Note: This English translation is solely for reference purposes and not a legally definitive translation of the original Japanese text. In the event a difference arises regarding the meaning herein, the original Japanese version will prevail as the official authoritative version.
DENTSU SOKEN INC.
April 26, 2024
INDEX
Outline of financial results for the 1Q of FY2024
Forecasts for FY2024
2
Appendix
INDEX
Outline of financial results for the 1Q of FY2024
- Forecasts for FY2024
3
Appendix
Financial Highlights for the First Quarter of FY2024
+6.7% increase, mainly due to expansion on Financial Solutions and Manufacturing Solutions
Net sales
+1.4% increase, absorbing increase in cost of sales and SG&A expenses due to increase in personnel and higher base salaries
Operating profit
Orders received increased by +2.4% and order backlog increased by +1.6% mainly for Financial Solutions
Orders
50.1% for net sales and 52.3% for operating profit against the 1H forecasts
Rate of progress
Consolidated Results for the First Quarter of FY2024
(Unit: Millions of yen)
1Q of FY2024 (cumulative) | YoY | |||
1Q of FY2023 (cumulative) | Variance | % change | ||
Net sales | 37,099 | 34,779 | +2,320 | +6.7 |
Gross profit | 13,566 | 12,774 | +792 | +6.2 |
Gross profit margin (%) | 36.6 | 36.7 | -0.1p | ‐ |
Selling, general and administrative expenses | 7,809 | 7,098 | +711 | +10.0 |
Operating profit | 5,757 | 5,676 | +81 | +1.4 |
Operating margin (%) | 15.5 | 16.3 | -0.8p | ‐ |
Ordinary profit | 5,734 | 5,781 | -47 | -0.8 |
Profit attributable to owners of parent | 4,118 | 3,837 | +281 | +7.3 |
Number of employees* | 3,683people | 3,397people | +286 | +8.4 |
*at the end of the first quarter
Factors for Increase/Decrease in Operating Profit (YoY)
(Unit: 100 million of yen)
Impact of decline in gross profit margin
-0.6
Operating profit 56.7
Operating profit 57.5
Increase in SG&A expenses -7.1
Effect of increase in sales +8.5
Increase mainly in personnel expenses.
Gross profit margin declined -0.1p, mainly in Consulting, Outsourcing, Operation and Maintenance Services.
YoY
+0.8
Non-operating Income/Expenses and Extraordinary Income/Losses
- Non-operating income/expenses deteriorated due to the posting of foreign exchange losses, etc.
- Extraordinary income/loss improved due to the recording of gain on sale of investment securities
1Q of FY2024 (cumulative) | YoY | |||
1Q of FY2023 (cumulative) | Variance | % change | ||
Operating profit | 5,757 | 5,676 | +81 | +1.4 |
Non-operating income | 73 | 115 | -42 | -36.5 |
Non-operating expenses | 96 | 11 | +85 | +772.7 |
Ordinary profit | 5,734 | 5,781 | -47 | -0.8 |
Extraordinary income | 265 | - | +265 | - |
Extraordinary losses | 25 | 377 | -352 | -93.4 |
Profit before income taxes | 5,974 | 5,403 | +571 | +10.6 |
Total income taxes | 1,856 | 1,565 | +291 | +18.6 |
Profit attributable to non-controlling interests | ‐ | 0 | -0 | ‐ |
Profit attributable to owners of parent | 4,118 | 3,837 | +281 | +7.3 |
(Unit : Millions of yen)
Net Sales and Operating Profit by Reportable Segment
(Unit : Millions of yen)
1Q of FY2024 (cumulative) | YoY | Overview | |||
Variance | % change | ||||
Financial Solutions | Net sales | 7,886 | +571 | +7.8 | Net sales and operating profit increased due to expanded sales and implementation of third-party software in the accounting area to the banking industry and increased provision of custom system development service in the customer contact point area, mainly to general business companies. |
Operating profit | 967 | +444 | +84.9 | ||
% | 12.3 | +5.2p | ‐ | ||
Business Solutions | Net sales | 5,606 | -68 | -1.2 | Although sales and implementation of the POSITIVE expanded mainly for the service industry, in the accounting area, sales and implementation of solutions were sluggish due to the peak-out of several projects. As a result, net sales remained on a par the same period of the previous year. Profit decreased due to a significant increase in personnel expenses accompanying strategic staffing. |
Operating profit | 1,235 | -336 | -21.4 | ||
% | 22.0 | -5.7p | ‐ | ||
Manufacturing Solutions | Net sales | 11,712 | +1,557 | +15.3 | Net sales and operating profit increased due to the expansion of consulting to support system grand design and engineering, as well as sales and implementation of the Teamcenter mainly to the transportation equipment and electric appliances and precision instruments industries. |
Operating profit | 1,847 | +563 | +43.8 | ||
% | 15.8 | +3.2p | ‐ | ||
Communication IT | Net sales | 11,893 | +260 | +2.2 | Net Sales increased due to expanded implementation of SAP solutions mainly in the machinery industry. Profit decreased due to factors such as an increase in personnel expenses associated with an increase in the number of employees and the impact of the continued low profitability of projects that were unprofitable in the previous fiscal year. |
Operating profit | 1,706 | -591 | -25.7 | ||
% | 14.3 | -5.4p | ‐ | ||
*POSITIVE: human capital management, Teamcenter: product lifecycle management solution
Net Sales by Service Category and Dentsu Group
(Unit: Millions of yen)
Service category | 1Q of FY2024 (cumulative) | YoY | |
Variance | % change | ||
Consulting Services | 2,671 | +480 | +21.9 |
Custom System Development | 7,531 | -422 | -5.3 |
In-house Software | 7,496 | +294 | +4.1 |
Third-party Software | 13,289 | +1,912 | +16.8 |
Outsourcing, Operation and Maintenance Services | 4,078 | -35 | -0.9 |
IT Equipment Sales and Others | 2,031 | +89 | +4.6 |
Counterparty | 1Q of FY2024 (cumulative) | YoY | |
Variance | % change | ||
Dentsu Group Inc. and its subsidiaries | 5,355 | +26 | +0.5 |
Net Sales by Industry
(Unit: Millions of yen)
Industry | 1Q of FY2024 (cumulative) | YoY | |||
Net sales | Composition ratio (%) | Variance | % change | ||
Banks | 5,703 | 15.4 | +113 | +2.0 | |
Other financial institutions | 1,854 | 5.0 | +351 | +23.4 | |
Financial | 7,558 | 20.4 | +465 | +6.6 | |
Transportation equipment | 6,537 | 17.6 | +372 | +6.0 | |
Electric appliances Precision instruments | 4,204 | 11.3 | +661 | +18.7 | |
Machinery | 2,837 | 7.6 | +418 | +17.3 | |
Other products | 2,701 | 7.3 | -352 | -11.5 | |
Manufacturing | 16,280 | 43.8 | +1,098 | +7.2 | |
Services and public offices | 10,265 | 27.7 | +691 | +7.2 | |
Distributions and others | 2,994 | 8.1 | +66 | +2.3 | |
Orders Received and Order Backlog
Orders received | Order backlog | ||||
1Q of FY2024 (cumulative) | YoY % change | End of 1Q of FY2024 | YoY % change | ||
Total | 45,842 | +2.4 | 62,642 | +1.6 | |
Reportable segment | Financial Solutions | 8,822 | +28.5 | 8,711 | +18.8 |
Business Solutions | 5,892 | +3.3 | 8,162 | -20.5 | |
Manufacturing Solutions | 15,453 | +4.4 | 26,855 | +18.1 | |
Communication IT | 15,674 | -10.0 | 18,913 | -11.3 | |
Service category | Consulting Services | 2,532 | +15.1 | 1,225 | +23.4 |
Custom System Development | 8,790 | +10.5 | 6,394 | -8.1 | |
In-house Software | 7,644 | -1.1 | 10,919 | -17.4 | |
Third-party Software | 17,363 | +5.9 | 31,163 | +14.7 | |
Outsourcing, Operation and Maintenance Services | 7,053 | -6.1 | 7,061 | +2.2 | |
IT Equipment Sales and Others | 2,458 | -17.9 | 5,878 | -8.1 | |
(Unit: Millions of yen)
INDEX
- Outline of financial results for the 1Q of FY2024
Forecasts for FY2024
Note:
Forecasts of business results in this document are based on judgments and assumptions made in light of industry trends, customer conditions, and other information currently available, and are not intended as a guarantee that they will be achieved. Actual results may differ from these forecasts due to uncertainties inherent in forecasts, changes in internal and external conditions, and other factors.
12
Earnings Forecasts for FY2024
- There is no changes in the forecasts announced on February 14, 2024.
(Unit: Millions of yen)
FY2024 (cumulative) | YoY | |||
FY2023 (cumulative) | Variance | % change | ||
Net sales | 153,000 | 142,608 | +10,392 | +7.3 |
Operating profit | 22,500 | 21,028 | +1,472 | +7.0 |
Operating margin(%) | 14.7 | 14.7 | -0.0p | ‐ |
Ordinary profit | 22,500 | 21,244 | +1,256 | +5.9 |
Profit attributable to owners of parent | 15,700 | 14,663 | +1,037 | +7.1 |
Number of employees* | 4,000 people | 3,652 people | +348 | +9.5 |
1H of FY2024 (cumulative) | YoY | ||
1H of FY2023 (cumulative) | Variance | % change | |
74,000 | 69,849 | +4,151 | +5.9 |
11,000 | 10,652 | +348 | +3.3 |
14.9 | 15.3 | -0.4p | ‐ |
11,000 | 10,785 | +215 | +2.0 |
7,700 | 7,446 | +254 | +3.4 |
* at the end of the fiscal year
Net Sales Forecasts by Reportable Segment for FY2024
(Unit: Millions of yen)
FY2024 (cumulative) | YoY | |||
FY2023 (cumulative) | Variance | % change | ||
Financial Solutions | 33,000 | 30,598 | +2,402 | +7.9 |
Business Solutions | 25,000 | 23,107 | +1,893 | +8.2 |
Manufacturing Solutions | 45,000 | 41,118 | +3,882 | +9.4 |
Communication IT | 50,000 | 47,784 | +2,216 | +4.6 |
1H of FY2024 (cumulative) | YoY | ||
1H of FY2023 (cumulative) | Variance | % change | |
16,000 | 14,721 | +1,279 | +8.7 |
12,300 | 11,653 | +647 | +5.6 |
21,700 | 19,795 | +1,905 | +9.6 |
24,000 | 23,678 | +322 | +1.4 |
Net Sales Forecasts by Service Category for FY2024
(Unit: Millions of yen)
FY2024 (cumulative) | YoY | |||
FY2023 (cumulative) | Variance | % change | ||
Consulting Services | 9,500 | 8,611 | +889 | +10.3 |
Custom System Development | 32,000 | 30,913 | +1,087 | +3.5 |
In-house Software | 34,000 | 30,237 | +3,763 | +12.4 |
Third-party Software | 53,000 | 48,184 | +4,816 | +10.0 |
Outsourcing, Operation and Maintenance Services | 17,000 | 17,108 | -108 | -0.6 |
IT Equipment Sales and Others | 7,500 | 7,553 | -53 | -0.7 |
1H of FY2024 (cumulative) | YoY | ||
1H of FY2023 (cumulative) | Variance | % change | |
4,600 | 3,999 | +601 | +15.0 |
16,000 | 15,738 | +262 | +1.7 |
16,400 | 15,054 | +1,346 | +8.9 |
25,300 | 23,059 | +2,241 | +9.7 |
8,000 | 8,216 | -216 | -2.6 |
3,700 | 3,780 | -80 | -2.1 |
INDEX
- Outline of financial results for the 1Q of FY2024
- Forecasts for FY2024
16
Appendix
M&A Implementation
- Acquired all the shares of Mitsue-Links Co., Ltd, UI/UX design company.
- Strengthen the support business that many company aims to "Creating Value" and " Improving Customer Experiences," through synergy with the company.
- The impact on our forecasts for the current fiscal year is minimal.
Company Name | Mitsue-Links Co., Ltd. |
Head Office | 8-17-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo |
Corporate Representative | Masashi Takahashi (CEO) |
Capitalization | 99,800,000 yen |
Incorporation | July 1990 |
Employees | 465 people |
Business Activities | Web Integration, Web Consulting, SystemDevelopment, Audio/Video Content |
FY2023 Results | Net sales: 4,064 million yen, Ordinary profit: 699 million yen |
© DENTSU SOKEN INC. 17