Meiji Holdings Co., Ltd. · TSE:2269

Meiji — FY2020 Earnings Presentation

57 slides from Meiji's earnings presentation, May 18, 2021

  1. Slide 1: Financial Results for FY 2020 / 2023 Medium-Term Business Plan

    Financial Results for FY 2020 2023 Medium-Term Business Plan May 18, 2021 0 © Meiji Holdings Co., Ltd. All rights reserved.

  2. Slide 2: Summary for 2020 Medium-Term Business Plan

    Summary for 2020 Medium-Term Business Plan 1 © Meiji Holdings Co., Ltd. All rights reserved.

  3. Slide 3: Summary for FY 2020 Consolidated Results

    Summary for FY 2020 Consolidated Results (JPY bn) FY 2019 FY 2020 FY 2020 Results Plan Results YoY Change vs. Plan -4.9% -0.7% Net sales 1,252.7 1,200.0 1,191.7 -60.9 -8.2 +3.3% +0.1% Operating profit 102.7 106.0 106.0 +3.3 +0.0 Op. profit margin 8.2% 8.8% 8.9% +0.7pt +0.1pt Profit attributable to -

  4. Slide 4: FY 2020 Analysis of Operating Profit Food segment

    FY 2020 Analysis of Operating Profit Food segment FY 2019 FY 2020 FY 2020 (JPY bn) Results Plan Results YoY Change vs. Plan -4.8% -1.0% Net sales 1,049.5 1,010.0 999.6 -49.8 -10.3 +0.1% -3.9% Operating profit 87.3 91.0 87.4 +0.1 -3.5 Analysis of Operating Profit (JPY bn) Results - FY 2019 87.3 Due t

  5. Slide 5: FY 2020 Analysis of Operating Profit Pharmaceutical segment

    FY 2020 Analysis of Operating Profit Pharmaceutical segment FY 2019 FY 2020 FY 2020 (JPY bn) Results Plan Results YoY Change vs. Plan -5.2% +1.1% Net sales 204.3 191.5 193.6 -10.6 +2.1 +19.5% +19.4% Operating profit 15.9 16.0 19.1 +3.1 +3.1 Analysis of Operating Profit (JPY bn) Results - FY 2019 15.

  6. Slide 6: Summary for 2020 Medium-Term Business Plan -1

    Summary for 2020 Medium-Term Business Plan -1 Consolidated Operating Profit (JPY bn) Initial Plan CAGR 3.9% 125.0 98.3 102.7 106.0 94.6 (JPY bn) FY 2017 FY 2018 FY 2019 FY 2020 FY 2020 Op. profit margin 7.6% 7.8% 8.2% 8.9% 9.3% ROE 13.1% 12.2% 12.4% 11.1% 13-14% Overseas sales 82.9 88.1 91.9 86.8 14

  7. Slide 7: Summary for 2020 Medium-Term Business Plan -2

    Summary for 2020 Medium-Term Business Plan -2 Key Strategies Results Evaluation • Food Segment: Nutrition grew, Yogurt (incl. functional yogurt) and chocolate sluggish Expand share and achieve high 1 • Pharmaceutical Segment: Started vaccine business, revenues in core businesses Faced severe market

  8. Slide 8: The Meiji Group 2026 Vision

    The Meiji Group 2026 Vision Our promise and commitment The Meiji Group will combine the strengths, we have cultivated over the past 100 years, with the latest technology and new findings. Thus we create innovative ways to meet our customers’ needs with food and health and grow in Japan and around th

  9. Slide 9: Noteworthy Issues in Business Climate

    Noteworthy Issues in Business Climate Strength Weakness • Health-oriented product lines • Disseminating information (Meiji brand, • Sound financial structure sustainability) • Evidence marketing • Diversity & inclusion • Expertise, integrating knowledge in food and drug • Developing overseas market

  10. Slide 10: New Slogan: Now ideas for wellness

    New Slogan: Now ideas for wellness Brand for reassurance, reliability, tastiness, and Message appropriate for our 2026 Vision, enjoyment, we are with customers at every life stage Brand that shares health Food Japanese Japan Pharmaceutical English Overseas Chinese 9 © Meiji Holdings Co., Ltd. All ri

  11. Slide 11: Health value unique to the Meiji Group

    New Slogan: Now ideas for wellness Health value unique to the Meiji Group Through a variety of product lines, we will link individual health to the smiles of people all over the world by continually moving through the cycle of Cure, Care and Share. 10 © Meiji Holdings Co., Ltd. All rights reserved.

  12. Slide 12: The World We Want to Create through Cure, Care and Share

    New Slogan: Now ideas for wellness The World We Want to Create through Cure, Care and Share We will work hard to spread happiness to those who share the earth with us and create a better future for people, society and the earth. 11 © Meiji Holdings Co., Ltd. All rights reserved.

  13. Slide 13: 2023 Medium-Term Business Plan

    2023 Medium-Term Business Plan 12 © Meiji Holdings Co., Ltd. All rights reserved.

  14. Slide 14: Promote the Meiji ROESG Management effectively

    2023 Medium-Term Business Plan Concept Promote the Meiji ROESG®* Management effectively Realize both profit growth and sustainability activities Key Issues 1. Business strategy Food segment 1) Recover from the slump in our core business 2) Accelerate growth in our business overseas Pharmaceutical 1)

  15. Slide 15: Promote the Meiji ROESG Management Effectively

    Promote the Meiji ROESG® Management Effectively Offering Health Value: our founding commitment We reaffirm this commitment and will be a sustainable corporate group that shares health value with people and societies around the world in order to achieve growth Indicators ROE × Achieve ESG goals ＋ uni

  16. Slide 16: Business Strategy: Food segment - Recover from slump in core business

    Business Strategy: Food segment - 1 Recover from the slump in our core business Sales* (JPY bn)  Yogurt and functional yogurt CAGR 4.1% • Improve functionalities and evidences of 107.6 96.0 100.7 existing products 131.0 • Launch new products that have new added-value 116.0 123.9 • Venture into new

  17. Slide 17: Business Strategy: Food segment - Expand overseas business

    Business Strategy: Food segment - 2 Expand overseas Business  China • Increase production capacity significantly Production capacity at the end of FY 2023 (Based on monetary amount, compare to FY 2020) Milk and yogurt About 4 times（Expand capacity in Suzhou*1, New factory in Tianjin*2, Guangzhou*3)

  18. Slide 18: Business Strategy: Pharmaceutical segment - Integrate Meiji Seika Pharma and KM Biologics

    Business Strategy: Pharmaceutical segment - 1 Integrate business operations of Meiji Seika Pharma and KM Biologics (Expand vaccine business)  Improve research and development collaboration  Enhance supply management integrating production and sales  Progress product development • Inactivated vacc

  19. Slide 19: Business Strategy: Pharmaceutical segment - Expand CMO/CDMO

    Business Strategy: Pharmaceutical segment - 2 Expand CMO/CDMO  Overseas • Expand businesses with existing customers and capture new customers • Strengthen R&D capabilities to secure a competitive advantage • Expand production capacity Sales* of overseas business(JPY bn) (capital expenditure) (overs

  20. Slide 20: Business Strategy: Venture into New Domains - Immunity domain

    Business Strategy: Venture into New Domains - 1 Contribute in immunity domain Sales (for illustration purposes)  Offer new value that ■ New domains Existing business Expand contributes to extending Commercialize healthy lifespans • Commercialize anti-ageing ingredients • Create immunity-boosting su

  21. Slide 21: Business Strategy: Venture into New Domains -2

    Business Strategy: Venture into New Domains -2 Strengthen external partnerships to create new businesses (promote open innovation) 1. Internal development program • Establish innovation business strategy department • Solicit internally to launch new businesses driven by young employees • Partner wit

  22. Slide 22: Improve Business Management: Using ROIC effectively -1

    Improve Business Management: Using ROIC effectively - 1 Improve the Group capital productivity  Review noncore businesses, redistribute management resources to growth businesses  Improve capital productivity by business Efforts to strengthen business management structure 1. Strict ROIC management

  23. Slide 23: Improve Business Management: Using ROIC effectively -2

    Improve Business Management: Using ROIC effectively -2  Defined business categories for ROIC evaluation Food segment: 10 Pharmaceutical segment: 9 Disclosure unit Business management unit Category Yogurt&cheese 1) Yogurt&cheese Functional yogurt, yogurt, cheese Nutrition 2) Nutrition Infant formula

  24. Slide 24: Improve Business Management: Using ROIC effectively -3

    Improve Business Management: Using ROIC effectively -3  Set WACC 5%, Keep whole group equity spread ≥ 5% ROIC (Return on invested capital) FY 2020 FY 2021 FY 2023 Spread The Meiji Group 10.0% 9.5% ≥ 10% ≥ 5% Food segment 12.5% 11.4% ≥ 12% ≥ 7% Pharmaceutical segment 6.1% 6.4% ≥ 6% ≥ 1% FY 2020 FY 2

  25. Slide 25: Financial strategy: Capital rationing

    Financial strategy: Capital rationing  Continue investments to grow business (growth investment) within cash flows from operating activities  Effective M&A as part of growth strategy  Reduce cross-shareholding by 30% (based on book value)  Increase dividend continually, Gradually increase divide

  26. Slide 26: Sustainability: Materiality -1 Healthier Lives

    Sustainability: Materiality -1 Healthier Lives Contribute to healthy diets through our business activities • Develop health-conscious products and nutritional products with added value • Promote and spread healthy diets and food culture Action against emerging/re-emerging infectious diseases • Devel

  27. Slide 27: Sustainability: Materiality -2 Caring for the Earth

    Sustainability: Materiality -2 Caring for the Earth Action against climate change • Promote using renewable energy (install solar power generator, purchase renewable energy) • Get SBT (Science Based Targets) certification in FY 2021 • Introduce internal carbon pricing in FY 2021 • Abolish totally th

  28. Slide 28: Sustainability: Materiality -3 A richer society

    Sustainability: Materiality -3 A richer society Respect for diversity • Promote Diversity and Inclusion Respect for human rights • Conduct human rights due diligence and disclose results Sustainable procurement Procure raw materials in accordance with human rights and environmental impact • Establis

  29. Slide 29: Sustainability: Sustainability investment

    Sustainability: Sustainability investment  Invest JPY 30 bn in 3 years in sustainability investment Invest strategically to realize 2026 vision Item JPY bn Content • Introduce energy-saving equipment Reduce CO2 emission 13 • Introduce solar power generator Abolish totally the use of 7 • Install flu

  30. Slide 30: KPIs for 2023 Medium-Term Business Plan

    KPIs for 2023 Medium-Term Business Plan Indicator FY 2020 Target for FY 2023* Integrated goal Meiji ROESG🄬 9 points 13 points Consolidated net sales JPY 1,191.7 bn JPY 1,080.0 bn Growth and Consolidated operating JPY 106.0 bn JPY 120.0 bn Profitability profit (profit margin) (8.9%) (11.1%) Overseas

  31. Slide 31: Target for sales and operating profit

    2023 Medium-term Business Plan Target for sales* and operating profit Food Segment Consolidated Sales (JPY bn) Pharmaceutical Segment Consolidated Sales (JPY bn) 826.5 831.1 874.5 182.1 194.5 209.0 FY 2020 2020年度 2021年度 FY 2021 ‧‧ 2023年度 FY 2023 2020年度 2021年度 ‧‧ 2023年度 Analysis of Operating Profit (

  32. Slide 32: Plan for FY 2021

    Plan for FY 2021 31 © Meiji Holdings Co., Ltd. All rights reserved.

  33. Slide 33: Plan for FY 2021

    Plan for FY 2021* FY 2020 FY 2021 (JPY bn) Results Plan YoY Change -14.1% Net sales 1,191.7 1,024.0 -167.7 +1.4% Operating profit 106.0 107.5 +1.4 Op. profit margin 8.9% 10.5% - Profit attributable to owners of +2.0% 65.6 67.0 +1.3 parent EPS (JPY) 452.52 461.79 +9.27 Cash dividends per share (JPY)

  34. Slide 34: References

    References 33 © Meiji Holdings Co., Ltd. All rights reserved.

  35. Slide 35: Results for FY 2020

    Results for FY 2020 Before applying revenue recognition standards 34 © Meiji Holdings Co., Ltd. All rights reserved.

  36. Slide 36: Financial Positions for FY 2020

    Financial Positions for FY 2020 FY 2020 (JPY bn) Results Change Main Factors for Change +2.2% - Merchandise and finished goods (+6.4) - Cash and deposits (+2.8) Current assets 426.0 +9.1 - Raw materials and supplies (+1.9) +10.1% - Investment securities (+40.8) - Construction in progress (+11.3) Non

  37. Slide 37: FY 2020 Analysis of Consolidated Operating Profit

    FY 2020 Analysis of Consolidated Operating Profit (JPY bn) Consolidated total Food Pharma Other Results - FY 2019 102.7 87.3 15.9 -0.6 Due to increased/decreased sales -9.8 -7.9 -1.9 ― Impact of drug price revision -5.8 ― -5.8 ― Changes in costs of goods sold +9.6 *1 +7.6 +2.0 ― *2 Changes in other

  38. Slide 38: FY 2020 Results by Business Food segment-1

    FY 2020 Results by Business Food segment-1 (JPY bn) FY 2020 Results YoY Change vs. Plan -3.0% -1.2% Net sales 318.1 -9.7 -3.7 Fresh and Fermented Dairy +10.8% -2.7% Operating profit 53.6 +5.2 -1.4 -0.0% -1.4% Net sales 178.3 -0.0 -2.4 Processed Food -15.7% -6.6% Operating profit 7.0 -1.3 -0.5 -6.3%

  39. Slide 39: FY 2020 Results by Business Food segment-2

    FY 2020 Results by Business Food segment-2 (JPY bn) FY 2020 Results YoY Change vs. Plan +3.4% -0.2% Net sales 93.7 +3.1 -0.1 Nutrition +4.4% +2.9% Operating profit 16.4 +0.6 +0.4 +1.6% -2.2% Net sales 49.1 +0.7 -1.0 Overseas -19.2% +11.8% Operating profit 1.3 -0.3 +0.1 -12.8% -0.1% Net sales 246.6 -

  40. Slide 40: FY 2020 Results by Business Pharmaceutical segment

    FY 2020 Results by Business Pharmaceutical segment (JPY bn) FY 2020 Results YoY Change vs. Plan -3.4% +1.9% Net sales 136.9 -4.8 +2.5 Japan -42.0% +124.7% Operating profit 5.6 -4.0 +3.1 -13.4% -0.8% Net sales 37.6 -5.8 -0.3 Overseas +59.0% -11.4% Operating profit 4.3 +1.6 -0.5 +7.2% -0.0% Net sales

  41. Slide 41: FY 2020 Analysis of Operating Profit by Business Food segment

    FY 2020 Analysis of Operating Profit by Business Food segment (JPY bn) Fresh and Other Food Segment Processed Corporate Fermented Confectionery Nutrition Overseas Domestic Total Food Expenses Dairy Subsidiaries FY 2019 87.3 48.4 8.3 19.0 15.7 1.6 3.5 -9.4 Operating profit Due to increased/ -7.9 -4.7

  42. Slide 42: FY 2020 Analysis of Operating Profit by Business Food segment

    FY 2020 Analysis of Operating Profit by Business Food segment Excluding change in cost accounting method (JPY bn) Fresh and Other Food Segment Processed Corporate Fermented Confectionery Nutrition Overseas Domestic Total Food Expenses Dairy Subsidiaries FY 2019 87.3 48.4 8.3 19.0 15.7 1.6 3.5 -9.4 O

  43. Slide 43: FY 2020 Consolidated Cash Flows

    FY 2020 Consolidated Cash Flows FY 2020 (JPY bn) Results YoY Change Main Factors for Change - Income taxes paid (+13.6) - Profit before income taxes (+5.4) Cash flows from - Increase in trade payables (+3.8) 123.6 +9.5 - Increase in retirement benefit liability (+2.7) operating activities - Deprecia

  44. Slide 44: Plan for FY 2021 and FY 2023

    Plan for FY 2021 and FY 2023 43 © Meiji Holdings Co., Ltd. All rights reserved.

  45. Slide 45: Consolidated Plan for FY 2021 and FY 2023

    Consolidated Plan for FY 2021 and FY 2023 After applying revenue recognition standards (JPY bn) FY 2021 FY 2023 Plan YoY Change Plan vs. FY2020 +1.7% +7.2% Net sales 1,024.0 1,080.0 Consolidated +16.8 +72.8 +1.4% +13.1% Operating profit 107.5 +1.4 120.0 +13.9 Profit attributable to +2.0% +21.8% 67.0

  46. Slide 46: Consolidated Plan for FY 2021 and FY 2023 Food segment-1

    Consolidated Plan for FY 2021 and FY 2023 Food segment-1 Before applying revenue recognition standards (JPY bn) FY 2021 FY 2023 Plan YoY Change Plan vs. FY2020 Net sales 260.9 +0.1% 272.0 +4.3% Yogurt&cheese Op. profit 47.7 +0.1% 50.0 +4.8% Net sales 123.9 +6.7% 131.0 +12.8% Nutrition Op. profit 18.

  47. Slide 47: Consolidated Plan for FY 2021 and FY 2023 Food segment-2

    Consolidated Plan for FY 2021 and FY 2023 Food segment-2 Before applying revenue recognition standards (JPY bn) FY 2021 FY 2023 Plan YoY Change Plan vs. FY2020 Frozen dessert Net sales 71.7 -3.9% 72.0 -3.6% &ready meal Op. profit 2.9 -20.7% 4.0 +9.1% Net sales 55.0 +12.6% 82.0 +67.8% Overseas Op. pr

  48. Slide 48: Consolidated Plan for FY 2021 and FY 2023 Pharmaceutical segment

    Consolidated Plan for FY 2021 and FY 2023 Pharmaceutical segment Before applying revenue recognition standards (JPY bn) FY 2021 FY 2023 Plan YoY Change Plan vs. FY2020 Net sales 97.5 +6.7% 104.9 +14.8% Domestic ethical pharmaceuticals Op. profit 6.4 +14.3% 3.5 -37.5% Net sales 44.4 +12.7% 49.5 +25.6

  49. Slide 49: FY 2021 Analysis of Consolidated Operating Profit

    FY 2021 Analysis of Consolidated Operating Profit After applying revenue recognition standards (JPY bn) Consolidated total Food Pharma Other Results - FY 2020 106.0 87.4 19.1 -0.5 Due to increased/decreased +19.1 +9.5 +9.6 ― sales Impact of drug price -5.1 ― -5.1 ― revision Changes in costs of goods

  50. Slide 50: FY 2021 Consolidated Cash Flows

    FY 2021 Consolidated Cash Flows FY 2021 (JPY bn) Plan YoY Change Main Factors for Change Cash flows from 134.3 +10.6 ‧ Increase in trade receivable operating activities ‧ Increase in investments Cash flows from [Investment] (JPY bn) -117.2 -24.1 investing activities Food 102.3 (+81.4% YoY) Pharmaceu

  51. Slide 51: KPIs for Sustainability Activities

    KPIs for Sustainability Activities Target Our activities FY 2023 FY 2026 FY 2030 Reduce group-wide CO2 emissions (Scope1, 2) (FY ≥ 23% ≥ 40% 2015 baseline) Reduce CO2 emissions Increase renewable energy in group-wide power ≥ 15% ≥ 50% usage Reduce Abolish totally the refrigerator Abolish totally the

  52. Slide 52: R&D Pipeline-1

    R&D Pipeline-1 ■Japan ■Overseas R&D Pipeline (◆: discovered in-house) FY 2020 FY 2021 FY 2022 Infectious diseases ME1100 Arbekacin inhalation [HABP/VABP] ◆ P Ib PI OP0595 Nacubactam [β-lactamase inhibitor] ◆ with β-Lactams disorders CNS ME2112 Ziprasidone [Antipsychotic] Phase III HBI-8000 Tusidinos

  53. Slide 53: R&D Pipeline-2

    R&D Pipeline-2 ■Japan ■Overseas R&D Pipeline FY 2020 FY 2021 FY 2022 Phase III Apply KD-370 [Pentavalent vaccine against diphtheria, tetanus, pertussis, polio, and haemophilus influenza type b] Phase II Human vaccines KD-382 [Quadrivalent vaccine against dengue fever] Phase I KD-404 [Egg-derived ina

  54. Slide 54: R&D Pipeline-3

    R&D Pipeline-3 ■■Japan ■Overseas R&D Pipeline (◆: discovered in-house) FY 2020 FY 2021 FY 2022 Agricultural chemicals ME5382 [Insecticide/Flupyrimin] ◆ Approved ME5343 [Insecticide] Licensing agreement with BASF ◆* Approved ANM-138 [Insecticide] Joint development with Nippon Kayaku ◆ Approved Approv

  55. Slide 55: Key Currencies and Our Average Exchange Rates

    Key Currencies and Our Average Exchange Rates Key Currencies and Our Average Exchange Rates (JPY) USD EUR RMB 140.00 Foreign exchange forecast 129.19 128.10 125.70 123.29 123.71 124.41 119.83 120.65 120.68 118.94 for FY 2021 plan 120.00 USD JPY 106 112.83 110.46 110.00 100.00 107.70 108.98 109.22 10

  56. Slide 56: Market Prices of Main Raw Materials Imported

    Market Prices of Main Raw Materials Imported (USD/MT) Nonfat Dry Milk (USD/MT) Cheese 3,000 7,000 6,000 2,500 5,000 4,000 2,000 3,000 1,500 2,000 (GBP/MT) Cocoa beans (USD/ｌｂ) Sugar 2,500 25 2,000 20 1,500 15 1,000 10 500 5 55 © Meiji Holdings Co., Ltd. All rights reserved. Source: Bloomberg

  57. Slide 57: Information in this material is not intended to solicit sale or purchase of shares

     Information in this material is not intended to solicit sale or purchase of shares in Meiji Holdings.  Business forecasts and other forward-looking statements are based on information available at the time of the release of this presentation and reasonable assumptions made by the Company.  Actua

Meiji Holdings — FY2020 Earnings Presentation on 6ix