Financial Results for the 1st Quarter of the Fiscal Year Ending March 2016
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KDDI Corporation reported a 19% year-over-year increase in operating income for Q1 FY16, reaching ¥231.0 billion, while total operating revenue increased by 7% to ¥1,046.6 billion. The company's growth strategy, termed the '3M strategy', aimed at expanding ARPA revenues and targeting new growth domains in addition to domestic telecommunications. The results indicate strong performance across personal services and a significant increase in the global services segment, contributing to overall positive financial growth.
![5Consolidated Consolidated Operating Income:
Factor for Change, YOY for 1Q/FY16.3
(Billions of yen)
193.6
231.0
+15.3 +2.6
+8.9
<Others>
+10.6
<Personal>Note
Others
<Personal>Note <Value>Note
+37.41Q/FY15.3
[IFRS]
1Q/FY16.3
[IFRS]
+17.9
Total ARPA
Revenues
au ARPA
Revenues
Value-Added
ARPA
Revenues
Note) <Personal>:the Personal Services segment <Value>:the Value Services segment
Driven by Total ARPA Revenues](https://image.slidesharecdn.com/2015-150807063812-lva1-app6891/85/Financial-Results-for-the-1st-Quarter-of-the-Fiscal-Year-Ending-March-2016-6-320.jpg)
Financial Results for the 1st Quarter of the Fiscal Year Ending March 2016
- 1. President Takashi Tanaka KDDI Corporation Financial Results for the 1st Quarter of the Fiscal Year Ending March 2016 (from April to June 2015) August 7, 2015
- 2. Consolidated Highlights of 1Q Performance Note) Based on IFRS 1 Operating Income for 1Q: ¥231.0B +19% YOYNote Expanded Total ARPA Revenues by Promoting the “3M Strategy” Promoted Initiatives Targeting a New Stage of Growth In Addition to Domestic Telecommunications Business, Growth in New Domains
- 3. FY15.3 FY16.3FY15.3 FY16.3 2 *Based on IFRS Achieved YOY Increases in Revenue and Income Performance in 1Q/FY16.3Consolidated Operating IncomeOperating Revenue Profit for the period attributable to owners of the parent (Billions of yen) (Billions of yen) (Billions of yen) 231.0 193.6 YOY +19% FY15.3 FY16.3 977.4 YOY +7% 1Q 1Q 1Q1Q 1,046.6 143.9 1Q 1Q YOY +29%111.4
- 4. (Billions of yen) FY15.3 FY16.3 16.4 Segment Operating Income (1) 3 Personal Services Steady Income Growth In Both Segments, Value Services Personal / Value Services (Billions of yen) *Based on IFRS FY15.3 FY16.3 153.4 179.2 YOY +17% 1Q 1Q 18.4 1Q 1Q YOY +12% YOY +¥25.8B YOY +¥2.0B
- 5. FY15.3 FY16.3 3.6 4 Income Up Significantly In the Global Services Segment Business / Global Services Business Services Global Services (Billions of yen) (Billions of yen) Segment Operating Income (2) *Based on IFRS FY15.3 FY16.3 20.3 20.1 YOY -0.9% 1Q 1Q 11.3 1Q 1Q YOY +216% YOY -¥0.2B YOY +¥7.7B
- 6. 5Consolidated Consolidated Operating Income: Factor for Change, YOY for 1Q/FY16.3 (Billions of yen) 193.6 231.0 +15.3 +2.6 +8.9 <Others> +10.6 <Personal>Note Others <Personal>Note <Value>Note +37.41Q/FY15.3 [IFRS] 1Q/FY16.3 [IFRS] +17.9 Total ARPA Revenues au ARPA Revenues Value-Added ARPA Revenues Note) <Personal>:the Personal Services segment <Value>:the Value Services segment Driven by Total ARPA Revenues
- 8. Multi-Network Multi-Use Multi-Device 4G LTE WiMAX 2+ FTTH CATV au ID Data Share au ID Value-Added ARPA Revenues au ARPA Revenues 7 Expand Total ARPA RevenuesNote by Further Promoting the “3M Strategy” Promoting the 3M Strategy3M Strategy au Smart Pass (Unlimited Voice & Tiered Data Plan) au Smart Value (Bundled Services) Advance Advance Base Note) Total ARPA Revenues = au ARPA Revenues + Value-Added ARPA Revenues
- 9. 1Q 2Q 3Q 4Q 1Q 417.0 425.6 425.8 423.3 432.3 30.5 31.2 32.6 35.6 33.1 8 FY15.3 FY16.3 Total ARPA RevenuesNote YOY +4.0% YOY +¥17.9B YOY +4.0% 465.4 447.5 Quarterly Basis 3M Strategy (Billions of yen) au ARPA Revenues Value-Added ARPA Revenues Note) Total ARPA Revenues = au ARPA Revenues + Value-Added ARPA Revenues
- 10. 1Q 2Q 3Q 4Q 1Q 5,470 5,570 5,560 5,510 5,600 1Q 2Q 3Q 4Q 1Q 0.37 0.46 0.63 0.89 0.52 9 (Yen) FY15.3 FY16.3 au ARPA / au Net Adds Steady Growth in Both au ARPA and au Net Adds FY15.3 FY16.3 au Net Adds 3M Strategy au ARPANote * Based on the Personal Services segment Note) Mobile communications revenues, excluding MVNO and prepaid ÷ au customers (Millions) YOY +2.4% YOY +41%
- 11. Mobile Devices per Person 10 Tablets at 2.3 Times YOY Number of Mobile Devices Rising Steadily Mobile Devices per PersonNote 6/'14 6/'15 YOY ×2.3 Cumulative Tablet Subs (Unit) Note) Excluding MVNO and prepaid* Based on the Personal Services segment 3M Strategy (Multi-Device) 1.34 1.35 1.36 1.37 6/'14 9/'14 12/'14 3/'15 6/'15 1.38
- 12. 6/'12 6/'13 6/'14 6/'15 11 Mobile Fixed-line Quarterly Basis Steady Expansion 40 months after launch (As of June 30, 2015) 3M Strategy (Multi-Network) au Smart Value (Bundled Services) Note) Households: total for KDDI group companies and fixed-line allied companies 9.84M 4.84M (au subs) (Households) Note
- 13. 6/'12 6/'13 6/'14 6/'156/'12 6/'13 6/'14 6/'15 12 60% of au Hikari (FTTH)52% of au smartphone au Hikari（FTTH) subs au Smart Value for au Hikari (FTTH) subs au smartphone subs au Smart Value for au smartphone subs Penetration More Than Half of KDDI Group’s Service Subscribers au Smart Value (Bundled Services) 3M Strategy (Multi-Network) Penetration for au Hikari (FTTH) SubscribersNote2 Penetration for au Smartphone SubscribersNote1 Note1) Percentage of au Smart Value for au smartphone subscribers Note2) Percentage of au Smart Value for au Hikari (FTTH) subscribers (As of June 30, 2015) (As of June 30, 2015)
- 14. 1Q 2Q 3Q 4Q 1Q 300 300 310 340 310 100 110 120 120 120 13 FY15.3 FY16.3 430 400 YOY +7.5% Quarterly Basis YOY +20円 YOY +10円 3M Strategy (Multi-Use) (Yen) ＜KDDI services and othersNote3＞ ＜Settlement commissionsNote2＞ au Simple Payment (Online Carrier billing) au Smart Pass, etc. Value-Added ARPA Note1 Note1) Value-Added ARPA = Value-Added ARPA revenues (Settlement commissions + KDDI services and others) ÷ au customers Note2) Settlement commissions = Settlement commissions revenues of au Simple Payment (online carrier billing) and au WALLET Note3) KDDI services and others = Sales from KDDI services (such as “au Smart Pass” and product sales) and advertising revenues, etc. Settlement commissionsNote2 KDDI services and othersNote3
- 15. 14 FY15.3 FY16.3 FY15.3 FY16.3 Number of ApplicationsNote Targeting a New Stage of Growth Secure Customer Base in the Value-Added Domain Online Base Offline Base au Smart Pass 3M Strategy (Multi-Use) (Million members) (Millions) Note) au WALLET Prepaid Card 6/'14 9/'14 12/'14 3/'15 6/'15 10.70 13.19 6/'14 9/'14 12/'14 3/'15 6/'15 3.10 12.90 YOY +23%
- 16. 153M Strategy (Multi-Use) Providing Charging Methods for use online and offline Charge using cash at au shops au Simple Payment Online Carrier Billing 0% 10% 20% 30% 20s 30s 40s 50s 60s Age Distribution by Use of Principal Charging Methods *Based on sampling data of au WALLET prepaid card users in their 20s through 60s (Study period: January–March 2015)
- 17. 16 Gross Merchandise ValueNote2 via au settlement services 2015 2020 47.0 64.6 8.7 17.4 ×1.4 ×2.0 82.0 55.7 3M Strategy (Multi-Use) au Simple Payment Online Carrier Billing FY15.3 FY16.3(E) FY17.3(E) 0.38 0.85 (Trillion Yen) (Trillion Yen)Prepaid card settlements (including debit cards) Credit card settlements Market Forecast for Electronic Settlements Note1 Online Offline Note1) Prepared by KDDI based on “Overview of Electronic Settlements 2015–2016”（CardWave Co., Ltd., ePayments.jp, Yamamoto International Consultants) Note2) Total amount in circulation, including from KDDI’s own services, via au settlement services of “au Simple Payment (Online Carrier Billing)” and “au WALLET” Increasing Gross Merchandise Value Aiming to Increase Gross Merchandise Value Both Online and Offline
- 18. 17 7.79 9.51 12.80 2.84% 3.40% 4.37% 2.00% 4.00% 6.00% 8.00% 0.00 5.00 10.00 2010 2012 2014 E-Commerce Market (Trillion Yen) EC Conversion Rate Note2 Services through Tablet 3M Strategy (Multi-Use) Supported by staff Scheduled to begin in summer 2015 Note1）”Market Survey on E-Commerce Transactions” (Ministry of Economy, Trade and Industry) (http://www.meti.go.jp/press/2015/05/20150529001/20150529001-3.pdf, Japanese only) (May 2015) Note2）Scale of e-commerce transactions as a percentage of all transaction amounts (scale of the market for commercial transactions) Aiming to Increase Users by Leveraging Customer Contact Points Market Survey on E-Commerce TransactionsNote1 For consumer
- 19. 18Global Services Telecommunications Business in Myanmar MPT Mobile Subscribers Reinforce Network to Support a Rapid Increase in the Number of Users 7/'14 6/'15 More than 14.0M Since joint business agreement signed (July 2014), Approx. 6.0M More than doubled in one year Taken in Yangon (2015/7/23） MPT and KSGM (KDDI Summit Global Myanmar Co., Ltd.) staff involved in base station facility expansion
- 20. Summary 19Consolidated Note) Based on IFRS In Addition to Domestic Telecommunications Business, Growth in New Domains Operating Income for 1Q: ¥231.0B +19% YOYNote Expanded Total ARPA Revenues by Promoting the “3M Strategy” Promoted Initiatives Targeting a New Stage of Growth
- 21. Appendix
- 22. Consolidated Financial Results 21 1Q/FY15.3 1Q/FY16.3 YOY FY16.3 Operating revenue 977.4 1,046.6 +7.1% 4,400.0 Operating income 193.6 231.0 +19.3% 820.0 Operating margin 19.8% 22.1% -- 18.6% Profit for the period attributable to owners of the parent 111.4 143.9 +29.2% 490.0 EBITDA 330.8 367.5 +11.1% 1,400.0 EBITDA margin 33.8% 35.1% -- 31.8% Free cash flow -30.7 -80.1 -- 280.0 （E） Consolidated (Billions of yen) *Based on IFRS
- 23. 22 Operating Income Consolidated Personal Value Business Global Other, Elimination and Corporate IFRS 193.6 153.4 16.4 20.3 3.6 0.0 J-GAAP 194.8 155.9 15.2 19.7 2.7 1.4 Difference -1.1 -2.5 +1.2 +0.6 +0.9 -1.4 Major differences • Non-amortization of goodwill: +6.6 • Differences in depreciation method: –8.9 • Differences in the scope of consolidation: –0.9 • Non-amortization of goodwill: +5.0 • Differences in depreciation method: –8.3 • Differences in the scope of consolidation: +0.1 Non-amortization of goodwill: +1.0 Differences in the scope of consolidation: -1.0 Operating Revenue Consolidated Personal Value Business Global Other, Elimination and Corporate IFRS 977.4 750.7 53.9 159.0 69.2 -55.4 J-GAAP 1,020.6 780.6 54.5 161.9 66.7 -43.1 Difference -43.1 -30.0 -0.6 -2.8 +2.5 -12.3 Major differences • Impact of excluding selling commissions: –30.1 • Impact of excluding reward point expenses: –6.6 • Differences in the scope of consolidation: –2.4 • Impact of excluding selling commissions: –29.1 • Impact of excluding reward point expenses: –6.0 • Differences in the scope of consolidation: +10.0 Unification of reporting period for overseas subsidiaries: +2.5 Differences in the scope of consolidation: -12.4 (Ref.) IFRS/J-GAAP Differences in 1Q/FY15.3 (Billions of yen) • Non-amortization of goodwill: +0.5 • Share of profit(loss) of investments accounted for using the equity method: +0.4 • Impact of excluding selling commissions: –1.1 • Impact of excluding reward point expenses: –0.6
- 24. Financial Results by Segment 23 Personal 1Q/FY15.3 1Q/FY16.3 YOY Operating revenue 750.7 814.6 +8.5% Operating income 153.4 179.2 +16.8% Operating margin 20.4% 22.0% -- EBITDA 273.5 299.8 +9.6% EBITDA margin 36.4% 36.8% -- Value 1Q/FY15.3 1Q/FY16.3 YOY Operating revenue 53.9 61.8 +14.6% Operating income 16.4 18.4 +11.9% Operating margin 30.4% 29.7% -- EBITDA 19.0 20.7 +9.0% EBITDA margin 35.2% 33.5% -- Business 1Q/FY15.3 1Q/FY16.3 YOY Operating revenue 159.0 151.2 -4.9% Operating income 20.3 20.1 -0.9% Operating margin 12.7% 13.3% -- EBITDA 31.4 31.0 -1.3% EBITDA margin 19.8% 20.5% -- Global 1Q/FY15.3 1Q/FY16.3 YOY Operating revenue 69.2 76.8 +11.0% Operating income 3.6 11.3 +215.5% Operating margin 5.2% 14.7% -- EBITDA 6.8 14.0 +105.5% EBITDA margin 9.9% 18.3% -- (Billions of yen) *Based on IFRS
- 25. KPI 24 Segment 3/’15 6/’15 Change 3/’16（E） Consolidated au subscriptions (Millions) 43.48 44.07 +0.60 45.78 Personal Services au subscriptions (Millions) 36.48 37.00 +0.52 38.18 Mobile Devices per Person （Units） 1.37 1.38 +0.01 1.40 au smartphone penetration （%） 54.3% 55.1% +0.8pt -- au Smart Value (Mobile) (Millions) 9.33 9.84 +0.51 -- au Smart Value (Fixed-line) (Millions) 4.59 4.84 +0.25 -- Value Services au Smart Pass (Millions) 12.89 13.19 +0.30 -- Segment 1Q/FY15.3 1Q/FY16.3 YOY FY16.3（E） Total ARPA (Yen) 5,870 6,030 +2.7% 6,110 Personal Services au ARPA (Yen) 5,470 5,600 +2.4% 5,610 Value Services Value-added ARPA (Yen) 400 430 +7.5% 500
- 26. CAPEX (cash flow basis) 25 1Q 1Q Mobile Fixed-line and other (including UQ) 1Q/FY16.3 ¥144.9B FY15.3 FY16.3 Capital ExpendituresConsolidated YOY -¥15.5B Progress Rate 24.2% 63.4 97.0 Full-year (E) (Billions of yen) 160.4 600.0 144.9 667.7 64.4 80.6 *Based on IFRS Full-year
- 28. The figures included in the this brief, including the business performance target and the target for the number of subscribers are all projected data based on the information currently available to the KDDI Group, and are subject to variable factors such as economic conditions, a competitive environment and the future prospects for newly introduced services. Accordingly, please be advised that the actual results of business performance or of the number of subscribers may differ substantially from the projections described here. Disclaimer