FY20.3 Annual Investors Meeting
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FY20.3 Annual Investors Meeting May 12, 2020 Kyushu Railway Company Contents Highlights 3 Ⅰ Financial results for FY20.3 4 Ⅱ Forecasts for FY21.3 11 Ⅲ Short-term strategies 15 Ⅳ Status of Medium-Term Business Plan Initiatives 18 APPENDIX 28 2 Highlights Results Consolidated operating revenue, operating income, ordinary income, and net for FY20.3 income all declined. Due to the influence of the spread of the COVID 19 infection, future revenue trends Forecasts are very unclear, and accordingly our results forecast and annual dividends have not for FY21.3 yet been determined at this point. In the future, when it becomes possible to make a forecast, we will release it promptly. Cash flow is declining substantially, centered on the decline in railway passenger revenues. Accordingly, we will advance measures with the highest priority on securing liquidity at hand. In preparation for further worsening of cash flow, we will consider and implement Short-term diversification of our fund-raising methods. strategies Looking at capital investment, we will steadily advance railway safety investment and investment in two station buildings. On the other hand, we will delay or control investment as much as possible. When we generate cash through the reevaluation of our portfolio, we will first allocate it to working capital. Status of To further strengthen our management foundation, we will accelerate the reevaluation Medium-Term of our business portfolio. Business Plan We will work to build sustainable railway services through improved profitability, and will strive to increase the population in the areas around our railway lines by investing Initiatives in strategic city-building initiatives in the regions around our bases. 3 Ⅰ. Financial results for FY20.3 4 Consolidated Financial Highlights for FY20.3 Financial Results Overview (\bil) Operating revenue FY19.3 FY20.3 YoY Through the third quarter, results were solid, centered on the railway business and the real estate leasing business. However, Operating revenue 440.3 432.6 (7.7) 98.2% from February 2020, revenue were down due to the influence of the spread of the COVID 19 infection. Operating income 63.8 49.4 (14.4) 77.3% Operating income Ordinary income 66.5 50.6 (15.9) 76.1% In addition to the elimination of special tax measures [¥(4.6) billion] and an increase in depreciation [¥(3.6) billion] at JR Kyushu, the spread of Extraordinary gains and the COVID 19 infection also had an influence. As a result, the scale of the (2.1) (7.5) (5.4) - decline in profits expanded. losses Net income attributable to 49.2 31.4 (17.7) 64.0% owners of the parent Extraordinary gains and losses An extraordinary loss was recorded on the new-style passenger ship QUEEN (※) EBITDA 85.4 75.0 (10.3) 87.9% BEETLE. →In consideration of the dramatic changes in the external environment, ※Note: EBITDA = operating income + depreciation expense (excluding depreciation of leased assets held for subleasing purposes). The same applies hereafter such as the long-term worsening of Japan-South Korea relations, intensified competition due to the rise of LCCs, the spread of the COVID 19 infection, the entire amount was recorded as a loss. [¥(6.1) billion] Change in operating revenue by segment Change in operating income by segment (¥bil) ((億円)¥bil) (億円) 4,450445 70070 440.3 (8.1) 63.8 (7.5) +0.6 (0.5) +5.5 +0.6 (5.9) 60060 +0.2 (6.2) 4,350435 432.6 (0.5) +0.0 49.4 50050 4,250425 ( Transportation Construction Hotels and Estate Real Restaurant and Retail Other Adjustment ( revenue Operating Operating 40 revenue 400 FY19.3 FY20.3 ( ( income Operating Transportation Construction Hotels and Estate Real Restaurant and Retail Other income Operating FY20.3) FY19.3 2021.3 (2020.3 運 建 不 流 そ 調 ( 2021.3 輸 設 動 通 の 整 (2020.3 運 建 不 流 そ ( 営 営 輸 設 動 通 の 業 サ 産 ・ 他 額 業 営 営 ) ) ー ・ 外 業 サ 産 ・ 他 業 収 収 ) ー ・ 外 益 ビ ホ 食 益 収 収 期 期 益 ビ ホ 食 益 ) ス テ ) 期 期 ル ) ス テ ) ル Note: Figures for changes in operating revenues and EBITDA by segment are prior to eliminating intersegment transactions and therefore do not coincide with consolidated figures. 5 Major Consequences Related to COVID 19 ①(Railway Business) Due immigration and movement restrictions and people staying inside, railway transportation revenues declined substantially. In particular, the influence on middle and long distance revenues has been significant, and JR Kyushu Rail Pass sales were down significantly year on year. FY2020/3 Anticipated influence of COVID FY2020/3 Full-year result 19 Status of Operational Suspension for the Kyushu Shinkansen and Railway transportation revenues ¥153.5 billion \ 147.3 billion \ (6.2) billion Limited Express Trains (Mar. 20 ~ Apr. 5) ・Started suspension of operations from Mar. 20, First 9 months centered on special trains ●YoY 4Q (B) (B)-(A) Total number Suspended (A) Number of of trains suspended trains operation rate Handling revenues 101.4% 78.3% (23.1)% Regular trains and special trains 47,592 670 1% Short distance revenues 103.7% 89.2% (14.5)% Of which, regular trains 46,951 398 1% Medium and long distance revenues 101.2% 72.1% (29.1)% Of which, regular trains 641 272 42% JR Kyushu Rail Pass: Sales Amount 115.2% 56.3% (58.9)% * Changes in segments on which trains are operated are not included in the number of suspended trains Monthly Railway Transportation Revenues(YoY) 120% 101.2% 100% 86.8% 80% 60% Solid results through the third quarter 52.7% 【1Q】 【2Q】 40% 【3Q】 (Feb. 26) Request for self-restraint in ・ Longer Golden Week Substantial increase in Solid results despite rebound holiday period September due to rush prior regard to large-scale events from consumption tax 20% ・Restart of operations on to increase in consumption (Mar. 28) Request for self-restraint in increase Kyudai Main Line tax regard to going out 0% 2019 2020 Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 6 Major Consequences Related to COVID 19 ②(Other than railway) Due to the decline in railway passengers, the number of visitors to facilities around stations has declined substantially, and station building tenant sales have decreased In particular, at an early stage, the hotel business was affected as people refrained from going out, and occupancy rates in the fourth quarter were down. In the retail and restaurant businesses, conditions in March were challenging, centered on stores located at stations. FY2020/3 Anticipated Forecast influence of Quarterly Trend 4Q Overview (\bil) Full-year result (Feb. 10) COVID 19 Operating Station building tenant sales 【Station buildings】 Real 54.8 55.2 (0.6) 125% • Through February, sales were strong, at a record- revenue 105.9% 104.8% 100.2% setting pace estate 100% • In March, tenant sales at JR Hakata City were down leasing Operating 75% to approximately 40% of the previous year’s level due business 16.6 16.7 (0.3) 88.5% to the suspension of events to attract customers, income 50% 1Q 2Q 3Q 4Q reduced operating hours, etc. Occupancy rate • Results were solid through January. In February, the Operating occupancy rate was down by about 20% YoY due to a 18.5 16.6 (1.3) 100% revenue 81.8% 79.0% 78.6% decline in inbound customers, etc. Hotel 75% • In March, the occupancy rate was down by about business 60% YoY due to the cancellation of events, etc. In Operating 50% particular, at the Huis Ten Bosch Hotel, the adjacent 1.6 0.7 (0.8) 56.1% income 25% theme park was closed, and the occupancy rate 1Q 2Q 3Q 4Q declined by about 90%. 【Retail】 Operating External sales (YoY) • Through February, results were solid. In March, sales in 106.6 104.6 (1.3) 125% Retail and revenue 102.1% 101.3% 101.5% the convenience store business were down about 20% YoY. restaurant 100% 【Restaurants】 • Through February, results were solid. In March, business segment Operating 75% 100.6% 2.9 2.8 (0.2) was affected, centered on stores located at stations, and income 50% sales were down about 40% YoY. 1Q 2Q 3Q 4Q 7 Segment Information 【Summary】 (\bil) FY19.3 FY20.3 YoY Major factors Operating revenue 440.3 432.6 (7.7) 98.2% Transportation 181.8 173.7 (8.1) 95.5% Increase in revenues from railway transportation, increase due to change in Railway Business (non-consolidated) 172.2 165.2 (7.0) 95.9% revenue/expense classifications related to station buildings (+2.4), etc. Construction 93.8 99.3 5.5 105.9% Increase in Shinkansen-related construction, etc. Real Estate and Hotels 90.0 90.7 0.6 100.8% Real Estate Lease 53.9 55.2 1.3 102.5% Condominium Sales 19.7 18.9 (0.8) 95.7% Decrease in revenue from sales of condominiums, etc. Hotel Business 16.4 16.6 0.1 101.1% Retail and Restaurant 104.0 104.6 0.6 100.6% Other 72.6 72.1 (0.5) 99.3% Decrease due to transfer of financing subsidiary leasing business, etc. Operating income 63.8 49.4 (14.4) 77.3% Transportation 27.4 19.8 (7.5) 72.4% Decrease due to elimination of special tax measures and increase in depreciation, Railway Business (non-consolidated) increase due to change in method of revenue/expense classifications, such as those 26.7 20.0 (6.6) 75.1% related to station buildings, (+5.0), etc. Construction 6.2 6.5 0.2 104.6% Real Estate and Hotels 25.4 19.1 (6.2) 75.2% Decrease due to change in revenue/expense classifications, such as those Real Estate Lease 20.6 16.7 (3.9) 81.1% related to station buildings, (-5.0), etc.