Lacto Japan Co., Ltd. · TSE:3139
Lacto Japan — H1 FY11/2023 Earnings Presentation
35 slides from Lacto Japan's earnings presentation, July 2023
Slide 1: FY2023 First Half Financial Results Briefing
FY2023 First Half Financial Results Briefing July 2023 © Lacto Japan Co., Ltd.
Slide 2: Contents
Contents Consolidated Financial Results for FY11/2023 1H and Full-Year FY11/2023 Earnings Forecasts P. 3 Business Environment in 2H and Future Initiatives P. 15 Reference: Corporate Business Plan “NEXT-LJ2025” P. 28 2 © Lacto Japan Co., Ltd.
Slide 3: Consolidated Financial Results for FY11/2023 1H and Full-Year Earnings Forecasts
Consolidated Financial Results for FY11/2023 1H and Full-Year FY11/2023 Earnings Forecasts 3 © Lacto Japan Co., Ltd.
Slide 4: FY11/2023 First Half Financial Results
FY11/2023 First Half Financial Results In 1H, sales increased and profits decreased YoY, which was in line with our initial forecasts. Sales increased as expected due to higher ingredient prices and a weaker yen. Ordinary income declined, as we had initially forecast. The main reasons were that the
Slide 5: Factors Contributing to Increase/Decrease in Sales and Ordinary Income
Factors Contributing to Increase/Decrease in Sales and Ordinary Income ⃞ Net sales ⃞ Ordinary Income (Major factors of change) Rise in cost of sales ratio due to higher raw cheese prices, Higher unit sales prices Decline in gross margin in the Cheese due to rise in ingredient Manufacturing and Sales
Slide 6: Consolidated Balance Sheets
Consolidated Balance Sheets (Million yen) 30-Nov-2022 31-May-2023 Difference Current assets 70,067 77,369 7,302 Cash and cash equivalents 6,379 8,587 2,207 Major factors of change Trade notes and accounts receivable 21,065 22,141 1,075 Increase in inventories Inventories 41,382 45,594 4,211 • Cheese
Slide 7: Consolidated Cash Flow Statements
Consolidated Cash Flow Statements (Million yen) FY11/2023 Major factors of change 1st Half Decrease in cash flows from operating activities Cash flows from operating activities -5,839 Due to increase in working capital: Cash flows from investing activities -227 ・Increase in inventories. (cheese and
Slide 8: Overview of Dairy Ingredients and Cheese Business Div. (1st Half)
Overview of Dairy Ingredients and Cheese Business Div. (1st Half) ⃞ Business environment □Net Sales (Million yen) 56,791 ▏ Along with the recovery of the movement of people, including inbound travel, demand for eating out and leisure activities Cumulative 47,202 gradually recovered. 29,196 ▏ However
Slide 9: Overview of Meat and Ingredients Business Div. (1st Half)
Overview of Meat and Ingredients Business Div. (1st Half) □Net Sales ⃞ Business environment (Million yen) 8,996 ▏ Restaurant demand was in a recovery trend. Demand for imported pork was strong, as market prices for domestic pork Cumulative 7,221 trended upward. 4,933 ■ 2Q ▏ Higher production costs a
Slide 10: Overview of Asian Business (Dairy Ingredients Div.) (1st Half)
Overview of Asian Business (Dairy Ingredients Div.) (1st Half) □Net Sales ⃞ Business environment (Million yen) Cumulative 12,279 ▏ Local demand for dairy products recovered, especially for 10,564 commercial use, due to the recovery of the movement of people. 7,495 ■ 2Q 5,316 ▏ Demand for imported pr
Slide 11: Overview of Asian Business (Cheese Div.) (1st Half)
Overview of Asian Business (Cheese Div.) (1st Half) □Net Sales ⃞ Business environment (Million yen) 2,246 ▏ Demand from restaurants and bakeries showed underlying Cumulative 1,827 strength, especially in Singapore. 1,158 ▏ In China, economic recovery was slow, and demand for food ■ 2Q 892 products i
Slide 12: FY11/2023 Consolidated Earnings Forecasts
FY11/2023 Consolidated Earnings Forecasts In 2H, imports of dairy ingredients are expected to recover as inventories of domestic skim milk powder are optimized. In the case of Asian cheese manufacturing and sales, profit margins are expected to gradually improve due to a decline in raw cheese prices
Slide 13: Net Sales and Sales Volume by Business Division (YoY)
Net Sales and Sales Volume by Business Division (YoY) (Million yen) Net sales FY11/2022 FY11/2023 YoY Full-year 2Q 2Q Difference Change Estimates Cumulative Cumulative Dairy Ingredients and Cheese Business 47,202 56,791 9,588 20.3% 106,400 Meat and Ingredients 7,221 8,996 1,775 24.6% 15,200 Asian
Slide 14: International Prices of Dairy Products
International Prices of Dairy Products 8,000 Skim milk powder（EUR/ton） 7,000 Butter（EUR/ton） Cheese（EUR/ton） 6,000 5,000 4,000 3,000 2,000 1,000 0 Note: Skim milk powder and butter: Dutch official price (pre-factory price) Cheese: German Edam cheese 14 © Lacto Japan Co., Ltd.
Slide 15: Business Environment in 2H and Future Initiatives
Business Environment in 2H and Future Initiatives 15 © Lacto Japan Co., Ltd.
Slide 16: Business Environment in 2H: Dairy Ingredients and Cheese Business Division
Business Environment in 2H: Dairy Ingredients and Cheese Business Division Positive ▍ Domestic skim milk powder inventories should head toward an appropriate level. ▍ There is likely to be a shortage of domestic butter and cream ingredients and increased demand for imported products. ▍ Restaurant, l
Slide 17: Status of skim milk powder inventories
Status of skim milk powder inventories Against the backdrop of recovering demand and declining raw milk production, skim milk powder inventories are decreasing toward a state of optimization. Nationwide raw milk production volume Skim milk powder inventory volume MT (YoY) 120,000 May 2022 % 104,203
Slide 18: Recovering demand for imported butter
Recovering demand for imported butter Butter inventory volume (domestic) Bidding results for butter MT Unit: Times MT Aug. 2021 5,000 5.00 Number of bidders 45,000 42,410 Number of successful bids 4,500 4.50 Ratio of successful bids 40,000 May 2023 4,000 4.00 35,000 30,371 3,500 3.50 30,000 3,000 3.
Slide 19: Initiatives for 2H: Dairy Ingredients and Cheese Business Division
Initiatives for 2H: Dairy Ingredients and Cheese Business Division Promoting a full-fledged recovery in demand for imported dairy products. ▌ Strengthening sales of imported dairy ingredients, especially imported powdered milk mixtures. Promote replacement of domestic ingredients with imported ingre
Slide 20: Business Environment in 2H: Meat and Ingredients Division
Business Environment in 2H: Meat and Ingredients Division Positive ▍ The production system of our major supplier of pork (in the US) is improving. Elimination of concerns regarding supply of chilled and frozen pork. ▍ Due to higher production costs and the impact of ASF (African swine fever), the su
Slide 21: Reference: ASF (African Swine Fever) Outbreak in Europe
Reference: ASF (African Swine Fever) Outbreak in Europe In Europe, ASF will continue in 2023 as well. Imported pork supply areas to Japan are expected to be limited for the time being. 【ASF Outbreak in Europe】 FY2022 FY2023 FY2022 FY2023 Country Occurrenc Last Occurrenc Last Country Occurrenc Last O
Slide 22: Initiatives for 2H: Meat and Ingredients Division
Initiatives for 2H: Meat and Ingredients Division We will steadily capture North American pork demand and further diversify our product lineup, including processed products. ▌ Expansion of sales of chilled and frozen pork. Expansion of sales of North American pork, for which there are many inquiries
Slide 23: Business Environment in 2H: Asian Business
Business Environment in 2H: Asian Business Positive ▍ Despite the impact of high prices caused by inflation, demand from local food manufacturers should be firm. (dairy ingredient) ▍ Profit margins should gradually improve due to falling raw cheese prices. (cheese) ▍ New business aimed at restaurant
Slide 24: Initiatives for 2H: Asian Business
Initiatives for 2H: Asian Business In dairy ingredient sales, we will focus on cultivating new customers and increasing the number of items proposed to existing customers. In cheese manufacturing and sales, we will aim to boost sales by steadily capturing demand from restaurants outside of China. Da
Slide 25: Priority Measures: Accelerate development of functional food ingredients business
Priority Measures in the Medium-Term Plan: Accelerate development of functional food ingredients business Sales centered on protein, demand for which continues to grow However, we will propose value-added formulations designed for final products, not just protein alone. Trend in functional food ingr
Slide 26: Functional Food Ingredients Business: Examples of proposed formulations
Functional Food Ingredients Business: Examples of proposed formulations Proposal of high-protein protein ingredients that do not solidify even in hot water at 100℃. Feature (1) Dispersion in hot water Generally, protein denatures and coagulates at temperatures above 80℃, but the new product develope
Slide 27: Aiming to improve the PBR
Aiming to improve the PBR In addition to striving to raise ROE, we will also focus on improving the PER ▪ Expansion of market share through expansion of customers’ Sales target industries, etc. (Dairy Ingredients) expansion ▪ Diversification of products handled (Meat and Ingredients) ▪ Sales channel
Slide 28: Reference: Corporate Business Plan “NEXT-LJ 2025”
Reference：Corporate Business Plan “NEXT-LJ 2025” 28 © Lacto Japan Co., Ltd.
Slide 29: Basic Policy
Basic Policy Base Growth Challenges Existing business Expansion of Asian Build next-generation “evolution" business businesses Stable supply based on Expand cheese manufacturing Develop new products, starting diversification of supply and sales business with functional foods sources Consulting sales
Slide 30: Business Strategy: Domestic Business
Business Strategy: Domestic Business Ensure stable supply and increase market share through best matching In addition to expanding sales of functional foods to existing customers, develop exports on a full scale Business Relationship to Basic Policy Business policy Major measures segment Base Growth
Slide 31: Business Strategy: Overseas Business
Business Strategy: Overseas Business Aggressive investment in strengthening local systems, relocation to new plants, etc. Evolve into a complex food company by expanding into upstream and downstream areas Business Relationship to Basic Policy Business policy Major measures segment Base Growth Challe
Slide 32: Numerical Targets of Corporate Business Plan
Numerical Targets of Corporate Business Plan Changed disclosure format from a rolling method to a fixed term method By clarifying the goals for each period, we aimed to increase the effectiveness of the plan and make it a driving force for solid growth, while at the same time facilitating dialogue w
Slide 33: Financial Targets
Financial Targets FY11/2022 FY11/2025 Item (Actual) (Plans) ROE 10.9% 10% or more Payout ratio 17.3% 20-25% Consolidated shareholders’ equity ratio 30.5% 30-35% Medium-term use of funds Capital investment…At present, we expect the move to the new factory in Singapore to be the largest investment d
Slide 34: Shareholder return policy
Shareholder return policy Shareholder return policy is based on increasing dividends and will promote raising of dividend payout ratio Trends in dividends and payout ratio (Yen) 20.4% Increased dividends based on stable 50 25.0% Dividend per share dividends Payout ratio 17.3% In order to achieve m
Slide 35: Projections disclaimer
This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections as a result of changes in the business environment and other risks and uncer