Earnings Call: Q4 2026

May 13, 2026

Summary

FY 2025 delivered record net sales and operating profit as auto auction volume and market share advanced. FY 2026 guidance targets further records, supported by capacity investment and continued shareholder returns.

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. We would like to allow as much time as possible for your questions, so we appreciate your active participation. Let us start from page 4. I start with the three key points for today's briefing. First, the USS Group results. in FY 2025, consolidated net sales amounted to JPY 113.8 billion, and operating profit reached JPY 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 FY 2026 forecast. We expect net sales of JPY 119.8 billion and operating profit of JPY 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 JPY 54.7 per share, an increase of JPY 11.3 from the previous year. For FY 2026, we plan to further increase the annual dividend by JPY 0.3 to JPY 55 per share. In addition, today, we executed a share repurchase of JPY 18 billion, and I will explain the details later in the presentation. On page 7, I will explain the factors behind the year-on-year 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 year on 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 the 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 the 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 leads the market as the industry's top runner. Please turn to page 12. This slide represents the performance of our auto auction business. First, the chart at the lower left shows the trend in our market share. Our share rose to 43.2% in FY 2025. 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 JPY 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 the selling business. In the Rabbit business, although auction market prices remained strong, the number of vehicles handled declined. As a result, net sales were JPY 7.4 billion, or 101% of the previous fiscal year, while operating profit was JPY 120 million, or 62% of the previous fiscal year, resulting in higher sales but lower profits. 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 JPY 5 billion, or 94% of the previous fiscal year, while operating profit rose significantly to JPY 260 million, or 306% of the previous fiscal year, resulting in lower sales but higher profits. Please turn to page 15 for recycling business. I'll start with the resource recycling business. Nonferrous metal market prices trended upward, but increased depreciation expenses led to higher net sales of JPY 5.9 billion, or 111%, but lower operating profit of JPY 300 million, or 63% of the previous fiscal year. Next is the industrial plant recycling business. With an increase in orders for larger scale demolition projects, net sales rose to JPY 4.3 billion, or 142% of the previous fiscal year, and operating profit increased significantly to JPY 370 million, or 536% of the previous fiscal year, resulting in higher sales and higher profits. Turning to page 17. From here, I will explain our full year consolidated earnings forecast. For the full year, we project net sales of JPY 119.8 billion, operating profit of JPY 61 billion, and profit attributable to owners of parent of JPY 41.6 billion. 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. 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, our 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 50% market share. While accelerating investment, we also place strong emphasis on capital efficiency. We have already achieved our ROE target of 20%. Regarding 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. On page 23 is our cash allocation for FY 2025 through FY 2027. In FY 2025, we returned a total of JPY 41.3 billion 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 JPY 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 this strong demand, 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 JPY 54.7 per share for FY 2025. For FY 2026, the plan is JPY 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%. 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. This concludes my presentation. Thank you very much for your kind attention.