NTT(US:NTTYY)2023-08-13 16:10Financial Data and Key Metrics Changes - Operating revenues increased by JPY 42.2 billion year-on-year, reaching JPY 111.1 billion, attributed to growth in the integrated ICT business and Gold Mobile Business Solution segments [6][8] - Operating profit decreased by JPY 28.7 billion year-on-year to JPY 474.7 billion due to increased upfront costs and rising electricity costs [7][8] - Profit increased by JPY 7.2 billion year-on-year to JPY 175.8 billion, supported by proceeds from sales of shares [8] - EBITDA decreased by JPY 18.9 billion year-on-year to JPY 838.5 billion due to the decline in operating profit [8] Business Segment Data and Key Metrics Changes - Integrated ICT business segment saw revenue growth due to increases in Enterprise and Smart Life businesses, although operating profit declined due to growth investments in Smart Life [9] - Regional communication business segment experienced declines in both operating revenue and profit due to reduced demand for fixed line voice services and increased operational costs [10] - Global Solutions business segment's revenue grew from domestic business growth, but operating profit declined due to integration-related costs and increased growth investments [11][12] - Other segment's operating revenue and profit declined due to reduced revenue from the electricity business [12] Market Data and Key Metrics Changes - The company reported a significant increase in the number of shareholders, with an 18% rise following the announcement of a stock split [17] - The impact of currency fluctuations contributed positively to revenue growth, particularly in the Global Solutions segment [11] Company Strategy and Development Direction - The company established three new entities aimed at creating new value, including NTT Innovative Devices Corporation and NTT Green and Food, Inc. [13] - A share buyback program of up to JPY 200 billion was announced to enhance shareholder returns and improve capital efficiency [14][15] - The company aims for carbon neutrality by 2040, with investments in renewable energy as a key strategy [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in operating profit but emphasized that performance is in line with full-year expectations, with plans for cost reductions in the second half of the fiscal year [20][21] - The company is prepared for a potential decline in electricity business revenue and is focusing on cost control to secure operating profit [22] - Management expressed confidence in achieving annual plans despite current challenges, with expectations for improved performance in the second half [39] Other Important Information - The company is addressing the impact of rising electricity costs, which increased by approximately 10% year-on-year [54] - The transfer of data center responsibilities to NTT Communications impacted revenue growth, but overall performance remained in line with expectations [59][70] Q&A Session Summary Question: Concerns about low operating profit and its alignment with expectations - Management confirmed that the decline in operating profit is due to anticipatory investments and cost control measures are being implemented to secure future profits [20][21] Question: Inquiry about Green Power and IIJ investments - Management highlighted the importance of investments in Green Power for achieving carbon neutrality and discussed the strategic rationale behind the investment in IIJ [24][27] Question: Impact of government share sales on buyback plans - Management indicated that they have the cash flow capacity to absorb government share sales and will consider various strategies for share buybacks [35][36] Question: Clarification on profit decline in NTT East and West - Management acknowledged that the profit decline is due to increased costs and assured that cost restructuring efforts are underway for the second half [38][39] Question: Details on electricity cost increases - Management reported a JPY 1.4 billion increase in electricity costs for NTT East and West, along with additional costs from system updates [73] Question: Performance of NTT Limited and data center operations - Management stated that NTT Limited's performance was in line with expectations, despite challenges related to semiconductor shortages affecting equipment sales [70]