Financial Results for Q2 of the Fiscal Year Ending March 31, 2025 (FY2025) 539KB (2024/10/30)

Nov 22, 2024 at 2:40 AM UTC · Issued by NEC Capital Solutions Limited

Financial Results for Q2 of the Fiscal Year Ending March 31, 2025 (FY2025)

October 30, 2024

NEC Capital Solutions Limited

Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Financial Results for Q2 of the Fiscal Year

Ending March 31, 2025 (FY2025)

Financial Results for Q2 of FY2025

Highlights of Financial Results
Business Environment
Financial Summary
Revenues by Business Segment
Business Results by Business Segment
Leasing Business
Finance Business
Investment Business
Operating Asset Balances
Procuring Funds
Credit Costs

Forecasts for FY2025
Progress of Medium-term Plan 2025

1. Financial Results for Q2 of FY2025

1) Highlights of Financial Results

Business Environment

Total leasing contracts in the industry overall rose 10.7% Y/Y.

We need to continue to monitor future trends in the financing environment and bankruptcies.

Results in Key Business Units

In the Leasing Business, contracts executed rose Y/Y, though a decreased in new transactions. Both contracts executed and new transactions in the finance business decreased Y/Y.


Contracts executed : 10.6% up	New transactions : 11.5% down

Contracts executed : 3.9% down	New transactions : 4.7% down

Business Performance

Net Income increased significantly Y/Y due to an increase in gross profit and improvements in credit costs.

2) Business Environment

Total Leasing Contracts:

Total leasing contracts in the industry overall rose 10.7% Y/Y and rose by 14.0% Y/Y for our mainstay Information and communication equipment leasing.

Bankruptcies:

The total liabilities decreased Y/Y , but there was an increase in bankruptcies, particularly among SMEs.

Y/Y change in total leasing contracts

(%)

* By quarter

Volume of leasing contracts

-10

-20

Information and communication

-30

equipment

-40

21/2Q

21/3Q

21/4Q

22/1Q

22/2Q

22/3Q

22/4Q

23/1Q

23/2Q

23/3Q

23/4Q

24/1Q

24/2Q

(Source: Lease statistics of the Japan Leasing Association)

Bankruptcies (total liabilities/number of bankruptcies）

(Billions of Yen)

(Number)

2,500		* By quarter	5,000

2,000	Total liabilities		4,000
	(Left axis)	Number of
1,500		bankruptcies	3,000
	（Right axis）
1,000			2,000
500			1,000
0	21/2Q 21/3Q 21/4Q 22/1Q 22/2Q 22/3Q 22/4Q 23/1Q 23/2Q 23/3Q 23/4Q 24/1Q 24/2Q	0

(Source: Bankruptcy information on the website of Teikoku Data Bank; liabilities of companies that filed for bankruptcy)

3) Financial Summary

Revenues: Revenues remained steady and maintained the same level of Y/Y.

Net Income: Major gains Y/Y due to an increase in gross profit and an improvement in credit costs.

Performance measures	Main Reasons for Y/Y Increase/Decrease in Net Income
(Billions of Yen)	(Billions of Yen)

		FY2024	FY2025
		2Q	2Q	Y/Y Change
Revenues	124.0	123.7	-0.2%

Operating Income	3.7	4.7	+26.5%

Ordinary Income	3.2	5.3	+64.7%

Profit attributable to owners of parent	1.9	3.4	+74.0%

	Net Income per Share (Yen)	90.31	157.14	－

Operating Asset Balance	967.8	974.9	+0.7%

Net Assets	133.6	139.2	+4.2%

	Shareholders' Equity	112.3	117.8	+4.9%

	Equity Ratio (%)	10.7	10.7	－


Dividend per share (Yen)	65	75	+10

	Profit in		Credit costs
	investment		Income taxes
	partnerships
		etc.
	etc.
		-0.7	3.4

		-0.8	＋1.3
	+1.1

1.9	+0.4	SG&A(Exclude credit costs)
	Gross profit
FY2024 2Q			FY2025 2Q

4) Revenues by Business Segment

Revenues by Business Segment

				(Billions of Yen)

		FY2024	FY2025
		2Q	2Q	Y/Y Change
Leasing
Revenues	112.5	113.7	+1.1%
Business
Gross Profit	8.1	8.3	+2.8%


	Operating Income	2.7	2.5	-6.8%
Finance	Revenues	3.9	4.0	+1.1%
Business
Gross Profit	2.7	2.7	+0.6%


	Operating Income	0.7	1.9	+164.7%
Investment	Revenues	5.9	4.2	-29.2%
Business
Gross Profit	2.8	2.9	+6.0%


	Operating Income	0.9	1.1	+22.2%
Other	Revenues	1.7	2.0	+12.4%
Business
Gross Profit	1.0	1.0	+6.7%


	Operating Income	0.3	0.3	-0.8%
Total	Revenues	124.0	123.7	-0.2%

	Gross Profit	14.5	14.9	+2.9%

	Operating Income	3.7	4.7	+26.5%

*Excluding adjustment amount

Leasing Business

Despite an increase in gross profit, operating

income decreased Y/Y due to an increase in SG&A expenses.

Finance Business

Operating income increased Y/Y primarily due to higher interest and dividend incomes,

as well as a decline in credit costs.

Investment Business

Although revenues decreased Y/Y due to large-scale real estate sales in the same period of the previous year, profits increased

Y/Y due to strong gains on debt collection and interest income.

Other Business

Revenues and income both increased Y/Y due to the progress of solar energy and health- care initiatives and PFI fee.

5) Business Results by Business Segment

Contracts Executed by Business Segment

		(Billions of Yen)
	FY2024	FY2025
	2Q	2Q	Y/Y Change
Leasing Business	82.0	90.8	+10.6%
Leasing	73.0	83.1	+13.8%
Installment Sales	9.0	7.7	-15.1%
Finance Business	169.8	163.2	-3.9%
Loans	116.8	107.1	-8.3%
Bulk Factoring	53.0	56.1	+5.9%
Other Business	0.8	1.6	+104.6%
Total	252.6	255.6	+1.2%

New Transactions by Business Segment

		(Billions of Yen)
	FY2024	FY2025
	2Q	2Q	Y/Y Change
Leasing Business	167.6	148.4	-11.5%
Leasing	158.7	141.4	-10.9%
Installment Sales	8.9	7.0	-21.4%
Finance Business	170.5	162.4	-4.7%
Loans	117.5	106.3	-9.5%
Bulk Factoring	53.0	56.1	+5.9%
Other Business	－	2.1	ー
Total	338.1	313.0	-7.4%

Contracts Executed by Business Segment

Maintained the same level of Y/Y due to growth in leasing business, etc.

New Transactions by Business Segment

New transactions decreased Y/Y due to a decrease in the Leasing Business, which had won a large-scale project in the same period of the previous year.

6) Leasing Business

Contracts Executed by Customer Sector

New Transactions by Customer Sector

Public Sector: Government agencies and Municipalities

Private Sector

Services

Distribution

Manufacturing

Other

Total

FY2024

2Q 27.0

55.0 21.1 9.3 14.3 10.2 82.0

(Billions of Yen)
FY2025
2Q	Y/Y Change

36.5 +35.1%

54.2 -1.4%

-17.1%

-8.3%

15.7 +9.4%

12.5 +22.2%

90.8 +10.6%

		(Billions of Yen)
	FY2024	FY2025
Public Sector: Government	2Q	2Q	Y/Y Change
111.4	96.5	-13.4%
agencies and Municipalities

Private Sector	56.2	51.9	-7.7%
Services	22.2	16.6	-25.4%
Distribution	8.6	8.8	+1.7%
Manufacturing	13.2	15.2	+15.1%
Other	12.1	11.3	-6.7%
Total	167.6	148.4	-11.5%

(For ref.) Contracts Executed by Equipment Type

			(Billions of Yen)

		FY2024	FY2025
		2Q	2Q	Y/Y Change
Information and	55.6	69.9	+25.7%
Communication Equipment

	Computer Hardware	28.1	35.3	+25.6%

	Computer Software	19.3	28.0	+45.1%

	Telecommunications Equipment	8.2	6.6	-19.7%

Office Equipment	8.3	7.7	-6.7%

Other	18.1	13.2	-27.5%

Total	82.0	90.8	+10.6%

Contracts Executed by Customer Sector

In the public sector, contracts executed rose Y/Y due to the increase steadily.

In the private sector, contracts executed overall were flat Y/Y, due to the decline in the service sector was offset by manufacturing sector and other sector.

New Transactions by Customer Sector

Public sector demand decreased Y/Y due to the impact of a large project won in the same period of the previous year.

Private sector decreased Y/Y due to a decrease in the service industry, etc., while manufacturing demand increased.

7) Finance Business

Contracts Executed by Form of Contract

Contracts Executed by Customer Sector

Contracts Executed by Form of Contract

Contracts executed decreased Y/Y, mainly in Business Loans, due to a decrease in short-term contracts, etc.

Contracts Executed by Customer Sector

While contracts executed increased in manufacturing and other sectors, they decreased in distribution, finance and insurance, etc., resulting in an overall decrease compared to the same period last year.

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