Results for the First Six Months Ended September 30, 2013

Transcription

1 Translation ANALYST MEETING Results for the First Six Months Ended September 30, 2013 November 1, 2013 Setsuo Wakuda Representative Director and CEO AUTOBACS SEVEN CO., LTD.

2 Contents 1. Results for the First Six Months Ended September 30, Measures for the Latter Six Months of FY2013 (from Oct. 1, 2013 to Mar. 31, 2014) 3. Objectives for the Business of FY 2014 and Beyond 1

3 1. Results for the First Six Months Ended September 30,

4 Financial Results (Six Months Ended Sep 30, 2013) (Billion Yen) Initial Forecast Six months ended September 30, 2013 Actual result YoY change ratio Change from initial forecast Six months ended September 30, 2012 Net Sales % Gross margin % Gross margin ratio 32.6% 33.4% +1.5pt +0.8pt 31.9% SG&A % Operating income % Operating income ratio 4.1% 4.3% +0.5pt +0.2pt 3.8% Non-operating income/ expenses % Ordinary income % Extraordinary gains/ losses - (0.2) Net income % Amounts are rounded to the nearest hundred million yen. % of Net Sales and YoY comparisons are calculated in million yen. Note: Figures in parentheses are negative. 3

5 Performance Points for the Six Months Ended Sep 30, Falling store sales(domestic retail sales) 2. Gross Margin improvement and SG&A cost reduction (Minimized the effects of weak sales) 3. Reform efforts of store subsidiaries progressing steadily.(sales decreased but profits improved) 4

6 Analysis for Operating Income Domestic Retail sales Total store basis: -5.9%/ same store basis: -8.0% Segment Amount Operating income (Billion yen) Major drivers of variance (yoy) Non-consolidated BY Net sales (-9.3%) Gross Profit (21.4% (last year 21.2%)) Principally due to change in merchandise mix and improvement in purchasing conditions SG&A BY Decrease in directly managed stores Review of advertising and sales promotion, reduced commission paid Domestic store subsidiaries (1.19) BY (-2.3% in Sales) Due to change in merchandise mix and improvement in purchasing conditions Overseas subsidiaries BY Subsidiaries for supporting function, car goods supply and other BY Segment total BY Consolidation Adjustments Consolidated BY (0.18) Adjustment amount decreased by 0.15 BY from last year I. Increased in adjustment of inventories which were sold from parent company to domestic store subsidiaries II.Decreased in depreciation of goodwill by acquisition of franchise company Amounts are rounded to the nearest hundred million yen. Note: Figures in parentheses are negative. 5

7 Segment Information Non-consolidated Domestic store subsidiaries Overseas subsidiaries Subsidiaries for car goods supply and other Subsidiaries for supporting function Segment total Six months ended September 30, 2013 Six months ended September 30, 2012 YoY Change Initial Forecast % to Plan Net sales % % Operating income % % Net sales % % Operating income (1.19) (1.32) Net sales % % Operating income % % Net sales % % Operating income % % Net sales % % Operating income % % Net sales % % Operating income (Billion Yen) % % Amounts are rounded to the nearest hundred million yen. % of Net Sales and YoY comparisons are calculated in million yen. Note: Figures in parentheses are negative. 6

8 (1) Falling Store Sales(Domestic Retail Sales) 1. Reaction to the boost in sales last year as a result of eco-car subsidy program (the program continued during the first six months of last year) Decreased demand for car accessories, wheels, maintenance goods, and car navigation devices 2. Drop in the unit price of/demand for navigation devices Intensified competition with car dealers, etc. 3. Failure to attain estimated tire sales Retail sales at all stores Six months ended September 30, 2013 Six months ended September 30, 2012 YoY Amounts Units ASP Tires % -4.3% -1.0% Car Electronics % -12.2% -11.5% Navigation devices (Billion Yen) % -10.6% -16.3% 7

9 Domestic Retail Sales (Billion Yen) Retail sales including FCs: billion Yen (- 5.9% YoY) Others(Fuel & Second-hand goods sales): 2.2 billion Yen (+22.2% YoY) Safety Inspection & maintenance services: 8.1 billion Yen (+5.5% YoY) 277 thousand cars (+2.7% YoY) Number of fully certified & designated stores: 366 stores (+14 from the previous fiscal yearend) Car purchase & sales: 9.6 billion Yen (+18.6% YoY) 9,882 cars (+16.9% YoY) Car related goods and services sales: billion Yen (-8.7% YoY) 0 Six months ended Sep Six months ended Sep Amounts are rounded to the nearest hundred million yen. * Sales at all domestic store formats (AUTOBACS, Super AUTOBACS, AUTOBACS CARS, AUTOBACS Secohan Ichiba and AUTOBACS EXPRESS) 8

10 Motorcycle Goods Car Leisure Items Car Repair Goods Services (excl. Inspections/Maintenance) Maintenance Parts Motor Sports Goods Accessories Tires Car Electronics Batteries Wheels Oil Sales Variance by Merchandise Same store basis Sales: -8.0% YoY, Number of customers: -5.8% YoY (Million Yen) 1,000 Retail sales ups and downs by merchandise category (for six months ended Sep. 30, 2013, YoY change in amount, total store basis) , ,192-2,000-3,000-4,000-5,000-6,000-7,000 Accessories : -0.5 BY Interior items : -0.2 BY PB tires: -0.6 BY Navigation devices: -4.5 BY Digital terrestrial tuners: -0.4 BY -6,230 * Sales at all domestic store formats (AUTOBACS, Super AUTOBACS, AUTOBACS CARS, AUTOBACS Secohan Ichiba and AUTOBACS EXPRESS) 9

11 ASP Trends in Car Navigation Devices ASP and Unit Sales Trends of Car Navigation Devices (YoY) 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -9.4% -22.3% -0.6% -0.9% -1.8% -4.2% -8.2% -8.4% -14.1% -13.6% -12.9% -12.3% -13.7% -17.4% -17.4% -17.1% -18.4% -18.9%-18.7% -17.9% -17.0% -19.8% -21.4% -21.7% Unit sales (YoY) ASP (YoY) 10

12 Sales Trend: Retail & Wholesale (Oct Sep. 2013) (%) YoY change for the last 12 months Oct 2012 Strong sales of tires, wheels and tire chains Decrease in reaction to last year s strong sales thanks to the recovery from the effects of the Thai flood Inventory at stores Nov Dec Jan Nov. 30, Sales Rebound from last year s decrease Wholesale Decrease in reaction to the boost in sales last year as a result of eco-car subsidy program.drop in the unit price for navigation devices Feb Mar Apr May Jun Jul Aug Sep 2 March 31, Nov. 30, Vs.1 * Sales at all domestic store formats (AUTOBACS, Super AUTOBACS, AUTOBACS CARS, AUTOBACS Secohan Ichiba and AUTOBACS EXPRESS) (Billion Yen) 3Vs.2 Tires % +15.6% Car Electronics % -5.0% 11

13 (2) Factors for Improving the Gross Margin 1. Improving the gross profit mix - Sales ratio for car electronics items decreased from 23.1% to 19.0%. - Sales ratio for oil and batteries increased from 10.9% to 12.0%. 2. Improving the gross margin for tires - Streamlining merchandise; the ratio of fuel-efficient tires increased from 32.6% to 45.5%. 3. Improving the gross margin for motor sports goods - Improving purchasing and reviewing store sales prices 12

14 (3) Initiatives to Improve the Performance of Domestic Store Subsidiaries A dedicated division provides support for managing the subsidiaries. Results: Operating loss improved by 140 million Yen, although net sales decreased by 2.3% year on year. 1. The gross margin improved from 36.0% to 37.8%. - The gross margin for tires improved due to negotiations with suppliers. 2. Operational efficiency has continued to improve. - Transferred certain personnel to headquarters (moved 100 personnel to parent company from April 2013) - Redeployed personnel among stores (within each subsidiary) - Increased efficiency in serving customers, and productivity through multifunctionality (Sales in 62 stores improved by 2.0 points year on year) 13

15 Results of Overseas Operation by Country Number of Stores at September 30, 2013 Same store sales YoY change for the six months ended September 30, 2013 Period Net Sales (Million Yen) SG & A (Million Yen) Operating Income (Million Yen) Results of overseas subsidiaries by country six months ended 9/30/2013 FRANCE CHINA SINGAPORE THAILAND % +51.8% 2.7% 9.9% six months ended 9/30/2012 six months ended 9/30/2013 six months ended 9/30/2012 six months ended 9/30/2013 six months ended 9/30/2012 six months ended 9/30/2013 six months ended 9/30/2012 4,000 3, ,910 1, (40) (90) (20) (0) Business Conditions Net sales decreased, partially due to price competition with competitors. Gross margin improved due to strong sales of oil, batteries, service, etc. SG&A costs were also reduced, but operating income remained flat year over year. As a result of improved sales promotion, sales of tires, wheels, etc. expanded significantly and operating losses narrowed. Store sales decreased, despite strong sales of wheels, maintenance, and service. However, operating income improved due to reduced expenses and the effect of exchange rates. Net sales decreased, resulting in an operating loss due to price competition with competitors, offsetting strong sales of tires and maintenance-related merchandise. Amounts are rounded to the nearest hundred million yen. Note: Figures in parentheses are negative. 14

16 Decrease in Consolidation Adjustments Consolidation Adjustments Six months ended September 30, 2013 Operating Income for segment total 4,644 (Million Yen) Six months ended September 30, ,539 Elimination of Intersegment transaction (Income of subsidiaries for supporting functions, etc.) Inventories (Unearned income of subsidiary inventories, etc.) (80) (218) (245) (155) Depreciation of Goodwill (61) (116) Adjustment in fixed assets Allowance for point card Other Consolidation adjustment (180) (325) Consolidated operating income 4,464 4,214 Amounts are rounded off to the nearest million yen. Note: Figures in parentheses are negative. 15

17 Progress of New Store Openings Store openings from April to October, 2013 Store name Owner of stores Opening date 1 AUTOBACS KAMATA Store FC Apr 18, AUTOBACS KUMAMOTO HITOYOSHI Store FC Apr 18, AUTOBACS YANAI MINAMIMACHI Store Subsidiaries Jun 21, AUTOBACS AIZUMI Store Subsidiaries Jun 27, AUTOBACS FUKUROI IC Store FC Jul 11, AUTOBACS Tire Shop NAGAREYAMA Subsidiaries Jul 17, AUTOBACS MAEBASHI AMAGAWA Store FC Jul 19, AUTOBACS SHIRONE Store FC Aug 8, AUTOBACS HITACHINAKA Store FC Sep 12, AUTOBACS KAHOKU Store FC Sep 13, AUTOBACS BANDO Store FC Sep 14, AUTOBACS KAKAMIGAHARA Store FC Sep 20, AUTOBACS TSURUGA Store FC Sep 20, AUTOBACS Tire Shop AKIRUNO Store Subsidiaries Sep 21, AUTOBACS AOMORI-CHUO Store FC Oct 4, AUTOBACS SHIZUNAI Store FC Oct 11, AUTOBACS AKITA OMAGARI Store FC Oct 11, AUTOBACS EXPRESS IYOSAIJO Store Subsidiaries Oct 18, AUTOBACS Tire Shop MATSUMORI Store Subsidiaries Oct 24, 2013 *From October to December, five new stores are publicly announced to open, and additionally two more stores are scheduled to open by December,

18 Engagement in the Tires Business Opening low-cost stores specializing in tires Low-cost operation: Management system mainly dealing in tires and wheels, with fewer staff (Average number of employees: 4) Low-cost store openings: Renovation of a property purchased as a going concern and a warehouse-type property, and installation of facilities and equipment Reduction of the total investment Six months ended September 30, 2013 Opening Month Store name Store sales (YoY) Number of tires (YoY) Sales of tires (YoY) Mar-11 AUTOBACS HAKODATE NAKAMICHI Store (format changes) 104.0% 99.1% 97.8% Feb-12 AUTOBACS Tire Shop OGORI 116.4% 118.5% 123.2% Jul-13 AUTOBACS Tire Shop NAGAREYAMA Store *137.5% *124.5% *126.9% * Comparison to internal plan AUTOBACS Tire Shop AKIRUNO Store (Sep-13 Opening) AUTOBACS Tire Shop MATSUMORI Store (Oct-13 Opening) 17

19 Renovation of Super AUTOBACS Stores Concept: Promote the concept of AUTOBACS store floor renovation as A store where it is easy to choose and buy," and further strengthen Super AUTOBACS advantage, a technicality to promote how it differs from competitors Number of stores renovated in the six months ended Sep 30, 2013: 16 stores The performance of the central shelve merchandise and the merchandise making the most of the technicality improved. YoY Amount Comparison (six months ended September 30, 2013) Item Central shelve *Wall merchandise Car electronics Motor sports goods Renovated stores 95.4% 82.1% 77.3% 93.6% Stores yet to be renovated Increase in merchandise assortment and improved display *Wall merchandise: Wheels/Car electronics/ Motor sports goods 92.6% 79.3% 75.9% 86.4% Refurbishment of the main counter Improved store floor environment 18

20 Internet Sales Results Net sales for the six months ended September 30, 2013 : 570 million yen (up 99.5% year on year) Delivery directly to customers: 250 million yen Store sales: 320 million yen Main merchandise - Car Electronics: about 50% of total Main merchandise - Tires and Wheels: about 20% of total By channel - Through the company's website: about 67% of total By channel - Shopping mall: about 33% of total [Steps taken] Increased merchandise assortment : about 58,000 SKU (as of March 31) about 96,000 SKU Improved the company's internet sales site (AUTOBACS.COM) Used Amazon.co.jp for sales Developed merchandise, etc. accompanied by installation service 19

21 Alliances in the ASEAN region Malaysia Name of new company :ENEOS AUTOBACS CAR CENTRE MALAYSIA Sdn.Bhd. Alliance partner :JX Nippon Oil & Energy Trading Corporation Line of business :Retail and wholesale of car parts and accessories Launch schedule:within 2013 Indonesia Name of joint venture company :PT. AUTOBACS INDOMOBIL INDONESIA Joint venture partner :PT.CENTRAL SOLE AGENCY Line of business :Wholesale of car parts and accessories Launch schedule :within

22 2. Measures for the Latter Six Months of FY2013 (from Oct. 1, 2013 to Mar. 31, 2014)

23 Forecasts for FY 2014 (Billion Yen) 1Initial Forecast 2 nd Half (FY 2014) FY2014 2Actual result 2-1 YoY Change 1Initial Forecast 2Revised forecast 2-1 YoY Change Net sales % % Gross margin % % 32.6% 33.4% +0.8pt 32.9% 33.4% +0.5pt SG&A % % 28.5% 29.1% +0.6pt 27.2% 27.5% +0.3pt Operating income Ordinary income % % 4.1% 4.3% +0.2pt 5.7% 5.9% +0.2pt % % 4.6% 5.4% +0.8pt 6.2% 6.4% +0.2pt Net income % % 2.2% 2.9% +0.7pt 3.5% 3.6% +0.1pt Same store sales Total store sales +0.5% -8.0% -8.5pt +0.1% -4.0% -4.1pt +3.0% -5.9% -8.9pt +2.6% -1.6% -4.2pt Amounts are rounded to the nearest hundred million yen. % of Net Sales and YoY comparisons are calculated in million yen. 22

24 Measures for the Second Half of FY2013 Business environment: - Increasing demand for new cars before the consumption tax increase - Reduced effects in reaction to the end of eco-car subsidies Measures 1. Focus management resources mainly on tire sales 2. Strengthen statutory safety inspections and car sales - Start offering online reservations for statutory safety inspections - Increase display vehicles (vehicles on loan to stores) 3. Promote the continual reform of store subsidiaries - Strengthen the gross profit management of each store - Continue to improve operational efficiency at stores - Start working to reduce equipment costs Web reservations page for statutory safety inspections 23

25 <Reference>Trends in domestic sales of new cars (cars) 800, , , , , % Domestic sales of new cars (Registered cars+k-cars) Eco-car subsidy program 66.40% 43.60% 37.50% Number of cars sold YoY 100% 80% 60% 40% 300, % 17.70% 20% 200, , % -5.70% -0.40% -3.10% -7.80% -8.10% % 1.50% -6.90% % -8% -1.10% 0% 0-20% Source: JAPAN AUTOMOBILE DEALERS ASSOCIATION. 24

26 <Reference> Monthly Sales in FY1997 and FY1998 (YoY) 25.0 Before/after increase in consumption tax Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Same store sales at AB Group stores Number of new cars registered 25

27 Strengthening Internet Sales 1. Renovate AUTOBACS.COM (the company's site) - Make it easier to choose/buy tires, wheels, etc. - Increase contents for customers with less knowledge of cars 2. Strengthen the channel - Use the Yahoo! Shopping site - Offer more items at the shopping mall - Improve/strengthen the smartphone application 3. Efforts to enhance the appropriateness of sales promotion measures - Search engine measures - Original online advertisements AUTOBACS.COM App for smartphones 26

28 Conversion before stock split Financial Strategies Shareholder return policy (Yen) FY March 2010 FY March 2011 FY March 2012 FY March 2013 FY March 2014 (Estimates) Annual Interim 27

29 3. Objectives for the Business of FY 2014 and Beyond The next medium-term business plan is scheduled to be announced in May 2014 after determining the effects of the increase in the consumption tax. Assuming that the domestic automotive aftermarket industry continues to shrink, focus on expanding statutory safety inspections and maintenance services, body repair services, and car purchase/sales business. Increase new small-scale stores and specialty stores. Take advantage of Japan's top brand and bases to realize the concept of Anything about cars, you find at AUTOBACS." Promote overseas business, mainly through alliances in the ASEAN region. Returns to stockholders based on existing policies 28

30 Today's Message - The effects of fewer sales were minimized, primarily by improving the gross margin and reducing SG&A costs for the six months ended September 30, It is vitally important to improve the performance of store subsidiaries. - Efforts will be focused on tires, statutory safety inspections, and car sales for the second half of FY2013. All employees will work together to improve the sales structure. - The next medium-term plan will be announced in May Towards establishing a stronger AUTOBACS chain and increasing shareholder value 29

31 Forward-Looking Statements These materials include forecasts regarding the Company s future plans, strategies, and performance. This information is based on judgments and estimates made in accordance with information currently available. Actual results may differ materially from forecasts due to such factors as changes in operating circumstances.

32 APPENDIX 30

33 Quarterly P/L (FY March 2014) (Billion Yen) Q1 Q2 1 st Half Result YoY Result YoY Result YoY Net sales % % % Gross margin % % % % of Sales 32.5% % % - SG&A % % % Operating income % % % % of Sales 3.6% - 5.0% - 4.3% - Ordinary income % % % % of Sales 4.6% - 6.1% - 5.4% - Net income % % % % of Sales 2.4% - 3.4% - 2.9% - Same store sales % % % Amounts are rounded to the nearest hundred million yen. % of Net Sales and YoY comparisons are calculated in million yen. 32

34 Performance Breakdown(Six months ended Sep 30, 2013) Parental company (Non-consolidated) Net Sale 81.7BY YoY: -8.42BY Wholesale Retail -6.68BY (-8.0%) -1.75BY (-41.0%) fuel, used car, oil, batteries, services car electronics, tires & wheels, motor sports goods, etc. on-line store, fuel car electronics, services, tires & wheels, etc. Gross Margin 17.5BY YoY: -1.64BY Wholesale Retail -0.92BY (-5.3%) -0.61BY (-46.3%) tires & wheels, oil, batteries, used car etc. car electronics, car interior and exterior items, etc. - services, tires & wheels, car interior items, etc. Personnel: same as the previous year (a decrease in labor costs due to the transfer of directly managed stores, an increase due to transfers from store subsidiaries) SG&A 12.0BY YoY: -1.53BY Sales promotion costs: decrease due to a review of TV commercials, direct mail, promotional materials, and other production Equipment costs: decrease in depreciation expenses related to the information system, decrease in rent due to the transfer of directly managed stores Others: decrease in consulting fees, etc. Domestic Store Subsidiaries *Four directly managed stores were rendered subsidiaries in the retail division. Net Sales: 35.9 BY YoY: BY Operating Income: ( 1.19 BY) YoY: +0.14BY An increase in sales from acquiring franchise corporations and directly managed stores in order to make them subsidiaries was significantly affected by a decrease in tire/car electronics sales. However, the gross margin improved due to a change in the sales mix from a decrease in car electronic sales and an increase in the gross margin for tires. In addition, operating loss improved from the previous year thanks to an efficient store personnel structure and a reduction of sales promotion expenses. 33

35 Balance Sheet: Assets Total Assets (Billion Yen) BY BY Major items changed Cash and deposits Trade notes and account receivables Lease investment assets Securities Inventories Other current 18.4 assets 0.5 Cash and deposits:-2.7by Marketable securities:-0.5by Accounts receivable : -6.2BY 41.5 Tangible fixed 42.2 assets Intangible fixed assets 31.4 Investments 29.9 and other assets Investment securities: +1.2BY At March 31, 2013 At September 30, 2013 Amounts are rounded to the nearest hundred million yen. 34

36 Balance Sheets: Liabilities & Equity Total Liabilities & Equity (Billion Yen) 205.5BY BY Accounts payable 21.6 ST borrowings and 2.2 corporate bond Other ST liabilities Bonds and 10.9 LT debts Major ST borrowings: items changed -1.0 BY Other ST liabilities -Amount in arrears: -3.3 BY - Income taxes payable:-1.8by Other LT liabilities Net assets Net assets - Retained Earnings (dividend payments): -6.1BY -Treasury Stock (share buyback): +3.9BY At March 31, 2013 At September 30,

37 Store Openings & Closings Domestic Store As of March 31, 2013 As of March 31, 2013 From Apr 1, 2013 to Sep 30, 2013 (Result) Fiscal year ending March 31, 2013 From Apr 1, 2012 From Oct 1, 2012 As of to Sep 30, 2012 (Result) to Mar 31, 2013 (Forecast) Sep 30, New S/B R/L Close 2013 New S/B R/L Close Fiscal year ending March 31, 2013 As of Sep 30, 2013 From Oct 1, 2013 to Mar 31, 2013 (Forecast) As of March 31, 2014 France China Thailand Singapore Taiwan Malaysia As of March 31, 2014 AUTOBACS / / Super AUTOBACS Secohan Ichiba AUTOBACS EXPRESS Domestic Total / / Overseas Store S/B=Scrap & Build, R/L=Relocation(include format change) Overseas Total

38 Capital Expenditures & Depreciation 9.0 (Billion Yen) Capital Expenditures (Billion Yen) 7.0 Depreciation Full year estimate Full year estimate March 2009 March 2010 March 2011 March 2012 March 2013 March March 2009 March 2010 March 2011 March 2012 March 2013 March

39 Performance Results of Franchisees Ordinary Income of Franchise Companies 4,000 (Million Yen) 2,000 1,889 1,422 1,776 0 (937) -2,000-4,000 6 months ended Sep 30, months ended Sep 30, 2010 Total of profit-making FCs Total of loss-making FCs Ordinary income(gross) 6 months ended Sep 30, months ended Sep 30, 2012 (2,024) 6 months ended Sep 30, 2013 Notes) Franchisees financial figures are preliminary and are subject to revision. One company is not included due to unfixed financial results (total 87 companies) 38

40 Forward-Looking Statements These materials include forecasts regarding the Company s future plans, strategies, and performance. This information is based on judgments and estimates made in accordance with information currently available. Actual results may differ materially from forecasts due to such factors as changes in operating circumstances.