financial results for fiscal 2018, the year ended march 31 ... · may 27, 2019 financial results...

May 27, 2019

Financial Results for Fiscal 2018,

the Year Ended March 31, 2019

KNT-CT Holdings Co., Ltd.

1

Contents

I. Summary

II. Overview of Financial Results for Fiscal 2018

III. Forecasts of Financial Results for Fiscal 2019

IV. Medium-Term Management Plan (FY2018 - FY2020)

I. Summary

2

Overview of Financial Results for Fiscal 2018

3

405.1

411.8

FY2017 FY2018

71.6 71.9

FY2017 FY2018

3.12.5

FY2017 FY2018

1.41.2

FY2017 FY2018

Sales Gross income

Operating income Profit attributable to owners of parent

+6.6

(+1.6%)

+0.3

(+0.5%)

(-0.6)

(-20.3%)

(-0.1)

(-9.5%)

(Billions of yen)

Progress on Medium-Term Management Plan (Topics)

4

Rebuild

individual

travel

business

Products

Integrate Kinki Nippon

Tourist and Club

Tourism

Switch to

online sales

focus

Sales

Switch to community-based development

☞Reorganize Mate planning and purchasing channels and integrate KNT and CT

through product development

Reform business processes

☞Pre-sale products on website and shorten business term from planning to selling

Effective and efficient online sales

☞Shift media production from paper media orientation to online focus (website

and email magazines)

☞New sales model that combines stores (real) and online (virtual)

Renovate website

☞Update website design to enhance usability

Expand sales of CT products at KNT stores

Strengthen interconnections of websites and customer data of both

companies

Establish new KNT-CT Partners Association made up of affiliated and

collaborating organizations

Expand and

strengthen group

travel business

Expand orders received for hospitality business, etc. of sponsor companies for 2020 large-scale international

sporting games

Develop original educational travel support system aimed at expanding handling of educational travel and

creating future customers

Strengthen

global business

Expand service through B to B (to C) basic strategy

Strengthen mutual collaboration between domestic and overseas subsidiaries

☞Expand inbound travel business and travel business at overseas

StructureHD

(Web Strategy

Dept.)

KNT-CT

Web Travel Kinki Nippon Tourist

Club Tourism

＋＋

II. Overview of Financial Results for

Fiscal 2018

5

KNT-CT Holdings’ Scope of Consolidation

6

33 consolidated subsidiaries

NTT DATA TERANOS CORPORATION KNT TRAVEL (THAILAND) CO., LTD.

H&M INSURANCE HAWAII, GRIFFIN INSURANCE

KIE (USA), KIE (CANADA), KIE (OCEANIA), HOLIDAY TOURS MICRONESIA (GUAM),

KINTETSU INTERNATIONAL EXPRESS (CHINA), KINTETSU MAYSEN

INTERNATIONAL (SHANGHAI), KNT Taiwan, KNT (HK)

TOURIST EXPERTS, INC.

Kinki Nippon Tourist Shoji Co., Ltd.

TOURIST SERVICE HOKKAIDO CO., LTD.,KNT Business Create Co., Ltd.

Tourist International Assistance Service, Inc.

Event & Convention House, Inc.

Japan Outside Japan

8 travel companies

outside Japan

Other

10 other affiliated

companies

Temporary staff services

Merchandising and insurance

Business consignment and others

Travel assistance services

Event and convention planning

Club Tourism International Inc., Kinki Nippon Tourist Hokkaido Co., Ltd., Kinki Nippon

Tourist Tohoku Co., Ltd., Kinki Nippon Tourist Kanto Co., Ltd., Kinki Nippon Tourist

Metropolitan Co., Ltd., Kinki Nippon Tourist Chubu Co., Ltd., Kinki Nippon Tourist Kansai

Co., Ltd., Kinki Nippon Tourist Chugokushikoku Co., Ltd., Kinki Nippon Tourist Kyushu Co.,

Ltd., Kinki Nippon Tourist Corporate Business Co., Ltd., KNT-CT Global Travel Co., Ltd.,

KNT-CT Web Travel Co., Ltd., Kinki Nippon Tourist Okinawa Co., Ltd., UNITED TOURS CO.,

LTD., Sanki Travel Service Co., Ltd.

Reinsurance underwriting businesses

Club Tourism Life Care Service Co., Ltd.Nursing care business


Headquarters: Shinjuku Sumitomo Bldg., 2-6-1 Nishi-Shinjuku,

Shinjuku-ku, Tokyo

Club Tourism Space Tours Inc.Space trip enterprise

15 travel companies in

Japan

Two companies affiliated by the equity method

Results and Sales by Segment for FY2018

7

FY2017 FY2018Increase/

decrease

Increase/

decrease

(%)

Sales 405,172 411,821 6,649 1.6

Gross income 71,658 71,993 335 0.5

Operating income 3,177 2,532 (645) (20.3)

Ordinary income 3,342 2,834 (507) (15.2)

Extraordinary income 43 12 (31) (72.3)

Extraordinary loss 509 1,786 1,277 250.9

Profit attributable to owners of parent 1,412 1,279 (133) (9.5)

(Millions of yen; %)

Consolidated Balance Sheets at the End of FY2018

8

FY2017

(March 31, 2018)

FY2018

(March 31, 2019)

Increase/decrease

Current assets 111,013 121,521 10,508

Cash and

deposits68,140 71,348 3,207

Fixed assets 19,403 19,958 555

Total assets 130,416 141,479 11,063

Current liabilities 101,631 111,224 9,593

Trade accounts

payable and

unsettled travel

tickets

40,997 40,494 (502)

Fixed liabilities 3,480 3,305 (175)

Total liabilities 105,111 114,529 9,417

Total net assets 25,304 26,950 1,645

Retained earnings 7,731 9,010 1,279

Total liabilities

and net assets130,416 141,479 11,063

(Millions of yen)

FY2017

(March 31,

2018)

FY2018

(March 31,

2019)

Capital adequacy

ratio19.3% 19.0%

FY2017

(March 31,

2018)

FY2018

(March 31,

2019)

Net assets per share 923.26 yen 983.82 yen

Consolidated Cash Flow Statement for FY2018

9

(Millions of yen)

FY2017(April 1, 2017 – March 31, 2018)

4,590

(2,519)

(23)

67,191

FY2018(April 1, 2018 – March 31, 2019)

4,845

(1,677)

(18)

70,349

Cash flows used in

operating activities

Cash flows from

investment activities

Cash flows from

financing activities

Cash and cash

equivalents at the end

of the interim period

III. Forecasts of Financial Results for

Fiscal 2019

10

Forecasts of Consolidated Financial Results for FY2019

11

FY2018 FY2019Increase/

decrease

Increase/

decrease

(%)

Sales 411,821 422,500 10,679 2.6

Operating income2,532 3,000 468 18.5

Ordinary income 2,834 3,200 366 12.9

Profit attributable to owners of parent 1,279 1,860 581 45.4

(Millions of yen; %)

12

IV. Progress on Medium-Term

Management Plan

(FY2018-FY2020)

1. Overview of Medium-Term Management Plan

13

Plan Period

Basic Target

Basic Policies

Priority

Businesses

FY2018-FY2020 (three fiscal years)

Expand net sales and profit through business structure reform

(1) Maximize effects through organizational restructuring

(2) Rebuild individual travel business

(3) Expand and strengthen group travel business

(4) Reinforce internal control

(5) Develop and utilize human resources

(1) Growth area business (inbound travel business, sports

business, and regional exchange business)

(2) Online sales business

(3) 2020 large-scale international sporting games business

2. Overview of Business Structure Reform

14

Basic

PoliciesBasic Strategies

Centraliza-

tion

Strengthen group-wide business strategy formulation functions and business

promotion functions

Decentrali-

zation

Accelerate decision-making by being locally focused and demonstrate agility

Specialize in growth markets, including inbound travel business and online

sales business


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◇Group Structure33 consolidated

subsidiaries

Two companies affiliated by the equity method

(As of April 1, 2019)

3. Rebuild individual travel business

15

(1) Plan and develop products

Establish Individual Travel and Online Sales

Department at each KNT

Reorganize Mate planning and purchasing

departments

☞ Strengthen collaboration with each operating

company and expand online sales based on KNT-CT

Web Travel

(1) Expand products selling by online

(2) Strengthen aggressive marketing through email

magazines.

☞Switch from departure side-based development

to community-based development

Purchasing

planning

centers

Local purchasing

Plan and develop local tourism

(community-based unit) products

Domestic

planning

centers

Develop products at departure point

(local tourism products + transport

from departure destination)）

Products based on

conventional material-

type products

Highly theme-based products

that provide “experiences” with

clear targets

＋

☞Collect tourism resources with collaboration between KNT

and CT in each region

☞Develop Mate products including CT’s local product

☞Expand local tourism products (community-based units)

Develop and expand highly theme-based

products

450

3,000

FY2018 FY2019(plan)

Community-Based Units

(Number of units)

Acronyms: Kinki Nippon Tourist = KNT, Club Tourism = CT

(KNT)

Progress of Medium-Term

Management Plan


16

(2) Product sales

Switch business processes to online first

☞Implement business flow to online pre-sale and

system reformBusiness term from purchase plan develop list product

online (sales)

KNT: before, approx. 3 months⇒ after, approx. 0.5 months

☞Reform website and email magazines to evoke

images of travel utilizing videos, etc.

Use tablets for in-store sales

Expand sales of CT products at KNT stores

Respond immediately to customer needs

Develop seasonal products with sense of speed ,

☞ Equip each KNT store in Japan with tablets for

efficient in-store information with “product

explanations and applications through website”

Switch to IT-based sales style

Ensure acquisition and appropriate management of customer information

Expand online sales through integration of stores (real) and online (virtual)

☞ Introduce CT sales terminals at each KNT store in

Japan. Also introduce simple terminals at KNT partner

stores (agencies and dealers, in partners

association )

8.5

10.7

FY2017 FY2018

Sales of CT Products in Stores (includes partners association)

+22

(+26%)

(Billions of yen)


Management Plan


17

(3) Product purchasing

Establish KNT-CT Partners Association

Strengthen purchasing functions

☞ While promoting integration of KNT and CT, establish new association aimed at further mutual collaboration

among partner organizations

Previously

Kinki Nippon Tourist National Himawari

Association

Club Tourism Partners Association

Kinki Nippon Tourist Affiliated Ryokan

& Hotel Federation

April 01, 2019～

KNT-CT Partners

Association

☞ Promote strengthening of purchasing capabilities of reorganized “purchasing planning centers” at each KNT operating company

With collaborating organizations, including hotels, tourist facilities, and transport:

■ Enhance marketing and planning proposals alongside appropriate market research

■ Establish deeper bonds and relationships than ever before through increased frequency of sales visits

☞ Integrate KNT (group travel and individual travel) and CT aimed at seamless cooperation with KNT-CT Partners Association to

promote use of ordinary guest rooms (improve inventory reduction rate) and attract more customers


Management Plan


18

(4) Develop and improve IT systems at KNT and CT

IT investment plan aimed at expanding online sales

Update website designs

☞ Investment plan under Medium-Term Management Plan (FY2018 – 2020)

Investment

areas:

(1) Website support, (2) Customer databases,

(3) Core system reconstruction, (4) Other

Total

investment: Approx. ¥9.4 billion

☞ Update and expand functionality of KNT and CT sites to enhance website

usability

Display products for each

point of departure based on

popular areas and keywords

Establish feature pages using

themes, seasons, areas, etc.

Establish local tourism

planning pages introducing

recommendations for each

destination

KNT website CT website

Promote smartphone support for

feature pages

Update design to improve ease of

use of application screens

Enhance functionality to enable

customers to select the content of e-

mail magazines and the number

received themselves


Management Plan


19

(5) Interconnection of KNT/CT via IT systems

Website

Custom-

er data

List KNT and CT feature products on joint feature site

Joint feature site

KNT

products

KNT products

CT

productsCT

products

KNT email magazine

CT email magazine

*Introduce

features in

email

magazines, etc.


KNT customers CT customers

STEP1 STEP２

Sell both KNT and CT products on the own site

for each other

KNT

products

CT

products

CT

products

KNT

products


Register both KNT and CT members from joint

feature site

Establish and run a marketing analysis environment (including

recommendations) using customer information of both KNT

and CT

Implement One to One marketingJoint feature site

KNT customer

system

Register

CT customer

system

Register

KNT email magazine CT email magazine

(1) New customers

(2) New KNT (CT

members)

(3) New CT (KNT

members) Integrated customer data

KNT customer data

CT customer data

Recommendation system (KNT)

Online recommendations

Recommendationemail magazine

Analysis staff

Product

planning staff

Analysis tools

Recommendation system (CT)Analysis

results

KNT customers KNT/CT customers

CT customers

Online recommendations

Recommendation email magazine


Management Plan


20

(6) Expand customers at KNT and CT

“Infrastructure” required to expand online sales

☞ Customer data from customer expansion

■Current (end of FY2018)

Total customer target: 9.76 million

■2022 target

KNT customers

Approx. 4 million

• Group travel customers

• Register companion

customers

• Incorporate customers

making first-time bookings

• Ongoing customer increase

Customers of both

Approx. 1.70 million

Club Tourism customers

Approx. 10 million

Total customer target:


KNT customers


Customers of both

Approx. 280,000

Club Tourism customers


Ongoing customer

increaseIncorporate mutual

customers at each company


Management Plan

4. Target Direction for Individual Travel Business

21

1. Differentiation from OTAs through product development that make use of

our speciarities

Product

development

and

customer

contact not

present at

OTAs

(4) Real customer contact in stores

Understand real customer needs

Develop customer and local communication

(1) Club Tourism’s highly theme-based products

(2) Uncover local tourism resources using

nationwide branches and stores, provide

community-based tourism incorporating

these resources

(3) Human resources

Knowledge and skills in “travel demand

development”

Planning and

development

capabilities

(5) Purchasing capabilities

Purchasing and sales capabilities in both group and

individual travel businesses

Information gathering capabilities through collaboration with

KNT-CT partners association


Management Plan

4. Target Direction for Individual Travel Business

22

2. Topline expansion through multi-channel sales with a focus on online sales

Direct sales “stores” Role of online sales channel (own site)

(1) Tool for acquisition of customer data (e-mail address, purchase history, etc.)

required for sales promotions and marketing

(2) Pre-sale (or limited sale) of products through own website

(a) Sell high-value-added,* high-profit-margin products via own website

*Highly theme-based products. Products in niche markets in collaborations with

animations, sports, and celebrities, etc.

(b) Challenging products for which agency sales are difficult

*Confirm and visualize needs (website sales also play role as litmus test)

Media, call centers, etc.

Other company sales channels,

including OTAs

Direct sales “website”

3. Expand online sales


Management Plan

Ｏverseas

subsidiaries

5. Strengthen global business

23

Basic

Strategies

Expand handling through B to B (to C)

Strengthen mutual collaboration at domestic and overseas Group companies based on KNT-CT

Global Travel

Roll out efficient and effective promotion in collaboration with KNT-CT-Web Travel

Japan Outside Japan

KNT-CT

Global Travel

Kinki Nippon Tourist

Corporate Business

Club Tourism International

KNT regional companies

Site operation and

management

KNT-CT Web Travel

Local travel companies overseas (real and online), agents,

etc.

Business

strategies

Focus:

Expand partners

through collaborative

business

Collaboration (customers, product

information, customer transfer)

Collaboration (promotion)

Expand DMC business and create global

exchange business through collaboration with

overseas travel companies, etc.

Reinforce lineup of Club Tourism YOKOSO

inbound travel products

Boost sales through expanded collaboration with

online travel companies

Expand inbound accommodation-only JTO

products through collaboration with purchasing

locations of each KNT regional company

Collaboration (customers,

product information,

customer transfer)

Growth area business


Management Plan

6. Expand education-related business

24

☞Develop Tabitomo Plus, an original smartphone app for an educational travel support system

Provide new services and value using “education × travel × ICT”

Information for parents

Travel Guide

Itinerary

Group organization

Portfolio/memos

MY Page

Safe & Sound

Travel guide

Memos

Survey

Group Activities

Album

Increase order rate for school events by responding to diversifying needs

Reduce work for teachers

Increase learning outcomes for students utilizing ICT

Provide greater reassurance to parents

Integrated support for travel events with 12 functions from pre-travel to

post-travel

Realize enhanced convenience by connecting schools, students, parents,

and KNT within the system

Expand and strengthen group travel business

Objectives

Functions

12 functions Image of smartphone top screen


Management Plan

7. Initiatives for 2020 large-scale international sporting games business

25

Establishment of structure and sales activities for 2020

(1) Promote business as one KNT-CT Group

☞In process of building and implementing a Group-wide structure based on the holding company

(2) Sponsor company sales

☞Support for ordered corporate hospitality programs

(3) Sale of add-on travel products for spectator tickets

☞Develop products and roll out sales leveraging customer Kinki Nippon Tourist’s ability to attract tourists

and planning capabilities of Club Tourism

☞Activities to evoke demand through campaigns

☞Feature products and announce sales information through stores, website, and mail magazines

Use 2020 as opportunity to create “legacy”

Sales know-how in related businesses to international sporting games

Establish trust and personal connections through corporate hospitality business, etc.

Use 2020 as opportunity to expand sales territory in the group and individual travel businesses

Develop human resources through experience

Use sales of add-on travel products for spectator tickets as opportunity to expand customers (mail magazine members)

Human resources

Skill credentials

Customer base

Business base

Growth

base

“legacy”

for the

future

(2020 and

beyond)

8. Numerical Plans (Consolidated)

26

FY2017 FY2018 FY2019 FY2020

Results Results YoY Forecasts YoY Plan YoY

Sales 405,172 411,821 101.6% 422,500 102.6% 456,000 107.9%

Operating income 3,177 2,532 79.7% 3,000 118.5% 5,500 183.3%

Ordinary income 3,342 2,834 84.8% 3,200 112.9% 5,700 178.1%

Profit attributable

to owners of parent1,412 1,279 90.6% 1,860 145.4% 3,400 182.8%

Capital adequacy

ratio19.3% 19.0% 19.7% 20.5%

Return on Equity

(ROE)5.7% 4.9% 6.7% 10.3%

IT investment

plans3,437 2,330 67.8% 3,900 167.4% 3,170 81.3％

(Millions of yen)

Period of Medium-Term Management Plan

IR Inquiries

Shinjuku Sumitomo Buildings, 2-6-1

Nishi-shinjuku, Shinjuku-ku, Tokyo, Japan, 163-0239

Public Relations, General Affairs Department

(IR contacts: Tachibana, Iwamoto)

TEL：03-6851-4500

URL：https://www.kntcthd.co.jp/


These materials are not intended to solicit investment, but are provided for reference only.

Please refer to the company’s financial statements and securities reports for accurate

earnings figures. The financial targets provided in this material are based on information

available at the time of writing, however, actual results may differ from the forecasts as a

result of changes in a range of factors.

financial results for fiscal 2018, the year ended march 31 ... · may 27, 2019 financial results...

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