Kagome Co., Ltd. · TSE:2811
Kagome — FY2020 2Q Earnings Presentation
35 slides from Kagome's earnings presentation, Jul 30, 2020
Slide 1: Results Briefing Materials for FY2020/2Q
Results Briefing Materials for FY2020/2Q Kagome Co., Ltd. July 30, 2020 1
Slide 2: Topics
Topics 1. Impact of COVID-19 • Establishment of COVID-19 Task Force to accelerate decision-making and the implementation of countermeasures • Improvement in performance of products for institutional and industrial use, which hit bottom in April. However, impact still being felt. 2. Summary of Busine
Slide 3: 1. Impact of COVID-19
1. Impact of COVID-19 3
Slide 4: Actions to Address COVID-19 Crisis
Actions to Address COVID-19 Crisis Established COVID-19 Taskforce (April 7) Basic policy for measures against COVID-19 • Organization under the President’s leadership 1 To prevent Kagome Group employees and our • Convenes regularly once a week customers and suppliers from catching the virus • Gather
Slide 5: Impact of COVID-19 on Business (Timeline)
Impact of COVID-19 on Business (Timeline) Year-on-year changes in revenue in severely affected categories 120% 110% Household use category (Japan) 100% 90% Institutional and industrial use category (United States) 80% Institutional and industrial 70% use category (Japan) 60% 50% Jan. Feb. Mar. Apr.
Slide 6: 2. Summary of Business Results for FY2020/2Q
2. Summary of Business Results for FY2020/2Q 6
Slide 7: FY2020/2Q Consolidated Results
FY2020/2Q Consolidated Results Unit: 100 million yen Consolidated Results 1Q 2Q Results Year on year Results YoY Results YoY Rate of Margin change Revenue 888 - +3 +0% 409 +10 480 (7) Core Operating Income 64 7% +9 +17% 20 +4 44 +5 Operating Income 69 8% (3) (4)% 24 +8 45 (11) Net Income*1 46 5% (9)
Slide 8: FY2020/2Q Results by Segment
FY2020/2Q Results by Segment Unit: 100 million yen Revenue Core Operating Income FY2019 FY2020 FY2019 FY2020 Year on Rate of Year on Rate of year change year change Beverages 353 365 +12 +3% 26 36 +10 +38% Food and others 276 272 (4) (2)% 21 20 (1) (5)% Domestic processed food business 629 637 +8 +1
Slide 9: Domestic Processed Food Business (Beverages)
Domestic Processed Food Business (Beverages) Gains in revenue and profitmainly due to the “Let’s Eat Vegetables” campaign and health- related demand and consumption at home because of COVID-19 Unit: 100 million yen Revenue Core Operating Income Domestic Processed Food Business FY2019 FY2020 YoY FY20
Slide 10: Domestic Processed Food Business (Food and others)
Domestic Processed Food Business (Food and others) Both revenue and profit decreased due to decline in products for institutional and industrial use, despite brisk sales of products for home-cooked food and direct marketing sales Unit: 100 million yen Revenue Core Operating Income Domestic Processed
Slide 11: Domestic Agriculture Business
Domestic Agriculture Business Both revenue and profit increased , reflecting brisk sales in 2Q and reform of earnings structure Unit: 100 million yen Revenue Core Operating Income Domestic Agriculture FY2019 FY2020 YoY FY2019 FY2020 YoY Business 52 54 104% 0 2 - Trends in fresh tomato sales (1Q) • T
Slide 12: Implementation of “Let’s Eat Vegetables” campaign
Domestic Business Implementation of “Let’s Eat Vegetables” campaign Stimulation of demand for vegetables by putting a full-page ad in a national paper and on product packages Newspaper ad Promotion using TV ad and packages Announcement at press conference Sales revenue in June: 125% of sales revenue
Slide 13: Implementation of “Let’s Eat Vegetables” campaign
Domestic Business Implementation of “Let’s Eat Vegetables” campaign Progress of measures taken Measures Details Results Communicate information via Information about vegetables Six Vegetable Ambassadors shared vegetable ambassadors spread by well-known people information on how they themselves eat v
Slide 14: International Business
International Business Decrease in both revenue and profit due to restrictions on the business in the U.S. restaurant industry Unit: 100 million yen Revenue Core Operating Income International Business YoY YoY FY2020 YoY (excl. exchange FY2020 YoY (excl. exchange rate impact) rate impact) U.S.: Kago
Slide 15: Factors Contributing to Core Operating Income Changes
Factors Contributing to Core Operating Income Changes Unit: 100 million yen FY2019 54 Increase in advertising expenses (1) (8) processed food business Changes in the domestic Cost reduction (2) +8 Increase in profit accompanying increase in sales +3 Increase in efficiency of promotion expenses (3) +
Slide 16: Factors Contributing to Operating Income and Profit Changes
Factors Contributing to Operating Income and Profit Changes Unit: 100 million yen FY2019 FY2020 Core operating income 54 64 Total other income (expenses) 18 5 Gain on sales of non-current assets 0 9 (1) Breakdown Loss on disposal of non-current assets (0) (2) (2) Gain on sale of businesses 17 ‐ (3)
Slide 17: Changes to Statement of Financial Position
Changes to Statement of Financial Position Assets/liabilities and equity ¥216.3 B (up ¥15.1 B from the end of FY2019) Equity attributable to owners of parent to total assets: 49.9% (down 4.0 points from the end of FY2019) Unit: 100 million yen Unit: 100 million yen Current assets: up 178 1,305 Curre
Slide 18: Changes in Cash Flow
Changes in Cash Flow Unit: 100 million yen FY2019 FY2020 Change Cash flows from operating activities (A) 68 74 6 Cash flows from investing activities (B) (60) 1 61 Free cash flows (A+B) 7 75 68 Cash flows from financing activities (94) 106 200 Factors contributing to changes in cash flows <Cash flow
Slide 19: 3. Reform of Earnings Structure of Domestic Agriculture Business
3. Reform of Earnings Structure of Domestic Agriculture Business 19
Slide 20: Current Status and Challenges of Domestic Agriculture Business
Current Status and Challenges of Domestic Agriculture Business Performance has been poor since FY2017 and efforts to reform the earnings structure will continue Past Performance Trends Net sales/Revenue Operating income/ Unit: million yen Core operating income (47) (70) (10) (236) (161) (97) (225) (
Slide 21: Establishment of New Company in Domestic Agriculture Business
Establishment of New Company in Domestic Agriculture Business Establishment of Kagome Agrifresh Co., Ltd. (KAF) • Plan to establish new company (as wholly-owned subsidiary) on October 1, 2020 • Plan to transfer domestic agriculture business to KAF in January 2021 through company split (simplified ab
Slide 22: 4. Reform of Earnings Structure of International Business
4. Reform of Earnings Structure of International Business 22
Slide 23: Current Status and Challenges of International Business
Current Status and Challenges of International Business Performance has been poor since FY2017 and efforts to reform the earnings structure will continue Past Performance Trends Net sales/Revenue Operating income/ Unit: million yen Core operating income (735) (656) (683) (828) (1,071) (1,824) (FY) J
Slide 24: Direction of Earnings Structure Reform of International Business
Direction of Earnings Structure Reform of International Business Focus on reforming the earnings structure of primary processing and strengthen secondary processing particularly in the U.S. Portugal-based HIT, which is core company in primary processing domain • Focus on structural reform at an appr
Slide 25: 5. FY2020 Full-year Consolidated Results Forecasts and Numerical Targets
5. FY2020 Full-year Consolidated Results Forecasts and Numerical Targets under Second Mid-term Management Plan 25
Slide 26: FY2020: Revision of Full-Year Results Forecasts
FY2020: Revision of Full-Year Results Forecasts Unit: 100 million yen Revenue Core Operating Income FY2019 FY2020 FY2019 FY2020 Initial Revised Initial Revised Results Change Results Change forecast forecast forecast forecast Domestic processed food business 1,325 1,364 1,338 (26) 112 102 110 +8 Dom
Slide 27: Priority Strategies for Second Half of FY2020
Priority Strategies for Second Half of FY2020 Stimulate demand for vegetables through the “Let’s Eat Vegetables” campaign Stimulate demand for vegetables through the “Let’s Eat Vegetables” campaign • Continue the promotion focusing on the “Let’s Eat Vegetables” campaign • Promote demand for vegetabl
Slide 28: Priority Strategies for Second Half of FY2020
Priority Strategies for Second Half of FY2020 Domestic Processed Food Business (Beverages) • Expand retailers selling large-sized containers, which are in increasing demand • Make seasonal health proposals in response to heightened health awareness • Introduce foods with function claims for the firs
Slide 29: Numerical Targets under Second Mid-term Management Plan
Numerical Targets under Second Mid-term Management Plan Revised Targets for Final Year of (FY2021) Second Mid-term Management Plan Unit: 100 million yen Final Year of First Mid-term Final Year of Second Mid-term Management Plan Management Plan FY2021 FY2021 FY2018 Change Initial target Revised targe
Slide 30: Finally…
Finally… “Become a strong company 2025 Goal that can achieve sustainable growth resolving social issues through foods.” 2025 Transform from a “tomato company” Long-term Vision to a “vegetable company” Survive in the “food and health” domain through the power of vegetables Growing consumer interest i
Slide 31: Note
Note All information contained herein on the current plans, forecasts and strategies of Kagome that does not consist of historical facts is based on judgments made by Kagome’s management from currently available information. We therefore request that you refrain from relying comprehensively and sole
Slide 32: Reference
Reference 32
Slide 33: Fresh Tomato Market Prices
Fresh Tomato Market Prices Trends in the fresh tomato market • A downward trend in market prices has continued since 2017. • Market structure tends towards excessive supply, due to factors such as the increase in the number of large-scale glasshouse plantations. Yen/㎏ Source: Created based on market
Slide 34: Worldwide Production and Consumption of Primary Processed Tomato Products
Worldwide Production and Consumption of Primary Processed Tomato Products Trends in worldwide production and consumption (3-year moving average) of primary processed tomato products(*) (*) Primary processing: Tomato paste, whole tomatoes, and diced tomatoes • Both production and consumption have slo
Slide 35: Environmental Initiatives
Environmental Initiatives Key Activities to Protect the Environment in FY2020 Established Kagome Plastic Policy to reduce environmental load Jan. Goal 1: By 2030, stop using all straws made of oil-based materials attached to beverages in paper containers Goal 2: By 2030, switch at least 50% of bever