Hikari Tsushin, Inc. · TSE:9435

Hikari Tsushin — Q3 FY2006.3 Earnings Presentation

23 slides from Hikari Tsushin's earnings presentation, Feb 27, 2006

  1. Slide 1: The 3rd Quarter Financial Results of Fiscal Year 2006.3

    (TSE：9435） The 3rd Quarter Financial Results (April 2005～ December 2005) of the Fiscal Year 2006.3 2006.02.27 Copyright (c) 2006 Hikari Tsushin, Inc. 1

  2. Slide 2: Financial Results Highlight

    Financial Results Highlight Copyright (c) 2006 Hikari Tsushin, Inc. 2

  3. Slide 3: Consolidated Financial Results

    Consolidated Financial Results （\ Millions） FY2005.3 Q1-Q3 FY2006.3 Q1-Q3 （2004/4 ～ 2004/12) （2005/ 4 ～ 2005 /12) Net Sales 124,803 136,123 9.1% Increase Gross Profit 63,905 78,783 GP Margin: GP Margin 51.2% 57.9% 6.7 Points Increase Operating Income 15,865 17,135 8.0% Increase OP Income Margin 12.7

  4. Slide 4: Business Segment

    Business Segment 【Net Sales】 （¥ Millions） 【Operating Income】 （¥ Millions） 150,000 18,000 1,124 130,000 16,000 Corporate or Elimination + Others 2,467 2,736 15.9% 14,000 110,000 61,774 45.3% SHOP SHOP 1,570 9.1% 44.3% 55,336 12,000 23.9% 3,790 90,000 Insurance 10,000 70,000 Insurance 9,996 7.3% 9.7%

  5. Slide 5: Topics from the Balance Sheet

    Topics from the Balance Sheet 【①Balance of Net Liquidity – Over ¥120 Billion】 【②February 2006 – Issue of Straight Bonds】 For the first time in over six years Hikari Tsushin issued straight （¥ Billions） bonds, positioned as “revival into the bonds market”. This issuance will 140 Total ¥124 billion al

  6. Slide 6: Business Results & Strategy

    Business Results & Strategy Copyright (c) 2006 Hikari Tsushin, Inc. 6

  7. Slide 7: Hikari Tsushin Group Overview

    Hikari Tsushin Group Overview The Hikari Tsushin Group will aim to provide ①low marketing cost ②fast & wide market penetration ③high customer satisfaction to be the No.1 distributor. distributor Insurance OA Equipment Telecom Carriers Companies Manufacturers Medical Cellular Telecom OA Equipments In

  8. Slide 8: Low Marketing Cost

    ① Low Marketing Cost Young Age Average: Average:27 27yrs yrsold ・・・・・・・・・・・ old Lowest Cost Per ・ Cheapest Capita ・ Cheapestrent rentinin Ikebukuro area Cost Management ・・・・・・・・・・・ Ikebukuro area ・Strict controls on ・Strict controls on Low direct- direct -indirect tax ratio direct- direct -indirect

  9. Slide 9: Fast & Wide Market Penetration

    ② Fast & Wide Market Penetration ■ History of Deregulation, Liberalization and Technology Innovation. Innovation. 1950's 1950's ～1990's 1990's 2000～ 2000～2005 2006～ 2006～ ～1980's ～1980's The Hikari Tsushin Group has been expanding as a distributor Fixed- FMC Fixed-Mobile Convergence in various compe

  10. Slide 10: High Customer Satisfaction

    ③ High Customer Satisfaction ・ Support Inquiry Contact ・・・・・・・・ ・・・・・・・・ ・ SupportCenters Centers ・Opinion Box on the Web ・Opinion Box on the Web Customer Responsiveness Recording of System ・・・・・・・・ ・・・・・・・ Systemfor for All Communication avoiding troubles avoiding troubles ・ Entry/exit Security ・・・

  11. Slide 11: Basic Business Model

    Basic Business Model Building core businesses on “Stock Stock Model” Model for stable and long- long-term growth. Cellular phones Copiers N Insurance etc 4 Retained Customers ↓ Source of Stable Income 3 3 Prior To New Customers 2 N-1 2 2 1 1 1 1 Period 1 2 3 4 Period N Churn Copyright (c) 2006 Hikar

  12. Slide 12: Corporate Business: Net Sales / Income

    Corporate Business : Net Sales / Income 【Net Sales】 （¥ Millions） 【Operating Income】 （¥ Millions） 70,000 65,612 1.4％ increase 66,583 12,000 11,703 60,000 se ea cr in 10,000 ％ 45 50,000 43,792 8,070 8,000 40,000 6,000 30,000 4,638 4,000 20,000 10,000 2,000 0 0 FY 2004.3 Q1-Q3 FY 2005.3 Q1-Q3 FY 2006.3

  13. Slide 13: Corporate Business: Copiers

    Corporate Business : Copiers 【Sales Volume 【Installed Copiers & Percentage of Color Copiers】 28.3% 30% & Percentage of Color Copiers】 16.2% （Unit） 15% 90,000 11.1% 16.7% 20% 10% 8.0% 80,000 （Unit） 8.8% 4.8% 10% 45,000 3.2% 5% 3.3% 70,000 0.0% 0.1% 40,000 41,560 0% 0% 60,000 35,000 36,814 Shift of sa

  14. Slide 14: Internet-related Business

    Internet-related Business 【Sales & Income: e-machitown Co., Ltd.】 （¥ Millions） 8,000 Focusing on opening portal sites for local communities nationwide 7,000 7,000 6,290 （TSE Mothers： 4747） 6,000 FY 2005.9 Results FY 2006.9 Forecast 5,000 4,000 3,000 2,000 1,141 1,200 1,241 1,100 1,000 0 http://emach

  15. Slide 15: Insurance Business

    Insurance Business 【Net Sales & Operating Income】 【Number of Employees】 （¥ Millions） 11,000 Net Sales 3,100 9,996 10,000 Operating Income 3,000 9,000 se r ea 2,500 inc 8,000 ％ 90 7,000 Up-front cost due to 2,000 6,000 substantial increase in number of employees 5,244 1,600 5,000 1,500 4,000 1,000 3,

  16. Slide 16: SHOP Business

    SHOP Business 【Retained Subscribers & Quarterly Sales of Handsets】 Retained Subscribers 2.39 M 3M 2.32 M 2.18 M • Nov. 2006 Introduction of number portability 2.08 M 1.98 M 2.5M 1.87 M 1.81 M 2M 300K 1.5M ⇒ Improving customer mobility 1M 0.5M • 2006-07 New carriers entering the market 250K 0M Handse

  17. Slide 17: Forecast FY2006.3

    Forecast 【Forecast : FY2006.3 (Apr 2005 ～ Mar 2006)】 （\ Billions） FY2 0 0 5 . 3 FY2 0 0 6 . 3 FY2 0 0 6 . 3 Q1 - Q3 (Re su lt s) (Fo r e c ast ) (Re su l t s) YOY Progress Net Sales 171.0 180.0 105.3% 136.1 75.6% Operating Income 21.7 24.0 110.6% 17.1 71.4% Ordinary Income 29.5 26.0 88.1% 21.5 82.5%

  18. Slide 18: Disclaimer

    Disclaimer This material contains “forward-looking” information, including the Company’s plans, strategies, forecast or belief. Hikari Tsushin cautions readers that forward-looking statements are based on Hikari Tsushin’s current expectations, which have been deprived from information that is availa

  19. Slide 19: Appendix

    Appendix Copyright (c) 2006 Hikari Tsushin, Inc. 19

  20. Slide 20: Consolidated Balance Sheet

    Consolidated Balance Sheet （¥ Millions） （¥ Millions） Dec-04 Mar-05 Dec-05 Dec-04 Mar-05 Dec-05 Current Assets 59,692 64,623 47,299 Current Liabilities 31,991 30,677 43,684 Cash 31,278 29,763 15,535 Acct Payables 14,347 12,587 12,793 Acct Receivables 17,198 20,618 19,121 Borrowings (curent) 250 3 14,

  21. Slide 21: Cash Flow

    Cash Flow （¥ Millions） FY 2004.3 FY 2005.3 FY 2006.3 Q3 Operating Cash Flow 15,010 48,081 11,464 Investing Cash Flow 2,115 (26,360) (37,521) Financing Cash Flow (36,555) (3,989) 13,335 Cash and its Equivalents 10,337 28,111 15,271 Copyright (c) 2006 Hikari Tsushin, Inc. 21

  22. Slide 22: FY2003-2005 Business Segment Transition

    FY2003-2005 Business Segment Transition 【Net Sales】 （¥ Millions） 【Operating Income】 （¥ Millions） 171,009 21,702 170,000 21,000 Corporate or 3,494 150,000 145,995 19,000 Elimination SHOP 17,068 75,459 17,000 124,105 44.1% 130,000 1,614 SHOP 4,856 15,000 21.4% 110,000 83,513 57.2% 13,000 90,000 11,000

  23. Slide 23: 3-Year Financial Summary

    3-Year Financial Summary （¥ Millions） FY 2003 FY 2004 FY 2005 2002/4～2003/3 2003/4～2004/3 2004/4～2005/3 Net Sales 124,105 145,995 171,009 Gross Profit 55,284 66,887 90,636 GP Margin 44.5% 45.8% 53.0% Operating Income 10,269 17,068 21,702 Operating Margin 8.2% 11.6% 12.6% Ordinary Income 3,403 19,628

Hikari Tsushin — Q3 FY2006.3 Earnings Presentation on 6ix