Financial Results Meeting: The 1st 6 Months of FY Ending March 2018 (April 1, 2017 September 30, 2017) November 10, 2017

Transcription

1 Financial Results Meeting: The 1st 6 Months of FY Ending March 2018 (April 1, 2017 September 30, 2017) November 10, 2017

2 Contents Summary of Business Results for Six Months ended September 30, 2017, and Forecast for FY Ending March Financial Summary 03 Year over Year Comparisons of Net Sales, Cost of Sales, and SGA Expenses 04 Balance Sheets 05 Cash Flow Statements 06 Net Sales and Operating Income by Segment 07 Operating Margins by Segment Review of Operations 11 Net Sales by Business 12 Gross Margin by Transportation Mode 13 Performance Forecast for FY Ending March Performance Forecast by Business & Segment for FY Ending March 2018 Business Strategies and Measures 16 Outline of Medium-Term Management Plan (FY Ended March FY Ending March 2019) 17 Medium-Term Management Plan Results and Numerical Targets 18 Net Sales and Operating Income Targets by Segment (FY Ending March 2018/FY Ending March 2019) 19 Air and Sea/Volume Targets 20 Priority Measures KWE/APLL - Collaboration 22 KWE/APLL - Integration 23 Outlook nd Half 24 Dividends Supplemental Materials 26 Freight Volume by Segment (Air Freight) 27 Freight Volume by Segment (Sea Freight) 28 Our Global Network 1

3 Financial Summary Weight (1,000 tons) Shipments (thousands) Volume (1,000 TEU) Amount (\million) Item September YoY change YoY change Air freight exports (Weight) % % Air freight imports (Shipments) 583 (3.8%) % Sea freight exports (Volume) % % Sea freight imports (Shipments) % % Net sales 227, % 262, % Operating gross profit 39, % 43, % Operating income 4,287 (35.0%) 6, % Ordinary income 4,691 (33.4%) 6, % Income before income taxes 5,076 (27.8%) 7, % 1st 6 months of FY ending March 2018 Forecasts (Announced on May 11, 2017) 243,000 5,300 5,100 Net income attributable to owners of the parent 1,177 (71.6%) 2, % 1,100 Conversion Rate 1st 6 months of FY ended March 2017 FY ended March st 6 months of FY ending March 2018 US-Dollar \ \ \ Euro \ \ \ HK-Dollar \13.57 \13.97 \14.24 Chinese Yuan \15.94 \16.11 \

4 Year over Year Comparisons of Net Sales, Cost of Sales, and SGA Expenses (Millions of yen) 250, , , , , ,728 Net sales 150,000 Cost of sales 100,000 50,000 35,346 36,620 SGA expenses 0 September 30, 2016 September 30, 2017 (Millions of yen) September Ratio to net sales 2017 Ratio to net sales Net sales 227, % 262, % Cost of sales 187, % 218, % SGA expenses 35, % 36, % Operating income 4, % 6, % 3

5 Balance Sheets (Millions of yen) March 31, 2017 September 30, 2017 Differences Assets Current assets 178, ,958 5,857 Non-current assets 201, ,780 (6,362) Property, plant and equipment 46,109 46, Intangible assets 128, ,410 (6,638) Total investments and other assets 26,983 26,967 (16) Total assets 379, ,739 (505) Liabilities Current liabilities 104, ,952 10,501 Non-current liabilities 148, ,867 (9,910) Total liabilities 253, , Net assets Total net assets 126, ,919 (1,096) Total liabilities and net assets 379, ,739 (505) 4

6 Cash Flow Statements (Millions of yen) Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Increase (decrease) in cash and cash equivalents resulting from change in the fiscal period of consolidated subsidiaries September Differences 7,498 5,607 (1,891) (2,784) (1,412) 1,372 (1,654) (4,309) (2,655) (6,200) 1,127 7,327 (3,141) 1,012 4,153 63,903 65,506 1,602 (569) Cash and cash equivalents at end of period 60,193 66,519 6,325 5

7 Net Sales and Operating Income by Segment 34.8% 0.4% Composition by segment September 30, % 16.1% 11.4% 2.4% 23.1% Japan The Americas Europe, Middle East & Africa East Asia & Oceania Southeast Asia APLL 9.3% 13.4% 6.6% 9.8% 28.4% 5.2% 16.9% Net Sales Operating Income (Millions of yen) Segment Net Sales YoY change Operating Income YoY change * Other refers to business not included in reportable segments and provides incidental logistics related services within the Group. FOREX impacts (consolidated) Net sales: +\5,568 million Operating income: +\283 million Japan 59, % 2, % The Americas 24, % 1, % Europe, Middle East & Africa 17, % % East Asia & Oceania 45, % 2, % Southeast Asia 26, % 1, % APLL 93, % 1, % Amortization of goodwill (3,099) Other 1, % % Adjustment (6,802) 4 Total 262, % 6, % Other 6

8 Operating Margins by Segment 7.0% 7.1% 6.0% 5.4% 6.2% 6.1% 5.8% 5.0% 4.0% 3.9% 4.5% 3.0% 2.6% 2.7% 2.4% 3.0% 2.0% 1.9% 1.0% 1.2% 0.8% 0.0% 17/3 2Q 18/3 2Q 17/3 2Q 18/3 2Q 17/3 2Q 18/3 2Q 17/3 2Q 18/3 2Q 17/3 2Q 18/3 2Q 17/3 2Q 18/3 2Q 17/3 2Q 18/3 2Q Consolidated Japan The Americas Europe, Middle East & Africa East Asia & Oceania Southeast Asia APLL * APLL s operating margin is calculated based on the amount before amortization of goodwill. 7

9 Review of Operations Japan September 30, 2016 September 30, 2017 (Millions of yen) YoY change Net Sales by Business 1.2% 7.1% Air Freight Sea Freight Logistics Other Net sales 52,778 59,820 7,041 Operating income 1,402 2, Steady growth with volume increase mainly in semiconductor and electronic components and profitability improvement Subsidiaries in Japan showed steady growth 34.3% 57.4% The Americas September 30, 2016 September 30, 2017 (Millions of yen) YoY change Net Sales by Business 5.5% 6.3% Air Freight Sea Freight Logistics Other Net sales 20,369 24,943 4,573 Operating income 913 1, Steady growth in the U.S. and Canada driven by volume increase FOREX impact Net sales: +\1,121 million Operating income: +\51 million 27.8% 60.4% 8

10 Review of Operations Europe, Middle East & Africa September 30, 2016 September 30, 2017 (Millions of yen) YoY change Net Sales by Business 6.0% 10.4% Air Freight Sea Freight Logistics Other Net sales 14,022 17,677 3,654 Operating income Favorable in Benelux, France, and the U.K. but sluggish in Germany, Russia, and Italy FOREX impact Net sales: +\1,114 million Operating income: +\29 million 19.7% 63.9% East Asia & Oceania September 30, 2016 September 30, 2017 (Millions of yen) YoY change Net Sales by Business 5.7% Air Freight Sea Freight Logistics Other Net sales 36,354 45,523 9,169 Operating income 2,575 2, Freight volume increased while freight costs rose. Logistics showed steady growth FOREX impact Net sales: +\1,741 million Operating income: +\120 million 22.3% 22.5% 49.5% 9

11 Review of Operations Southeast Asia September 30, 2016 September 30, 2017 (Millions of yen) YoY change Net Sales by Business 6.3% 12.5% Air Freight Sea Freight Logistics Other Net sales 21,437 26,406 4,969 Operating income 1,254 1, Overall steady growth with volume increase, especially in Thailand, Philippines, and Vietnam FOREX impact Net sales: +\1,103 million Operating income: +\66 million 24.8% 56.4% APLL September 30, 2016 September 30, 2017 (Millions of yen) YoY change Net Sales by Business 1.9% Air Freight Sea Freight Logistics Net sales 86,545 93,749 7,204 Operating income (2,416) (1,968) 447 Automotive: Parts transportation between the U.S. and Mexico, finished car transportation in India saw steady growth Retail, Consumer, Industrials: Showed steady growth overall Operating income of 1,131 million yen before amortization of goodwill, however, recorded operating loss of 1,968 million yen after amortization FOREX impact Net sales: +\433 million Operating income: +\3 million 64.6% 33.5% 10

12 Freight transportation Net Sales by Business September 30, % Composition by Business September 30, % Air Freight Sea Freight Logistics Other 33.4% 31.4% 31.1% 34.2% 28.3% 28.3% (Millions of yen) September 30 Business Net sales Net sales YoY change Air Freight 71,476 89, % Sea Freight 64,419 74, % Logistics 75,837 81, % Other 15,628 16, % Total 227, , % 11

13 Gross Margin by Transportation Mode * Gross profit=net sales-direct cost FY ended March 31, 2016 Six months ended September 30, 2016 FY ended March 31, 2017 Six months ended September 30, 2017 Air 29.3% 30.2% 30.0% 27.8% Sea * 27.8% * 30.8% * 31.0% * 28.0% *Added APLL's sea freight forwarding (including PO Management and Buyer s Consolidation related to sea freight operation) from the 3Q of FY ended March 31,

14 Performance Forecast for FY Ending March 2018 <Revised on November 9, 2017> (Millions of yen) Item FY ended March 31, 2017 (Results) YoY change FY ending March 31, 2018 (Forecasts) YoY change Net sales 474, % 525, % Operating gross profit 85, % 89, % Operating income 13,075 (14.9%) 15, % Ordinary income 13,036 (27.2%) 15, % Income before income taxes 12,486 (30.0%) 14, % Net income attributable to owners of the parent 4,487 (54.1%) 5, % 13

15 Freight transportation Performance Forecast by Business & Segment for FY Ending March 2018 <Revised on November 9, 2017> Net Sales by Business Net Sales by Segment 32.0% 6.5% 32.8% Air Freight Sea Freight Logistics Other 36.3% 0.4% 21.9% 8.9% Japan The Americas Europe, Middle East & Africa East Asia & Oceania Southeast Asia APLL Other 6.7% Business 28.7% (Millions of yen) FY ending March 2018 (Forecast) Net sales Composition Air Freight 172, % Sea Freight 151, % Logistics 168, % Other 34, % Total 525, % 9.5% Segment 16.3% FY ending March 2018 (Forecast) Net sales (Millions of yen) Operating income Japan 118,000 4,700 The Americas 48,000 2,800 Europe, Middle East & Africa 35,800 1,100 East Asia & Oceania 87,400 4,900 Southeast Asia 51,300 3,000 APLL 194,900 4,400 Amortization of goodwill (6,200) Other 2, Adjustment (12,400) Total 525,000 15,000 14

16 Business Strategies and Measures 15

17 Outline of Medium-Term Management Plan (FY Ended March FY Ending March 2019) Vision A superior business partner supporting customers strategic objectives and activities by providing comprehensive innovative supply chain solutions Slogan Going to the Next Phase! Toward Air Freight export 700,000 tons/sea Freight export 700,000 TEUs Target by March 2019 (Revised on May 11, 2017) Net Sales: 568 billion yen Operating Income: 18 billion yen <Key Strategies> Become an industry leader providing comprehensive services Actively respond to customers logistics needs at production locations and consumer markets Improve productivity by leveraging corporate capabilities <Core Competences> Maximize efficient utilization of corporate resources Strengthen corporate risk management capabilities Heighten quality of operational performance 16

18 Medium-Term Management Plan Results and Numerical Targets Net sales Operating income Ordinary income Net income attributable to owners of the parent (Billions of yen) (Billions of yen) 6, , \474.3 billion Revised on November 9, 2017 \500.0 billion \525.0 billion \568.0 billion , , , , \13.0 billion \13.0 billion \4.4 billion ROE 3.7% \13.5 billion \13.0 billion \5.0 billion ROE 4.0% \15.0 billion \15.0 billion \5.5 billion ROE 4.7% \18.0 billion \17.6 billion \7.2 billion ROE 5.5% (Results) (Initial plan) (Revised plan) (Plan) 1st year (Mar 2017) 2nd year (Mar 2018) 3rd year (Mar 2019)

19 Net Sales and Operating Income Targets by Segment (FY Ending March 2018/FY Ending March 2019) Japan The Americas Europe, Middle East & Africa East Asia & Oceania Southeast Asia APLL Other (Billions of yen) 7, , , , , , , Net Sales by Segment \474.3 billion Others Others Mar 2017 (Results) Revised on November 9, 2017 \525.0 billion Mar 2018 (Revised plan) \568.0 billion Mar 2019 (Plan) Others 2.0 (Billions of yen) Consolidated Operating Income by Segment \13.0 billion % 36.6% 2.9 \15.0 billion (3.3) Mar 2017 (Results) Revised on November 9, 2017 Mar 2018 (Revised plan) \18.0 billion Mar 2019 (Plan) * Total amount of net sales includes inter-segment elimination. (\11.1 billion in Mar 2017, \12.4 billion in Mar 2018 Revised plan, \11.0 billion in Mar 2019 Plan ) (1.8)

20 Air and Sea/Volume Targets Definite targets: 700,000 tons air freight/700,000 TEUs sea freight Weight (tons) 800,000 Air Freight (Export) Volume (TEUs) 800,000 Sea Freight (Export) 700, , , , , , , , , , ,000 1st 6 months: 280,892 (22.6% increase YoY) 600, , , , ,062 APLL 60, , , , ,000 1st 6 months: 320,579 (21.0% increase YoY) 200, ,000 KWE 394, , , , , Mar 年度 2016 ( 実績 )2016 Mar 年度 2017 ( 実績 )2017 Mar 年度 2018 ( 計画 (Plan) ) 2015 Mar 年度 2016 ( 実績 )2016 Mar 年度 2017 ( 実績 )2017 Mar 年度 2018 ( 計画 (Plan) ) (Results) (Results) Target (Results) (Results) Target 0 19

21 Priority Measures Volume expansion of TPEB (Trans-Pacific East Bound) business 2. Business expansion among Non-Japanese Corporate Accounts 3. Promotion of sales strategy by commodity (Electronics, Automotive, Healthcare, Retail/Consumer) 4. Verification of the IT system looking into the future 5. Continued efforts to improve earnings 6. Strengthen group governance for optimal group management 7. Development of human resources and their optimal placement 20

22 KWE/APLL - Collaboration Actual Cooperative Marketing Cases (As of October 2017) Contract Logistics at KWE Canada (Retail, Automotive) at KWE Singapore (Retail) Airfreight Forwarding ex-asia (Retail) Brokerage at KWE Japan (Retail) 4PL at APLL, China (KWE Corporate Account) 21

23 KWE/APLL - Integration Establishment of "Global Procurement Center" (November 2017) Locations : Hong Kong (HQ), Tokyo, Los Angeles, Hamburg Optimize sea freight procurement and carrier relations by combining KWE and APLL s know-how to support further volume growth 22

24 Outlook nd Half Business Environment Active Demand Brisk electronics/semiconductor market with technological innovation (Smart Phone, EV, AI, IoT, Drone, etc.) Our Countermeasures Freight Cost Increase Excessive demand vs. Restricted supplies Restriction of extra flights at Shanghai To freight cost increase: For volume growth: Minimize negative factors fully utilizing our experience and knowledge. Transferring increased cost to customers, choice of air carriers, optimizing consolidation efficiency. Keep on promoting every possible strategies for volume growth to be a real "global player" in the market 23

25 Dividends Cash dividends per share, payout ratio Annual dividend per share (yen) Payout ratio 15.3% 15.8% 19.2% Annual \20.0 Annual \23.0 Annual \26.0 Annual \ % Annual \26.0 Year-end 16.0 (Plan) Interim /3 2015/3 2016/3 2017/3 2018/3 (Plan) 34.0% *The company conducted a stock split at a ratio of 1:2 of common stock on October 1, Cash dividends per share is calculated based on the assumption that the stock split was conducted on April 1,

26 Supplemental Materials 25

27 Freight Volume by Segment (Air Freight) (Weight: tons) 300, , , , ,000 Air Freight Exports 229,057 48,914 52,637 22,768 39,063 Y o Y 122.6% 117.8% 135.0% 130.0% 123.5% (Shipments) Air Freight Imports 700, ,892 Y o Y 652, % 57, , , , % 101, ,000 71, , , % 250,763 29, ,000 48,228 58, % 55, ,000 60, % 48,680 Southeast Asia East Asia & Oceania Europe, Middle East & Africa The Americas 50,000 65, % 74, , % 151, ,474 Japan 0 September 30, 2016 September 30, September 30, 2016 September 30,

28 Freight Volume by Segment (Sea Freight) (Volume: TEUs) 350, , , , , ,000 50,000 Sea Freight Exports 264,944 APLL 51,085 47,077 74,281 9,613 21,019 Y o Y 121.0% 106.9% 140.1% 129.5% 102.9% 111.8% 113.9% 320,579 54,614 65,935 96,183 9,891 23,509 61,869 70,446 (Shipments) 150, , ,000 75,000 50,000 25,000 Sea Freight Imports 121,371 22,357 26,725 6,481 14,948 50,860 Y o Y 112.9% 115.2% 112.7% 118.8% 110.5% 112.0% 137,070 25,752 30,117 7,700 16,519 56,982 Southeast Asia East Asia & Oceania Europe, Middle East & Africa The Americas Japan 0 September 30, 2016 September 30, September 30, 2016 September 30,

29 Our Global Network 46 countries, 338 cities, 832 locations (as of September 30, 2017) Other business (2 companies) Japan (10 companies) Includes KWE Japan and 3 equity method affiliates Europe, Middle East & Africa (16 companies) Includes 1 equity method affiliate KWE Group The Americas (5 companies) Southeast Asia (17 companies) Includes 1 equity method affiliate APLL (72 companies) Includes 1 equity method affiliate East Asia & Oceania (24 companies) Includes 4 equity method affiliates Logistics facilities 401 locations/2,809,609m² 28

30 Kintetsu World Express, Inc. Website: * The information contained herein does not constitute an offer to solicit investment which can only be made by formal prospectus. The forward-looking statements contained herein are not intended to assure or guarantee future performance. Actual results may vary from that projected herein.