Nomura Research Institute,Ltd. · TSE:4307
Nomura Research Institute,Ltd — FY2020 Earnings Presentation
52 slides from Nomura Research Institute,Ltd's earnings presentation, Apr 28, 2020
Slide 1: Financial Results Presentation
Financial Results Presentation Financial Results for the year ended 31st March, 2020 and Financial Results Forecast for the year ending 31st March, 2021 Nomura Research Institute, Ltd. Shingo Konomoto Chairman and President & CEO, Member of the Board April 28, 2020
Slide 2: Agenda
1 Financial Results for FY March 2020 2 Value co-creation initiatives Impact of COVID-19 and earnings forecast 3 for FY March 2021 4 Recent Activities 5 Reference Materials These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions,
Slide 3: Highlights of Consolidated Financial Results
Financial Results for FY March 2020 Highlights of Consolidated Financial Results YoY comparison（＊ are shown as a reference） （JPY million） YoY FY Mar. 2019 FY Mar. 2020 Diff. Change Sales 501,243 528,873 27,629 5.5% Operating Profit before goodwill amortization＊ 75,373 86,343 10,970 14.6% Operating
Slide 4: Comparison to Forecasts
Financial Results for FY March 2020 Comparison to Forecasts (JPY billion) FY Mar. 2019 FY Mar. 2020 Results Forecasts* Results Diff. Sales 501.2 530.0 528.8 (1.1) Operating Profit 71.4 82.0 83.1 1.1 Operating Profit Margin 14.3% 15.5% 15.7% 0.3P Profit attributable to owners of parent 50.9 69.0 69.2
Slide 5: External sales by segment <Total>
Financial Results for FY March 2020 External sales by segment <Total> （JPY million） YoY FY Mar. 2019* Share FY Mar. 2020 Share Diff. Change Consulting 34,839 7.0% 38,572 7.3% 3,733 10.7% Financial IT Solutions 252,367 50.3% 273,571 51.7% 21,203 8.4% Securities 100,309 20.0% 112,762 21.3% 12,453 12.4
Slide 6: External sales by segment (supplementary information)
Financial Results for FY March 2020 External sales by segment <Total> (supplementary information) Sales by main client （JPY million） YoY FY Mar. 2019 Share** FY Mar. 2020 Share** Diff. Change Nomura Holdings 60,579 12.1% 65,049 12.3% 4,470 7.4% Seven & i Holdings 49,109 9.8% 52,434 9.9% 3,324 6.8%
Slide 7: Segment Performance Results <Total>
Financial Results for FY March 2020 Segment Performance Results <Total> Including Inter-segment sales for each segment. （JPY million） YoY FY Mar. 2019* FY Mar. 2020 Diff. Change Sales 35,481 39,612 4,130 11.6% Consulting OP 7,786 9,515 1,729 22.2% OPM 21.9% 24.0% 2.1P Sales 255,162 276,937 21,775
Slide 8: Analysis of increase and decrease factors
Financial Results for FY March 2020 Analysis of increase and decrease factors Main factors for increases and decreases in external sales and operating profit by segment are as follows. (Key) (+) Increase factors, (-) Decrease factors Segment External sales Operating profit (+) Higher profit due to
Slide 9: Sales by Service <Total>
Financial Results for FY March 2020 Sales by Service ＜Total＞ （JPY million） YoY FY Mar. 2019 FY Mar. 2020 Diff. Change Consulting Services 90,816 96,862 6,046 6.7% System Development & 150,467 161,703 11,235 7.5% System Application Sales System Management & Operation Services 244,273 251,908 7,635 3.
Slide 10: Consolidated P/L Highlight <Total>
Financial Results for FY March 2020 Consolidated P/L Highlight ＜Total＞ （JPY million） YoY FY Mar. 2019 FY Mar. 2020 Diff. Change Sales 501,243 528,873 27,629 5.5% Cost of Sales 336,508 348,006 11,498 3.4% Subcontracting Costs 150,635 161,305 10,670 7.1% Gross Profit 164,735 180,866 16,131 9.8% Gross
Slide 11: Consolidated P/L Highlight <Total> (continued)
Financial Results for FY March 2020 Consolidated P/L Highlight ＜Total＞(continued) （JPY million） YoY FY Mar. 2019 FY Mar. 2020 Diff. Change Operating Profit 71,442 83,178 11,736 16.4% Non-operating income and loss 967 1,349 382 39.5% Dividend Income 1,145 956 (189) (16.5%) Extraordinary income 4,340
Slide 12: Key Factors in Financial Results
Financial Results for FY March 2020 Key Factors in Financial Results Higher income with +5.5% in sales Business with domestic clients drove sales increases, particularly in financial IT +16.4% in operating profit Profit increased thanks to improved productivity in development in addition to
Slide 13: Agenda
1 Financial Results for FY March 2020 2 Value co-creation initiatives Impact of COVID-19 and earnings forecast 3 for FY March 2021 4 Recent Activities 5 Reference Materials These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions,
Slide 14: NRI Group Sustainability Management Policy
Value co-creation initiatives NRI Group Sustainability Management Policy NRI Group Growth Building sustainable futures Corporate Philosophy “Dream up the future” NRI Group Sustainability Management Solving social issues through value co-creation (CSV) Co-create a thriving future society by driving n
Slide 15: Important Indexes
Value co-creation initiatives Important Indexes *Monitored on a quarterly basis “—” means undisclosed Social value Medium to long-term measures Key indexes Results in FY March 2020 Provide social recommendations and system Number of appearances in major media 122 proposals publications*1 DX-related
Slide 16: Status of FY March 2020 initiatives (for reference)
Value co-creation initiatives Status of FY March 2020 initiatives (for reference) Social value Medium to long-term measures Status of initiatives Provide social recommendations and • Proposed to society a new economic index GDP+i system proposals • Released NRI’s Recommendations for COVID-19 Emergen
Slide 17: Agenda
1 Financial Results for FY March 2020 2 Value co-creation initiatives Impact of COVID-19 and earnings forecast 3 for FY March 2021 4 Recent Activities 5 Reference Materials These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions,
Slide 18: Order Backlog by Segment (Outstanding)
Impact of COVID-19 and earnings forecast for FY March 2021 Order Backlog by Segment (Outstanding) Order backlog is well performed centered on consulting and financial IT (JPY million) At end of At end of YoY Diff. Mar. 2019* Mar. 2020 Change Consulting 3,559 4,339 779 21.9% Financial IT 154,930 16
Slide 19: Order Backlog by Segment (Domestic/International)
Impact of COVID-19 and earnings forecast for FY March 2021 Order Backlog by Segment（Domestic/International） Order backlog domestically (JPY million) At end of At end of YoY Diff. Mar. 2019* Mar. 2020 Change Consulting 3,253 4,043 790 24.3% Financial IT Solutions 154,568 165,143 10,575 6.8% Industr
Slide 20: Forecast assumptions and impact on performance
Impact of COVID-19 and earnings forecast for FY March 2021 Forecast assumptions and impact on performance Assumptions • Increase in new infections will subside by around summer for the outside environment • Business activities will restart in earnest around September and approach normal levels towar
Slide 21: Sales Forecasts by Segment for FY March 2021
Impact of COVID-19 and earnings forecast for FY March 2021 Sales Forecasts by Segment for FY March 2021 Performance forecast is subject to change, depending on how the spread of COVID-19 subsides. (JPY billion) FY Mar. 2020 FY Mar. 2021 YoY Share Share Diff. (Results) (Forecasts) Change Consulting
Slide 22: Sales Forecasts by Service for FY March 2021
Impact of COVID-19 and earnings forecast for FY March 2021 Sales Forecasts by Service for FY March 2021 Performance forecast is subject to change, depending on how the spread of COVID-19 subsides. (JPY billion) FY Mar. 2020 FY Mar. 2021 YoY Diff. (Results) (Forecasts) Change Consulting Services 96
Slide 23: Forecasts for FY March 2021
Impact of COVID-19 and earnings forecast for FY March 2021 Forecasts for FY March 2021 Performance forecast is subject to change, depending on how the spread of COVID-19 subsides. (JPY billion) FY Mar. 2020 FY Mar. 2021 YoY Diff. (Results) (Forecasts) Change Sales 528.8 540.0 11.1 2.1% Operating P
Slide 24: Make more proposals that preempt the paradigm shift
Impact of COVID-19 and earnings forecast for FY March 2021 The paradigm shift resulting from the pandemic could give rise to new business opportunities Voice of the customer Business continuity Make operations fully digital and bolstering clients’ intranet infrastructure in preparation for full
Slide 25: Forecasts for FY March 2021 and Medium-term plan target
Impact of COVID-19 and earnings forecast for FY March 2021 Forecasts for FY March 2021 and Medium-term plan target (JPY billion) 100.0 8,000 83.1 83.0 Consolidated operating profit 7,000 670.0〜 71.4 6,000 100.0 Consolidated sales 528.8 540.0 5,000 501.2 46.7 50.0 Overseas sales 53.0 4,000 3,000 2,00
Slide 26: Agenda
1 Financial Results for FY March 2020 2 Value co-creation initiatives Impact of COVID-19 and earnings forecast 3 for FY March 2021 4 Recent Activities 5 Reference Materials These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions,
Slide 27: Growth Strategy on Medium-term Plan (2019-2022) (Repeat)
Recent initiatives Growth Strategy on Medium-term Plan(2019-2022) (Repeat) Main Strategies Use technology to transform customer business models and processes DX Offer comprehensive support through DX from front-office to core systems to develop large-scale customers Evolve business platforms (BPFs
Slide 28: Creating and expanding DX business
Recent initiatives: DX strategy Creating and expanding DX business Bolstered NRI Digital capabilities and acquired digital IP to accelerate NRI’s DX strategy Bolstered • Transfered management of accounts closely tied to DX2.0* to NRI Digital capabilities of and beefed up organization to around 200
Slide 29: Acquiring full ownership of DSB
Recent initiatives: Business platform strategy Acquiring full ownership of DSB Executing a takeover bid aiming to further advance finance business platforms Stock purchase period April 30 – June 15, 2020 Shares of stock and other All shares of common stock (excluding shares already owned by NRI in
Slide 30: Further business infrastructure growth in Australia
Recent initiatives: Global strategy Further business infrastructure growth in Australia Began the procedure to acquire shares of AUSIEX*1 Enter back-office operations services in Australia’s growing wealth management market and, in the future, aim to be part of Australia’s direct finance market
Slide 31: Agenda
1 Financial Results for FY March 2020 2 Value co-creation initiatives Impact of COVID-19 and earnings forecast 3 for FY March 2021 4 Recent Activities 5 Reference Materials These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions,
Slide 32: Sales + Consolidated Order Backlog in the current FY
Reference Materials -Other Financial Result-related Data- Sales + Consolidated Order Backlog in the current FY (JPY billion) 500 (JPY billion) 400 FY FY YoY Mar.2020 Mar.2021 Change Sales※1 528.8 540.0 +2.1% 300 FY2019.3 Consolidated FY2020.3 Order Backlog※2 269.8 282.0 +4.5% FY2021.3 200 Realizatio
Slide 33: Order Volume <Total>
Reference Materials -Other Financial Result-related Data- Order Volume ＜Total＞ (JPY million) YoY FY Mar. 2019* FY Mar. 2020 Diff. Change Consulting 34,315 39,352 5,036 14.7% Financial IT Solutions 265,724 284,089 18,365 6.9% Industrial IT Solutions 184,653 176,867 (7,786) (4.2%) IT Platform Services
Slide 34: Order Volume <Total> (Domestic/International)
Reference Materials -Other Financial Result-related Data- Order Volume ＜Total＞（Domestic/International） Order volume domestically (JPY million) YoY FY Mar. 2019※ FY Mar. 2020 Diff. Change Consulting 30,262 35,226 4,964 16.4% Financial IT Solutions 261,802 280,798 18,996 7.3% Industrial IT Solutions
Slide 35: Cash Flow <Full Year>
Reference Materials -Other Financial Result-related Data- Cash Flow < Full Year > (JPY million) YoY FY Mar. 2019 FY Mar. 2020 Change Operating activities 56,349 102,787 82.4% Investing activities (16,826) 18,382 - (Except Cash management purpose) (15,025) (6,985) (53.5%) Free Cash Flow 39,523 121,16
Slide 36: Highlights of Consolidated Financial Results <4Q>
Reference Materials -Other Financial Result-related Data- Highlights of Consolidated Financial Results <4Q> YoY comparison（＊ are shown as a reference） (JPY million) 4Q FY Mar. 2019 4Q FY Mar. 2020 YoY Diff. (Jan.-Mar.) (Jan.-Mar.) Change Sales 134,179 138,328 4,149 3.1% Operating Profit before goo
Slide 37: External Sales by Segment <4Q>
Reference Materials -Other Financial Result-related Data- External Sales by Segment <4Q> (JPY million) 4Q FY Mar. 4Q FY Mar. YoY 2019 Share 2020 Share Diff. Change (Jan.-Mar.)* (Jan.-Mar.) Consulting 10,107 7.5% 11,509 8.3% 1,402 13.9% Financial IT Solutions 68,059 50.7% 71,010 51.3% 2,951 4.3% Secu
Slide 38: External sales by segment <4Q> (supplementary information)
Reference Materials -Other Financial Result-related Data- External sales by segment <4Q> (supplementary information) Sales by main client (JPY million) 4Q FY Mar. 4Q FY Mar. YoY 2019 Share** 2020 Share** Diff. Change (Jan.-Mar.) (Jan.-Mar.) Nomura Holdings 16,603 12.4% 17,288 12.5% 684 4.1% Seven
Slide 39: Segment Performance Results <4Q>
Reference Materials -Other Financial Result-related Data- Segment Performance Results <4Q> Including Inter-segment sales for each segment. (JPY million) 4Q FY Mar. 4Q FY Mar. YoY 2019* 2020 Diff. Change (Jan.-Mar.) (Jan.-Mar.) Sales 10,314 11,985 1,670 16.2% Consulting OP 2,660 3,824 1,163 43.7% O
Slide 40: Analysis of increase and decrease factors <4Q>
Reference Materials -Other Financial Result-related Data- Analysis of increase and decrease factors <4Q> Main factors for increases and decreases in external sales and operating profit by segment are as follows. (Key) (+) Increase factors, (－) Decrease factors Segment External sales Operating prof
Slide 41: Sales by Service <4Q>
Reference Materials -Other Financial Result-related Data- Sales by Service ＜4Q＞ (JPY million) 4Q FY Mar. 4Q FY Mar. YoY 2019 2020 Diff. Change (Jan.-Mar.) (Jan.-Mar.) Consulting Services 24,519 25,936 1,417 5.8% System Development & 42,105 41,933 (172) (0.4%) System Application Sales System Manageme
Slide 42: Consolidated P/L Highlight <4Q>
Reference Materials -Other Financial Result-related Data- Consolidated P/L Highlight ＜4Q＞ (JPY million) 4Q FY Mar. 4Q FY Mar. YoY 2019 2020 Diff. Change (Jan.-Mar.) (Jan.-Mar.) Sales 134,179 138,328 4,149 3.1% Cost of Sales 90,519 90,857 338 0.4% Subcontracting Costs 40,698 42,112 1,414 3.5% Gross P
Slide 43: Consolidated P/L Highlight <4Q> (continued)
Reference Materials -Other Financial Result-related Data- Consolidated P/L Highlight ＜4Q＞ (continued) (JPY million) 4Q FY Mar. 4Q FY Mar. YoY 2019 2020 Diff. Change (Jan.-Mar.) (Jan.-Mar.) Operating Profit 20,019 21,072 1,053 5.3% Non-operating income and loss 209 364 155 74.5% Extraordinary income
Slide 44: Order Volume <4Q>
Reference Materials -Other Financial Result-related Data- Order Volume ＜4Q＞ (JPY million) 4Q FY Mar. 2019* 4Q FY Mar. 2020 YoY Diff. (Jan.-Mar.) (Jan.-Mar.) Change Consulting 7,019 8,485 1,465 20.9% Financial IT Solutions 163,132 173,499 10,367 6.4% Industrial IT Solutions 109,889 108,614 (1,274) (1
Slide 45: Order Volume <4Q> (Domestic/International)
Reference Materials -Other Financial Result-related Data- Order Volume ＜4Q＞（Domestic/International） Order volume domestically (JPY million) 4Q FY Mar. 2019* 4Q FY Mar. 2020 YoY Diff. (Jan.-Mar.) (Jan.-Mar.) Change Consulting 6,045 7,497 1,452 24.0% Financial IT Solutions 162,242 172,863 10,620 6.5
Slide 46: CAPEX, R&D and Depreciation Forecasts
Reference Materials -Other Financial Result-related Data- CAPEX, R&D and Depreciation Forecasts for FY March 2021 Capital Expenditure, R&D (JPY billion) FY Mar. 2020 FY Mar. 2021 YoY Diff. (Results) (Forecasts) Change Capital Expenditure 28.4 38.0 9.5 33.3% Tangible 6.6 13.0 6.3 94.5% Intangible 2
Slide 47: Forecasts for FY March 2021 <Consolidated Earnings Model>
Reference Materials -Other Financial Result-related Data- Forecasts for FY March 2021 ＜Consolidated Earnings Model＞ FY March 2021 Consolidated Earnings Model - Sales of JPY540.0 billion and Operating profit of JPY83.0 billion (JPY billion) FY Mar. 2019 FY Mar. 2020 FY Mar. 2021 YoY (Results) (Resu
Slide 48: Capital expenditures and depreciation/amortization
Reference Materials Capital expenditures and depreciation/amortization Expecting 38 billion yen in capital expenditures Capital Capital expenditures and Depreciation and depreciation/amortization by year Amortization expenditure (JPY billion) (JPY billion) 42.4 Investments in tangible fixed asse
Slide 49: R&D
Reference Materials R&D Bolster business development to achieve Vision 2022 Some R&D topics this year R&D costs by year (JPY billion) Business development 6 5.6 • Companywide business development 5.1 5.1 efforts • Strategic business exploration 4.2 4.3 3.9 4.0 • Technology assessments and 4 3.6
Slide 50: NRI's employees + Partners (in Japan & China)
Reference Materials NRI’s employees + Partners (in Japan & China) NRI Group-s employees Employees at overseas bases Employees NRI Group’s employees New graduates (Head count) （⼈） (Head count) Personnel: 14,000 New graduates in Apr. 500 4,500 13,278* 12,000 391 4,000 379 400 347 3,500 10,000 320 32
Slide 51: Forward-looking statements notice
This document contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition of the Company. Such
Slide 52: Share the Next Values!
—— Share the Next Values! i
Nomura Research Institute — FY2020 Earnings Presentation on 6ix