FY2018.4Q Financial Results-Key Points

Last updated : May 15, 2019

FY2018 Financial Results of NTT have achieved the highest value ever for consecutive fiscal years in both revenue and operating profit.
EPS has reached a 3.6% growth (year-on-year), by excluding the effect from special factor in FY2017^*.

^*Received Arbitration Award from Tata Sons Limited

Forecast of FY2019 may affected by the revenue decrease in NTT DOCOMO driven by the expansion of customer returns implemented to customers those who migrated to new billing plans. The group companies make efforts to increase profits but the performance forecast expects revenue and profit decrease.
Please note that net income and EPS exceeding last fiscal year's level are expected to be realized.
We identifies FY2019 forecast as "the bottom" and exert effort for immediate profit recovery.

Although the FY2019 forecast to be identified as the bottom and exert effort for "immediate profit recovery", exactly when will that be?

We believe profit to recover steadily from FY2020 by enhancement of competitiveness through reorganization of the global business structure, thoroughly work for improvement of productivity and efficiency by digitalizing operating process by utilizing AI in domestic network business.
Regarding global business, saying that to transform NTT Ltd. as an operating company engaged in Managed IT Service as core business by 2 years starting from July 2019, when will the global business profit expands?

In FY2019, improvement of profit margin is expected to be small as reforming the structure/operation of NTT Ltd. and invest up-front expenditure for NTT Data to reform business structure of EMEA/Central South American market. We plan to promote further improvement from FY2020 by collaboration in sales team of NTT group and working on cost reduction such as digitalization of operating process.
Although revenue of FY2019 declined from last year, is it possible to achieve the EPS Growth Target (around 640JPY in FY2023)?

The achievement of EPS growth target is our commitment as mentioned at the announcement of the new Medium-Term Management Plan on November 2018. Though the revenue decreases this year, we plan to expand EPS and constantly grow from FY2020.
Since revenue and profit decrease is expected in FY2019, will the policy of shareholder returns be changed? Also, increase of dividend by 10 yen compared to last fiscal year and 2,500 billion yen of share buyback have being announced but will there be more shareholder returns this fiscal year?

Regarding the shareholder returns, our basic policy is to implement continuous increase of dividends. Share buybacks will be conducted flexibly and there is no change in the idea of improving capital efficiency.
Why EBITDA^* of FY2019 decreases significantly? (▲327.4 billion yen)

Mainly around ▲220 billion yen has decreased in the Mobile communications business segment (NTT DOCOMO group) and around ▲100 billion yen of decrease in Regional communication business segment (NTT East/West group).

It is due to the implementation of new billing plan of NTT DOCOMO but identifies FY2019 as "the bottom" and exert effort for profit and cash flows recovery.

Regarding NTT East and NTT West, it has been expected that expenses such as removal of retirement of fixed asset without disposal and equipment toward future use, new business development, and enforcement of sales structures, but we aim at cash flow recovery with enhancing competitiveness of network business by improving productivity (digitalization) and thoroughly exert effort to improve work efficiency.

^*As IFRS 16 (leases) became effective on April 1, 2019, NTT Group has changed the method of accounting for lease payments under operating leases from expense to depreciation. In consideration of the comparability of EBITDA with actual results in FY 2018, EBITDA and depreciation of EBITDA and its components in the full-year forecast for FY 2019 are not changed.

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