KDDI HOMECorporate InformationInvestor RelationsIR DocumentsPresentationsFY 2021.3Performance Highlights and Q&A for the Fiscal Year Ended March 2021

Performance Highlights and Q&A for the Fiscal Year Ended March 2021

Date May 14, 2021 (Fri), 5:30-6:30 PM
Location KDDI Hall (Otemachi)
Respondents Makoto Takahashi, President; Takashi Shoji, Executive Vice President; Shunichi Muramoto, Executive Vice President; Keiichi Mori, Senior Managing Executive Officer Director; Kazuyuki Yoshimura, Managing Executive Officer Director; Nanae Saishouji, Executive Officer, General Manager, Corporate Management Division; Ikuko Hongou, General Manager, Investor Relations Department (MC)

Highlights of Financial Results

The Presentation of the Financial Results

At the financial results meeting, President Takahashi described five points: "Consolidated performance in the fiscal year ending March 2021," "Growth strategies," "Personal Services Segment," "Improving corporate value & SDGs," and "Projections for consolidated performance in the fiscal year ending March 2022."

1. Consolidated performance in the fiscal year ending 2021

Consolidated sales were 5,312.6 billion yen, up 1.4% year-on-year. Operating profit was 1,037.4 billion yen, up 1.2% year-on-year. Despite the rapidly changing environment, revenue and profit increased, led by the growth fields.
Consolidated operating profit for the fiscal year ending March 2021 grew by 12.2 billion yen year-on-year. Sales in growth fields, which are the Life Design Domain and Business Services Domain, excluding the Energy Business, recorded 58.2 billion yen, despite au's total ARPA revenue decreasing by 40.9 billion yen. In the Energy Business, revenue dropped by 20.5 billion yen, but this is expected to be temporary as we will be putting power-source procurement policies to work.

2. Growth strategies

Our growth strategies will be based on our existing communication business. We will actively advance 5G usage through multi-brand strategies and save costs for stable growth. As the growth strategies that are built on this foundation, the Life Design Domain will look to expand the au economy zone through customer contact points and point-scoring schemes, and the Business Services Domain will look to expand its business areas based on communication and IoT.
In the Life Design Domain, we will increase customer contact points, based on communication services. We now have over 32 million members using smartphone payment "au PAY" at physical stores, and over 15 million members using the online "au Smart Pass" service. As for point-scoring schemes, we will enable customers to use and score points at more locations and make the schemes more appealing. Through enhancing customer contact points and these point schemes, we will look to maximize the au economy zone, centering around finance, energy and commerce. The Life Design Domain KPI has seen steady growth of core services, with 2.88 million au Denki,etc. subscriptions, 6.5 million au PAY card members, and 15.63 million au Smart Pass members. Of these, 11.37 million members are au Smart Pass Premium members, suggesting the services are steadily taking root.
In the Life Design Domain, we will look to boost sales and operating profit by double digits. The financial business, which is a driver of growth, has been contributing significantly to operating profit, showing 19 billion yen operating profit growth year-on-year for the fiscal year ending March 2021 across the KDDI Group. As a result, in the fiscal year ending March 2021, the Life Design Domain recorded a 20 billion-yen increase in operating profit year-on-year. We expect profit to grow further, to 52 billion yen for the fiscal year ending March 2022.

For this growth driver, with respect to the transaction volume of settlement and loan in the Financial Business, we have seen au PAY payments grow, with the au Carrier billing service doing especially well, thanks partly to the effects of more people staying at home due to Covid. au Jibun Bank payments have also greatly increased, thanks to the steady growth of au Jibun Bank mortgages and specified-purpose loans, and to the enhanced collaboration with au Kabucom Securities, boosting transaction volume of settlement and loan to over 9 trillion yen for the fiscal year ending March 2021, growing by 1.4 times year-on-year. As the amounts of payments and financial transactions increased, operating profit also significantly increased to 49.8 billion yen from the entire KDDI Group in the fiscal year ending March 2021, growing 1.6 times year-on-year.
We will aim for further growth in the financial business toward the next medium-term management plan. Currently, we are actively promoting au PAY to encourage not just au customers, but non-au customers to use it as well. The aim is to create new businesses by enhancing connections between the bank and credit cards through the use of au PAY. Furthermore, we are seeing the number of core service users growing, as we have utilized the synergy with communication services and offered au Jibun Bank's mortgage discount and improved the special offer from au PAY Gold Card. Going forward, we will promote online financial services associated with securities and financing, enhancing connections between the bank, credit cards and financial services.

In the Business Services Domain, sales were 991.6 billion yen for the fiscal year ending March 2021, while the projection for the fiscal year ending March 2022 is 1.02 trillion yen, and operating profit was 166.7 billion yen for the fiscal year ending March 2021.The projection for the fiscal year ending March 2022 is 184 billion yen. We are hoping that the operating profit will grow by double digits.
For the growth strategy for the Business Services Domain, we have positioned fixed lines, mobiles and 5G as the "core businesses." Based on communication and over 21 million IoT lines (current as of the end of the fiscal year ending in March 2021) , which are our strengths, we will advance our business domains at home and abroad to become the "NEXT core" which are "Corporate DX," "Business DX" and "Business infrastructure services." All of these NEXT core businesses are value-added solutions that enhance existing communication services, offering comprehensive support to customers' businesses. We are aiming for the NEXT core businesses to account for over 30% of entire sales in the fiscal year ending March 2022, while enhancing synergies with the core businesses by expanding IDs and enhancing customer engagement, boosting the growth of the entire Business Services Domain.
"Corporate DX" will be based on teleworking and a zero-trust approach. With the measures to prevent the spread of the Covid, more small and mid-size companies are adopting teleworking. KDDI Matomete Office products have grown over the last year, including cloud apps, with PCs and tablets growing by 1.3 times and smartphones by 1.7 times. Going forward, we will advance "Managed Zero Trust," a one-stop service to offer customers cloud and security operations and management to support "Smart Work," a new way of working, helping customers to organize their environment and to shift to smart work.
The "Business DX" will be based on IoT and cloud. The number of IoT lines has grown steadily, to a cumulative total of over 18 million lines, achieving the medium-plan target in advance. On a group-wide basis, we have over 21 million lines, including SORACOM lines. As for the KDDI Group's capabilities, we will introduce companies such as SORACOM as our group companies and establish DXGoGo, a new company to support companies' business transformation with AI and IoT, so that the entire KDDI Group can support customers identifying and working on new business opportunities, with the accelerating growth of IoT.
The "Business Platform Services" will be based on data centers and call centers, looking to grow together with customers at home and abroad. We are opening data centers mainly in Europe, a zone with high connectivity, operating at over 40 sites in 10 cities around the world. KDDI Evolva, which runs BPO and contact centers, recorded sales of over 100 billion yen in the fiscal year ending March 2021, and operating profit grew significantly by 29% year-on-year.

3. Personal Services Segment

Regarding 5G-accessible area construction, we will bring 5G to new areas based on where consumers are most likely to go on a daily basis. 5G will be available on all Osaka Loop Line stations from the end of March, and all Yamanote Line stations from around the end of May. We plan to gradually cover the other key railway lines. Toward offering 5G services across Japan, we plan to launch about 50,000 stations by March 2022, covering 90% of the population. Also, in addition to offering 5G services in the new 3.7GHz, 4.0GHz, and 28GHz frequencies for 5G, we have been launching 5G in existing frequencies, to create 5G networks ahead of the stand-alone 5G era.
For the number of smartphone subscribers, we reached a cumulative total of 4G LTE and 5G subscriptions of 28.87 million devices at the end of March. Cumulative sales of 5G smartphones were over 2.4 million units by the end of March, far exceeding the initial target.
For the multi-brand strategies, au will offer stress-free unlimited data services, looking to increase new subscribers with simple and affordable UQ mobile at the core, as well as povo that can be customized freely by customers by adding and taking away options. The multi-brand communication ARPU will likely decline, but we will aim for increased data usage as we offer more 5G services in the medium-term. Supported by the growth of the Life Design Domain, or the au economy zone, we will look to enhance customer engagement and total growth in ARPU.
povo started not just as a simple online-only service, but as a unique concept by being a customizable service with options. The application is simple and fast to use, and it can be easily customized according to customer needs. Customers can add and delete options such as "5 Mins Voice" and "Unlimited Data 24h" as needed. We also plan to open "povo Lab" as a place of collaboration for customers and partner companies, and to introduce more options as they become ready.

4. Improving corporate value & SDGs

For financial engagements, we will advance our medium-term management plan to further improve profitability and efficiency.
For non-financial engagements, we will work on solving various social issues through our business, based on the "KDDI Sustainable Action" announced last May. Based on data, we verified and analyzed the relationship between our non-financial affairs and corporate value and found that various initiatives, including disaster-prevention policies, conservation for the global environment and efforts for women's career advancement, are proportional to corporate value. We will continue to advance these efforts to improve corporate value with both financial and non-financial engagements.
To conserve the global environment, the entire KDDI Group will advance decarbonizing initiatives. To reduce our own CO2 emissions, we will evaluate every possibility including technological development, and on the business side, we will work on creating new energy businesses. On April 26, we announced our support for the proposals made by the Task Force on Climate-related Financial Disclosures (TCFD). An analysis of the relationship between our ESG and corporate value with data has revealed that there is a positive relationship between the two, in which a 10% reduction of greenhouse gas intensity boosts PBR by 2.4% after 6 years. We will further advance initiatives and active information disclosure.
Toward our Human Resources First transformation, we have introduced a new human resource system to realize new work styles to help workers achieve results without being confined by time or location. We are simultaneously driving "In-house DX," the "KDDI Version Job Style Personnel System," and the "Declaration of KDDI New work Styles," and as part of In-house DX, we have provided all employees with secure PCs based on the zero-trust concept, and we are currently working on making visible work-style data to further improve productivity. Putting these initiatives to work ourselves has helped improve our prowess in making suggestions for Corporate DX in the Business Services Domain, an area that we will promote as a business to contribute to the public.

5. Projections for the consolidated performance in the fiscal year ending March 2022

For consolidated sales in the fiscal year ending March 2022, we are ascertaining the changes in circumstances as business opportunities, including the lowered communication charges, intensified competition, and significant changes in people's lives due to Covid, and we are aiming for sustainable growth. More specifically, we will look to further grow our growth fields, further save costs, and steadily create cash flow to improve returns to shareholders.
For the fiscal year ending in March 2022, we project consolidated sales of 5.35 trillion yen and operating profit of 1.05 trillion yen. We expect the growth fields to drive the increases in profit and revenue, with both the Life Design Domain and Business Services Domain to increase operating profit by double digits, with the Life Design Domain projected to record 250 billion yen, up 26.3% year-on-year, and the Business Services Domain's operating profit of 184 billion yen, up 10.4% year-on-year. For further cost-savings, we will improve marketing efficiency and reduce marketing costs, associated with the integration of UQ mobile. Toward improving and optimizing network efficiency, we will drive structural reforms, including by reviewing construction processes and internalizing them. We will also advance cost efficiency by driving work-style reforms on the corporate side, making every effort for sustainable growth.
Finally, for the dividend, we have been focusing on DPS growth associated with sustainable growth, looking to provide a higher dividend for the 20th consecutive term, at 125 yen for the fiscal year ending March 2022. We have also approved the acquisition of our own shares at an upper limit of 150 billion-yen.

Questioner 1

  • QTell us about competitiveness after the release of new prices. What is your projection for competitiveness for the coming 12 months, given the impacts of the March competition, the last-minute demand for Rakuten Mobile, and the start of ahamo? Tell us how much UQ mobile acquisition will accelerate and how effective povo has been.

    Customer movements remained limited in the first half of the 4Q with companies announcing online brands, but the second half of the 4Q saw active customer movements. With regard to Rakuten Mobile, actually we struggled a little because campaigns lasted until early April, but it then got back on track. UQ mobile has been doing well after the integration in October last year. The online brand povo is also doing well, being positively received by customers. Most customers are interested in the medium-volume data allowance. We will address customer needs with multiple brands and hope to help customers select UQ mobile and povo. The importance is how we can use multiple brands to boost customers' usage, including by offering au's unlimited MAX 5G and 4G to customers who want a large data allowance.

  • QYou say our growth fields will significantly drive growth. How did the growth fields boost revenue last year? Tell us about the drivers of revenue for the coming 12 months.

    We have defined the growth fields as finance, energy and commerce. In the financial business, we are just beginning to see signs of growth in au Jibun Bank. We feel that the other businesses, such as credit cards, securities and insurance, are also showing sure and early signs of growth. Energy and commerce have been growing recently as well. The key is how we can encourage au customers to use these services and how we can accelerate usage. With respect to customer touchpoints, we have been focusing efforts into au PAY. By using credit cards, customers receive Ponta points that they can use for payments. We want to drive this positive cycle further. We want to get to the entrance of customers' lives through channels like au Jibun Bank mortgages. We also think that the Energy Business is another field that will grow significantly.
    In the financial business, we expect the most from credit cards. I feel this area is set to grow, as au PAY Gold Card is being received positively. au Jibun Bank mortgages are also doing well. They are being used not only by au customers, but also by many customers from other mobile carriers. You get a lower interest rate if you are an au user, so it has helped attract more au subscribers. Paying by telecommunication carrier services is proving popular under Covid, driving growth. Unfortunately, the Energy Business recorded a decline of 20.5 billion yen in revenue this term due to the soaring market prices on the Japan Electric Power Exchange. Building on the lesson learnt, that it is a highly volatile market, we will pursue stability as we secure profit. I feel that this decline in revenue is temporary and that revenue will grow in the fiscal year ending March 2022.

Questioner 2

Questioner 3

Questioner 4

Questioner 5

  • KDDI Evolva merged with Relia, Inc. on September 1, 2023 to form Altius Link, Inc.
Print This Page
Change Text Size

E-mail Alerts

E-mail Alerts is a service that informs subscribers by E-mail of updates to the Investor Relations website, financial results, and other vital up-to-the-minute information.

Open link in a new windowRegistration

KDDI IR Official Twitter