comsys presentation1109 pm
TRANSCRIPT
November 16, 2011
Presentation of Performance for the First HalfFiscal Year Ending March 31, 2012
I. Overview of Performance for the First Half of the Fiscal Year Ending March 31, 2012
1. Highlights of the First Half Financial Statements 1
2. Details of the First Half Sales by Business Segment 2
3. Details of First Half Operating Income 3
II. Forecasts for the Fiscal Year Ending March 31, 2012 4
III. Great East Japan Earthquake Recovery and Reconstruction Work
1. Comprehensive Reconstruction Work 5
2. Disaster Countermeasures 6
3. Recovery and Reconstruction Work Orders 7
IV. Progress in Structural Reform Measures and Priority Initiatives
1. Sustained, More In-Depth Structural Reform 8
2. Major Structural Reform Measures
2-1. Management Integration Synergy in Hokkaido 9
3. New Initiatives
3-1. Promoting Incubation Measures 10
3-2. Urban Infrastructure Development Business Activities 11
V. Status of Treasury Stock and Policies for Returns to Shareholders 12
— CONTENTS —
– 1 –
I-1. Highlights of the First Half Financial Statements
Orders received substantially surpassed forecast figures; Net sales and income were essentially in line with plans
(Unit: ¥100 million)
Orders Received
Topics
+76 -161,446Net Sales -18 +511,251
Gross Profits -3 +7115-0.2 percentage points9.2% +0.3 percentage pointsGross Profit Margin
Operating Income +1 +320+0.1 percentage points1.6% +0.2 percentage pointsOperating Margin
Recurring Profit +2 +523+0.2 percentage points1.9% +0.4 percentage pointsRecurring Profit Margin
Net Income -0 +288-0.1 percentage points0.6% +2.3 percentage pointsNet Profit Margin
Income
Comparisonswith forecastsPerformance
Comparisons withthe previous term
Increase in operating income compared with the same period of the previous fiscal year due to measures aimed at strengthening the Group’s operational infrastructure (streamlining assets and rationalizing the structure of personnel costs) implemented during the second half of the previous fiscal year. Results essentially in line with plans.
* Quarterly net income climbed ¥2.8 billion compared to the same period of the previous fiscal year. This was largely attributable to the temporary extraordinary loss recorded following the streamlining of assets (write-down of software) and other measures resulting from efforts to strengthen the Group’s operational structure implemented during the previous fiscal year.* Forecasts at the beginning of the fiscal year do not include reconstruction projects for telecommunications infrastructure resulting from the Great East Japan Earthquake.
Orders Received
Orders received substantially surpassed forecast figures due mainly to earthquake disaster-related recovery and reconstruction demand. Despite solid first-half performance contributions from TSUKEN Corporation, orders received fell slightly below results of the same period of the previous fiscal year. This was mainly due to the absence of the extraordinary Indefeasible Right of User (IRU) business demand enjoyed during the same period of the previous fiscal year.* Please turn to the next page for details of net sales.
Note: Figures are rounded down to the nearest whole unit.
– 2 –
I-2. Details of the First Half Sales by Business Segment(Unit: ¥100 million)
+51(+4.3%)
-18(-1.5%)
Including first half performance contributions from TSUKEN
(¥19 billion)
Comparisons with the Previous Term
Comparisons with Forecasts
Performance in Previous Term Performance Target
1,2701,251
1,200
+100
NTT-G+15.2%
-2 +8
NCC-1.5%
Construction-28.9%
IT+4.8%
-55NCC
+13.6%Construction
+7.3%IT
-10.5%NTT-G-3.0%
+7-22 +19 -23
* Earthquake disaster-related reconstruction net sales
around ¥1.2 billion
of earthquake disaster reconstruction
business construction
disaster-related reconstruction work in the NTT business
operating processes (data centers)
Slump in the IT market; Increased competition
– 3 –
I-3. Details of First Half Operating Income
(Unit: ¥100 million)
Performance in Previous Term Performance Target
*p.p. = percentage points
+3(+0.2 p.p.)*
+1(+0.1 p.p.)*
16
-13
+2
-4+5
+6
+7
+2
Operating Margin(1.4%)
20Operating Margin
(1.6%)19
Operating Margin(1.5%)
Drop in net salesImpact of changes in the structure
of net sales
Results of structural reform
Amount attributable torationalizingthe structureof personnel
costs
Amount attributable to the streamlining
of assets
Results ofstrengthening
the Group’s operationalinfrastructure
Contributionto income
from TSUKEN
Impactattributable tolower net sales
personnel costs
Increase in operating income after structural reform and measures to strengthen the Group’s operational infrastructure
Comparisons with the Previous Term Comparisons with Forecasts
– 4 –
II. Forecasts for the Fiscal Year Ending March 31, 2012
Despite an upswing in demand due to an increase in earthquake disaster-related construction, full forecasts for the fiscal
year remain unchanged from estimates set at the beginning of the fiscal year owing largely to the slump in market demand
(Unit: ¥100 million)
Orders Received
Remarks
2,960 +172,943Net Sales 3,080 -743,154
Gross Profits 328 +1831010.6%9.8% +0.8 percentage pointsGross Profit Margin
Operating Income 123 +61174.0%3.7% +0.3 percentage pointsOperating Margin
Recurring Profit 128 +71214.2%3.8% +0.4 percentage pointsRecurring Profit Margin
Net Income 73 -22952.4%3.0% -0.6 percentage pointsNet Profit Margin
Income
Full Year Targets(No changes in forecasts)
Performance inPrevious Term
Comparisons withthe previous term
While income is projected to rise due to an increase in NTT, DOCOMO and NCC construction, along with earthquake disaster-related reconstruction, full fiscal year forecasts remain unchanged from estimates. This recognizes the downside risk of outsourcing and other expenses, which are expected to hover at a high level, owing mainly to increased business in the second half of the fiscal year.
Orders Received and Net Sales
Despite expectations of an upswing in demand due to earthquake disaster-related reconstruction, full fiscal year forecasts remain unchanged from estimates. While results are anticipated to fluctuate on an individual business basis, this is largely attributable to the significant projected decline in orders received and net sales as a result of the slump in capital investment demand and increased competition, as well as persistent uncertainty surrounding the state of future operating conditions.
(* Please refer to the detailed data attached for revised orders received and net sales forecasts by business)
Note: Figures are rounded down to the nearest whole unit.
– 5 –
III-1. Comprehensive Reconstruction Work
Building B
Route 2
Building A
Building A Building B
Route 1
Building facilities that are resilient against disaster to ensure uninterrupted telecommunications services
Promote inland, small loop relay transmission lines Relocating relay transmission lines underground below waterways
Offices Electric power facilities
WaterwayVertical shaft Vertical shaft
Ace mole construction method
The nose section of ace mole equipment (cutter head)
Relocation of exchange offices to higher ground
Waterproofing (building protection; protection of important offices and rooms; installation of facilities at higher floors)
Exchange of degraded batteries as a result of discharge
Installation of power generating equipment at important telecommunications facilities in the three main disaster-stricken prefectures
– 6 –
III-2. Disaster Countermeasures
Large-zone base stations
Promote uninterruptible power using engines Shift to 24-hour batteriesDOCOMO and other building base stations (approx. 800 stations) Steel tower base stations (approx. 1,100 stations)
Newly construct large-zone base stations in densely populated areas nationwide in addition to the network of standard base stations
Construct at about two locations in each prefecture for a nationwide network of 104 locations
Large-zone method with a 360° radius of approx. 7 km (covering around 35% of the total population)
Use highly earthquake-resistant buildings and steel towers
Promote both uninterruptible power and two route transmission lines
Collapse
Wireless transmission
Cable-basedtransmission
BlackoutBlackout
Blackout
Line disconnectionEngine
(Source: NTT DOCOMO data)
Uninterruptible base stations
(approx. 400 stations)
Base stations that need countermeasures (approx. 400 stations)
Batteries24 hours
(approx. 90 stations)
Batteries10 hours
(approx. 90 stations)
Batteries3 hours
(approx. 220 stations)
Batteries24 hours
(approx. 150 stations)
Base stations that need countermeasures (approx. 950 stations)
Batteries10 hours
(approx. 530 stations)
Batteries3 hours
(approx. 420 stations)
– 7 –
III-3. Recovery and Reconstruction Work Orders
(Unit: ¥100 million)
Efforts toward recovery and reconstruction of telecommunication facilities leveraging the comprehensive strengths of the Group
Mobile facilities
New installation of optical fiber cables
* Includes emergency recovery construction totaling ¥1.5 billion
Type of Project Details First Half Second Half Total
Total
NCC
Access 40 8 48
1 4 5
15 15 30
5 1 6
* 61 28 89
Network
Mobile
Base station establishment(telecommunications facilities), relay transmission lines, etc.
Relay micro-transmission lines,shift to uninterruptible power, large-zone base stations, use of 24-hour batteries, etc.
Relay transmission lines,base station establishment(telecommunications facilities),electric power facilities, etc.
Relay transmission lines, relocating relay transmission lines underground below waterways, base station establishment(telecommunications facilities), etc.
– 8 –
IV-1. Sustained, More In-Depth Structural Reform
Fundamental Concept
Promoting “COMSYS WAY” under a harsh operating environment
Building a company that generates continuous profit
— COMSYS WAY —Sustained, More In-Depth Structural Reform
Promoting robust innovation measures
Maintain and upgrade construction technological capabilitiesStrengthen market competitiveness
Strengthen operational infrastructure
Producing maximum results by optimally interlocking individual measures
Strengthening project management by acting as prime contractor
Increase productivity by realizing Group synergies
Shift to a new earnings structure
[ Review of operational structure of regional businesses ] [ Promote structural reform of the DOCOMO business ]
[ Generate management integration synergies in Hokkaido ]
[ Implementation of incubation strategy ] [ Pursue a policy of selection and focus in the IT business ]
[ Pursue the shift toward IT devices]
[ Promote the early establishment of a new construction structure ][ Optimize personnel assignments ]
[ Strengthen partner construction company management ][ Workflow standardization ] . . .
– 9 –
IV-2-1. Management Integration Synergy in Hokkaido
Location integration
Integration of core systems
Reorganization of the NTT businesses of Nippon COMSYS and TSUKEN
Comprehensive business management structure including SANCOM
In progress
April 2012 —
NW-based Access-basedAccess July 2012
NW July 2012
Access April 2012
July 2011: Four subsidiaries integrated into two companies
Nippon COMSYS(Hokkaido Branch)
Nippon COMSYS(Hokkaido Branch)
TUKEN SANCOM(Hokkaido Branch)
TSUKEN
NWCompleted in October 2011Integration and
reorganizationCOMSYS Hokkaido Engineering
Hokutoudensetsu
Dououtsushin
Tsuken Doutou Engineering
Tsuken Dounan Engineering
Construction structure
Sales and marketing system
Responsible for the NTT group (NW) Responsible for the NTT group (Access) Responsible for NCC
Integrated construction operation management of three companies
Other measures
Further integration and reorganization of Group companiesConsolidation of common operations
CMS (group finance) Completed in September 2011 April 2012
– 10 –
IV-3-1. Promoting Incubation Measures
Status of First Half Incubation MeasuresBusiness Segment Sector Current Status Orders received
NTT & NTT DOCOMO Business
New in-home businessEntering new onsite businesses that target carriers outside the NTT group in service areas not currently covered; working toward uniform implementation of in-home LAN construction
¥0.2 billion
Maintenance and operation business
Packaged order received for access system construction and maintenance in the Nagano area (Omachi, Kiso);Packaged network system NTT group data center order received (construction and maintenance); maintenance operations area expanded;Proposal for expansion of mobile system maintenance areas in progress
¥0.3 billion
IT BusinessIT management services
Cultivated new customers in the IT asset management business in collaboration with partner companies;Developed business in IT delivery services using partner companies as a basic model
¥1.4 billion
Expanded server system business lines
Developed business mainly in the electronic medical records market by bolstering alliances with partner companies ¥0.9 billion
Construction Business
Water Recycling(Grey Water) Business
(Biological Water Treatment)
Proposal to NTT-related buildings; contract execution scheduled in the second half;Took steps to promote the acquisition of qualifications to expand orders received
¥1 billionEnvironment and energy conservation, including
solar power
Selected potential sites for solar power generation facilities; proposed joint commercialization to local government authorities and the corporate sector;Put in place a prototype to simplify the panel installation process by developing a new mounting; developed a string monitor (a system to detect solar cell anomalies) in house
Urban infrastructure business, including water resources
Urban infrastructure development business strong (please refer to the next page for a detailed explanation)
Securing results in urban infrastructure development in the construction business
– 11 –
IV-3-2. Urban Infrastructure Development Business Activities
Taking up the challenge of renewing earthquake-resistant facilities targeting the Tokyo metropolitan water and sewage system, which are showing significant degradation
Expanding potential order domains and raising the amount of potential project orders by increasing tender qualification credentials with the Bureau of Waterworks
FY March 2014 = A rankFY March 2012 = B rankFY March 2011 = C rank
Senkawa-dori St.
Oume-kaido Ave.
Senkawajousui
Sekicho 1-chome intersection
Entry point
Destination point
Bore diameter 700mm muddy water pressure system method L = 39.1m
Raise rank Raise rank Drainage pipes + main pipes + trunk lines¥0.4 billion <
Drainage pipes + main pipes
¥0.2 billion < < ¥0.4 billion
Drainage pipes
< ¥0.2 billion
Major project orders during the current fiscal year First main pipeline project order received (Zenpukuji, Suginami Ward)
Activities toward commercialization
Expanding the contracting business
Responding to the Bureau of Waterworks’ emergency 10-year business plan to convert to water pipelines with earthquake-proof joints
Orders completed during the current year in excess of ¥0.7 billion; annual order target of ¥1.0 billion or more from the next fiscal year and beyond
Pay careful attention to future trends in connection with the packaged outsourcing of business to the private sector
[Metropolitan sewage system] Reconstruction: Shinjuku 1-chome, Yotsuya 4-chome(May, ¥0.24 billion)[Metropolitan water system] Drainage and main pipes, Zenpukuji, Suginami Ward(July, ¥0.24 billion)[Metropolitan water system] Drainage and main pipes JV, Wakasu 2-chome Koto Ward(August, ¥0.42 billion * 70% = ¥0.29 billion)
– 12 –
V. Status of Treasury Stock and Policies for Returns to Shareholders
Mar. 2009Mar. 2008 Mar. 2010 Mar. 2011 Mar. 2012 (FY)
Decision to acquire treasury stock (¥3.0 billion) for the fifth consecutive fiscal year as a part of ongoing efforts to return profits to shareholders
[ Interim ]
[ Year-end ]
Consolidated Payout Ratio
Dividends per Share ¥20
¥10
¥10
26.5%
¥17
¥7
¥10
20.3%
¥20
¥10
¥10
27.1%
¥20 (Planned)
¥10
¥10
35.6% (Planned)
¥20
¥1036.2%
¥10(including a ¥3
commemorative dividend)
20,270 thousand shares 16,124 thousand shares
Newly acquired portion5,250 thousand shares
(Approximately ¥5.0 billion)15,027 thousand shares
9,193 thousand shares
Newly acquired portion4,143 thousand shares
(Approximately ¥5.0 billion)
Newly acquired portion5,544 thousand shares
(Approximately ¥5.0 billion)
Use in implementingmanagement integrationwith TSUKEN Corporation
8,351 thousand shares
Newly acquired portion3,612 thousand shares
(Approximately ¥3.0 billion)
Decision to acquire treasury stock for the fifth consecutive fiscal year
Number of shares held
16,074 thousand shares
Acquisition period: November 10, 2011 to March 31, 2014
Acquisition planned in the current fiscal year
maximum