Slide 1: Briefing Materials for FY2022 Results
Briefing Materials for FY2022 Results Kagome Co., Ltd. Securities Code: 2811 Figures in these materials ・Amounts are rounded down to the nearest 0.1 billion yen. Part of amounts for core operating income are rounded down to the nearest 10 million yen. ・Percentages are rounded to one decimal place. 1
Slide 2: Introduction: Today's Agenda
Introduction Today’s Agenda ■FY2022 Business Results ・ Income declined year on year due to rising cost of sales, despite beating the revised earnings forecast released in July 2022. ・The beverage category, which experienced weakness in the first half, recovered on the back of marketing strategies. ・
Slide 3: Topics
Topics 1. Summary of Financial Results for FY2022 2. FY2023 Earnings Forecast and Strategies 3. Looking Toward 2025 4. Reference 3
Slide 4: 1. Summary of Financial Results for FY2022
1. Summary of Financial Results for FY2022 4
Slide 5: FY2022 Consolidated Results
FY2022 Consolidated Results Revenue: Increased year on year driven by the International Business, including the effects of yen depreciation. Core operating income: Decreased due to soaring raw materials prices worldwide and increased promotions in the Domestic Processed Food Business. FY2022 Result
Slide 6: FY2022 Results by Segment
FY2022 Results by Segment Domestic Processed Food Business: Revenue increased in Beverages and Food - Other, but income declined due to cost of sales increases, etc. International Business: Revenue and income both rose on strong results from the US food service and tomato primary processing business
Slide 7: FY2022 Domestic Processed Food Business
FY2022 Domestic Processed Food Business ・Revenue increased amid strong sales of beverages in the second half and recovery in food service demand seen in Food - Other. ・Income declined due to soaring prices of raw materials and energy, despite price revisions initiated for some products. Revenue Core
Slide 8: FY2022 Domestic Agri-Business
FY2022 Domestic Agri-Business ・Volume of fresh tomatoes procured declined, but revenue was on par with the previous year as market conditions improved year on year. ・Income increased thanks to market conditions and ongoing earnings structure reforms following the business split. Revenue Core operati
Slide 9: FY2022 International Business
FY2022 International Business ・US food service business and European tomato primary processing business posted robust sales (revenue rose even excluding forex effects). ・Income increased on higher tomato paste prices, despite the impacts of higher costs (as with revenue, income also rose even exclud
Slide 10: FY2022 Factors Contributing to Core Operating Income Changes
FY2022 Factors Contributing to Core Operating Income Changes Core operating income declined because of higher cost of sales in the Domestic Processed Food Business. Unit: billion yen Unit: billion yen FY2021 14.1 Increase in incomeaccompanying Decline in income of Domestic (1) increase in sales +1.2
Slide 11: FY2022 Factors Contributing to Operating Income and Net Income Changes
FY2022 Factors Contributing to Operating Income and Net Income Changes The decline in net income slowed owing to a decrease in income taxes. Unit: billion yen FY2022 FY2021 Change Core operating income 12.80 14.13 -1.32 Other income 0.71 0.67 +0.03 Other expenses 0.76 0.80 -0.03 Operating income 12.
Slide 12: FY2022 Changes to Statement of Financial Condition
FY2022 Changes to Statement of Financial Condition ・Inventories and borrowings increased as a result of soaring raw materials prices and accumulation of stable inventories. ・Cash and cash equivalents declined on the purchase of treasury stock, etc. Assets/Liabilities and Equity Details of Changes fr
Slide 13: FY2022 Changes in Cash Flow
FY2022 Changes in Cash Flow Free cash flows: Declined year on year due to diminished cash flows from operating activities. Cash flows from financing activities: Increased owing to recoil from repayment of borrowings in the previous fiscal year in preparation for tightness of financing conditions due
Slide 14: 2. FY2023 Earnings Forecast and Strategies
2. FY2023 Earnings Forecast and Strategies 14
Slide 15: FY2023 Earnings Forecast
FY2023 Earnings Forecast Revenue: Expected to increase with the International Business continuing to be a driver. Core operating income: Expected to see large decline in income due to soaring raw materials prices on a scale much larger than the previous year. Revenue Core operating income FY2023 Pla
Slide 16: Factors Contributing to Core Operating Income Changes in FY2023
Factors Contributing to Core Operating Income Changes in FY2023 ・ Domestic Processed Food Business expected to see large decline in income due to cost of sales much higher than in FY2022 (1). ・ In addition to increase in income owing to price revisions (2), expect more efficient advertising and incr
Slide 17: Factors Behind Rising Sales Costs in Domestic Processed Food Business in FY2023
Factors Behind Rising Sales Costs in Domestic Processed Food Business in FY2023 Cost of sales in the Domestic Processed Food Business will become higher due to soaring prices starting with tomato raw materials. YoY Cost of sales increases Higher Cost of sales +12.7 billion yen (after cost of sales r
Slide 18: Our Response in FY2023
Our Response in FY2023 Domestic Quickly restore revenue Processed Food In February 2023, we hiked prices for the largest number of our products on Business record. We will dedicate our best efforts to quickly restore revenue by entrenching new prices and creating demand after the price revisions. Nu
Slide 19: Our Response in FY2023 – Beverages
Our Response in FY2023 – Beverages ・The vegetable beverages market is contracting due to a lower purchase rate. ・We will employ a marketing strategy emphasizing the unique value of vegetable beverages to restore the market. Vegetable Beverages Market Trends Spring/Summer 2023 Marketing Strategy ■Ris
Slide 20: Our Response in FY2023 – Food - Other
Our Response in FY2023 – Food - Other ・A temporary market downturn is expected similar to 2022 following price revisions. ・It will be important to quickly restore sales and create demand with new products and proposals to eat Western menu items in response to consumers inclination to cut back spendi
Slide 21: Our Response in FY2023 – International Business
Our Response in FY2023 – International Business Reliably produce and pass on higher costs to product prices in primary processing and achieve further growth in secondary processing using investment. Primary Processing (HIT, Kagome Australia Pty Ltd., etc.) Secondary Processing (Kagome Inc., etc.) ■R
Slide 22: Plans for Funding, Funds Demand and Cash Flow
Plans for Funding, Funds Demand and Cash Flow Despite the challenging environment, we will carry out effective capital investment and business investment aggressively to achieve medium- to long-term growth using funds procured in an agile manner. Resources Investment/Return Organic EBITDA 14.5 billi
Slide 23: 3. Looking Toward 2025
Owe BOLK RL. 3. Looking Toward 2025
Slide 24: Our Vision and What Kagome Strives for by 2025
Our Vision and What Kagome Strives for by 2025 ・Our vision and what we strive for by 2025 remains unchanged despite changes in the operating environment. ・Starting with FY2023, we will grow consistently and achieve our vision and what Kagome strives for by 2025. What Kagome “Become a strong company
Slide 25: Importance of FY2023 for 2025
Importance of FY2023 for 2025 ・FY2023 is a turning point for growing sales and profit over the medium to long term. ・The importance of the four actions in the third Mid-Term Management Plan will become even more important leading up to 2025. Priority issues heading toward 2025 Strengthen procurement
Slide 26: Basic Strategy of the Third Mid-Term Management Plan
Basic Strategy of the Third Mid-Term Management Plan Basic strategy of the third Mid-Term Management Plan: “achieve sustainable growth by taking four actions that are organically connected.” Promote behavioral change in terms of vegetable intake Achieve sustainable growth by Change to fan-based Purs
Slide 27: Promote Behavioral Change in Terms of Vegetable Intake and Change to Fan-based Marketing
Promote Behavioral Change in Terms of Vegetable Intake and Change to Fan-based Marketing ・Promoting behavioral change in terms of vegetable consumption is a focal point of our growth strategy. ・Promoting creation of fans as a growth driver for changing vegetable intake behavior. Promote behavioral c
Slide 28: Pursue Both Organic and Inorganic Growth
Pursue Both Organic and Inorganic Growth Organic growth: Complete earnings structure reforms domestically, strengthen the four growth areas, and grow the International Business. Inorganic growth: Develop new growth areas and explore M&A. Pursue both organic and inorganic growth Organic growth Inorga
Slide 29: Strengthen the Group's Management Foundation
Strengthen the Group’s Management Foundation ・Increase ability to respond to change by strengthening procurement capabilities and building a supply network. Strengthen the Group’s management foundation Strengthen global procurement Stable procurement of domestic Build supply network network raw mate
Slide 30: Finally… Kagome's goals remain the same
Finally… Kagome’s goals remain the same despite the dramatic changes in business environment What Kagome “Become a strong company capable of sustainable growth, strives for by 2025 using food as a means of resolving social issues” 2025 Transform from a “tomato company” Vision to a “vegetable company
Slide 31: Reference: FY2022 Topics
Owe BOLK RL. Reference FY2022 Topics
Slide 32: Monthly Revenue Compared with Pre-Pandemic (2019)
Monthly Revenue Compared with Pre-Pandemic (2019) Revenue in the domestic beverages category and domestic food for consumer use firmly exceeded 100% compared to FY2019 despite a slowdown in home cooking demand. Revenue in the domestic institutional and industrial use category recovered close to FY20
Slide 33: Topics in Domestic Processed Food Business Beverages
Topics in Domestic Processed Food Business Beverages Tomato juice sales were strong in response to consumers’ diet and beauty needs. Income declined due to soaring raw materials prices and increased promotion expenses. Year on year comparison of revenue from beverages Sales by sales channel and by c
Slide 34: Topics in Domestic Processed Food Business Direct Marketing
Topics in Domestic Processed Food Business Direct Marketing Maintained revenue on par with previous year underpinned by growing use of the direct marketing channel and rising health consciousness. Income declined amid soaring raw materials prices and increased advertising costs, etc. Direct marketin
Slide 35: Topics in Domestic Processed Food Business Food and Others
Topics in Domestic Processed Food Business Food and Others Revenue increased overall amid a recovery in sales of products for institutional and industrial use, which offset a decline from products for consumer use amid the recoil in rush-in demand ahead of product price revisions. Income declined du
Slide 36: Topics in Domestic Agri-Business
Topics in Domestic Agri-Business Revenue increased amid stronger market conditions for fresh tomatoes than in the previous year. Income rose on ongoing structural reforms from business split and other market condition impacts. Trends in fresh tomato sales ・Revenue increased on stronger market condit
Slide 37: Topics in International Business
Topics in International Business ・The US food service business and tomato primary processing business saw a significant jump in revenue, which resulted in increased income after offsetting cost of sales increases. Revenue Core operating income FY2022 FY2021 FY2022 FY2021 Unit: billion yen YoY YoY Yo
Slide 38: Dividends
Dividends Plan to pay a dividend of 38 yen per share for FY2023 based on the dividend policy in the third Mid-Term Management Plan (annual dividend per share of 38 yen or higher and total return ratio of 40% for the period of the plan). Annual dividend per share (yen) 45 (Special dividend) 40 35 10
Slide 39: Kagome's Sustainability Initiatives
Kagome’s Sustainability Initiatives 39
Slide 40: Kagome's Sustainability
Kagome’s Sustainability ・Kagome’s approach to sustainability is to pursue business activities that makes it a “strong company capable of sustainable growth, using food as a means of resolving social issues.” ・We established the Sustainability Committee in October 2022 to spearhead our sustainability
Slide 41: Sustainability Initiatives—Sustainable Environment
Sustainability Initiatives—Sustainable Environment ・Promoting initiatives aimed at our SBTi-approved reduction target with the ultimate goal of achieving net- zero greenhouse gas emissions as a Group by 2050. Fujimi Plant (Nagano) and Ueno Plant (Aichi) Beginning to use vegetable residue as now powe
Slide 42: Sustainability Initiatives—Water Conservation
Sustainability Initiatives—Water Conservation ・Droughts occurring around the world are greatly impacting agriculture production. Water conservation is an urgent task to achieving sustainable agriculture. Selected for A list for water conservation in CDP Launched services tailored to water shortages
Slide 43: Sustainability Initiatives - Health and Productivity Management
Sustainability Initiatives - Health and Productivity Management ・Kagome is actively working to manage and improve employees’ health as part of its process of expanding products and services that help to improve the health of customers. Kagome’s health and productivity management Status of health man