FY2019.4Q Financial Results-Key Points

Last updated : May 20, 2020

FY2019 resulted operating revenues and profit increased and operating income decreased. Each of them exceeded the financial forecasts and achieved the plan.
The impact of the COVID-19 was minimal in FY2019.
In FY2020, we anticipate a decrease in sales of new SI orders and various services both in Japan and overseas. On the other hand, we expect to have a positive impact due to reduced sales costs, etc. And although the volume of traffic is increasing, the impact on revenues and expenditures is small because flat-rate applies to most users.
We cannot predict the termination of the pandemic or the arrival of a second wave and cannot reasonably estimate the amount of the impact of COVID-19. Therefore, we have decided to postpone making financial forecasts for FY2020 at this time. We intend to promptly announce financial forecasts as soon as it is possible to reasonably estimate the amount of the impact.

Why the operating income decreased compared to last year while 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 +250 billion yen) 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.
Why did operating income in FY2019(4Q) decrease significantly(▲55 billion yen) from the previous year 4Q(3 months)?

Temporary additional expenses were incurred as a result of DOCOMO's initiatives implemented for leading to improvements in the next fiscal year and beyond, such as measures to promote migration of smartphones from 3G services, and the strengthening of the d-payment "Promote marketing of franchised stores" and "Establishment of daily use" campaigns, as well as accelerated structural transformations aimed at future earnings growth in overseas businesses.
Why was the overseas operating income margin (2.4%) lower than the previous year (3.2%)?

NTT DATA's business scale has expanded in EMEA & LATAM, while NTT Ltd. is steadily shifting its sales to high-value-added, high-profit services, despite delays in some regions. On the other hand, the overseas operating income margin declined from the previous year due to a temporary additional cost arising from accelerated structural transformations aimed at future profit growth. The effects of the structural transformations are expected to become apparent in FY2020. By further shifting to high-value-added, high-profit services, we aim to achieve our medium-term financial target of an overseas operating income margin 7%.
How will NTT respond to COVID-19?

In addition to the stable provision of communications services as a designated public institution, various initiatives are being undertaken, including the extension of payment periods and the partial free provision of telework and health support services as measures to support customers, and support for the establishment of an online learning environments in cooperation with schools as measures to support education.

As for planning after COVID-19, we will take on the challenge of bold reforms, such as resolving social issues through the establishment of a remote society by telework, telemedicine, education, etc., and contributing to the transformation of workstyles and operations and the improvement of productivity through digital transformation.

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