Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — FY2022 Earnings Presentation
43 slides from Aeon Financial Service's earnings presentation, Apr 11, 2023
Slide 1: FY2022 IR Presentation Material
This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails. FY2022 IR Presentation Material April 11, 2023 Stock Listing: Tokyo Stock Exchange
Slide 2: Contents
Contents 1. Financial Highlights 2. Earnings and Dividend Forecasts 3. Priority Initiatives to Improve Corporate Value 4. APPENDIX AEON Financial Service Co., Ltd. 1
Slide 3: Financial Highlights: Key points of the announcement
１. Financial Highlights Key points of the announcement Highest profit ever in Global business, consolidated results increase in sales and profit, and achieved published figures. Year-end dividend increased by 3 yen. In Domestic business, continue to make upfront investments to expand our operations,
Slide 4: Highlights of the Consolidated Results
1. Financial Highlights The Highlights of the Consolidated Results ・Domestic business : Have started business restructuring for regrowth. Global business : Growth exceeds pre-pandemic levels (+4.8 billion yen in exchange rate) ・Ordinary profit and net profit exceeded the published figures, dividend
Slide 5: Highlights of the Consolidated Results - 4Q 3 Months
1. Financial Highlights The Highlights of the Consolidated Results -4Q 3 Months ・Domestic : Business expansion centered on credit cards and shift to a business structure centered on payment progresses ・Global : Promote measures to expand transaction volume and strengthen screening and receivables ma
Slide 6: Breakdown of Operating Profit YoY
1. Financial Highlights Breakdown of Operating Profit YoY ・Credit card business continues to make upfront investments and promotes business expansion Contents YoY Change（Unit : billions of yen) ■Credit Card Shopping Recovery Shopping Revenue +9.4 - Transaction volume : 109%(YoY) / Revolving balance:
Slide 7: Domestic Business Restructuring
1. Financial Highlights Domestic Business Restructuring ・Phase 1 of the restructuring effort has been completed, and Phase 2 will continue to begin ・Scheduled to integrate business with subsidiary AEON Credit Service on June 1, 2023 Objective Optimal Phase 2 allocation of management resources Phase
Slide 8: Global Business
1. Financial Highlights Global Business ・Surpassing pre-pandemic profits in all areas and setting new record highs ・ACS Asia reaches record high transaction volume and operating receivables, ACS Malaysia sets record profits China Area Mekong Area Malay Area Operating profit Operating profit Operatin
Slide 9: Outstanding Receivables and NPL Ratio in Global business
1. Financial Highlights Outstanding Receivables and NPL Ratio in Global business ・In each area, the balance of outstanding receivables expands compared to before the pandemic, and the NPL ratio is controlled in the normal range 8.0% China 120 8.0% Mekong 400 8.0% Malay 400 Area Area Area 6.0% 90 6.0
Slide 10: Status of Productivity Improvement in Global Business
1. Financial Highlights Status of Productivity Improvement in Global Business ・Thailand's personnel cost ratio was 9.4% in FY22, an improvement of 5.5 pt from FY18 ・Further improve productivity by promoting digitalization even in the phase of expanding operating revenue Changes in Operating Revenue
Slide 11: Profit Expansion in Cambodia
1. Financial Highlights Profit Expansion in Cambodia ・Cambodia has moved into the profit expansion phase. In FY23, focus on the e-money business and expand revenue sources Trend in Operating Profit Trends in Product （Unit : billions of yen) Development Full-scale 1.6 deployment of e-money 1.2bn 1.2
Slide 12: FY2023 Earnings and Dividend Forecast
2. Earnings and Dividend Forecasts FY2023 Earnings and Dividend Forecast ・Restructuring continues in Japan. Although the company plans to record upfront investment costs of 2.4 billion yen in digital banks, consolidated operating profit increased ・Net profit is expected to decrease due to the record
Slide 13: Priority Initiatives to Improve Corporate Value
業績ハイライト・概要 第3四半期以降の取り組み Priority Initiatives to Improve Corporate Value AEON Financial Service Co., Ltd.
Slide 14: Environment Surrounding the Company and the Direction of Initiatives
３. -Environment Surrounding the Company and the Direction of Initiatives ・Re-organize Domestic business and reform overseas business models in order to maximize the value provided to customers External Environment : Digitalization / Price Rise / Interest Rate Fluctuation / Wage Increase / 単位：億円 Reco
Slide 15: Improve Profitability by Strengthening Sales Capabilities
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） ① Improve Profitability by Strengthening Sales Capabilities ･Increased profits by shifting to a business structure centered on payment １．Expansion of cashless payments centered on the AEON Group Accumulated Cashle
Slide 16: Productivity Improvement by Eliminating Duplicate Channels and Functions
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） ② Productivity Improvement by Eliminating Duplicate Channels and Functions ・Started reviewing each company's touchpoints with customers ・ Aim to increase revenue and profit by improving productivity by eliminating
Slide 17: Promoting Cross-Selling
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） ③-1 Promoting Cross-Selling ・Expand stakeholders entering the AEON Living Zone centered on settlement and maximize the number of IDs ・Promoting cross-selling of products and services based on credit cards AEON Liv
Slide 18: Cross-sell Propulsion
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） ③-2 Cross-sell Propulsion ・Increased usage of AEON Cardholders using housing loans, investment trusts, and insurance services ・Early realization of effective proposals through data utilization AEON Card usage per
Slide 19: Strengthen Sales Capabilities: Expansion of number of ID
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） Strengthen Sales Capabilities _ Expansion of number of ID ･Utilizing the AEON Group's customer base in the Tokyo metropolitan area to accelerate membership acquisition to 2.5 million per year ・Cooperation with AEO
Slide 20: Strengthen Sales Capabilities: Expansion of number of ID
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） Strengthen Sales Capabilities _ Expansion of number of ID ・Raise recruitment capabilities by granting benefits and channel reforms to meet the needs of the target Strengthening the approach to Establishment of gen
Slide 21: Expansion of AEON PAY and wallet app
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） Strengthen Sales Capabilities _ Expansion of number of ID ・Promoting the construction of payment infrastructure through the convenience of the app and the expansion of places where AEON PAY can be used UX (ease of
Slide 22: Expansion of Revolving credit & Installment payment and cash advances balances
３. Priority Initiatives to Improve Corporate Value （Domestic Business Restructuring） Strengthening profitability _ Expansion of Revolving credit & Installment payment and cash advances balances ・Due to the increase in the number of users that decreased due to pandemic, the balance of revolving credi
Slide 23: Planning of Credit Card Shopping Volumes, Revolving Credit and Cash Advance Balances
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） Planning of Credit Card Shopping Volumes, Revolving Credit and Cash Advance Balances ・Planned annual credit card shopping transaction volume of ¥8 tn (123%, yoy) ・Revolving credit balance exceeded pre-pandemic lev
Slide 24: Promoting the Use of Housing Loans
３. Priority Initiatives to Improve Corporate Value （ Domestic Business Restructuring ） Strengthening Profitability _Promoting the Use of Housing Loans ・Unique benefits in collaboration with retailers plan to increase mortgage disbursement by 130% (yoy) Promotion of housing loan benefits [AEON Select
Slide 25: Environmental Recognition in Global Business
３. Priority Initiatives to Improve Corporate Value （Global Business Model Reform) Environmental Recognition in Global Business ・Over the past 10 years, the outstanding amount of receivables and profits have increased significantly, mainly in the three listed countries ・Respond to changes in the exte
Slide 26: Strengthening Sales Capabilities and Improving Productivity through Digitalization
３. Priority Initiatives to Improve Corporate Value （Global Business Model Reform) Strengthening Sales Capabilities and Improving Productivity through Digitalization ・Shifting channels from physical to digital and developing new products and services ・Digitalize processes to improve speed, accuracy a
Slide 27: Modernize Processes by Digitizing Touchpoints
３. Priority Initiatives to Improve Corporate Value （Global Business Model Reform) Modernize Processes by Digitizing Touchpoints ・Centralize main touchpoints in app. Existing contact centers are positioned as complementary channels for apps to improve operational efficiency Manned Digitization of app
Slide 28: Advancement of Screening and Credit Management through the Use of AI
３. Priority Initiatives to Improve Corporate Value （Global Business Model Reform) Advancement of Screening and Credit Management through the Use of AI ･GAILABO, a provider of AI-based solutions, as a strategic partner, introduced AI credit and collection services to Indonesia. Improved screening spe
Slide 29: Initiatives to Establish New Business Models
３. Priority Initiatives to Improve Corporate Value （Global Business Model Reform) Initiatives to Establish New Business Models ･In preparation for the opening of a digital bank scheduled for January, 2024, we will invite CEO Raja, who has experience in digital banking, from outside to establish a bu
Slide 30: Human Capital Investment in Growth Areas (AFS Academy)
３. Priority Initiatives to Improve Corporate Value （Promoting Sustainability) Human Capital Investment in Growth Areas (Establishment of AFS Academy) ・AFS Academy established in March 2023 as a human resource education and development organization ・Invest in medium- to long-term employee development
Slide 31: Re-post: FY2023 Earnings and Dividend Forecast
2. Earnings and Dividend Forecasts 【Re-post】FY2023 Earnings and Dividend Forecast ・Restructuring continues in Japan. Although the company plans to record upfront investment costs of 2.4 billion yen in digital banks, consolidated operating profit increased ・Net profit is expected to decrease due to t
Slide 32: APPENDIX
業績ハイライト・概要 第3四半期以降の取り組み APPENDIX AEON Financial Service Co., Ltd.
Slide 33: Impact of the Application of the Accounting Standard on Revenue Recognition
４. APPENDIX Impact of the Application of the Accounting Standard on Revenue Recognition ・Began applying the accounting standards for revenue recognition in the FY2022 1Q ・Due to the application of the standards, some operating revenues and operating expenses have been changed from gross notation to
Slide 34: Impact of the Application of the Accounting Standard on Revenue Recognition
４. APPENDIX Impact of the Application of the Accounting Standard on Revenue Recognition ・FY22 results impact of ¥35.1 bn in Domestic credit card shopping revenue and ¥2.2 bn in Domestic e-money revenue ・Advertising expenses decreased by the same amount, and there was no impact on operating profit (U
Slide 35: Results by Segment
４. APPENDIX Results by Segment （Unit：billions of yen） Domestic Global Consol.To Total Total tal ※2 Retail ※3 Solutions※3 ※2 China Mekong Malay ※4 Operating 282.7 167.8 176.3 169.3 22.4 86.0 60.9 451.7 Revenue YoY※1 85％ 79％ 99％ 123％ 143％ 119％ 122％ 96％ Change※1 △50.6 △45.7 △2.4 ＋31.2 ＋6.7 +13.6 +10.9
Slide 36: Transaction Volume and Outstanding Receivables of Global Business
４. APPENDIX Transaction Volume and the Status of Outstanding Receivables of Global Business ・Strengthen sales promotion measures and continue to expand transaction volume and trade receivables balance in each area China Area Mekong Area Malay Area Global Business （Hong Kong） （Thailand） Comparison Co
Slide 37: Results by Area
4. APPENDIX Results by Area (Unit : billions of yen) Balance of Increase or Transaction FY2021 FY2019 receivables decrease at Change in the volume Compared to Compared to (Before (※) the beginning previous quarter same period same period securitization) from the FY Credit card 6,865.0 109% 119% 1,59
Slide 38: Cardholders Results
6. APPENDIX Cardholders Consolidated Diff from Domestic Diff from Global Diff from beginning of beginning of beginning of the FY the FY the FY Results (unit：million copies) 48.24 +0.92 30.82 +0.73 17.42 +0.19 【Domestic】 ・1.81 million new card members (YoY +0.23 million cards ) ・19.11 million cards w
Slide 39: FY2022 Performance of Three Overseas Listed Companies (Local currency)
４. APPENDIX FY2022 Performance of Three Overseas Listed Companies (Local currency) FY2021 FY2022 Results YoY Results YoY AEON Revenue 1,049,589 96% 1,231,631 117% CREDIT SERVICE Profit before tax 397,973 111% 449,294 113% (ASIA) (HK$’000) Profit for the period 342,592 114% 373,611 109% AEON Total Re
Slide 40: FY2022 Performance of Three Overseas Listed Companies (Yen conversion)
4. APPENDIX FY2022 Performance of Three Overseas Listed Companies (Yen conversion) AEON Credit Service FY2021 FY2022 （Unit：billions of yen） (Asia) Co., Ltd. Results Results YoY Exchange rates: HKD 1 Operating income 15.0 20.9 139% ・ FY2021 ：¥14.35 ・ FY2022 ：¥17.04 Operating profit 5.7 7.6 134% Fisca
Slide 41: Consolidated Balance Sheet
4. APPENDIX Consolidated Balance Sheet ■In fiscal 2022, the balance of operating receivables, including operating loans, banking loans, and installment accounts receivable, increased by ¥522.8 bn. The balance of allowance for doubtful accounts increased by ¥2.9 bn. 【Consolidated operating receivable
Slide 42: Allowance for Doubtful Accounts and Loss on Refund of Interest
4. APPENDIX Full Year Allowance for Doubtful Accounts and Allowance for Loss on Refund of Interest Received by Segment （Unit：billions of yen） Domestic FY2021 FY2022 Retail Solutions Total Beginning of Allowance for doubtful accounts, period 5.7 6.4 balance at beginning of period 5.4 53.8 58.8 Provis
Slide 43: Forward-looking statements
Statements contained in this report with respect to the Company’s management strategies, business policies and results forecasts are forward- looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available
AEON Financial Service — FY2022 Earnings Presentation on 6ix