Nippon Paint Holdings Co., Ltd. · TSE:4612
Nippon Paint — Q1 2020 Earnings Presentation
24 slides from Nippon Paint's earnings presentation, May 15, 2020
Slide 1: FY2020 1Q Financial Result Conference Call Presentation Summary
FY2020 1Q Financial Result Conference Call Presentation Summary May 15, 2020 Good evening everyone. I am Yuichiro Wakatsuki, chief financial officer of Nippon Paint Holdings. Thank you for taking the time late in the evening to participate in this conference regarding our earnings results for FY2020
Slide 2: Change in disclosure policy: reported and non-GAAP basis
Please look at the bottom of page 2. We have changed our disclosure policy for financial information since February to provide figures prepared both on a reported basis, which is the data in our tanshin, and an adjusted, or non-GAAP, basis. Major adjustments are the profit contribution from the acqu
Slide 3: First quarter FY2020 results overview
In the first quarter of FY2020, revenue increased with a profit decline on a reported basis, while both revenue and profit declined on a non-GAAP basis, year on year, respectively. Our consolidated earnings were affected significantly by the weak business performance at NIPSEA China and also by the
Slide 4: FY2020 forecast and dividend status
We will maintain the initial forecast for DuluxGroup but withhold that for Betek Boya this time taking into consideration the impact of coronavirus outbreak. Please also note that business environment surrounding DuluxGroup has changed from the time the initial forecast was formed. Our view is that
Slide 5: Coronavirus impact on global operations
Now I would like to explain the current coronavirus impact. This page shows the overview of coronavirus impact on NHPD’s global operations. Please note that production volumes are only approximate estimates and also that such volume itself is subject to change according to inventory buildup and futu
Slide 6: Response to coronavirus: three priority policies
NPHD announced internally and externally earlier on to respond to the novel coronavirus outbreak based on three priority policies. Regarding the first policy, NPHD Group has had 0 employees who tested positive for the coronavirus in Japan and only a few tested positive overseas, and no plant closure
Slide 7: Recovery outlook for NIPSEA China
the decorative paints business. We are not expecting a V-shaped recovery overall, and the FY2020 forecasts which I will explain later are prepared based on cautious assumptions for market recovery. That said, one of the strengths of NIPSEA China is the resilience power toward the recovery, i.e., the
Slide 8: Coronavirus impact on markets by region
This page shows the coronavirus impact on the market and business conditions in our major operating regions. Our Asia operations were faring well until February but have been affected by the coronavirus outbreak and lockdown since March. Our domestic decorative paints business has started to see the
Slide 9: Betek Boya and automotive coatings conditions
addition, some stores were ordered to shut down in the early stage of coronavirus outbreak. While all the stores have resumed operations, demand is calm at this time. Regarding Betek Boya, earnings were very strong in 1Q owing to factors such as the rollout of a major sales promotion event in Februa
Slide 10: April preliminary production and revenue estimates
The figures on this page are preliminary approximate estimates for April and intended to present an overall trend rather than examining each figures. As I stated earlier in the explanation about Betek Boya’s business conditions where revenue increase and sharp production decrease coexists, simply lo
Slide 11: Bridge loan refinance and liquidity
This page explains the second of our three priority policies explained earlier. The bridge loan refinance described in ② in this page has been under consideration before corona impact. During this period we were able to broaden bank relationships, extend duration in a good timing, and secure suffici
Slide 12: STAY HOME & ENJOY PAINTING campaign
There are business opportunities lying ahead even under these tough circumstances. This “STAY HOME & ENJOY PAINTING” campaign introduces the ideas for staying home not as home nesting, but rather as “home decorating,” and is very well received among consumers I hope everyone will give them a try. 12
Slide 13: Antivirus coatings and social issue initiatives
Lastly, I would like to explain about NPHD’s various initiatives that are underway toward solving social issues caused by infections using our technologies. In fact, NPHD already has a range of antivirus coatings available, although those products are not designed specifically to prevent the spread
Slide 14: Market climate heat map
This page shows a heat map we started using from FY2019 Q4 financial results presentation in February. Reading this chart takes some getting used to: The colors indicate market climates and the arrows for market share showing whether we have outperformed (increased market share), were in-line (maint
Slide 15: Operating profit bridge, reported and non-GAAP
This page shows the bridge in our first quarter operating profit on a reported and non- GAAP basis. The biggest positive adjustment for this year is for the profit contribution from the acquisition of DuluxGroup and Betek Boya. These adjustments should be eliminated from 3Q to 4Q. 15
Slide 16: FY2020 full-year earnings forecast
Now I would like to explain the full-year earnings forecasts for FY2020. I have already explained our assumptions used in preparing the FY2020 forecasts, but let me reiterate that it is in fact difficult to create an overall forecast given that the coronavirus impact varies enormously from region to
Slide 17: Dividend forecast and capital priorities
What comes next is growth investments to increase Total Shareholder Return (TSR) and then comes consideration of dividends also taking into account the stability of dividend payment. We thus believe that it is rather early to provide a dividend forecast at this time. 17
Slide 18: Second quarter market condition forecast
This page shows our forecast for the second quarter market conditions. The market conditions in China, for instance, are not all bad in April as I mentioned earlier. However, I believe the situations in May and June do not allow for optimism. 18
Slide 19: Second half market condition forecast
This page shows our forecast for the second half market conditions. The forecast assumes a peak out of the coronavirus outbreak to a certain extent, but we do not assume a V-shaped recovery of the overall business sentiment. However, we assume that conditions in many markets will recover to prior-ye
Slide 20: Various assumptions for FY2020 forecast
= LF \(@)) NIPPON PAINT HOLDINGS CO.,LTD. | 3-4. Various Assumptions for FY2020 Forecast ( 1) I NIPSEA China (-5%~-10% YoY) Decorative (DIY) : -5%~-10% YoY: Moderate market recovery expected due to resumption of economic activities. Promotion campaigns planned based on expectation for market recover
Slide 21: FY2020 forecast assumptions by region
The pages 27 and 28 explain assumptions for FY2020 forecasts by region. As I have mentioned earlier, these are the base case assumptions at this time, and the aggregate of figures created based on these assumptions comes to revenue of 720 billion yen we announced today. For instance, the market cond
Slide 22: Breakdown of adjustment items (FY2018 1Q vs FY2019 1Q)
4(@)) NIPPON PAINT HOLDINGS CO.,LTD. | 4-(1)-3. Breakdown of the Adjustment Items (FY2018 1Q vs. FY2019 1Q) (Billion yen) FY2018 1Q FY2019 1Q Subsidy, M&A Impair- New Subsidy, M&A Impair- New FX Insurance, ; related mont jogs; 2cqui- | Total FX j Insurance, ; related i rent jogs} Acdui- | Total etc.
Slide 23: Comparison of adjustment items between years
Before concluding today’s presentation, I would like to mention two items for your reference. Firstly, we provided a comparison of breakdown of the adjustment items between FY2018 and FY2019 according to requests from investors. The comparison of first quarter is provided on pages 32 and 33. We will
Slide 24: Trademark depreciable life change and closing
As footnoted on page 31, we reviewed the depreciable life of NIPSEA China’s trademark rights in accordance with changes in accounting estimates. As a result, depreciation and amortization declined approx. 0.6 billion yen per quarter, and this change will make a positive contribution on a full-year b
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