Kirin Holdings Co. Ltd. · TSE:2503
Kirin — Bank of America Merrill Lynch Japan Conference 2009
46 slides from Kirin's conference presentation, September 2009
Slide 1: Kirin 2009: Taking action for qualitative expansion
Bank of America Merrill Lynch Japan Conference 2009 Kirin 2009: Taking action for qualitative expansion September 2009 KIRIN HOLDINGS COMPANY, LIMITED 1
Slide 2: Kirin has changed
Kirin has changed 2000 2009 M&A: Lion Nathan / San Miguel Mercian / National Foods Kyowa Hakko / Dairy Farmers San Miguel Brewery EPS: 33 yen (‘00) 70 yen (‘07) 84 yen (‘08) 2000 2009 Range of Business Strong business segments Focused on beer in a traditional and in soft drinks and food, pharmaceuti
Slide 3: Kirin group Vision 2015 (KV 2015)
Kirin group Vision 2015 (KV 2015) (announced May 2006) KV2015 Group Vision ・ Nurture close links with customers through products that provide the enjoyment of food and health ・ Integrate our expertise in fermentation and biotechnology, manufacturing, and research and marketing to create value and of
Slide 4: Kirin has jumped to a new growth trajectory
Kirin has jumped to a new growth trajectory 2 years Net sales Year: Excl. liquor tax 2006 ¥1,263 billion 2008 ¥1,922 billion +52% • Pursuing major growth model under KV2015 and on track to meet 2015 targets • Japan’s most internationalized comprehensive beverages company • Focusing development on As
Slide 5: Balanced business segments: it's a bigger pie
Balanced business segments: it’s a bigger pie Domestic alcohol remains Kirin’s core business and primary cash generator, but Kirin Group sales and earnings are becoming more balanced and geographically diversified Other Pharma Alcohol Alcohol 6% • Kirin’s core business 4% 10% 10% • Very strong domes
Slide 6: Major growth initiatives have continued
Major growth initiatives have continued 2009 * 100% Lion Nathan * 48% San Miguel Brewery 2008 * 100% Dairy Farmers 2007 * 100% National Foods * Kyowa Hakko * Mercian Corporation International sales on track to reach 30% by 2015 Further reference: http://www.kirinholdings.co.jp/english/news (News rel
Slide 7: Clearly different from global peers
Clearly different from global peers Fusing the alcohol and soft drink value chains to create value ・ Diversifying consumer preferences are blurring the alcohol/soft drinks boundary ・ Kirin is organically integrating the alcohol and soft drinks value chains Beer business model comparison Realizing sy
Slide 8: Kirin group strategy in Asia and Oceania
Kirin group strategy in Asia and Oceania Net sales (excl. alcohol tax) composition ・ Pursue unique business model that combines alcohol and soft drinks 2015 target: approx. 30% operations and aim to maximize synergies 2008：27% ・ Advance business expansion in East Asia economic sphere and Oceania ・ P
Slide 9: Kirin's strong presence in Oceania
Kirin’s strong presence in Oceania Kirin enhanced its presence in attractive markets of Oceania with multiple complementary investments National Foods Lion Nathan Dairy Farmers (100% equity) （46%⇒100％ equity） Major dairy product No. 2 alcohol and soft drink company in Oceania company FY2008 1 FY2008
Slide 10: National Foods and Dairy Farmers: Market positions
National Foods and Dairy Farmers: Market positions Manufacturer KIRIN Group Product Category/ Market size Milk 1 1 2 3 2,166,000kL (37%) (25%) (17%) Yogurts 2 2 1 3 4 A$726M (27%) (28%) (12%) (11%) Dairy desserts 1 4 3 2 A$181M (46%) (5%) (8%) (30%) 1 2 3 Chilled juice (53%) (4%) A$352M (13%) 1 2 Am
Slide 11: Make Lion Nathan a wholly-owned subsidiary
Make Lion Nathan a wholly-owned subsidiary Kirin Holdings (“KH”) has reached an agreement to increase the shareholdings in Lion Nathan (“LN”) from 46.13% to 100% in May, 2009. Capital Composition Pre transaction 【Strategic Rationale】 KH AXN LN is one of the 2 major breweries in Oceania and its sus
Slide 12: Strategic alliance with San Miguel Brewery
Strategic alliance with San Miguel Brewery Kirin Holdings (“KH”) sold off its shareholdings in San Miguel Corporation (“SMC”) and newly acquired 48% of the shares in San Miguel Brewery, Inc. (“SMB”) in May, 2009 while SMC, which established SMB as its domestic beer company, made its fully fledged en
Slide 13: New developmental stage: Qualitative shift
New developmental stage ：Qualitative shift Major investments have lifted Group sales growth ahead of schedule. Now focusing strongly on increasing profitability through group infrastructure, synergies, efficiency, human resources and profit-oriented strategic investment. Growing through bank, brands
Slide 14: Maximizing group synergies
Maximizing group synergies Absolute commitment throughout organization for stronger intra-group collaboration ・ Specified 14 priority issues for creating synergies • Cross-company teams have begun extensive synergy project covering 8 areas: • Sales and marketing • Manufacturing and distribution • R&
Slide 15: Addressing key issues
Addressing key issues KIRIN BREWERY KIRIN BEVERAGE • Reducing sales and marketing expenses to increase • Emphasizing profit generation in a severe market margins environment • Renewed Ichiban Shibori and Nodogoshi supported • Deepening alliance with Kirin Brewery to pursue strong 1Q—ahead of plan co
Slide 16: Results and targets: 2007—2009e—2015 targets
Results and targets: 2007—2009e—2015 targets ・ 2009 H1 results exceeded targets ・ Likely to fall short of upwardly revised MTMP targets ・ Fast progress toward sales targets for 2015, with focus now on qualitative expansion Additional investments in SMB and LN are purely qualitative: no impact on s
Slide 17: Growth strategy supported by strong cash flows
Growth strategy supported by strong cash flows ■ Target operating CF in 2009 ¥143.0 bn (up ¥11.8 bn from 2008) ■ Investment for qualitative expansion means negative FCF of ¥140.0 bn in 2009 ■ LN and SMB will contribute CF (more than ¥10.0 bn) to Kirin Holdings, increase cash EPS (10% plus) and ultim
Slide 18: Sound financial fundamentals
Sound financial fundamentals ■ Focusing on asset efficiency and B/S management ■ Using strong cash flows (e.g. 100% ownership of LN) and asset sales to repay debt ■ Secure liquidity on hand (issue CP, etc. ) ■ Reduce accounts receivable Liabilities ■ D/E ratio will rise and inventory Assets temporar
Slide 19: Kirin: on track and hungry for further success
Kirin: on track and hungry for further success • Kirin owns the right companies in the right places • Promising start to the year in an adverse environment • Strong commitment to higher profitability • Becoming a truly international group in management approach and business portfolio • On the move a
Slide 20: This material is intended for informational purposes only
この資料は投資判断の参考となる情報の提供を目的としたものであり、投資勧誘を目的としたものではありません。 銘柄の選択、投資の最終決定は、ご自身の判断でなさるようにお願いいたします。 This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial instruments. 20
Slide 21: Supplementary Materials
Supplementary Materials 1
Slide 22: Selected Kirin group brands
Selected Kirin group brands Alcohol Soft drinks and foods Pharmaceutical Other 2
Slide 23: Three patterns for growth in 2009
Three patterns for growth in 2009 Toward further growth through organic links ■ Enter a stage of further growth through inter-pattern initiatives Promote comprehensive beverages group Continue investment in soft drink and strategy by creating organic links in value chains alcohol beverage businesses
Slide 24: Maximizing group synergies
Maximizing group synergies ■ Specified and announced 14 priority issues for creating synergies in revised medium-term business plan in August 2008 Priority issues for creating synergies Develop Purchase Produce Distribute Sell, market Promote cooperation in domestic Strengthen sales channels in dome
Slide 25: Key issues
Assignment ~4 key issues~ ■ Basic management strategies for 2009 Based on three core growth strategies, strengthen Kirin’s business foundations and realize a quantum leap in growth 1.Create renewed growth in the domestic alcohol beverage business 2.Pursue a domestic comprehensive beverages group str
Slide 26: Internal management (balanced scorecard, shortened PDCA cycle)
Internal management (balanced scorecard, shortened PDCA cycle) ■ BSC: Link strategies, bolster cooperation, stress commitment to targets, and focus on process management ■ PDCA: Shorten cycle, prioritize plan execution in deteriorating environment, and quickly revise challenges [Group management sys
Slide 27: Domestic alcohol business: Kirin brewery's initiatives
Domestic alcohol business: Kirin brewery’s initiatives Continue industry leadership • Create viable industry structure for long term that reflects new environment • Restore profitability through price increases • Control marketing costs for rational competition Marketing costs/ Operating Profit / Sa
Slide 28: Liquor tax: International liquor tax comparisons
Liquor tax: International liquor tax comparisons Liquor tax and VAT on beer are high in Japan compared to international levels (¥ per 633ml) 155.0 157.0 160 16.0 Liquor tax VAT 140 59.0 120 100 80 139.0 47.0 39.0 60 31.0 98.0 40 35.0 30.0 18.0 20 12.0 9.0 13.0 0 Japan (Beer) France Germ any US (NY)
Slide 29: Domestic alcohol business: Kirin beer product strategy
Domestic alcohol business: Kirin beer product strategy Improving Kirin brand value Developing evidence-based marketing *A marketing technique that promotes products by providing customers with easy-to-understand evidence and product value leading to sense of comfort Return to core brands→ Increasing
Slide 30: Overseas alcohol business: Focus areas in China
Overseas alcohol business: Focus areas in China Building business platform in three areas in China ●Northeast China ：Dalian Daxue Brewery ●Yangtze River Delta： Hangzhou Qiandaohu Brewery Kirin (China) Investment ●Pearl River Delta：Kirin Brewery (Zhuhai) 黒龍江省 ハルビン 長春 Dalian Daxue Brewery 内モンゴル 吉林省 Pr
Slide 31: Domestic soft drinks business: Market overview (2008)
Domestic soft drinks business: Market overview (2008) SD category Sales Vegetable Oters channels Other Vending juice 7% 12% Machines 1% 35% Black tea 6% Coffee CVS 22% 20% Sports/Functi onaldrink 8% Sugar-freet GMS and Fruit juice mass Soda 22% 12% 12% retallers MW 33% 10% Container Market share Oth
Slide 32: Domestic soft drinks business: Breakdown of market share
Domestic soft drinks business: Breakdown of market share Sales volumes of major manufacturers: 2008 Sales YoY Market Company volume change share （ (million case) (％） ％） Calpis Pokka JT Sapporo Coca-Cola Other 1 Coca-Cola Group 511.5 100 29 2% 2% 1% (JP) 2% 6% 29% 2 Suntory 315.5 101 18 Kagome 3% 3 K
Slide 33: Domestic soft drinks business: Market trends
Domestic soft drinks business: Market trends The soft drinks market recorded steady growth from the mid-90’s largely due to the penetration of PET bottle green tea and growing consumption of mineral water. However, sales growth in tea beverages and mineral water has slowed due to a recent weakenin
Slide 34: Domestic soft drinks business: Kirin Beverage's brands portfolio
Domestic soft drinks business: Kirin Beverage’s brands portfolio Expand core brands＆ Develop new category ＝ Strengthening of brands portfolio X Move further toward becoming a comprehensive beverages business KIRIN KIRIN NUDA Kirin LOVES Volvic LEMON SPORTS Kirin Alcali- Other Ion no Mizu Soda 8% Min
Slide 35: Domestic soft drinks business: Kirin Beverage's strategy in 2009
Domestic soft drinks business: Kirin Beverage’s strategy in 2009 ◆2009 Key points◆ Generating Kirin Group synergies: Promoting a consolidated beverages group strategy ■ Revising the revenue structure and profit management system ■ Enhancing research marketing related to generating customer value ■ S
Slide 36: Why break into Australia
Why break into Australia ・Australia’s GDP has shown sudden drop in 2008 as impacted by foreign currency. Stable growth in real GDP ・60% of export has made towards Asia and already have a good relationship. GDP per Capita Australia's Merchandise Exports, $ Country and Country Groups, FOB Value 60000
Slide 37: Market Trend for Dairy Products in Australia
Market Trend for Dairy Products in Australia ・All Dairy Products Market growing steadily and more rapid growth expected especially in Milk and Juice Market from 2006. Growth in the Australia Milk Market by Value Growth in the Australia Juice Market by Value CAGR (A$ in mm) (A$ in mm) AGR1,537 1,599
Slide 38: National Foods and Dairy Farmers
National Foods and Dairy Farmers National Foods (NFL) acquired Dairy Farmers (DF) in November 2008 Key opportunities include: • Expanding Kirin’s business domain throughout Asia and Oceania • Developing the health foods/functional foods market (dairy foods and biotechnology) • Using strong market po
Slide 39: Integration increased in Major Categories
Integration increased in Major Categories Alcohol Beverages Soft Drinks Foods Burns Philip Arnotts Goodman Fielder Dairy Foods Retailer 19
Slide 40: Pharmaceuticals: Business integration of Kyowa Hakko and Kirin Pharma
Pharmaceuticals: Business integration of Kyowa Hakko and Kirin Pharma • Established Kyowa Hakko Kirin in October 2008 by merge of Kyowa Hakko and Kirin Pharma. • Integration of the Pharmaceuticals businesses Key areas (Cancer, Kidney, Immunology) Integrate cutting-edge anti-body technologies Kyo
Slide 41: Pharmaceuticals: basic strategy & synergy targets
Pharmaceuticals: basic strategy & synergy targets (Medium-term business plan of Kyowa Hakko Kirin; Released on April 28, 2008) Basic strategy in pharmaceuticals Synergy targets (billions of yen) Research and Development 14.0 13.0 Generate innovative candidate products for development (Each year,
Slide 42: Promoting CSR activities
Promoting CSR activities ■ Kirin Group believes in the importance of coexisting harmoniously with nature and society, and keeps CSR firmly in mind when conducting all corporate activities. ■ With respect to “CSR through Business,” we work hard to enhance compliance in our activities and to strengthe
Slide 43: Development Alcohol-free product: Background
Development Alcohol-free product :Background While Drunk driving is recognized as big social problem, it is responsible as corporations to prevent drunk driving. Conscious on drunk-driving Expectations to manufactures Manufactures also need Q.「 Drunk driving can’t never be accept .」 To takeビールメーカーも、
Slide 44: KIRIN FREE
Product information The world’s first product, ’Alcohol 0.00%’ Beer-taste beverage, KIRIN FREE Launch date： April 8th 【nation-wide】 Perfectly non alcohol beer-taste malt beverage which is available anytime, even before driving! Invention of Alc. 0.00% New formula & process of manufacture for perfect
Slide 45: Kirin Group CSR and R&D activities
Kirin Group CSR and R&D activities Ecojiro – symbol of Kirin’s environmental Check the Information for Our CSR activities: activities http://www.kirinholdings.co.jp/english/csr/pdf/report2008/csr_report2008e.pdf * 2009 CSR report to be updated on Website in August 2009. And Our R&D activities: http:
Slide 46: This material is intended for informational purposes only
この資料は投資判断の参考となる情報の提供を目的としたものであり、投資勧誘を目的としたものではありません。 銘柄の選択、投資の最終決定は、ご自身の判断でなさるようにお願いいたします。 This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial instruments. 26
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