fiscal year ending december 2018 six months (january ... · “tanomail plus ” tanosee started...

Copyright©2018 OTSUKA CORPORATION All Rights Reserved.

Fiscal year ending December 2018

Six months (January – June)

Business Results

Yuji Otsuka, President

August 1, 2018

OTSUKA CORPORATION

Copyright©2018 OTSUKA CORPORATION All Rights Reserved. 1

(Millions of yen)

Consolidated Non-Consolidated

Amount Ratio to Plan

Change toLast Year Amount Ratio to

Plan Change toLast Year

Net sales 389,863 104.7% +9.0% 353,172 104.2% +8.7%

Operating income 27,178 96.7% +1.3% 24,054 93.9% -1.4%

Ordinary income 27,868 97.9% +1.8% 25,386 94.7% +0.1%

Net income* 18,791 99.7% +1.3% 17,543 96.2% +0.4%

Summary of Business Results,January - June, 2018

*Profit attributable to owners of parent


Segment Company name Business domain Number of

employees

2018 Jan.- Jun. Net sales

(Millions of yen)

S I

OSK Co., LTD. Development and sale of packaged software, IT consulting, and Consigned software development 430 4,980

Net World Corporation Sales and technology support for network-related equipment 399 52,053

S & S

Alpha Techno Co., Ltd Emergency repair of PC and peripheral equipment and data recovery service 335 2,283

Alpha Net Co., Ltd Comprehensive service and support for network systems 425 4,279

Consolidated subsidiaries


389,863357,585

338,509

27,17826,82723,944

27,86827,38724,568

15,95918,79118,541

0

100,000

200,000

300,000

400,000

2016 Jan.- Jun. 2017 Jan.- Jun. 2018 Jan.- Jun.0

10,000

20,000

30,000

40,000

Net sales Operating incomeOrdinary income Net income*

Net sales and ProfitsConsolidated

(Millions of yen)

Net salesOperating incomeOrdinary incomeNet income*



202 191

134,387 140,789 147,881

203,919 216,604 241,981

0

100,000

200,000

300,000

400,000

2016 Jan.- Jun. 2017 Jan.- Jun. 2018 Jan.- Jun.

338,509

389,863357,585

Net sales by segmentsConsolidated

(Millions of yen)SI business S&S business Other business


63,409 71,31167,192

69,457 72,095 75,19620,539 21,710 23,334

183,330163,766157,166

0

100,000

200,000

300,000

400,000

2016 Jan.- Jun. 2017 Jan.- Jun. 2018 Jan.- Jun.

310,573

353,172324,765

Net sales by 4 segmentsNon-Consolidated

(Millions of yen)SI related products Custom-made software, etc.

Supplies

Maintenance, etc.


171.1167.3

160.6144.2

180.2 177.3 158.9174.6

198.6

191.2

0

50

100

150

200

1Q 2Q 3Q 4Q

FY 2016 FY 2017 FY 2018

6

Consolidated Quarterly change of Net sales

(Billions of yen)


5,677

10,535

14,207

10,360 11,404

6,667

15,255

12,13112,222

15,645

0

4,000

8,000

12,000

16,000

1Q 2Q 3Q 4Q

FY 2016 FY 2017 FY 2018

7

Quarterly change of Ordinary income

Consolidated

(Millions of yen)


(Millions of yen)

Consolidated Non-Consolidated

Amount Change to Last year Amount Change to

Last year

Net sales 198,637 +12.0% 181,325 +11.1%

Operating income 15,327 +1.6% 13,959 -1.6%

Ordinary income 15,645 +2.6% 14,180 -1.2%

Net income* 10,727 +2.2% 9,798 -1.2%

8

Summary of Business Results,April – June, 2018



167,379 177,307198,637

13,91315,082 15,327

14,20715,255 15,645

10,495 10,7279,463

0

50,000

100,000

150,000

200,000

2016 2Q 2017 2Q 2018 2Q0

5,000

10,000

15,000

20,000


Net sales and Profits,April – June

Consolidated

(Millions of yen)




-2.3

12.8

5.5

3.2

9.1

-1.8

5.6

5.2

14.8

10.8

7.8

15.9

3.0 3.43.8

-0.2

2.1

-0.7

4.05.3 6.1

5.6

8.7

7.6 7.4

10.4

12.0

9.6

2.4

6.28.3

0.8

3.83.8

6.98.4

2.3

6.47.43.8

3.65.3

5.44.8

7.1 7.0

5.7

7.0

5.3

3.0

3.54.6

-5.0

0.0

5.0

10.0

15.0

20.0SI related products Custom-made software etc.Supplies Maintenance, etc.

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QFY 2015 FY 2016 FY 2017 FY 2018

10

Non-Consolidated

Quarterly Net Sales by 4 segments( % change year-on-year )

( % )

SI related products 15.9Custom-made software etc. 7.4 Supplies 6.4Maintenance, etc. 5.3


23.83% 29.95% 46.22%

22.77% 30.75% 46.48%

21.91% 30.37% 47.72%

0% 20% 40% 60% 80% 100%

2016 1H

2017 1H

2018 1H

Less than 1 billion of yen 1 to less than 10 billions of yen 10 billions of yen and above

Net sales structure on customers’ total annual business scale

Non-Consolidated

* “Less than 1 billion yen” includes public offices.

2018Jan. - Jun.

2016Jan. - Jun.

2017Jan. - Jun.


Lease, Creditfirms, etc.

9.13%

Serviceindustries

30.13%

Education,Public offices

5.71%

Retailingindustries

3.66%

Buildingindustries

8.99%

Wholesaleindustries

17.74%

Manufacturingindustries

24.64%

2018 Jan. – Jun.

Sales breakdown by customers’ type of industryNon-

Consolidated


36.4

28.0

40.3

-4.6-3.3 -2.9-13.4-9.5

-11.4

-15-10

-505

1015202530354045

C/F from operating C/F from investing C/F from financing

Cash flowsConsolidated

2016 Jan. – Jun. 2017 Jan. – Jun. 2018 Jan. – Jun.

(Billions of yen)


217,416197,877

179,053

9,111 8,933 8,565

52.451.651.2

2.12.32.60

50,000

100,000

150,000

200,000

250,000

As of Jun. 30, 2016 As of Jun. 30, 2017 As of Jun. 30, 20180

20

40

60

80

100

Equity Interest-bearing debtEquity ratio Interest-bearing debt ratio

Equity andInterest-bearing debtConsolidated

(Millions of yen) ( % )


2,982

3,567

2,127

186

8,862

（33.6%）

（40.3%）

（24.0%）

（2.1%）

Personnel organization(regular employees)

Consolidated

As of Jun. 30, 2018

Technical personnel

Sales personnel

Corporate staff

Others


<Amount of Sales> (Millions of yen)

2016 Jan. – Jun. 2017 Jan. – Jun. 2018 Jan. – Jun. 2018 Apr. – Jun.

Amount AmountChange to Last year Amount Difference to

Last yearChange to Last year Amount Difference to

Last yearChange to Last year

“tanomail” 74,913 77,480 +3.4% 80,298 +2,818 +3.6% 39,947 +1,953 +5.1%

SMILE 5,295 5,950 +12.4% 6,458 +507 +8.5% 3,794 +386 +11.3%

ODS 28,620 32,083 +12.1% 31,479 -604 -1.9% 17,032 -531 -3.0%

OSM 36,222 34,748 -4.1% 36,842 +2,094 +6.0% 18,982 +2,158 +12.8%

<As reference: Number of Sales> (Units)

Copier 24,007 25,440 +6.0% 23,274 -2,166 -8.5% 12,254 -1,211 -9.0%(of whichColor copier) 22,446 24,270 +8.1% 22,553 -1,717 -7.1% 11,894 -1,033 -8.0%

Server 18,425 16,021 -13.0% 16,428 +407 +2.5% 7,747 -378 -4.7%

PC 475,781 435,431 -8.5% 561,599 +126,168 +29.0% 263,190 +74,494 +39.5%

Client Total 507,800 453,087 -10.8% 584,637 +131,550 +29.0% 273,187 +74,953 +37.8%

(ODS: Otsuka Document Solutions OSM: Otsuka Security Management)

16

Key strategic businessNon-Consolidated


0

100,000

200,000

300,000

400,000

500,000

1Q 2Q 3Q 4Q

2011 2012 2013 2014 2015 2016 2017 2018

17

Quarterly Number of PCs SoldQuarterly Number of PCs Sold

(Units)


0

5,000

10,000

15,000

1Q 2Q 3Q 4Q

2011 2012 2013 2014 2015 2016 2017 2018

18

Quarterly Number of Copiers SoldQuarterly Number of Copiers Sold

(Units)


22,234

6,004

3,776

545 3,3029,61919,885

33,03646,369

7,152

2,029

1,475

1,560

2,207

2,313

2,465

1,4081,128

4,218

4,555

25,212

16,766

11,335

3,245

2,552

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

“MA tanomail”

“personal tanomail”

“tanomail plus”

TANOSEE

Started “tanomail”

Alliance withLION OFFICE PRODUCTS CORP.

(“tanomail” 1H)

59,062

71,088

82,493

89,192

92,990

100,980

“tanomail” achievedsales of over

100 billion yen

107,934

128,733

117,381122,367

80,298

139,106

146,046

153,500

Non-Consolidated

(Millions of yen)

Annual sales transition of “tanomail”

Other “tanomail” business“tanomail”

Number of “tanomail”registered accountsJune 2018 1,480,275 accountsJune 2017 1,374,627 accounts

Procurement service for large company

Mail-order Servicefor individual

Private brand

Procurement ASP service


81208 304 384

509 560 638 722 822 9031,039

1,4391,645

1,783

2,243

1,9312,110

1,2601,162

40

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(Thousand people)

Number of Users of Main Web Services (ASP)Number of Users of Main Web Services (ASP)

2.24 million peopleused services in June 2018

Years to 2017 are full years

June 2018


Accumulated business sales share (%)

Non-Consolidated Growth of accumulated business

Net sales of Supplies and Maintenance agreementAccumulated business sales share

As reference (1999)

Net sales of Supplies and Maintenance agreement(Billions of yen)


Future Plans


The Basic Principle and Mid-Term Plans

< Basic principle >• Grow with customers by realizing the Mission Statement< Mid-term plans >• Workforce basically remains flat or will increase slightly• Strive to expand business by increasing revenues and

profitsAim to achieve 7% in operating income to net sales ratioand ordinary income to net sales ratio

• Cultivate new demand by utilizing customer information• Effective use of people/materials/money to improve per

head productivity

23


• Continued moderate growth in Japan and overseas

• Demand for aggressive IT investment, raisingproductivity and cost reductions

• Demand for responding to labor shortages and forlabor-savings

• Rising interest in new IT such as AI and IoT

• Further progression of work style reform

• Strong demand by companies for IT utilization andenergy-saving

Market Forecastin the Second Half of 2018

Market Forecastin the Second Half of 2018


“Leverage solutions on all fronts and live up to customer trust”

• Strengthen on-site capabilities and customer contactpoints through business management led by local areasales groups

• Expansion of business items with customers andcross-selling

• Promote and support work style reform• Strengthen initiatives such as for AI and IoT• Further strengthening of solution proposals• Strengthening of logistics structure

Policies and Measuresin the Second Half of 2018

Policies and Measuresin the Second Half of 2018


9.0 3.4

-24.4

0.8

-8.0 -9.0

-13.7

-0.6

24.1

15.3

20.9

39.5

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

2017 1Q 2017 2Q 2017 3Q 2017 4Q 2018 1Q 2018 2Q

Copiers

PCs

(% change year-on-year)

26

Number of Copiers and PCs Sold

( % )


30,000

35,000

40,000

45,000

50,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181,000

1,500

2,000

2,500

3,000

3,500

4,000Net sales per employeeOperating income per employee

6,443 6,659 6,809 6,897 6,897 6,821 6,762 6,733 6,878 6,965 7,089 7,193 7,27327

Special demand for Windows XP

Non-Consolidated

Change of Net sales per employee and Operating income per employee

Operating income per employee (Thousands of yen)

Net sales per employee (Thousands of yen)

*Figures show totals for

Jan. – Jun.

Number of employeesat the end of June

(80 person increase from the end of the previous June)


Work Style Reform

State of Otsuka’s work style reform initiatives

28

Sal

es s

ide

Sup

port

side

Introduce RPA (Robotic Process Automation)* internally

*Automation tool for routine work

Quickly introduce in the Support Center Department, where enhancing the efficiency of support operations for an enormous amount of inquiries is an issue

Commenced telework for part of the Computer Department

Actually utilize Otsuka’s abundant solutions Many benefits created, including a reduction inovertime hours and an increase in the number of business discussions

Sup

port

cust

omer

s’ w

ork

styl

e re

form

sut

ilizi

ng th

e ex

perie

nces

from

Ots

uka’

s ow

n ca

se e

xam

ples

Introduce Chatbot internallyRespond to inquiries from inside and outside the company using AI


Providing Seasonal Work Style Reform Services

«Labor saving» Chatbot service «Automation» RPA service


643,417691,166 720,000

39,68444,386

47,30040,780

45,460 48,000

31,560 31,88026,675

0

200,000

400,000

600,000

800,000

FY 2016 FY 2017 FY 20180

15,000

30,000

45,000

60,000


Plans of Net sales and profitConsolidated

(Plan)

(Millions of yen)




383400

293,580282,064266,625

426,420408,718376,391

0

200,000

400,000

600,000

800,000

FY 2016 FY 2017 FY 2018

643,417691,166 720,000

Plans of Net sales by segmentsConsolidated

SI Business S&S Business Other Business (Millions of yen)

(Plan)


Stock Split ImplementedStock Split Implemented

• Listening to the voices of individual investors:“Too costly to buy”

• Enhancing the liquidity of stocks and expandingshareholder base

32

Split Ratio 1 : 2

A stock split implemented with an effective date of April 1


Community

Employees

Customers

ShareholdersBusiness Partners

We live up to ourStakeholders’ confidence

33


1. This material is intended to provide information about the business performance of the 2nd quarterof fiscal year 2018 and strategy of the OTSUKA CORPORATION and Group companies. It is not intended and should not be construed as an inducement to purchase or sell stocks ofOTSUKA CORPORATION.

2. Forward-looking statements in this material with respect to OTSUKA CORPORATION’s strategies,plans, beliefs, and other statements related to future trends and performance are not historicalfacts, and as such involve risks and uncertainties. Such statements are not guarantees of futureperformance. Actual results may differ considerably from projections due to unpredictable changes to the economic situation, and a number of factors. Key factors that could affect actual results aregeneral economic conditions, social trends, change of relative competitiveness in demand actionfor products and services provided by OTSUKA CORPORATION. Key factors that may affectbusiness performance are not limited to these items described here.

3. Statements in this document are based on the current beliefs, estimates and expectations ofmanagement. OTSUKA CORPORATION undertakes no obligation to update any forward-lookingstatements.

4. OTSUKA CORPORATION shall in no event be liable for any damages arising out of the use orinterpretation of this material.

Cautionary statement

fiscal year ending december 2018 six months (january ... · “tanomail plus ” tanosee started...

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