USS Co., Ltd.

I am Ando from USS. Thank you very much for taking the time to join us today for the briefing on our results for the fiscal year ending March 2025. I would like to begin by highlighting the current situation, our outlook, and our growth strategy going forward. And we would like to allow as much time as possible for your questions, so we appreciate your active participation. So let us start from page four. I start with the three key points for today's briefing. First, the USS Grip results. In FY 2025, consolidated net sales amounted to ¥113.8 billion and operating profit reached ¥59.8 billion, both marking record highs. This strong performance was driven by the auto auction business, where the number of vehicles consigned reached an all-time high of 3.5 million units, and the contract completion remained at a high level of 67%. The second is FY2026 forecast. We expect net sales of ¥119.8 billion and operating profit of ¥61 billion. In this section, I will outline our growth strategy. The third point is shareholder returns. For FY 2025, we plan to pay an annual dividend of ¥54.7 per share, an increase of ¥11.3 from the previous year. For FY 2026, we plan to further increase the annual dividend by ¥0.3 to ¥55 per share. In addition, today we executed a share repurchase of 18 billion yen, and I will explain the details later in the presentation. On page 7, I will explain the factors behind the ear-on-ear changes in operating profit for FY 2025. First, let me explain the factors behind the increase in net sales. In our core auto auction business, the number of vehicles consigned increased by 300,000 units a year, reaching 3.5 million units, and continued to perform strongly. In addition, the revision of the fee structure for USS Japan, which allows members to participate in auction using dedicated terminals, led to a significant increase in auction-related fee. Next, let me turn to the factors affecting cost of sales. The increase in outsourcing expenses was mainly due to higher on-site processing costs associated with the rise in the number of vehicles consigned. The increase in purchase cost reflects the higher volume of demolition work in the plant recycling business. The rise in cost of materials purchased was primarily driven by the expansion of aluminum product handling in the resource recycling business. Next is SG&A. The increase in taxes and dues was due to the recognition of real estate acquisition tax related to the Yokohama site, which was newly rebuilt and reopened in January 2026. Please turn to page 9. Here I will discuss market trends. First, the number of new car registrations was 99.1% of the previous fiscal year, slightly below the prior year level. Meanwhile, the number of used vehicle registrations was 100.6% year-on-year, remaining broadly flat. In addition, used car exports, which are said to account for roughly one-third of total used car demand, rose 10% year-on-year, reaching 1.73 million units. Demand for Japanese used vehicles remains extremely strong. Against this backdrop, the total number of vehicles consigned to the auction market increased to 8 million units. Despite the sluggish growth in new car registrations, the auction market continues to show solid momentum. Now please turn to page 11. This slide compares the average winning bid price at USS with that of the overall industry excluding USS. The price gap between USS and the industry average has continued to widen and most recently has expanded to more than ¥600,000. The reason is quite straightforward. Higher-priced, higher-quality vehicles tend to be consigned to large-scale auction sites where they can achieve higher selling prices. Because buyers know that they can reliably source high-quality vehicles at USS, a large number of buyers continue to come to our site. USS maintains an overwhelming competitive advantage in a segment of newer, higher-priced vehicles. We will continue to refine the strength of the platform we have built over the past 40 years and lead the market as the industry's top-runner. Please turn to page 12. This slide represents the performance of the auction business. First, the chart at the lower left shows the trend in our market share. Our share rose to 43.2% in FY2025. This increase reflects the sequential expansion of auction lanes at our three major sites, namely Tokyo, Nagoya, and Osaka, over the past two years. These enhancements have improved convenience for members, and contributed to steady growth in the number of vehicles consigned. The pace of market share expansion has also accelerated. In addition, we are seeing clear results from our sales initiatives that leverage our strength as a venue where vehicles can achieve higher selling prices. We will continue to build on this momentum and work steadily toward achieving a 50% market share. On page 13, let me explain the trends in fee income. Beginning in April 2025, we raised the successful bid fee for USS Japan by ¥3,000, which resulted in an increase in the average successful bid fee per vehicle. On the other hand, the unit price of consignment fees and contract completion fees declined as the proportion of large-volume members increased and rebate rose accordingly. Nevertheless, the total number of vehicles handled increased, leading to a significant rise in overall fee income. In addition, we did not observe any reluctance to purchase following the fee revision, so we believe that transition proceeded smoothly. Please turn to page 14. Let me now explain the used vehicle purchasing and selling business. In the rabbit business, although auction market prices remained strong, the number of vehicles handled declined. As a result, net sales were ¥7.4 billion or 101% of the previous fiscal year, while operating profit was ¥120 million or 62% of the previous fiscal year, resulting in higher sales but lower profit. Next is the accident-damaged vehicle purchasing and selling business. Although the number of vehicles sold decreased, gross profit per vehicle increased. Net sales were ¥5 billion or 94% of the previous fiscal year, while operating profit rose significantly to ¥260 million or 306% of the previous fiscal year, resulting in lower sales but higher profits. Placed into page 15 for recycling business. And I'll start with the resource recycling business. Non-ferrous metal market prices trended upward, but increased depreciation expenses led to higher net sales of 5.9 billion yen or 111%, but lower operating profit of 300 million yen or 63% of the previous fiscal year. Next is the industrial plant recycling business. With an increase in orders for large-scale demolition projects, net sales rose to ¥4.3 billion or 142% of the previous fiscal year, and operating profit increased significantly to ¥370 million or 536% of the previous fiscal year, resulting in higher sales and higher profit. Now turning to page 17, from here I will explain our full-year consolidated earnings forecast. For the full year, we project net sales of 119.8 billion yen, operating profit of 61 billion yen and profit attributable to owners or parent of 41.6 billion yen. We plan to steadily achieve new record highs in both revenues and profits. For the auto auction business, we forecast 3.56 million vehicles consigned and a contract completion rate of 66.3%. Although certain external factors such as geopolitical developments in the Middle East remain uncertain, the number of vehicles handled in our April auctions has started off on a solid note. The following pages provide details of the factors behind our earnings forecast and the forecast by segment. I would appreciate it very much if you could review them later for your convenience. So now moving on to page 21. From here, I will touch on the market environment surrounding our company and our mid- to long-term initiatives. This slide shows the trend in our market share from 1990 to the present. As of 2025, our market share stands at 43.2%, firmly establishing our position as the industry leader. Two years ago, our market share was 39.6%, meaning we have expanded our share by 3.6 percentage points over the past two years. In the auction business, a large market share enhances the attractiveness of an auction venue When our share expands, more high-quality vehicles and more buyers gather at our sites, which in turn leads to higher selling prices. This creates a virtuous cycle. For this reason, instead of being satisfied with the current position, we aim to achieve a 50% market share over the mid to long term as our next major milestone. Please turn to page 22. This slide outlines our mid to long term management goals. On a growth phase, we will clearly focus on our core competency and allocate management resources intensively to the auto auction business to achieve our target of a 50% market share. While accelerating investment, we also place strong emphasis on capital efficiency. We have already achieved our ROE target of 20%. Regarding the shareholder returns, last year we committed on the limited three-year basis to a total return ratio of 100%. Our commitment to shareholders' value will remain unchanged. Now on page 23 is our cash allocation for FY2025 through FY2027. In FY 2025, we returned a total of 41.3 billion yen to shareholders through dividends and share repurchases, thereby achieving our commitment to a 100% total return ratio as promised. For the current fiscal year, we executed an ¥18 billion share repurchase today with the plan to increase dividends for the 27th consecutive year. As for growth investments, the Yokohama Auction Site construction was done, and the new facility began auction operations in January of this year. Please turn to page 24. Let me explain the future growth investment plans. Our auction operations are currently experiencing extremely strong momentum. At the Tokyo site, auction volumes exceeded 20,000 vehicles in both March and April, and the current facility has already reached its capacity limits. At the HAA Kobe site as well, the final auction in March received 9,500 vehicles, creating an urgent need to expand capacity at both locations. To ensure that we fully capture these strong demands, we will rebuild and expand both the Tokyo and HAA Kobe sites, including the construction of multi-story parking structures, thereby strengthening our vehicle intake capabilities. Furthermore, to make it even easier for members to participate, we will continue to advance digitalization while also investing in nurturing our vehicle inspectors whose expertise underpins the trust placed in USS. By positioning investment in facilities, systems, and people as the pillars of our growth strategy, we will further solidify our position as the industry leader. Please turn to page 30. This slide shows the trend in dividends since we went public. As mentioned at the beginning of today's presentation, we plan to pay an annual dividend of ¥54.7 per share for FY2025. For FY2026, the plan is ¥55 per share, aiming to hike dividend 27 years in a row. The slide here shows the trend in our total return ratio. For the three years beginning in FY 2025, we have significantly increased our shareholder returns, raising the total shareholder return ratio to over 100%. And this is our last slide. This slide illustrates our vision for future growth and shareholder returns. As I have explained, we are firmly committed to pursuing both active investment to drive business growth and a high level of shareholder returns. We believe that continuing to drive these two pillars is essential for sustaining our long-term growth and further enhancing corporate value. We sincerely hope that our shareholders and investors will continue to place high expectations on our future growth and we greatly appreciate your ongoing support.