Slide 1: Earnings Briefing Materials for FY Ended December 2023 and New Mid-term Business Plan
Earnings Briefing Materials for the Fiscal Year Ended December 2023 and the New Mid-term Business Plan
Slide 2: Financial Result Highlights of FY 12/2023
Financial Result Highlights of FY 12/2023
Slide 3: Financial Result Highlights
Financial Result Highlights (Unit: 0.1 billion JPY) A higher-than-expected increase in raw material prices and lower GPM from our model mix negatively impacted results, which ultimately fell short of the plan. Insecticides & Repellents overperformed vs. the revised forecast (Nov.), with success
Slide 4: Main Factors Vs. Revised Forecast (Nov.)
Main Factors Vs. Revised Forecast (Nov.) (Unit: 0.1 billion JPY) As of Item Nov. Realized Main Factors revision • Domestic: Sales / GP overperformance vs. target ー ＋0.7 • Fewer product returns than expected contributed to profits. in Insecticides & Repellents • Bath salts: -17.4. Stay-at-home demand
Slide 5: Operating Income Change Factors (Vs. Forecast)
Operating Income Change Factors (Vs. Forecast) (Unit: 0.1 billion JPY) Greater than expected impact of rising costs, e.g., raw materials. The effect of price revisions fell short of expectations, and GPM worsened due to a sales underperformance vs. the forecast and the model mix. While cost co
Slide 6: Sales By Segment
Sales By Segment *To outside customers (excludes internal eliminations) (Unit: 0.1 billion JPY) Insecticides & Repellents：Plan achieved due to higher than planned Q4. Household products ：Oral hygiene products, bath salts, and other household goods all fell short of projections. General Environ
Slide 7: Regarding Losses on Valuation of Shares in BATHCLIN Corporation Inc.
Regarding Losses on Valuation of Shares in BATHCLIN Corporation Inc. • As announced on January 29, 2024, the Earth Corporation recorded a loss in the valuation of shares in BATHCLIN Corporation Inc. ‣ The business environment has changed significantly from the assumptions made when we acquired share
Slide 8: Review of Previous Mid-term Business Plans
Review of Previous Mid-term Business Plans
Slide 9: Act For SMILE-COMPASS 2023 - Outline
Act For SMILE‐COMPASS 2023‐ Outline The basic strategy for the MTBP was reforming the corporate compass & infrastructure and improving earnings by expanding the profit foundation in Asia, ESG/Open Innovation, and generating cost synergies. Main Drivers of the Medium-term Business Plan (2021 - 2023
Slide 10: Review of the Main Drivers
Review of the Main Drivers Updated management accounting and revamped our core system as planned. We now intend to deliver benefits from the use of these new systems. While we continue making efforts to reduce product disposals/returns and generate synergies, we haven’t been able to solve the is
Slide 11: Act For SMILE-COMPASS 2023 Review
Act For SMILE‐COMPASS 2023‐Review Sales were achieved against the original plan, but operating profit fell short of the plan. Sales were 158.3 B yen against an initial plan of 157 B yen. ( Achievement 100.8% ) Operating income was 6.37 B yen, compared to an initial plan of 14 B yen. ( Achievem
Slide 12: Management Accounting Basis: Sales / GPM
Management Accounting Basis: Sales / GPM (2021-2023） Domestic - Insecticides & Repellents: Upward trend in sales and stable high levels of profitability make this segment the Company’s core earnings source. Domestic - Household products: We saw heightened competition due to a market slowdown and
Slide 13: Domestic: Insecticides & Repellents Revenue Status
Domestic: Insecticides & Repellents Revenue Status Amidst the impact from soaring raw material prices, we executed cost pass-throughs as the top manufacturer in Japan. In doing so, we not just dampened the decrease in profitability, but also contributed to growing the scale of this market, within
Slide 14: Domestic: Household Products Revenue Status
Domestic: Household Products Revenue Status (Unit: 0.1 billion JPY) Greater competition in our core markets of bath salts and mouthwash products, due to new entrants and lower demand. While we attempted cost pass-throughs amidst a decrease in market share, we were unable to deliver sufficient re
Slide 15: Domestic: Household Products - Diversification of Categories Offered
Domestic: Household Products - Diversification of Categories Offered In anticipation of increased demand resulting from the COVID-19 pandemic, we launched products in new categories, e.g., sanitizer and nursing care products, and household detergents. However, rapid and drastic changes in the mark
Slide 16: Overseas: Revenue Status
Overseas: Revenue Status In ASEAN, we are seeing steady sales growth in Thailand and Vietnam, and are now in an expansion phase in Malaysia and the Philippines. Strong results in the export business, especially exports to the Middle East and the U.S. Conversely, the cross-border e-commerce busin
Slide 17: Overseas: Business Status
Overseas: Business Status ASEAN Core Area (Thailand & Vietnam) ASEAN Expansion Area (Malaysia & The Philippines) Focus on insecticides & repellents, air Established in 2019. This was immediately followed by fresheners/deodorants, and mouthwash. the outbreak of COVID and its associated restrictio
Slide 18: Total Health Care System: Revenue Status
Total Health Care System: Revenue Status The number of contracts has grown year in, year out, fueled by greater demand, with a robust foundation allowing us to deliver earnings in a stable manner. There is room for further global expansion, including to Vietnam in addition to China and Thailand.
Slide 19: Impact of Changes in the External Environment
Impact of Changes in the External Environment Soaring prices for raw materials, packaging & other materials, manufacturing costs, etc. led to a net increase in costs of 6 billion yen in 2 years. We had planned a total profit contribution of 3.0 billion yen from price revisions in 2023. Here, whi
Slide 20: Investment Carried out During the MTBP
Investment Carried out During the MTBP Raised 12.5 billion yen in equity financing in 2020. More active capex, e.g., upgrading our IT infrastructure and enhancing production capacity. Acquired the [BARTH] brand through transfer and also carried out M&A investment through the acquisition of a l
Slide 21: System Investment & Management Accounting Enhancements
System Investment & Management Accounting Enhancements Completed building our core system, integrating and preparing all processes and data – from the production phase all the way to sales. Separate fixed/variable expenses to better understand the earnings structure, allowing for more sophistica
Slide 22: Review - Summary
Review - Summary While we started efforts to expand business and improve profitability in overseas areas, each initiative has seen varying levels of success, and we‘re currently still in the process of shifting to a leaner management structure. While our overseas business continues on an expansion
Slide 23: New Mid-term Business Plan (2024-2026)
New Mid-term Business Plan (2024-2026)
Slide 24: Targets in the New MTBP to Address Issues
Targets in the New MTBP to Address Issues Continue enhancing the earnings structure while also carrying out growth investment in Household products in Asia and Japan While our overseas business continues on an Work to further accelerate growth in the expansion trajectory, challenges related to growt
Slide 25: Concept for the New MTBP
Concept for the New MTBP 各社個別最適からグループ全体最適に向けた準備の3年間にする Three-year preparatory period toward a shift from individual optimization to overall Group optimization efforts Domestic operations Execute structural drive revenue Synergy generation transformation Group restructuring to enhance earnings Overs
Slide 26: Positioning of the New MTBP
Positioning of the New MTBP 現中期経営計画の重点方針との連動は以下の通り Three-year period to build a revamped structure for the Earth Group Medium-Term Business Plan (2021 - 2023) Main Drivers Medium-Term Business Plan (2024 - 2026) Main Drivers Transform the earnings Reform Corporate Compass & Expand Profit Foundatio
Slide 27: Act For SMILE COMPASS 2026
MTBP Act For SMILE COMPASS 2026 Our Group Working Together Toward a Bright Tomorrow for EARTH Now is the time to fully actualize the Earth Group’s potential. Throughout the duration of the MTBP, we will be putting in place a structure allowing us to actualize our potential, allowing the Earth Group
Slide 28: Earth Group's Medium-to-long-term Concept
Earth Group’s Medium-to-long-term Our Group Working Together Toward a Bright Tomorrow for EARTH Concept Next MTBP Transform the earnings structure & build a framework Drive sales: Overseas Drive revenue: Domestic Expand Profit Generate Cost Foundation in Enhance global expansion Synergies Grow Culti
Slide 29: Main Driver 1: Transform the Earnings Structure
Main Driver ①: Transform the Earnings Structure Nurture a second revenue pillar following Insecticides & Repellents • Concentrate in brand, SKU core competencies ‣ Review our expanded product selection in Household products and focus on products with future potential and profitability. ‣ Selection t
Slide 30: Main Driver 1: Transform the Earnings Structure
Main Driver ①: Transform the Earnings Structure Leverage the corporate compass & infrastructure and derive benefits • Reduce the COGS ratio ‣ Our policy is to aim to reduce our environmental footprint and eliminate product returns in Insecticides & Repellents. We further seek to reduce product waste
Slide 31: Main Driver 2: Expand Sales Overseas
Main Driver ②: Expand Sales Overseas Put in place a growth foundation in coordination with our strategy for each area • Enhance strategies on a per-area basis ‣ Growth potential: Promote further acquisition of market share in Thailand/Vietnam and expand exports into North America and the Middle East
Slide 32: Main Driver 3: Group Restructuring
Main Driver ③: Group Restructuring Restructure our organization from the standpoint of overall optimization toward generating synergies. • Carry out Group restructuring ‣ Concentrate/integrate corporate planning functions and establish [Corporate Planning Headquarters] to advance transformation. ‣ L
Slide 33: Overview of Profitability & Capital Efficiency
Overview of Profitability & Capital Efficiency (Unit: 0.1 billion JPY) While ROE and ROIC are down as a result of a decrease in our earnings power and profitability, the debt ratios remain low and WACC remains high following the execution of equity financing in 2020. The efficient use of Debt to
Slide 34: Cash Allocation (2024 - 2026 Cumulative: Outline)
Cash Allocation (2024 - 2026 Cumulative: Outline) Transform the earnings structure to improve profitability and inventory efficiency as a base for generating cash. We expect to utilize Debt as a source for growth investment, all the while ensuring the maintenance of a sound financial foundation.
Slide 35: 2026: Quantitative targets
2026: Quantitative targets As of 2026, the reaping of some of the results of the structural reforms will start, but is considered only a passing point. After three years of preparation, dramatic growth will be achieved from 2027 onwards. (Unit: 0.1 billion JPY) 2023 Realized 2026 Plan Rise & Fal
Slide 36: 2024: Plan Highlights
2024: Plan Highlights We expect to incur non-recurring expenses related to structural transformation. In addition to active investment in human resources, we have plans for active investment in key categories. (Bath salts and Oral care, which we position as our next major revenue source.) Also i
Slide 37: Management Accounting Basis: Sales & GPM (2023 vs 2024)
Management Accounting Basis: Sales & GPM (2023 vs 2024) Domestic - Insecticides & Repellents: We expect to continue carrying out price revisions and to achieve higher sales by growing our market share. Domestic - Household products: We expect sales growth thanks to a market share recovery in our
Slide 38: Vision for the future
CAN ‘es= Earth Corporation Act For Life Vision for the future
Slide 39: Act For SMILE COMPASS 2026
MTBP Act For SMILE COMPASS 2026 Our Group Working Together Toward a Bright Tomorrow for EARTH Now is the time to fully actualize the Earth Group’s potential. Throughout the duration of the MTBP, we will be putting in place a structure allowing us to actualize our potential, allowing the Earth Group
Slide 40: COMPASS = MTBP (Guiding Principles)
COMPASS = MTBP (Guiding Principles) C: Customer first O: Open communication M: Mind-set for evolution P: Proactive challenge A: Agility in Asia S: Sustainability S: Smile © Earth Corporation All Rights Reserved. 39
Slide 41: Earth Group's Medium-to-long-term Concept
Earth Group’s Medium-to-long-term Our Group Working Together Toward a Bright Tomorrow for EARTH Concept Next MTBP Transform the earnings structure & build a framework Drive sales: Overseas Drive revenue: Domestic Expand Profit Generate Cost Foundation in Enhance global expansion Synergies Grow Culti
Slide 42: Vision
Vision Become one of the Top 5 manufacturers of Household products in Asia by 2030 1 2 3 Maintain our no.1 position Secure a top-class position Improve profit margins in the domestic in Asia in the category of through a strategy Insecticides & Repellents Insecticides & Repellents fine-tuned to marke
Slide 43: Earnings Structure Target for 2028
Earnings Structure Target for 2028 Transform the earnings structure and continue price revisions, making steady progress toward achieving our quantitative targets for 2026. In 2027 and beyond, we expect to reap the fruits of this transformation and improve profitability. 2023 (Realized) 2026 (Fo
Slide 44: APPENDIX
APPENDIX. © Earth Corporation All Rights Reserved.
Slide 45: Progress Toward The Operating Income Target (Quarterly / Cumulative)
Progress Toward The Operating Income Target (Quarterly / Cumulative) (Unit: 0.1 billion JPY) Q4 losses narrowed as a result. Q1 Q2 Q3 Q4 Quarterly 55.3 63.0 45.0 43.9 53.2 66.2 0.7 4.0 ▲ 7.0 ▲ 45.8 ▲ 32.0 ▲ 28.5 Quarterly 108.0 112.0 99.2 92.2 Cumulative 80.0 63.7 55.3 45.0 119.4 120.1 74.3 53.2 2
Slide 46: Operating Income Change Factors (YoY)
Operating Income Change Factors (YoY) (Unit: 0.1 billion JPY) Our price revision strategy bore some fruit, and sales growth excluding price revisions also contributed to sales. Conversely, soaring prices, e.g., raw materials, offset the gross increase in profits. This was coupled with increases
Slide 47: Status of the Insecticides & Repellents Segment (Domestic)
Status of the Insecticides & Repellents Segment (Domestic) Trends in the Domestic Market by 4-week Period Domestic Market - Product Returns (Unit: 0.1 B JPY) (Unit: 0.1 B JPY) YoY underperformance early in the season, but later As hot weather persisted late into the season in a recovery during p
Slide 48: COGS - Status Overview
COGS - Status Overview (Unit: 0.1 billion JPY) The impact at the end of the financial year exceeded expectations at 3.25 B yen, compared to the assumed annual impact of 2.5 B yen. The main reasons for the higher-than-expected results were higher energy costs and higher purchase prices for semi-f
Slide 49: Overseas Results
Overseas Results Steady sales increase in Thailand and Vietnam, coupled with a strong exports performance to the Middle East and the United States. Expansion phase in the Philippines and Malaysia. Decrease in sales on account of changes in the external environment in China. (Unit: 0.1 billion
Slide 50: Shareholder Returns
Shareholder Returns 【Shareholder Returns Policy】 Adopt an agile approach and, should our performance and retained earnings levels allow it, consider raising dividends and/or executing share buybacks. The dividend per share for 2024 is expected to remain unchanged from 2023 at 118 . Dividend-rela
Slide 51: Value Creation Through Initiative Themes (Business Contribution)
Value Creation Through Initiative Themes (Business Contribution) Contribute to MTBP results through human resources materialities within initiative themes. Realize MTBP Themes Reduce fixed costs through the Pool human resources toward Enhance oversight of overseas / consolidation of various functi
Slide 52: Training Human Resources Sought-after by the Earth Group
Training Human Resources Sought-after by the Earth Group Highly engaged, diverse human Contribute not just to business development but resources with career also to sustained employee career development. development opportunities leading Aim to be a model Company to work for. to greater Well-bei
Slide 53: Supplementary Materials; FY12/2023 Results
Supplementary Materials; FY12/2023 Results
Slide 54: Consolidated: Statement of Income
Consolidated: Statement of Income （Unit：million JPY） Q4 FY12/22 Q4 FY12/23 Q4 FY12/23 FY12/24 Realized Forecast Realized YoY vs.FCT Original forecast YoY Sales 152,339 160,000 158,344 1.0pt 1.0pt 165,000 104.2% Cost of sales 89,870 93,500 94,719 1.1pt 1.0pt 99,168 104.7% Gross profit 62,468 66,500 6
Slide 55: Consolidated: Sales by Segment
Consolidated: Sales by Segment （Unit：million JPY） Q4 FY12/22 Q4 FY12/23 Q4 FY12/23 FY12/24 Realized Forecast Realized YoY vs.FCT Original forecast YoY Insecticides & Repellents 59,368 61,713 62,031 104.5% 100.5% 65,175 105.1% Oral hygene products 8,191 8,442 8,364 102.1% 99.1% 8,916 106.6% Bath salt
Slide 56: Operating Income Change Factors (YoY)
Operating Income Change Factors (YoY) （Unit：million JPY） 7,434 2022 (Realized) ＜Breakdown＞ Increase in • Effect of revenue increase (excluding the +974 gross profit effect of price pass-through) +1,156 • Price shifting effect +2,164 • Sales contribution of BARTH business +630 • Model mix +639 • Impa
Slide 57: Operating Income Change Factors (vs. Forecast)
Operating Income Change Factors (vs. Forecast) （Unit：million JPY） 8,000 2022 (Realized) ＜Breakdown＞ Gross profit below • Sales plan achieved (excluding the impact -451 the forecast of price pass-through) -2,875 • Price shift effect -436 • Sales contribution of BARTH business +88 • Model mix -1,327 •
Slide 58: Consolidated: SG&A Expenses
Consolidated: SG&A Expenses （Unit：million JPY） FY12/22 FY12/23 FY12/23 FY12/24 Realized Forecast Realized YoY vs.FCT Original forecast YoY Personal expenses 20,685 21,795 21,607 1.0pt 1.0pt 23,215 107.4% Shipping expenses 4,502 4,821 4,594 1.0pt 1.0pt 5,049 109.9% Strage expenses 2,565 2,793 2,965 1
Slide 59: Consolidated: Balance Sheet
Consolidated: Balance Sheet （Unit：million JPY） End of End of Final comparison FY2022 FY2023 +/- Current Cash & deposits 14,772 17,505 2,732 assets Trade receivable 24,163 25,639 1,476 Inventories 32,253 28,266 - 3,986 Others 2,772 2,758 - 14 Non-current Property, plant & equipment 29,483 31,383 1,89
Slide 60: Consolidated: Statement of Cash Flows
Consolidated: statement of Cash flows （Unit：million JPY） End of Q4 End of Q4 YoY FY2022 FY2023 Cash flows from operating activities 3,901 7,524 3,622 Cash flows from investing activities - 6,266 - 10,135 - 3,869 Cash flows from financing activities - 4,464 4,893 9,358 Effect of exchange rate change
Slide 61: Consolidated: Capital Expenditure, Depreciation Expenses
Consolidated: Capital expenditure, Depreciation expenses （Unit：million JPY） FY2020 FY2021 FY2022 FY2023 FY2024 FY2020 FY2021 FY2022 FY2023 FY2023 Realized Realized Realized Realized Forecast Realized Realized Realized Realized Forecast Depreciation CAPEX 3,548 2,928 5,878 7,504 5,600 3,334 3,537 3,8
Slide 62: Overview of Group Companies' Business Performance
Overview of Group Companies' Business Performance （Unit：million JPY） Earth Corporation BATHCLIN Corporation Hakugen Earth Co., Ltd. Earth Pet Co., Ltd. FY22.Q4 FY23.Q4 FY23.Q4 FY22.Q4 FY23.Q4 FY23.Q4 FY22.Q4 FY23.Q4 FY23.Q4 FY22.Q4 FY23.Q4 FY23.Q4 Realized Forecast Realized Realized Forecast Realize
Slide 63: This presentation contains forward-looking statements and financial results forecasts. These forward-looking statemen…
This presentation contains forward-looking statements and financial results forecasts. These forward-looking statements and financial results forecasts were formulated on the basis of company assumptions based on the information available. These statements and forecasts are subject to risks and unce