ZERO : FY2019 Financial Results Supplementary Explanation

1

FY2019（2019/7～2020/6）

Financial Results

Supplementary

Explanation

6th August 2020

Zero Co., Ltd.

President & CEO

Takeo Kitamura

2

• Agenda
• FY19 Look Back
• • FY19 Japanese Automobile Market
  • FY19 Business Summary and Analysis

• FY20 Outlook
• • FY20 The COVID-19 Impact
  • FY20 Forecast and Positioning

3

• Agenda
• FY19 Look Back
• • FY19 Japanese Automobile Market
  • FY19 Business Summary and Analysis

• FY20 Outlook
• • FY20 The COVID-19 Impact
  • FY20 Forecast and Positioning

FY19 Look back ① Japanese Automobile Market	4

YOY New Vehicle Sales

120%			113%
	104%
100%		107%			87%	89%	88% 90% 91%
80%										71%
60%				75%							55%	77%
1,396,242	1,045,522		1,371,726			836,049
40%	（108.1%）	（83.7%）		（89.8%）			（68.2%）
	7	8	9	10	11	12	1	2	3	4	5	6
		1Q			2Q			3Q			4Q

YOY Used Car Registered

120%	107%	117%								105%
					98%	99%
					98% 94%
100%
80%		96%		96%	93%			94%			80%
60%		106.9%			95.5%			97.0%			93.1%
	7	8	9	10	11	12	1	2	3	4	5	6
		1Q			2Q			3Q			4Q

Reference：Automobile Dealers Association

Japan Light Motor Vehicle and Motorcycle Association

FY19 Look back ② Business Summary（Full-year）	5

（Unit：Millions of	FY18	FY19	FY19	Difference	Difference
from	from
JPY）	Result	Forecast	Result	previous
forecast
				year
Sales revenue	90,228	95,000	89,501	▲5,499	▲727
Operating income	3,305	4,000	3,675	▲325	＋370
(Ratio)	(3.7%)	(4.2%)	(4.1%)
Profit before tax	3,294	3,980	3,679	▲301	＋385
Profit attributable
to equity	1,658	2,300	2,374	＋74	＋716
shareholders of
the company
Basic earnings of	99.74	138.33	142.30	＋3.97	＋42.56
this year per
JPY	JPY	JPY	JPY	JPY
share
Annual dividend	24.9	34.6	35.6	＋1.0	＋10.7
per share	JPY	JPY	JPY	JPY	JPY

FY19 Look back ③ Business Summary（4Q）	6

（Unit:	1-3Q	1-3Q	Diffe-
Millions of	YOY
FY19	FY19	rence
JPY）
Sales	66,944	71,809	＋4,865	107.3%
revenue
Operating	2,175	3,439
income	＋1,264	158.1%
(Ratio)	(3.2%)	(4.8%)
Profit
attributable
to equity	888	2,274	＋780	256.1%
shareholders
of the
company

4Q	4Q	Diffe-	YOY
FY19	FY19	rence
23,284	17,692	▲5,592	76.0%
1,129	236	▲893	20.9%
(4.9%)	(1.3%)

770 100 ▲670 13.0%

4Q FY19 Overview

• Vehicle Transport＆Automotive Periphery：The number of vehicles transported and pre-delivery inspected fell sharply in response to the drop in new vehicles sales.
• Used Car Export：The number of vehicle exported fell sharply as a result of the lockdown in Malaysia.
• Human Resource：Sales declined due to the suspension of the pick-up service contractor's business and the termination of the temporary staffing contracts.
• General Cargo : The number of packing in CKD business declined as a result of the lockdown in Thailand.

FY19 Look back ④ Performance Analysis（Sales Revenue）7

94,000

（Unit：Millions of JPY）

92,000

＋3,625

▲4,716

90,000

▲256

90,228

＋695

▲618

＋543

89,501

▲1,090

＋76

＋287

88,000

FY18

1-3Q

4Q

1-3Q

4Q

1-3Q

4Q

FY19

Automotive

Human

General

Sales

Sales

Related

Resource

Cargo

Revenue

Revenue

Business

Business

Business

Human Resource

1-3Q

4Q

FY19

Automotive Related

65,766 → 64,675

Pick-up

＋380

▲290

＋90

Human Resource

18,527 → 18,603

Dispatch

＋120

▲210

▲90

Airport Related

＋200

▲120

＋80

General Cargo

5,935 → 6,222

Total

＋700

▲620

＋80

Automotive Related	1-3Q	4Q	FY19
Vehicle Transport	＋2,380	▲2,690	▲310
Automotive Periphery	▲450	▲500	▲950
Used Car Export	＋1,700	▲1,530	＋170
Total	＋3,630	▲4,720	▲1,090

General Cargo	1-3Q	4Q	FY19
Transport/Warehouse	＋90	▲60	＋30
Port handling	▲130	＋50	▲80
CKD	＋580	▲250	＋330
Total	＋540	▲260	＋290

FY19 Look back ⑤ Performance Analysis（Operating Income）8

4,500

（Unit：Millions of JPY）

4,000

＋337

▲339

▲159

3,500

＋531

3,675

3,000

3,305

2,500

FY18

Automotive

Human

General

Adjustment

FY19

Operating

Related

Resource

Cargo

Operating

Income

Business

Business

Business

Income

Automotive Related

4,894 → 5,426

General Cargo

150 → ▲188

・Profit improvement in block companies

・Extension of car carriers'

depreciation period

・Drop in unit price of fuel expenses ・Profit decrease in automotive

periphery business

・Allowance for bad debts in used car

＋400 ・Profit increased in the transport/ warehousing business

＋320 ・Profit decreased in the port handling ＋240 business

・Launching cost in CKD business

▲300

＋10

▲180 ▲170

export business	▲130
Human Resource	313 → 650		Adjustment	▲2,053 → ▲2,212

・Recovery from transient job	・General administrative expenses increase▲160
advertisement expenses	＋290
・Cost reduction	＋50

FY19 Look back ⑥ Performance Analysis（B/S）	9
（Unit：Millions		Current assets												Liabilities
	of JPY）		Non-current assets														Equity
														＋4,960
	┌────					──────┐			┌────		──────┐
	＋4,960
50,000	50,000
										44,514							＋3,139
																				44,514
40,000	39,554												40,000		39,554
																							＋1,822
						＋10		＋4,950
30,000																												19,620
	18,177							18,187			30,000		16,481
20,000
															20,000
10,000								26,327
																		23,072							24,894
0		21,377												10,000
			June									June	0
	30,	30,
					June 30,							June 30,
	2019	2020
					2019					2020

• Current : Cash increase and trade receivables decrease
• Non-current：Tangible fixed assets increase

• Liabilities：Lease debts increase*
• Equity：Retained earnings increase

*Due to the application of IFRS 16 (New Lease Standard),

mainly for real estate lease contracts, equivalent value of the total amount of rentals for a certain period（Total of 4,624 million yen) is recorded on the balance sheet as right-of-use assets (non-current assets) / lease debts (liabilities)

FY19 Look back ⑦ Performance Analysis（C/F）	10
（Unit：Millions of JPY）	FY18	FY19	Difference	Comments
Cash flow from	1,033	6,538	＋5,505
operating activities
Profit of the year	1,663	2,387	＋724
Depreciation and	1,708	4,188	＋2,480	Due to application of
amortization costs				IFRS16
Increase / decrease of	▲1,992	345	＋2,337	Decrease of used car
trade receivables				export receivables
Other	▲346	▲382	▲36
Cash flow from	▲2,402	▲2,067	＋335
investing activities
Expenditures due to
the acquisition of	▲2,195	▲1,889	＋306
tangible fixed asset
Other	▲207	▲178	＋29
Cash flow from	▲438	▲3,157	▲2,719
financing activities
Repayment of finance	▲563	▲3,209	▲2,646	Due to application of
lease debts				IFRS16
Other	125	52	▲73

11

• Agenda
• FY19 Look Back
• • FY19 Japanese Automobile Market
  • FY19 Business Summary and Analysis

• FY20 Outlook
• • FY20 The COVID-19 Impact
  • FY20 Forecast and Positioning

FY20 Outlook ① The COVID-19 Impact in FY20	12

Segment	Business	Weather	Comments
Forecast
		１Q	The automobile market is recovering from the COVID-19 impact, but
			it is expected to fall sharply compared to the previous year when there
			was a rush of demand before the tax increase.
	Vehicle	2Q	It is expected to remain at the same level as in the previous year,
		when the market was recovering from the COVID-19 effects and the
	Transport/		impact of the tax increase and natural disasters.
Automotive	Automotive
3Q	It is expected to remain at the same level as the previous year, when
Periphery
Related
		the effect of the launch of new models vehicles and COVID-19 was
			simultaneously felt.
		4Q	It is expected to recover significantly from the previous year when
			COVID-19 hit directly, to the same level as the year before last.
	Used Car		Due to the aftermath of the lockdown in Malaysia, it is not expected to
	Export		recover during the first half of FY20.
	Pick-up		Due to COVID-19, some customers terminate pick-up service
Human		contracts.
Resource	Dispatch		Some customers terminate temporary staffing contracts in FY19 4Q.
		As for airport business, It is not expected to recover during FY20.
	Transport/		Due to COVID-19, some customers' cargo volume decreases.
	Warehouse
General	Port Handling		Sales declines mainly in the vehicle and chassis handling business at
Cargo		Kanda Port.
	CKD		Packing volume decreases due to the suspension of the factory in
		Thailand.

FY20 Outlook ② FY20 Forecast		13
（Unit：Millions of	FY19	FY20	Difference	YOY
JPY）	Result	Forecast	from FY19
Sales Revenue	89,501	81,000	▲8,501	90.5%
Operating Income	3,675	3,600	▲75	98.0%
(Ratio)
Profit before Tax	3,679	3,580	▲99	97.3%
Profit attributable to
equity shareholders	2,374	2,300	▲74	96.9%
of the company
Basic earnings of	142.30JPY	137.84JPY	▲4.46JPY	96.9%
this year per share
Dividend per share	35.6JPY	34.5JPY	▲1.1JPY	96.9%
(Interim 15.0JPY)	(Interim 15.0JPY)

FY20 Positioning

• To break free from the sense of blockage and stagnation caused by the spread of the COVID-19 infection, then return to a growth trajectory.
• Toward "Coexistence "with coronavirus, to mobilize the power of the Zero
  Group to promote initiatives for FY21 and beyond, including consideration of new work styles.
• To build a sustainable growth scenario and business portfolio that responds to changes in social conditions and market trends.

14

60th anniversary in October 2021