FY2019.3Q Financial Results-Key Points

Last updated : February 12, 2020

FY2019 3Q resulted operating revenue increase and operating income decrease. The operating revenue reached the highest ever as a 3Q Result.
In 4Q (Jan.-Mar.), despite the impact of decrease in profit due to increasing DOCOMO users with a new rate plan and acceleration of structural transformation of NTT Ltd., make more efforts to outperform full-year forecast (operating income) of FY2019.

Why the operating income decreased compared to last year while the 3Q operating revenue increased?

The operating revenue ended up being year-on-year increase even the operating revenue decrease of DOCOMO due to the earning decreased from mobile communication services, the operating revenue increased (around +190 billion JPY) by making ENNET into consolidated subsidiary and this contributed to year-on-year increase. The operating income ended up being year-on-year decrease due to operating income decrease accompanied by customer returns of DOCOMO and cost increase as the result of global restructuring.
Although the progress rate of operating income against annual business plan is noticeably high by around 94%, how are full-year earnings expected to be?

In this fiscal year, the structural transformation is accelerated by strengthening customer base by implementing new rate plan of DOCOMO, build / maintain the structure of global business, and making investment for future profit growth. In 4Q, although certain amount of cost increase are expected for these measures, we will work for continuous cost efficiency as a whole group and make efforts to outperform full-year forecast (operating income).
3Q operating income of global business decreased compared to last year. Does the full-year forecast expected to be achieved?

It is tough circumstance to reach the earnings forecast. NTT Ltd. will work on structural transformations such as rationalization by business consolidation accompanied by integration and elimination of overlapping duties.

Moreover, accelerate to shift to high-value-added / high profitable services. NTT DATA will realize further profit growth through efforts such as accelerating expansion of offerings in digitalization.
The interest-bearing debt at the end of the current fiscal year is expected to be +600 billion yen compared to last year. As further investment are expected for urban solutions business and smart energy business, may the target ROIC stated in mid-term management strategy be affected?

In this term, interest-bearing debt may increase temporarily due to additional investments and share buybacks , while 1.2 trillion yen reduction (4.9 trillion yen (FY2019 year end estimate) -> 3.7 trillion yen) is expected on July 1, 2020 due to establishment of new leasing company.

Despite the fact that the certain scale of investment is necessary for business growth, make efforts to improve capital efficiencies by continuously work for utilization of REIT, liquidation of receivables, and off-balancing assets by company split-up etc.

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