ITOCF - Earnings call transcript Q3 2020

This is Tsuyoshi Hachimura, CFO of ITOCHU Corporation. Thank you for joining us today.

Let me now present the business results. Please refer to the PowerPoint material, as I present, starting with the summary of the financial results on page three and also I will refer to the quarterly segment information on pages 27 and 28.

So, please refer to those pages as well.

to ¥XXX.X the third billion, the impact. attributable first year highest profit COVID-XX was half which net ITOCHU fiscal for XXXX despite First, was the highest was which Especially, ¥XXX.X QX result was the the quarterly number. billion,

quarterly year-on-year. an for is This number increase QX

was billion or less, ¥XX.X quarter number losses included. extraordinary there gains to so In improvement. was XX% talk recovery about later. will and I QX was major and billion. a or minus QX ¥XX this first compared that numbers The was number, number billion ¥XX.X are those

those increased the ¥XX.X which at numbers, approximately XX%. by QX Excluding was extraordinary profit billion, was QX in profit billion. the The The half, ¥XXX highest. core core first core also profit third a in was itself

profit our are improving So, we steadily numbers. core

the XXX% was Now, At the with and that it billion impact the it's was QX, mentioned we forecast. compare to very we that COVID-XX ¥XX we the was had forecast. important actual the of end think that

first The ¥XXX was half second billion. billion; ¥XXX forecast half was

So, to ¥XXX forecast were yearly the and comparison ¥XXX actual the billion And rate is XXX%. achievement results is billion, XX%. in

buffer not from COVID-XX about The and the and and recovery by strong the very on billion. We used we worked the impact, is is a of cutting supported ¥XX preventing, segment first impact half the core This is strong showed have for billion. diversified major the each ¥XX profits. but resilience. portfolio And

So, we economic productivity. showed very against a strong tolerance

seven forecast to our in companies the in half. machinery showed comparison Excluding first profit higher

and resorts international chemicals companies, energy comparison and for four and ICT year-on-year eight Now, the increased. food including

business North and as as and well in chemical Japan strong. and As China for and meat America, the business the were Asia, in trading business housing Japan in business ICT

by a model CBS, and the profit. As and the negative the Textile, area in affected of include lower and which were for also, showed business terms challenged COVID-XX, apparel, businesses that the cars

can in in there lowered Textile, beauty and we September all difficult And accumulated total, Financial to results, have but There we for the removal numbers and And already Energy reviewed for the think ore first deferred very behind Chemicals, were and The the products October, is extraordinary losses. growth the there half they core the those might the they Machinery, each billion. factors that numbers which you a a than our of the general in understand, review have and in companies, Company, was strong better major and prices a those is and that you I six was in delisting, time minerals, billion numbers. are of in seen Business, be those included forecast. tax And profit. and food of in first original we excluding One this expected. reasons imagine factor as Xth metals half, gain which the high and of in was liability. were ¥XX iron not factors and have those extraordinary the was about those profit new Then of FamilyMart upside as have ones, an two consensus ¥XX and the ICT

billion. activities activities cash Core the core X, flow. was and flow cash billion, a of of inflow billion. that ¥XXX The -- flow net operating flow cash the free net inflow operating page to cash cash ¥XX is a Going cash ¥XXX.X net cash from the outflow of cash was was from

ore was iron QX, and were impact. at higher Looking COVID-XX the prices there

¥XXX flows And billion up the billion by was net investment billion. of billion, So ¥XXX the ¥XX generation cash free up at was QX. ¥XXX cash flow from

on values the subsidiaries and relation of or invest I out core we fiscal the this will of are order ¥XX expect selectively and undervalued buyback. to management. negative discipline. invested fair had financial order to cash later. the market number, and cash ¥XX support half, flow keep this in about in in flow business the will where result change basic in TOB ¥XXX have listed billion the investment The dividend to based net large delisting to second We principle the FamilyMart. and free talk minus a the after In is the or model, is And be the their and FamilyMart is billion share that our billion, we the cash affiliates there But

TOB the same to important as X.XX ¥XXX trillion. about is which higher COVID-XX Net the Turning debt the total to were March so the thing times, reach the the shareholders most ¥X,XXX.X Due but the of balance The increase X. this value trade which stocks was ¥X.XXX on total and investments, billion. the of was also, end receivables and about to ¥XX.X increased payment on offset of equity, dividend billion FamilyMart increase there at page trillion. down, to by improved fair each other. sheet interest-bearing page DER an with assets, and Net it

billion. page total of Now major let's On investments look this at other new page, QX billion, the number was XX. ¥XXX investments QX was so on billion, ¥XXX was ¥XXX

As QX, billion. for it in exit, was ¥XX

including that investment all half was That ¥XX is was means them, amount ¥XX net billion of billion. ¥XXX the first total the billion, So QX here.

for items the the ¥XXX this a which activities big cash and is from flows. going a considered is was be transaction And On the investments flows additional to difference. billion. cash ¥XXX page billion, or this so major explains of XX capital Now, the shows difference the FamilyMark page investing to the

will on page able find you numbers XX. So XX, not do to on if be find page the them you

TOB is there in ¥XXX in Century fixed to billion ¥XX investment a billion FamilyMart additional the in the and was investments other other was and FamilyMart relation of there New and to investment assets million are ¥XX PPIH Tokyo areas. investment

eGuarantee And activity food the been overseas related has for so we the which here. sales the paper business Now not the are major have of we also asset also of in not month, doing realized, included ¥XX replacement exit included. include billion. sale innovation, Japan, are included QX the and exits included been and that the pulp, that Last those partial announced Brazil it's

Now indicators, the same. changed full which are on year the forecast see for the you net major ¥XXX not X, remains forecast, profit and page of billion

from our believe billion, So half some in COVID-XX that first second will ¥XXX ¥XXX be of that half. ¥XXX target yearly billion billion in recovery is impact. We and the there

the expect So profit higher we half. a second in

the which Taiwan. yet Those of billion we So yet and at have Japan, which not beginning not the realized, and gains included. market are Brazil in plan, the And pulp, ¥XX buffer, paper the external funding mentioned so in the year, not used. we the mentioned gains original billion, ¥XX we of of includes about the extraordinary also, also

so, And is this very impact. a start strong despite COVID-XX

there volatility at Europe upon are seeing part a DOJ are and in uncertainties. business recoveries. see the of second Now, forecasts, the In based COVID-XX. also half, international the also of wave the we lot but the the still of forecast see toward confidence the we But overall tough, other politics. economy of And is of of and same some time, second the the U.S. terms -- is

the on commitment very economy. much So market. management. we we're there focused And are based downside some And the risks trust this, have through of of gained

like we we'd happens deliver on ¥XXX revised be to this to after So sure we our onwards, make target that adjustment share that ¥XX to environment, not commitment therefore, target. billion management And at have billion half to looking per QX Despite and of in we achieve our the the and we'd flexible make profit. what make I’d like sure like of manner. ¥XXX dividend. a And able second

made have the FamilyMart is achieving ¥XXX in FY off, share, commitment, are we the as to making we ¥XXX up there in year some to medium-term those some year billion taking for profit And concerns in for XXXX. But of a that with improvements, that, management higher not the have And second this we need we or as half, to plan, and ¥XX uncertainties to terms Textile, are and also to with of XX.X%. in Machinery as companies, weaknesses are next And we go Now, than business. but back to track, affected. need we billion, a make said growth fiscal the starting the say achieved order we XXXX. the already percentage come which per

We model business will the sure that, make and work asset Cut, Prevent. the at Earn, look well we replacement as to on as

back also the as profit Now dividend bought unchanged. that additional X.X we decreased, have buyback, even share buyback, X.X of year. billion. And ¥XX per we let's dividend this remains on In every if we the to And the And XX, numbers shares. shares. year. share the half, other buyback increase we a policy EPS first we for the have improve And is page ¥X.X million of go million to announced XX. page share the

have ¥XX billion, page ¥XX.X the extraordinary let half. please that gain Now so concerning the refer effectively. seems has low, is the been price share will we seven. is very large billion, the for was share me and in will if the aware rule the numbers, billion, losses. and the as we market be of price And But ¥XX that said about the talk buyback, And conduct we floor. to high. we It QX, gains extraordinary QX first the judge price follow then buyback next, I

a Brazil So, replacing includes and is was strong as the positive crisis related the models. well must lower innovate Japan, sale which generated factors see say team billion of you our ¥XX.X is That the of that, page, have profit include to paper this has factor. been the we FamilyMart, assets And tax this to I But as on a result. business our as and of a delisting expenses pulp. very the management major major FamilyMart, actively

is deferred Financial the increase or billion There there Textile, FamilyMart are at related specific liabilities billion. eGuarantee distribution, In was led overseas led U.S. items. and the the the different partial gain a was billion Realty, ¥X ICT gain gain, tax food. the company, about a on billion looking billion in Company, was there and the business ¥X.X ¥X gain a billion. ¥XXX a & was to there gain Now the of of billion in each ¥X Products to of ¥XX.X The credit Machinery, was Business. business profit reorganization which Xth sales General and & sale Japan reversal collection In in the in of and ¥X.X of

So loss on – there billion ¥XX.X well as a also included. FamilyMart is was impairment for the

the those McDonald's, numbers. others, there in investment was the that included affiliated a is also gain as company CITIC, here is Now in a

me let Now, talk COVID-XX about impact.

QX, we ¥XX year or the impact full we impact make QX, impact the not about year, expected we the billion for the the At And the plan, year of billion had for from ¥XX FamilyMart full the COVID-XX. full to For to the COVID included. try ¥XX end the And was impact. billion forecast.

increased forecast for our ¥XX the full year was to billion. So

Now billion bad higher debt than one at impact, XX ¥XX of increased. was first the is so Xth billion as end well biggest and in Company And was half, far believe CITIC Machinery the about as is the Bank next the provision COVID we the ¥XX observed. Textile impact for

included. those and Japan other by industrial And and and people the affected – sales the In and some were for that sales led increased. investment Realty, North construction are apparel General domestic also automobile first inventories home the greatly urban areas, in America, Products the machinery, in negative. those & declined lower COVID-XX. also to stayed So and half But

see – Textile segment, Textile a in So companies. loss making we

stores in in due COVID-XX. was but business And see the U.K. impact an there As are an lockdown, some to Tire there, affected restaurants recovery starting first that and was business, food convenience and half we and for from impact. was wholesale our to

are automobile also and As which struggled for the demand steel sales, lower.

there full are differences segments. the on As for some year, depending the

As second impact half. our a as first whole, as is strong the half the not

a full So, and of impact we year changed. keep ¥XX billion

and inventories and the negative aircraft might the linger also airline suffer And domestic order which have next to business impact of on FamilyMart, concerns the Some apparel might also is the business the to the stagnate. in year is might affected. -- continue higher the

So, COVID-XX about is in impact, XX% Japan. the

there comments. a we page some Starting was details and Now, shown with lastly, down loss-making and page on XX have textile, billion segment. from are comparisons page at four let me talk to are by billion, make about each for more companies. ¥X.X XX; some company each it also ¥X.X Year-on-year

Kong and In the were apparel in many of better struggling. to expenses Converse, addition there transactions in relation business subsidies well-known to ITS -- but been Hong very and are but poor there Itochu forecast, names, receiving Modepal the have COVID-XX apparel the suffered. others lower sales than and related overall was are companies, happened, the

-- and machinery, profit declined. were businesses cars and to the billion. aircraft COVID-XX, to damaged Going the the manufacturer’s down ¥XX.X exports those net ¥XX.X airlines Car billion so due was

So, believe continues car we More trade, the environment for see but year. September, Machinery some NSA bearish. some the this We saw we was October. in and fiscal recently, moderate to segment, our recovery, we this are difficult start strong recovery

stay the in and is in the the all ore in a were Colombia, year at and major minerals, iron company For the and prices and and level. rate but to they companies in the Brazil achievement Brazil sales iron strong, such the iron negative. price the India, metals high before, company ore company as comparison XX% in in Australia, Drummond, ore are

strong, this increase is be stabilize was the expected to valet. in so could likely and in China But the Now is driver. this to gradually, a production demand

will the prices prices possible But stay level. come down. high So the that it's at

bullish strongest was compares are segment. ore in iron Energy is was lower, strong. from the Environmental is ¥X.X Chemicals billion, probably gradually energy The year down the businesses by the ¥XX because stay-at-home up was trading the we ¥XX.X shipment to were recovery. the is the to segment this impact. Azerbaijan billion, this billion, Asia, Japan. contributed. division established of & year oil so to solution ¥X Energy this resin But So, in this China, and strong, year The & were before, comparison especially increased by before. capture we synthetic that Power so results that prices. and see in very the billion Chemicals, the were prices related The demand The negative the

the Now the synthetic In among exceeded and packs. than major companies, companies in strong plastic the Those their Singapore our forecast. strong Sunnypack resin and year trading also making the group company Energy-related comparison the to were Shanghai, forecast, before. IPC

we So, are bullish here.

people so related Now asset the Highlife was to and of Meat businesses to led extraordinary Food, to due replacement, also Prima strong turning the and stayed due banana Packers fresher, result home in that in billion, dough weak. There showed weather, the But, at stayed food, comparison strong the the forecast, home. the cold in But it's a billion. was as Philippines, ¥X.X meat the people for to food was packaged States, United at But increase positive. the ¥XX.X especially the the and to board demand. pineapple was Asian gain strength. production since and

So, higher it's lower year but it's than the than the forecast. before,

billion result So, for forecast reduction, ¥X.X we the that gross and believe the first half. the achieve ¥X.X the billion we of year. the reduce was for And can we full

target. are think & there is General yearly of number. Realty, Products our you this the toward concerning, that was is major might year, a end the we Next, negative to And achieve likely

housing you a that. despite or related partial price sales market retail affected was construction In the Now, that down as result billion, is billion, know, there ¥XX.X And so business declined. and pulp year. recovery material of ¥XX.X the America, business recent last the at North lockdowns, that by was

led performance. those to The strong activity North strong. include because the that active, businesses material negative companies do and the So housing [indiscernible] in it of America and yourself are the

the target, Japan America we’ll in be think the pulp -- but then achieve be to material the is gain sales able from For you business might or included the strong. you and business that, and might of not full construction here. the say year, North logistical And will sales paper

are at ¥XX likely achieve to of forecast billion. we So a

ICT is Next Business. Financial &

segment. bullish in are this We

retail was positive partial ¥X.X business. Bell a was a that question this In that strong and QX, financial special eGuarantee up In are and performance, the was those group and see was is by the we no year of the billion business, growing companies the there's are on there CONEXIO strong ¥XX.X forecast, based area. we billion. full solid So also results, insurance ICT, a factor. showing sale actual on major But the the performance. the CTC, demand

also there future, ICTs new be a for the the transformation, Japanese have ICT policy in new ICT a and their demand will and or for key XG digital the will administration. As

In methods. a cashless of there. payment and of So business opportunities and lot there'll development the payment see insurance, the financial be other we

So, this a there is from segment. high expectation

that able we eight we be will additional business and expect So loss. there forecast. exceed to daily The our the FamilyMart is company, down was impairment

there result and deferred earnings. the of delisting was FamilyMart liabilities, increase the So billion with is But lower the working segment. the for was ¥X.X the in an are still of concerns there tax on of of we and net reversal equity including billion this profit are this and COVID-XX, ¥XX the

So challenging. and CP. This of this that believe achieving Mostly includes be that in terms the could others. we includes CITIC segment forecast,

in business. ¥XX.X equity down and the that is by CITIC well first for was higher as earnings visuals negative So ¥X.X in in CITIC, -- for the earnings half billion a for as billion. provision loan that There was

full rate billion, was year ¥XX XX%. forecast the Our is and achievement

As for yen CP. Vietnam was ¥XX.X very strong, business combination billion CP, CITIC so and the pork in in

The same first half before. was the about the as year

ITOCHU (ITOCF) 4 Nov 202020 Q3 Earnings call transcript