Presentation Material of Financial Results for the Third Quarter of FY2023
(from January 1, 2023 to September 30, 2023)
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.
Outline of financial results for the Third Quarter of FY2023
Financial Highlights for the Third Quarter of FY2023
- Net sales : +12.2% with expansion in all segments
- Operating profit : +9.6%, absorbing increase in SG&A expenses
- Orders Received : +10.7%, mainly in Financial/Manufacturing solutions
- Progress against the full-year plan : 75.2％ of net sales,
Consolidated Results for the Third Quarter of FY2023
(Unit : Millions of yen)
3Q of FY2023
(cumulative)
YoY
3Q of FY2022
(cumulative)
Variance
% change
Net sales
105,267
93,808
+11,459
+12.2
Gross profit
Profit margin
37,859
36.0%
34,018
36.3%
+3,841
-0.3p
+11.3
-
Selling, general and administrative expenses
22,307
19,831
+2,476
+12.5
Operating profit
Operating margin
15,551
14.8%
14,186
15.1%
+1,365
-0.3p
+9.6
-
Ordinary profit
15,695
14,184
+1,511
+10.7
Profit attributable to owners of parent
10,838
9,574
+1,264
+13.2
Number of employees as of the third quarter
3,621 people
3,364 people
+257 people
+7.6
Factors for Increase/Decrease in Operating Profit (YoY)
Gross profit margin declined -0.3p, mainly in
In-house Software and Outsourcing, Operation and Maintenance Services.
YoY
+13.7
Effect of Increase in sales +41.5
Impact of decline in gross profit margin -3.1
Increase in SG&A expenses -24.7
(Unit: 100 million of yen)
Operating profit 141.8 Operating profit 155.5Increase in personnel, sales promotion, R&D and advertising expenses, etc.
3Q of FY2022
(cumulative) result
3Q of FY2023
(cumulative) result
Net Sales and Operating Profit by Reportable Segment
(Unit : Millions of yen)
Reportable segment
3Q of FY2023
(cumulative)
YoY
Overview
Variance
% change
Financial Solutions
Net sales
22,582
+1,872
+9.0
Net sales increased due to the expansion of the sales and introduction of software products in the core banking area centered on accounting and the customer contact reform area, mainly to the banking industry. Operating profit also increased due to higher sales and improved profitability.
Operating profit
2,577
+1,045
+68.2
%
11.4
+4.0p
-
Business Solutions
Net sales
17,466
+3,953
+29.3
Net sales and operating profit increased due to the expansion of the sales and introduction of four key solutions, POSITIVE, STRAVIS, Ci*X, CCH Tagetik mainly in the trading and the manufacturing industry.
Operating profit
4,571
+906
+24.7
%
26.2
-0.9p
-
Manufacturing Solutions
Net sales
29,819
+3,290
+12.4
Net sales and operating profit increased due to the expansion of NX, 3D CAD, Teamcenter, product lifecycle management solution and iQUAVIS, conceptual design support system, mainly in the transportation equipment and the machinery industry.
Operating profit
3,459
+317
+10.1
%
11.6
-0.2p
-
Communication IT
Net sales
35,398
+2,343
+7.1
Net sales increased due to an expansion of projects for the implementation of SAP solutions, mainly in the manufacturing industry. Operating profit decreased due to higher cost of sales for some custom system development projects and lower profitability of outsourcing, operation and maintenance services.
Operating profit
4,942
-904
-15.5
%
14.0
-3.7p
-
* POSITIVE : human capital management solution STRAVIS: consolidated accounting software Ci*X : financial solution system CCH Tagetik : business management solution
Ref.) Consolidated Results for the 3Q (July - September) of FY2023
(Unit : Millions of yen)
3Q of FY2023
(July - September)
YoY
3Q of FY2022
Variance
% change
Net sales
35,417
32,350
+3,067
+9.5
Gross profit
12,296
11,043
+1,253
+11.3
Profit margin
34.7%
34.1%
+0.6p
-
Selling, general and administrative expenses
7,397
6,491
+906
+14.0
Operating profit
4,898
4,552
+346
+7.6
Operating margin
13.8%
14.1%
-0.3p
-
- Consolidated Results
-
Reportable Segment
(Unit : Millions of yen)
Reportable segment
3Q of FY2023
(July - September)
YoY
Variance
% change
Financial Solutions
Net sale
7,861
+786
+11.1
Operating profit
1,160
+697
+150.5
%
14.8
+8.3p
-
Business Solutions
Net sale
5,812
+1,023
+21.4
Operating profit
1,418
+31
+2.2
%
24.4
-4.6p
-
Manufacturing Solutions
Net sale
10,023
+834
+9.1
Operating profit
1,287
+191
+17.4
%
12.8
+0.9p
-
Communication IT
Net sale
11,719
+424
+3.8
Operating profit
1,031
-573
-35.7
%
8.8
-5.4p
-
Net Sales by Service Category and the Dentsu Group
(Unit : Millions of yen)
Service category
3Q of FY2023
(cumulative)
YoY
Variance
% change
Consulting Services
6,024
+697
+13.1
Custom System Development
23,259
-1,227
-5.0
In-house Software
22,593
+4,897
+27.7
Third-party Software
35,351
+5,312
+17.7
Outsourcing, Operation and Maintenance Services
12,440
+1,205
+10.7
IT Equipment Sales and Others
5,597
+573
+11.4
(Unit : Millions of yen)
Counterparty
3Q of FY2023
(cumulative)
YoY
Variance
% change
Dentsu Group Inc. and it's subsidiaries
16,516
-1,141
-6.5
Net Sales by Industry
(Unit : Millions of yen)
Industry
3Q of FY2023 (cumulative)
YoY
Net Sales
Composition Ratio (%)
Variance
% change
Banks
16,492
15.7
+2,067
+14.3
Other financial institutions
5,337
5.1
-681
-11.3
Financial
21,830
20.8
+1,386
+6.8
Transportation equipment
16,399
15.5
+2,968
+22.1
Electric appliances Precision instruments
11,106
10.6
+1,411
+14.6
Machinery
7,791
7.4
+1,502
+23.9
Other products
8,912
8.5
+187
+2.1
Manufacturing
44,211
42.0
+6,069
+15.9
Services and public offices
29,946
28.4
+2,304
+8.3
Distributions and others
9,279
8.8
+1,700
+22.4
* As we reviewed some of our client industries, we used reclassified figures for comparative purposes for the same period last year.
Orders Received and Order Backlog
(Unit : Millions of yen)
Orders received | Order backlog | ||||||
3Q of FY2023 (July - September) | YoY (%) | 3Q of FY2023 (cumulative) | YoY (%) | End of 3Q of FY2023 | YoY (%) | ||
Total | 32,111 | +8.8 | 112,452 | +10.7 | 58,834 | +22.7 | |
Reportable Segment | Financial Solutions | 7,952 | +32.8 | 23,203 | +9.6 | 8,403 | +7.3 |
Business Solutions | 3,974 | -19.5 | 15,551 | +7.8 | 8,317 | +35.8 | |
Manufacturing Solutions | 11,199 | +32.3 | 36,808 | +29.3 | 25,091 | +43.7 | |
Communication IT | 8,984 | -11.3 | 36,888 | -1.8 | 17,022 | +3.0 | |
Service Category | Consulting Services | 1,820 | +3.5 | 6,479 | +17.1 | 1,440 | +47.7 |
Custom System Development | 7,007 | +3.7 | 22,020 | -12.3 | 5,718 | -19.7 | |
In-house Software | 5,091 | -8.4 | 20,851 | +9.8 | 10,957 | +30.3 | |
Third-party Software | 13,956 | +42.8 | 43,027 | +32.6 | 29,825 | +43.0 | |
Outsourcing, Operation and Maintenance Services | 2,524 | -30.0 | 13,868 | -0.5 | 4,939 | +1.4 | |
IT Equipment Sales and Others | 1,711 | -17.4 | 6,204 | +11.0 | 5,952 | +4.1 | |
Forecasts for FY2023
Note: Explanation regarding the appropriate use of forecasts of business results
The forecast figures are projections based on information available at the time of release and are not intended as a guarantee that we will achieve these targets. Actual results may differ significantly from the forecasts as a result of changes in the business environment and other factors.
Forecast for FY2023
We maintain unchanged our forecasts, as announced on July 31, 2023.(Unit : Millions of yen)
(Reference)
FY2023
YoY
3Q progress against full-year forecast (%)
FY2022
Variance
% change
Net sales
140,000
129,054
+10,946
+8.5
75.2
Operating profit
21,000
18,590
+2,410
+13.0
74.1
Operating margin
15.0%
14.4%
+0.6p
-
-
Ordinary profit
21,100
18,354
+2,746
+15.0
74.4
Profit attributable to owners of parent
14,700
12,598
+2,102
+16.7
73.7
Net Sales Forecast Reference for FY2023 by Reportable Segment
(Unit : Millions of yen)
(Reference)
FY2023
YoY
3Q progress against full-year forecast (%)
FY2022
Variance
% change
Financial Solutions
29,500
28,125
+1,375
+4.9
76.5
Business Solutions
21,900
18,608
+3,292
+17.7
79.8
Manufacturing Solutions
39,400
36,453
+2,947
+8.1
75.7
Communication IT
49,200
45,867
+3,333
+7.3
71.9
Total
140,000
129,054
+10,946
+8.5
75.2
Net Sales Forecast Reference for FY2023 by Service Category
(Unit : Millions of yen) | (Reference) | |||||
FY2023 | YoY | 3Q progress against full-year forecast (%) | ||||
FY2022 | Variance | % change | ||||
Consulting Services | 8,580 | 7,418 | +1,162 | +15.7 | 70.2 | |
Custom System Development | 33,006 | 33,107 | -101 | -0.3 | 70.5 | |
In-house Software | 28,141 | 24,807 | +3,334 | +13.4 | 80.3 | |
Third-party Software | 46,371 | 40,299 | +6,072 | +15.1 | 76.2 | |
Outsourcing, Operation and Maintenance Services | 17,082 | 16,052 | +1,030 | +6.4 | 72.8 | |
IT Equipment Sales and Others | 6,817 | 7,369 | -552 | -7.5 | 82.1 | |
Total | 140,000 | 129,054 | +10,946 | +8.5 | 75.2 | |