Ajinomoto Co., Inc. · TSE:2802
Ajinomoto — FY2013 Earnings Presentation
52 slides from Ajinomoto's earnings presentation, May 10, 2013
Slide 1: Forecast for the Fiscal Year Ending March 31, 2014 (FY2013) and Outlook
Ajinomoto Co., Inc. Forecast for the Fiscal Year Ending March 31, 2014 (FY2013) and Outlook May 10, 2013 Masatoshi Ito President & CEO
Slide 2: Contents
Contents I. Summary of FY2013 FY2013 Forecast P2 Factors in Changes in FY2013 Operating Income Forecast P3 FY2013 Forecast by Segment P4 FY2013 Forecast - Ordinary Income and Net Income P5 Management Indicators and Differences from FY2013 Medium-Term Management Plan P6-7 II. Main Policy for Genuine
Slide 3: I. Summary of FY2013
Nee | Summary of FY2013 SSS
Slide 4: FY2013 Forecast
FY2013 Forecast Net sales: Increase, with decrease due to exclusion of Calpis Co., Ltd. (Calpis) from consolidation and decrease in pharmaceuticals covered by other segments. Operating income: Increase, with decrease in effect of above covered by improvement of bioscience and fine chemicals and grow
Slide 5: Factors in Changes in FY2013 Operating Income Forecast
Factors in Changes in FY2013 Operating Income Forecast Negative factors will persist even if external environment becomes less severe. Plan to increase income due to expansion of overseas consumer foods and growth in sales of bioscience products and fine chemicals offset decrease in income due to ex
Slide 6: FY2013 Forecast by Segment
FY2013 Forecast by Segment (¥ Billion) FY2013 FY2012 YoY Change O.P.% O.P.% Forecast Amount % Net sales 1,019.0 985.0 34.0 3% Domestic Food Products 338.5 391.6 -53.1 -14% Overseas Food Products 303.9 245.4 58.5 24% Bioscience Products & Fine 232.8 204.2 28.6 14% Chemicals Pharmaceuticals 52.9 71.5
Slide 7: FY2013 Forecast - Ordinary Income and Net Income
FY2013 Forecast - Ordinary Income and Net Income Extraordinary gains (losses): Huge factors are not expected. Net income: Decrease in taxes due to tax rate return to normalcy despite extraordinary gains decrease considerably. Plan to achieve the highest profits. FY2013 FY2012 Difference Main Factors
Slide 8: Management Indicators and Differences from FY2013 Medium-Term Management Plan
Management Indicators and Differences from FY2013 Medium-Term Management Plan Net sales: Shortfall due to sale of Calpis Co., Ltd., structural improvement of Pharmaceuticals business, change in accounting standards for business tie-ups, etc. Operating income: Shortfall due to sale of Calpis Co., Ltd
Slide 9: Roadmap to a Genuine Global Company
Roadmap to a "Genuine Global Company" Achieve stable profit growth - Average annual growth rate of 10% - Become a global top 10 food company* Transition to Operating income >¥150B Operating margin >10% Build foundation a global ROE >10% Recover for a global company Market cap. >¥1.5T Overseas sales
Slide 10: II. Main Policy: Growth Driver Development
II. Main Policy for Genuine Global Company in FY2013 ~ Growth Driver Development ~ (1) R&D Leadership (2) Global Growth
Slide 11: Global Growth: Expansion of Overseas Consumer Foods Business
(1) Global Growth: Expansion of Overseas Consumer Foods Business Deepen Existing Business and Expand New Markets; Strengthen the Production Capacity. Poin Specific programs New MSG factory in Thailand (completion in March 2013) Capacity expansion (nucleotides) in Thailand (completion in Nov. 2011) U
Slide 12: Global Growth: Overseas Consumer Foods, New Products
(1) Global Growth: Expansion of Overseas Consumer Foods Business Deepen Existing Business and Expand New Markets; New Products Point Specific programs Vietnam Aji ngon® for vegetarians (August 2012) Thailand Ros Dee® Menu Aji-Quick for stew 2 items, for soup (November 2011 2 items (August 2012) Thai
Slide 13: Global Growth: Expanding into New Markets
(1) Global Growth: Expansion of Overseas Consumer Foods Business Deepen Existing Business and Expand New Markets Point Specific programs FY2011 FY2012 FY2013 Establish subsidiary in Myanmar: Study restart of business Establish Asia Bangladesh (August) Pakistan: Study entry opportunities Expand in ne
Slide 14: Global Growth: Deepen Existing Markets and Expand New Markets
(1) Global Growth: Expansion of Overseas Consumer Foods Business “Deepen” Existing Markets and Products, “Expand” New Markets and Developing Products Main countries: Steady growth on local currency basis and lead business with continued double-digit growth in future. By product type: Balanced growth
Slide 15: R&D Leadership: Cutting-Edge Biotechnology
(2) R&D Leadership: Cutting-Edge Biotechnology Strengthen the Environs of Advanced Medical Care with High Future Prospects Biopharmaceuticals Market ($ Billion) Market area where Ajinomoto Co. can utilize its technology related to Peptides pharmaceuticals market: 12 24 amino acids, nucleic acids, Nu
Slide 16: Expand Cell Culture Media Business
(2) R&D Leadership: Cutting-Edge Biotechnology Expand Cell Culture Media Business to Support Advanced Medical Care In addition to amino acids, Cell Culture Media vitamins, sugars and other Sugars nutrients, dozens of Amino acids ingredients such as trace Ajinomoto Salts minerals are necessary for Gr
Slide 17: Further advance the cell culture media business
(2) R&D Leadership: Cutting-Edge Biotechnology Expand Cell Culture Media Business to Support Advanced Medical Care Further advance the existing cell culture media (serum-free) business and establish a development and manufacturing system that can provide optimum customized cell culture media to biop
Slide 18: CORYNEX Technology for Biopharmaceuticals
(2) R&D Leadership: Cutting-Edge Biotechnology ® Technologies Expansion in Environs of Medical Business for Advanced Medical Care: CORYNEX Advanced technology using a specifically developed bacterium, Corynebacterium glutamicum, to improve efficiency of manufacturing process for biopharmaceuticals s
Slide 19: Acquisition of Althea Technology, Inc.
(2) R&D Leadership: Cutting-Edge Biotechnology Biopharmaceutical Contract Development & Manufacturing Organization Completes the Acquisition of Althea Technology, Inc. in April 2013 Pharmaceutical value chain Steps for biologics Basic Pre-clinical Clinical Regulatory/ Launch development research stu
Slide 20: Progress of Lower Resource Fermentation Technology
(2) R&D Leadership: Progress of Lower Resource Fermentation Technology Specific programs FY2011 FY2012 FY2013 FY2014 Start of commercial plant test in Brazil Expansion to other regions Technology to reduce main raw materials MSG (April 2013) (FY13 ) Full-scale implementation in Brazil (July 2013) In
Slide 21: II. Main Policy: Business Structure Reinforcement
II. Main Policy for Genuine Global Company in FY2013 ~ Business Structure Reinforcement ~ (1) Animal Nutrition Business (2) Fine Chemicals Business (3) Retail Business
Slide 22: Business Structure Reinforcement in Animal Nutrition Business
(1) Business Structure Reinforcement Initiatives in Animal Nutrition Business Maintaining and enhancing the value of businesses with a comprehensive strategy that applies the Ajinomoto Group’s strengths from various aspects Point Specific programs FY2011 FY2012 FY2013 Shift from Brazil-based to Enha
Slide 23: Growth Potential of Fine Chemicals Business (Electronic Materials)
(2) Growth Potential of the Fine Chemicals Business (Electronic Materials) Dealing with Coming Environmental Changes Deal with the changing industry structure and achieve stable future growth of ABF (insulation film for build-up in printed wiring boards). Increase in number of chips Diversification
Slide 24: Fine Chemicals: Developing New Growth Drivers
(2) Growth Potential of the Fine Chemicals Business Developing New Growth Drivers Commercialization and creation of demand for organic electroluminescent (EL) materials: Target of ¥7.5 billion in sales in FY2020 Ajinomoto Group technology continuous production → process simplification, cost reductio
Slide 25: Expanding Profit in the Retail Business
(3) Expanding Profit in the Retail Business - From VOLUME to VALUE - Maintain stable high profit in consumer food businesses in Japan and overseas. Net Sales and O.P. Margin of Consumer Businesses OP margin (Based on FY2013 forecast. Circle size is proportionate to operating income.) 218.2 254.5 Mai
Slide 26: IV. FY2013 Financial Strategy
IV. FY2013 Financial Strategy
Slide 27: FY2013 Financial Strategy
FY2013 Financial Strategy Develop growth drivers and fortify the business structure to strengthen cash flow generation. Use free cash flow for continuous and stable shareholder returns while prioritizing investments for growth. Generation of cash based on profit growth Operating cash flow: Conti
Slide 28: Investments for Growth and Shareholder Returns
FY2013 Financial Strategy Investments for Growth and Shareholder Returns Dividends: Increase from ¥16/year → ¥18/year, then ¥20/year Share repurchase: 30 million shares (maximum) for ¥30.0 billion (maximum) Dividends 1. Reason for increase Increase level of shareholder returns and improve capital ef
Slide 29: Financial Strategy: Investments for Growth and Shareholder Returns
Financial Strategy for FY2013 Investments for Growth and Shareholder Returns Generate free cash flow (FCF) and prioritize investments for growth. Aim to further improve shareholder returns. Generating FCF Cash Flow and Shareholder Returns (¥ Billion) Increase operating income and net income FY2010 F
Slide 30: Strategy of Umami Seasoning Business in FY2013
. Strategy of Umami Seasoning Business in FY2013 May 10, 2013 Keiichi Yokoyama Senior Vice President
Slide 31: Reinforcing the Umami Seasoning Business Structure
Reinforcing the Umami Seasoning Business Structure From VOLUME to VALUE Review of FY2012 2. External environment 1. Market/competitive environment Increased production by competitors (Ajinomoto Co. estimates) → Oversupply, dropping prices Market scale Market growth rate (Volume increase) MSG Approx.
Slide 32: Reinforcing the Umami Seasoning Business Structure (2)
Reinforcing the Umami Seasoning Business Structure (2) - From VOLUME to VALUE - Measures for results recovery: MSG 1. Value-added strategy: Promote comprehensive umami strategy. Accelerate growth of consumer business. → Increase added value of umami business as a whole. Use entire production of Ayut
Slide 33: Reinforcing the Umami Seasoning Business Structure (3)
Reinforcing the Umami Seasoning Business Structure (3) - From VOLUME to VALUE - Measures for results recovery: Nucleotides Ensure formidable cost competitiveness by introducing technologies. Develop/expand latent demand in emerging nations (Asia, Africa, etc.). Increase uses to promote demand
Slide 34: Strategy of Animal Nutrition Business in FY2013
. Strategy of Animal Nutrition Business in FY2013 May 10, 2013 Takashi Nagamachi Senior Vice President
Slide 35: Market and Competitive Environment
Market and Competitive Environment • Solid market growth 2012 → 2013 market growth rate (forecast): Lysine +8% Threonine +9% Tryptophan +11% • Competitors have increased supply capacity for Lysine, Threonine and Tryptophan, which is adding downward pressure on prices. • On the other hand, the price
Slide 36: Basic Strategies
Basic Strategies Strengthen cost competitiveness by accelerating deployment of lower resource fermentation technology. Execute the most suitable sales strategies by further strengthening marketing intelligence. Enhance the product lineup and develop new markets and fields to strengthen the profit
Slide 37: Building a Strong Foundation and High-Value-Added Products
Measures for Building a Strong Foundation and High-Value-Added Products Sales Operating (¥ Billion) Income 120 20% 100 15% • We have secured stable profit in the 80 animal nutrition business continuously 60 10% since 2010. 40 • Aim to increase operating income from 20 5% the previous fiscal year to
Slide 38: Further Develop a Large Potential Market: AjiPro-L
Further Develop a Large Potential Market AjiPro®-L Lysine for Dairy Cow • Plan to double production in Q1 of FY2013 to meet brisk demand in the Feed-use amino acid market U.S. market. • Conduct continued improvements in product potency (volume including Actual Market for available Lysine) and large-
Slide 39: Strategy of Sweetener Business in FY2013
. Strategy of Sweetener Business in FY2013 May 10, 2013 Takashi Nagamachi Senior Vice President
Slide 40: Reinforcing the Sweeteners Business Structure
Reinforcing the Sweeteners Business Structure Gap between FY2011-2013 Medium-Term Plan and Result Retail business section had performed well constantly. However, Industrial business section had underperformed due to both internal and external environments, so that overall Sweeteners business resulte
Slide 41: Sweeteners: Basic Strategy and Specific Actions
Reinforcing the Sweeteners Business Structure Basic Strategy and Specific Actions We would realize positive operating profit level during the next Mid-term plan period by the acceleration of business structure improvement, such as strengthen of cost competitiveness, focus more onto the value-added b
Slide 42: Sweeteners: Roadmap for Business Structure Improvement
Reinforcing the Sweeteners Business Structure Roadmap for Business Structure Improvement Focus more on Value-added business structure together with strengthen cost competitiveness of Aspartame Structural Reinforcement Concrete actions FY2013 FY2014 FY2015 FY2016 FY2017 Reinforce Aspartame business s
Slide 43: Strategy of Pharmaceutical Business in FY2013
. Strategy of Pharmaceutical Business in FY2013 May 10, 2013 Takashi Nagamachi Senior Vice President
Slide 44: Medium-Term Business Strategy for Pharmaceuticals Business
Medium-Term Business Strategy for Pharmaceuticals Business Management Issues and Efforts to Resolve Them 1. Management Issues and Efforts to Resolve Them 1) Reinforce infusions and dialysis business structure → Start joint venture business with Yoshindo Ltd. by establishing AY Pharma Co., Ltd. Estab
Slide 45: Pharmaceuticals: Measures for FY2013
Medium-Term Business Strategy for Pharmaceuticals Business Measures for FY2013 1. Sales Launch new products. ACTONEL: Launch of once-monthly dosage formulation (February/FY2012) MOVIPREP® (New oral bowel cleansing agent: scheduled for 1Q/FY2013) LIVACT® JELLY (scheduled for 1Q/FY2013) Expand prescri
Slide 46: Reference
Reference Trends in Overseas Consumer Food Products Assumptions of FY2013 Forecast Feed-Use Lysine Market Price and CBOT Spread Trend
Slide 47: FY2012 Trends in Overseas Consumer Food Products
(Reference) FY2012 Trends in Overseas Consumer Food Products Sales by Geographical Region Sales by Product < Europe & Africa> High-potential North Other America African market <Instant noodles and 2% 1% powdered beverages> Double-digit growth Europe 7% Other <South America> South processed AJI-NO- <
Slide 48: Assumptions of FY2013 Forecast
(Reference) Assumptions of FY2013 Forecast Foreign exchange rate (vs JPY) Feed-use amino acids 1) Estimated market size (Thousand MT) Sensitivity of translation effects to FY2011 FY2012 FY2013 est. Avg. rate full year O.P. Lysine 1,700 1,950 ±2,100 USD 90.0 ±¥1 approx. ¥50 million Threonine 270 330
Slide 49: Feed-Use Lysine Market Price and CBOT Spread Trend
(Reference) Feed-Use Lysine Market Price and CBOT Spread* Trend *The spread is the price difference between soybean meal and corn on the Chicago Board of Trade (CBOT). (USD/kg, CIF) (USD/ST) 4.5 300 Feed-Use Lysine Market Price (USD/kg) & CBOT Spread (USD/ST) 4.0 250 3.5 Spread 3.0 200 2.5 150 2.0 1
Slide 50: Forward-looking statements
Forward-looking statements, such as business performance forecasts, made in these materials are based on management’s estimates, assumptions and projections at the time of publication and do not represent a commitment from Ajinomoto Co., Inc. that they will be achieved. A number of factors could c
Slide 51: FY2013 Forecast by Segments
(Appendix) May.10, 2013 FY2013 Forecast by Segments (¥ Billion) A B A-B FY2013 FY2012 YoY Domestic Food Products Reasons for YoY Change or Main Measures Forecast Results Change Net sales 338.5 391.6 -53.1 Seasonings & processed foods 218.2 217.4 1.0 Frozen foods 120.2 114.8 5.5 * Decreases in sales
Slide 52: FY2013 Forecast by Segments: Pharmaceuticals and Other Business
(¥ Billion) A B A-B FY2013 FY2012 YoY Pharmaceuticals Reasons for YoY Change or Main Measures Forecast Results Change Net sales 52.9 71.5 -18.6 * Decrease in sales due to drop caused by shift to a new business scheme for infusions and dialysis products. Increase in operating income, with improved pr