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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Funai Soken Holdings Incorporated    9757   JP3825800000

FUNAI SOKEN HOLDINGS INCORPORATED

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Funai Soken Incorporated : 2020 Half-year Financial Results Briefing (Transcript)

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09/17/2020 | 02:35am EDT

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Hello everyone. I am Sakae Takashima, president and group CEO. Thank you for your ongoing support of the Funai Soken Consulting Group.

Without further ado, I'd like to report on our accounts for the second quarter of the year ended December 2020.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Let's begin with the Consolidated Statement of Income.

Sales were 12,234 million yen, up 1.2 percent over the same period in the preceding year. Operating income was 2,584 million yen, down 10.1 percent.

Ordinary income was 2,640 million yen, down 9.4 percent. And net income was 1,745 million yen, down 9 percent.

Covid-19 had an impact on our ability to seek new orders, and although sales were up, income was down-a bitterly disappointing outcome.

Compared with our financial result forecast, which we initially published on May 20, sales were roughly in line with the projected range of +2 percent through -1 percent, but operating income and ordinary income were far above the forecast.

I will explain about the factors behind these developments.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Next, let's look at how we fared in each of our operating segments.

In our core consulting segment, sales were 9,071 million yen, down 2.1 percent from the same period in the preceding year, and operating income was 2,513 million yen, down 12.1 percent. Since we began refraining from in-person seminars and workshops in April, and moved them online, we have been able to attract new customers to a certain degree, but growth in new orders has stagnated and sales are at roughly the same level as last year.

Meanwhile, Funai Consulting Shanghai, which was virtually inactive in the first quarter of the year, restarted operations in April and is gradually returning to pre-Covid levels.

Operating income in this segment, though, were down as we went ahead with necessary investments, including aggressive hiring of new staff.

Performance was solid in the Logistics segment. Sales were 1,279 million yen, up 9.4 percent over the same period in the preceding year, helped by some large spot orders; and operating income was 165 million yen, roughly even with last year.

In the direct recruiting segment, the suspension of large-scale seminars stunted growth in new orders. Sales were 1,358 million yen, and although that represents growth of 24.4 percent over the same period in the preceding year, still that growth rate is less than what it was previously. Operating income continues its improving trend, ending on a net loss of 66 million yen.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

This shows sales by service category in our core consulting segment.

Of the various forms of consulting we offer, projects are the most vulnerable to economic downturns like we have now, and the ravages of Covid-19 saw project sales down by a huge 35.2 percent.

On the other hand, sales of monthly support services, one of the main earners of our consulting business, were down only 5 percent as we managed to sustain these via online delivery. Similarly, management workshop sales were down only 4.6 percent.

The main factor behind these decreases was the 59.8-percent decline in open seminars. Suspending in-person seminars stalled our momentum in securing new orders, but we look forward to driving new orders again soon, either by resuming in-person seminars or holding web- based seminars.

Listing sales remained solid, up by 32.6 percent.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

This shows consulting sales by sector.

As different industries were affected in different ways and to different degrees by Covid-19, there is considerable variation in sales movement in the different sectors.

Those sectors known to be severely affected by the coronavirus-dining, specialist services, and human resource businesses-all experienced precipitous drops, while other sectors were more robust. These included core client industries such as housing and real estate, and education, childcare, and schools, as well as production goods manufacturing, an area which is fast adopting robotics technology.

In any case, as you can see from this graph, the situation is severe indeed for many of the sectors and clients we serve.

For that reason, although our business has focused mainly on providing SMEs support for growth and improved corporate value, we have recently begun providing support aimed at dealing with the effects of Covid-19, working with proprietors to help them survive the current difficulties.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Now, let's look at full-year forecasts and the effects of Covid-19.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

As you will recall, we previously withdrew our full-year financial result forecasts, labeling them "undetermined" amid the confusion surrounding the impact of coronavirus, but we have now published these as a range, so I'd like to go over those forecasts first.

We are currently forecasting sales of between 24.0 billion and 25.76 billion yen, operating income of between 4.3 billion and 5.15 billion yen, ordinary income of between 4.35 billion and 5.2 billion yen, and net income of between 2.9 billion and 3.5 billion yen.

The upper figures reflect our determination to earn as much revenue as possible during these Covid-affected times, and to maintain our proposed ROE of 15 percent.

The lower figures are what we could realistically hope to achieve in worst-caseCovid-19scenarios-specifically if the circumstances experienced in April through June after the government declared a state of emergency were to continue throughout the rest of the year.

For that reason, I think there is only a limited risk of us sinking to those lower figures, and we will work hard to come as close as possible to the upper figures.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Next, I would like to explain about how our various segments have been impacted by Covid-19, and what they can expect in the future.

In the consulting segment, our efforts in the first half of the year have shown that pre-existing consulting contracts can be performed by delivering support remotely. So even if the virus continues to spread, we can handle these by increasing the ratio of remote support to non-remote support. The problem lies in drumming up new orders; our main concerns would be easily resolved if we could hold in-person seminars, but as long as we must refrain from them or there are major restrictions on our ability to hold them, we are forced to rely solely on web-based seminars to seek new orders, which will inevitably have an impact on business performance.

Incidentally, Covid-19 seems to be on the wane in China, and I believe Funai Consulting Shanghai is on the road to pre-Covid levels of performance.

The logistics segment performed solidly thanks to some large projects lasting through the second quarter, but as with the consulting segment, we foresee a lag in the attraction of new projects. Full- year sales will likely be in line with last year, and operating income is forecast to decline slightly.

Despite the decline in new client acquisitions and ad placements due to the suspension of large- scale seminars, the direct recruiting segment's revenues were buoyed by existing accounts and the July launch of our new fixed-feesubscription-based "all you can hire" service. We are forecasting a year-on-year improvement in profitability.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Next, I will give a simple run-down of new consulting services offered to help clients deal with Covid-19.

At present, we offer an Exit Strategy Report, covering 41 points specific to different industries and solution categories, and online seminars focused on adapting to the Covid-affected landscape.

Meanwhile, we also offer industry-specific solutions that go a step further to help clients not only navigate the immediate difficulties, but also to prepare for the new post-Covid realities.

Here is an example. For instance, for clients in the education and childcare sector, we offer help in delivering online classes and online student recruitment; for clients in the certified professional services sector, we offer assistance for the remote delivery of legal consultation; and for clients in the manufacturing sector, we offer help relating to marketing automation and remote business meetings, etc.

Digital transformation for SME clients is already a major facet of our current Mid-Range Business Plan, and has been made all the more relevant by the challenges thrown up by Covid-19. As such, we are working to quickly develop new solutions in this area.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

Finally, I would like to touch on dividends.

The board has approved a resolution to stick with our original plan and pay an interim dividend of 20 yen per share. For now, there is no change to our stated position, with a year-end dividend of 25 yen, making for a total of 45 yen per share for the year.

As we seek sustainable growth for the whole Funai Soken Consulting Group, we look forward to your ongoing support for our efforts to uphold dividend policy also designed to uphold long-term growth.

That concludes the presentation. Thank you very much.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

2020 Half-year Financial Results Briefing

Aug. 24, 2020

Funai Soken Holdings Inc.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Funai Soken Holdings Co. Ltd. published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 06:34:06 UTC

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Financials
Sales 2020 25 450 M 241 M 241 M
Net income 2020 3 425 M 32,4 M 32,4 M
Net cash 2020 13 147 M 125 M 125 M
P/E ratio 2020 36,0x
Yield 2020 1,82%
Capitalization 123 B 1 168 M 1 168 M
EV / Sales 2020 4,33x
EV / Sales 2021 4,08x
Nbr of Employees 1 209
Free-Float 78,6%
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Mean consensus HOLD
Number of Analysts 3
Average target price 2 950,00 JPY
Last Close Price 2 476,00 JPY
Spread / Highest target 25,2%
Spread / Average Target 19,1%
Spread / Lowest Target 13,1%
EPS Revisions
Managers
NameTitle
Sakae Takashima President, CEO & Representative Director
Takayuki Nakatani Director & General Manager-Operations
Tatsuro Ono Director & General Manager-Human Resources
Takahisa Okumura Director & GM-Business Administration
Masahiro Hyakumura Director
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