Thank you very much for waiting and taking the time out to join us today. We will now start the press conference for NTT DATA Group financial results for the first quarter of the year ending March 2025. Let me introduce today's presenters. NTT DATA Group Representative Director and Senior Executive Vice President, Kazuhiko Nakayama. Director and then Senior Vice President, Head of Corporate Headquarters, Tadaoki Nishimura. Corporate Headquarters and Head of the Finance Department, Keisuke Kusakabe. I'm your facilitator, Fukunaga, of the Public Communications Department. And today's presentation consists of two materials: financial results summary and then the company presentation, which are available for download on our website under Investors section. Now, Mr. Nakayama will present the financial results for the first quarter of the year ending March 2025. The floor is yours, Mr. Nakayama. This is Nakayama from NTT DATA Group. Firstly, thank you very much for attending the earnings results briefing session despite your busy schedule. Here is today's agenda. Firstly, I will explain Q1 results of the fiscal year ending March 2025. Please move to page four. This shows the outline of the Q1 results. New orders received, helped by data center business abroad and domestic business, that are performing strongly, posted a large increase of JPY 466 billion year-on-year. Net sales was up by JPY 97.1 billion, year-on-year, and against the full year forecast, it is making a steady progress. Operating income was on par with the previous fiscal year, while profit attributable shareholders of NTT DATA was down by JPY 6.4 billion. However, it was broadly on track. There's no change to the original full year guidance. Please move to page five. Before I walk you through, let me explain how we have segmented our businesses in our disclosure. Since April 2024, we have moved to a new global business operating structure. As shown at right, the overseas segment is now broken down into North America, EMEAL, APAC, and Global Technology and Solutions Services, or GTSS. So this is a change. The Japan segment's breakdown remains unchanged. Now, let me take you through some details by each measure. Page six, please. New orders received, both Japan and overseas performed strongly, and the year-on-year result was significantly up by JPY 466.6 billion. In the Japan segment, the public and social infrastructure business won large deals from central government and ministries, plus the enterprise and financial businesses performed well in taking orders, and the result was up by JPY 72.8 billion. In the overseas segment, GTSS, mainly in UK and India, increased data center business for hyperscalers, leading to an increment of JPY 394.3 billion. Even excluding the FX impact of JPY 117.5 billion, the result increased by JPY 276.8 billion. Next, net sales. All in all, it was up by JPY 97.1 billion, but this includes the FX impact of JPY 82.2 billion. As for the upward/downward factors, other than the FX impact in the Japan segment, the public and social infrastructure business upscaled its project for the central government and ministries, contributing to an increase, and the financial and enterprise businesses also grew sales, therefore recorded an uplift of JPY 15.9 billion. In the overseas segment, GTSS data center business for hyperscalers and APAC business trajectory grew. Conversely, North America, EMEAL, and APAC reduced sales of communications equipment, and the segment result was slightly down, if we excluded the FX impact. Please move to page 8. Next, operating income. It's almost on par with the previous fiscal year, but it is, as mentioned earlier, against the full year forecast. It is almost on track. Incremental factors include three businesses in Japan grew sales and profit, and previous years' overseas business structural transformation cost, which is absent this fiscal year. On the other hand, downward factors can be found in the Japanese financial business, which had won a high profitable deal in the previous fiscal year, and that's absent this fiscal year. Also, the overseas segment, which recorded lower sales of communication equipment, leading to less profit. As a whole, the result was up by JPY 300 million. Please move to page 9. This slide supplements information on the overseas segment results. As explained so far, the overseas segment sales experienced the FX impact and data center and SAP business growth, recording an increase. North America, EMEAL, and APAC regions in the previous fiscal year had the upward impact in communication equipment sales owing to supply chain recovery, and that impact is absent this fiscal year. So, due to such reduced sales, it indicates a moderate year-on-year growth rate. As for EBITDA, it was impacted by the equipment sales reduction. However, the absence of the structural transformation costs pushed up the overall segment's profit. From here, let me cover some major topics. Please move to page 11. This shows the new leadership of the NTT DATA Group. In June, the NTT DATA Group, the holding company, appointed Yutaka Sasaki as the new CEO, and NTT DATA, Inc., the overseas business operating company, appointed Abhijit Dubey as the new CEO. The management has been working together to further drive the group's business. Page twelve, please. This slide is a part of the deck used at the fiscal year 2023 earnings results briefing session, showing the current midterm plan's objectives. Under the new leadership team, we will continuously strive for delivering targets. Page thirteen, please. Here, let me take up one of the goals, consolidating net sales of JPY 4.7 trillion. This is for fiscal year 2025, and let's look at it from a strategy perspective. Each region is horizontally supported by cross-functional units as growth drivers. By creating assets and solutions, and by tapping into DC demand and others, we will continuously drive each region's growth. In addition, each region is working on growing existing business, improving productivity, and increasing delivery by leveraging assets and forging partnerships. In this way, regional units' growth is supported by cross-functional units to deliver JPY 4.7 trillion in fiscal year 2025, which is our target. Please move to page 14. Achievements by regional units in the first quarter. Let me share a couple of cases. Japan successfully grew existing business, and overseas used assets to increase delivery. The first one is Japan's large system digitization project for the central government and ministries. By harnessing our strengths of deployment capability to build cloud and others, we promoted cloud integration for the client and won a mega deal of around JPY 50 billion. This has helped digitize government services as well as improve user experience. For the case leveraging assets to drive business, in EMEAL, the leading global energy corporation signed a framework contract with us for continued long-term use of assets. These key assets have been provided mainly in Europe, already for over 5 clients, helping the energy sector to improve operational management efficiency. Page 15, please. This shows the progress on Gen AI initiatives. In order to increase software development productivity, fiscal year 2023 mainly focused on implementation and testing phases in using Gen AI tools, and 140 projects applied Gen AI, helped improve productivity by 7%. Going forward, as mentioned earlier, not only at the implementing and testing phases, but throughout all phases in the project management life cycle, we will promote the use of Gen AI. The target number of such projects is 200 in fiscal year 2024, and 400 in fiscal year 2025, where 20% productivity improvement is targeted. Page 16, please. This shows progress on data center business. Q1 recorded $590 million in sales, with EBITDA $190 million, steadily achieving year-on-year growth. Going forward, the data center market is expected to enjoy strong demand, driven by Gen AI and others, to which we will continue to respond, and we target to increase EBITDA 1.7 times more than that in fiscal year 2023, with continued aggressive investment. This shows M&A status. In order to nimbly acquire necessary capabilities to drive domestic business, by the end of the current midterm plan in fiscal year 2025, we will look into M&A opportunities at a level of JPY 100 billion. In Q1, we have taken steps to make JASTEC a subsidiary company, signed a capital and business alliance with TerraSky, and turned GHL Systems into a subsidiary. Page eighteen, please. Next, the progress of the overseas business combination. In Q1, we mainly promoted overseas business combination and integrated IT systems with a spend of ¥1.6 billion. This fiscal year plans to spend ¥30 billion for business combination costs, and in order to accelerate synergies, we will mainly work on transforming business portfolio, optimizing corporate functions and IT systems, and we plan to spend more towards the second half of the fiscal year. Page 19, please. Finally, let me cover the status of interest-bearing debt and financial income and costs. Q1 recorded ¥2.4 trillion in consolidated interest-bearing debt balance, and a drop of ¥16.7 billion in financial income and costs, which is on track as per our expectation. Toward fiscal year 2025, we are promoting initiatives toward an asset-light model by using REIT and other instruments, through which we will control the increase of interest-bearing debt and financial costs. Recent actions include sales of our subsidiary, which is listed in the market, XNET Corporation, and sold Recruit, Recruit company shares that we used to strategically own, and we are making efforts to increase capital efficiency. This concludes my presentation. Thank you for listening.
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