% Policy Actual 51.5% 50.1% 50.1% 47.0% 50% 43.1% 44.3% 45.1% 45.1% 4
Slide 24: Earnings Distributions – Dividend Policy
Earnings Distributions – Dividend Policy ◼Increase the consolidated payout ratio (50% to 55%) from FY3/2020 ◼Dividend per share for FY3/2020 Revised to 55.4 yen from 51.2 yen (5.0 yen higher than FY3/2019 dividend) ◼ 20 consecutive years of dividend growth since listing DPS Consolidated payout ratio
Slide 25: Earnings Distributions – Total Payout Ratio
Earnings Distributions – Total Payout Ratio ◼Flexible stock repurchases while maintaining stable dividend. (Million yen) Dividend Paid Stock Repurchased Total Payout Ratio 30,000 120% 117.6% 111.4% 103.5% 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% 3.6% 0
Slide 26: 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% 13.6% 15.0% 10.9% 11.7% 10.4% 5% FY3/00 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05 FY3/06 FY3/
Slide 27: 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 28: How USS Creates Social and Economic Value
How USS Creates Social and Economic Value ◼USS creates social and economic value by functioning as a platform for a used vehicle ecosystem. The used vehicle ecosystem The reuse cycle The new vehicle value chain Production Purchase of Used vehicle Steel Vehicle auctions Used vehicle and sale of used
Slide 29: Reference
Reference 29
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 volunta