Ajinomoto Co., Inc. · TSE:2802
Ajinomoto — FY2016 Earnings Presentation
49 slides from Ajinomoto's earnings presentation, May 10, 2016
Slide 1: Forecast for the Fiscal Year Ending March 31, 2017 (FY2016) and Outlook
Ajinomoto Co., Inc.（2802） Forecast for the Fiscal Year Ending March 31, 2017 (FY2016) and Outlook May 10, 2016 Takaaki Nishii President & CEO
Slide 2: Contents
Contents I. Overview of FY2016 Forecast FY2016 Forecast ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P2 Factors in Changes in FY2016 Operating Income Forecast ・・・・・・・・・ P3 FY2016 Forecast by Segment・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P4 FY2016 Forecast - Ordinary Income and Net Income ・・・・・・・・・
Slide 3: I. Overview of FY2016 Forecast
I. Overview of FY2016 Forecast
Slide 4: FY2016 Forecast
FY2016 Forecast In the final fiscal year of the FY2014-2016 Medium-Term Management Plan, even though both net sales and operating income are expected to be basically unchanged year on year (YoY), we aim to achieve operating income in line with our initial plan. Net sales(left scale) Operating income
Slide 5: Factors in Changes in FY2016 Operating Income Forecast
Factors in Changes in FY2016 Operating Income Forecast Negative impact on exchange rates from the appreciation of the yen. Increases forecast in both fermentation raw materials and fuel and food product raw materials. We will promote measures to further raise profitability to achieve the targets for
Slide 6: FY2016 Forecast by Segment
FY2016 Forecast by Segment (¥ Billion) YoY Change FY2016 YoY O.P.% FY2015 O.P.% Forecast Amount % Change* Net sales 1,186.0 1,185.9 0.0 0% 3% Japan Food Products 411.8 397.0 14.7 3% 3% International Food Products 466.8 463.9 2.8 0% 7% Life Support 145.2 142.4 2.7 2% 7% Healthcare 98.0 89.5 8.4 9% 14
Slide 7: FY2016 Forecast - Ordinary Income and Net Income
FY2016 Forecast - Ordinary Income and Net Income Ordinary income and net income will decrease substantially. Excluding non-recurring items, they will be on par with the previous fiscal year. FY2016 FY2015 (¥ Billion) (¥ Billion) Difference Main Factors Forecast Results Net sales 1,186.0 1,185.9 0.1
Slide 8: Targeted Composition of Operating Income
Targeted Composition of Operating Income Raise earnings quality by controlling the ratio of bulk businesses and pursuing specialty groupwide. 150.0 (¥ Billion) 150 Amortization of goodwill 10.0 (¥6.8 billion) 90 （97.8） Animal nutrition 91.0 91.0 91.0 5.5 6.5 8.0 74.5 1.6 72.6 71.2 4.6 Pharmaceutical
Slide 9: Share of Specialty Products in Operating Income FY2013-FY2016
Share of Specialty Products in Operating Income FY2013～FY2016 Share of specialty products in operating income is steadily growing. (¥1200 Billion) 84.5 83.9 7% 80.0 9% 8% 1000 7% Life Support ﾗｲﾌｻﾎﾟｰﾄ 62.1 (excluding Animal Nutrition) （除く動物栄養） 56.3 11% 800 4% 9500 Healthcare ﾍﾙｽｹｱ 50.0 10% 47% 5% 49
Slide 10: Roadmap to a Genuine Global Specialty Company
Roadmap to a Genuine Global Specialty Company Accelerate growth to take aim at becoming one of the global top 10 companies. Achieve stable profit growth with a shift to specialty EPS growth of around 10%/year Transition to a global food Accelerate company growth momentum Build foundation for Acceler
Slide 11: Accelerate Growth Momentum
II. GROW: Accelerate Growth Momentum (1) Growth Drivers International Food Products/Seasonings & Processed Foods (2) Stable Growth Businesses Japan Food Products/Seasonings & Processed Foods and Frozen Foods (3) Business Strengthening Healthcare/Amino Acids (4) M&A Follow-Up International Frozen Foo
Slide 12: Growth Drivers: International Seasonings and Processed Foods
II. GROW: Accelerate Growth Momentum (International Food Products/Seasonings & Processed Foods) (1) Growth Drivers: International Seasonings and Processed Foods Sales of international seasonings and processed foods remain firm, centered on AJI-NO-MOTO® and flavor seasonings. FY2014 ¥272.5 billion FY
Slide 13: Create country/area pillars in the Five Stars countries (1)
II. GROW: Accelerate Growth Momentum (International Food Products/Seasonings & Processed Foods) (1)-1. ①Create country/area pillars to follow Japan with rapid growth in the “Five Stars” countries. Aim to Double/Triple Growth in “Five Stars”: Steady growth of existing businesses and aggressive expans
Slide 14: Create country/area pillars in the Five Stars countries (2)
II. GROW: Accelerate Growth Momentum (International Food Products/Seasonings & Processed Foods) (1)-1. ②Create country/area pillars to follow Japan with rapid growth in the “Five Stars” countries. Aim to Double/Triple Growth in “Five Stars”: Steady growth of existing businesses and aggressive expans
Slide 15: Expansion to adjacent areas: ASEAN and South Asia
II. GROW: Accelerate Growth Momentum (International Food Products/Seasonings & Processed Foods) (1)-2. Accelerate building a foundation for rapid growth with “expansion to adjacent areas” Build a Foundation in ASEAN and South Asia: Select categories in line with conditions in target countries Ajinom
Slide 16: Japan Food Products - Consumer Trends (Household Composition)
II. GROW: Accelerate Growth Momentum (Japan Food Products) (2)-1. ① Stable Growth Businesses: Japan Food Products - Consumer Trends (Changes in Household Composition) Household composition is diversifying from the era when typical parent-and-child households were the mainstream to include more singl
Slide 17: Diversification of Food Needs and Values
II. GROW: Accelerate Growth Momentum (Japan Food Products) (2)-1. ① Stable Growth Businesses: Japan Food Products - Consumer Trends (Changes in Food Needs) Consumer food needs are becoming more sophisticated and diverse beyond factors such as generation and family composition Instant food Pleasure T
Slide 18: Growth in the Restaurant and Institutional-Use Market
II. GROW: Accelerate Growth Momentum (Japan Food Products) (2)-2. ① Growth in the Restaurant and Institutional-Use Market: Expansion mainly in home meal replacement (HMR) ◆ Ratio of Household-Use/Restaurant and ◆ FY2016 Restaurant and Institutional-Use in Ajinomoto Co. Net Sales Institutional-Use Ma
Slide 19: Growth of HMR: Expansion of the B2B2C Business
II. GROW: Accelerate Growth Momentum (Japan Food Products) (2)-2. ② Growth of HMR: Expansion of the B2B2C Business B2C Business B2B Business ● Target: Consumers ● Target: Food processing ● Use: Home cooking, food products B2B2C Business companies ● Customers: Mass merchandisers, ● Use: Raw materials
Slide 20: Improving Nutrition with Proteins and Amino Acids (1)
II. GROW: Accelerate Growth Momentum (Japan Food Products) (2)-3. ① Improving Nutrition with Proteins and Amino Acids Source: Lab. of Nutrition Science, Kyoto Prefectural University New Understanding of Protein Requirements ・Excerpted from materials announced by Professor Yasuhiro Kido - Toward grea
Slide 21: Evidence-Backed Foods with Functional Claims
II. GROW: Accelerate Growth Momentum (Japan Food Products) (2)-3. ② Improving Nutrition with Proteins and Amino Acids Evidence-Backed “Foods with Functional Claims” (FFC) ・ Glyna®: August 2015 First FFC supplement in the field of sleep ・ Amino Aile®: April 2016 First FFC muscle support supplement ・
Slide 22: Strengthening the Amino Acids Inside Strategy for Foods
Reference: Strengthening the “Amino Acids Inside” Strategy for Foods Strengthening the “Amino Acids Inside” Strategy for Foods ◆ Create new value with amino acids ◆ Create new food processing technologies ◆ New merchandising to sales companies and retailers Soy milk Smoothies Toppings for rice Freez
Slide 23: Initiatives for Amino Acids for Pharmaceuticals and Foods
II. GROW: Accelerate Growth Momentum (Healthcare) (3) Business Strengthening: Initiatives for Amino Acids for Pharmaceuticals and Foods Promote the value of the traceability and non-animal origin of amino acids manufactured within the Group by fermentation Change in “Specialty” Domains (Image of sal
Slide 24: Ajinomoto Windsor: Strengthening Frozen Food in North America
II. GROW: M&A Follow-Up (International Food Products/Frozen Foods) (4)-1. Ajinomoto Windsor, Inc.: Strengthening the Frozen Food Products Business in North America Combine international seasonings/processed foods and international frozen foods to change to a portfolio based on sales regions. Maximiz
Slide 25: Windsor Frozen Foods in North America - Growth Strategies
II. GROW: M&A Follow-Up (International Food Products/Frozen Foods) (4)-1. ① Ajinomoto Windsor, Inc.: Initiatives in the Frozen Foods Business in North America – Growth Strategies Basic Policy: Achieve ¥100 billion or more in sales in the North American frozen foods business by 2020 and establish the
Slide 26: Reference: Ajinomoto Windsor's Customer Base and Main Products
Reference: Ajinomoto Windsor Inc.’s Customer Base and Main Products Customer Base and Main Products ◆ For Mass Merchandisers ◆ For Warehouse Clubs (Walmart, Safeway) (Costco, Sam’s Club) Asian/Ethnic food YAKISOBA Asian/Ethnic food Asian/Ethnic food TAIPEI® Ling Ling® Asian/Ethnic food Yakitori Chic
Slide 27: Windsor Frozen Foods in North America - Generate Synergy
II. GROW: M&A Follow-Up (International Food Products/Frozen Foods) (4)-1. ② Ajinomoto Windsor, Inc.: Initiatives in the Frozen Foods Business in North America – Generate Synergy Expand Sales and Strengthen the Profit Structure ◇ Expand sales using an enhanced customer base ◇ Strengthen the profit st
Slide 28: AGF: Expand the Scale of Japan Food Products
II. GROW: M&A Follow-Up (International Food Products/Frozen Foods) (4)-2. Ajinomoto General Foods, Inc. (AGF): Expand the Scale of Japan Food Products Adding AGF (coffee products) to the scope of consolidation in FY 2015 has helped to substantially expand Japan Food Products (+ approximately ¥100 bi
Slide 29: AGF: Initiatives in the Coffee Business
II. GROW: M&A Follow-Up (Japan Food Products/Coffee Products) (4)-2.① Ajinomoto General Foods, Inc. (AGF): Initiatives in the Coffee Business Market Initiatives ◆ Continuing growth forecast for Japan’s coffee market ◆FY2016 sales forecast: ¥108.9 billion Total amount of consumer purchases: ¥2,800 bi
Slide 30: Reference: Dry Coffee Market
Reference: Dry Coffee Market AGF’s Position in the Dry Coffee Market 2005 to 2015 Unit Price FY2015 Home regular Machine Growth Rate (Cup) AGF Share +2% ¥10.8 3rd Regular +91% ¥26.8 2nd Personal regular +183% ¥15.6 1st Stick-type Instant Instant (jar) -31% 3rd ¥8.6 + Stick- type Instant (refill-type
Slide 31: Accelerating Synergy with AGF
II. GROW: M&A Follow-Up (Japan Food Products/Coffee Products) (4)-2. ② Accelerating Synergy with Ajinomoto General Foods, Inc. (AGF) Newly consolidated from April 2015 Themes of Main Initiatives Orientation for R&D Generating Synergy ・Become a global center in the domain of beverages Combine R&D + D
Slide 32: III. FIT: Further Business Structure Reinforcement
III. FIT: Further Business Structure Reinforcement (1) Shift to Specialty Products in Bulk Commodities Business (2) Resource-Saving Fermentation Technologies (3) Structural Reinforcement of Businesses with Issues
Slide 33: Shift to Specialty Products in Bulk Commodities Business
III. FIT: Further Business Structure Reinforcement (Animal Nutrition, Umami Seasonings for Processed Food Manufacturers, Sweeteners) (1)-1. Shift to Specialty Products in Bulk Commodities Business: Reducing Dependence on Bulk Products Animal Nutrition Animal Nutrition (% of operating income) 35% in
Slide 34: Initiatives to Promote Specialty in the Animal Nutrition Business
III. FIT: Further Business Structure Reinforcement (Life Support/Animal Nutrition) (1)-2. Shift to Specialty Products in Bulk Commodities Business: Initiatives to Promote Specialty in the Animal Nutrition Business Item Main Initiatives FY2015 ・ Started sales outside the U.S. ・ Fell substantially sho
Slide 35: Resource-Saving Fermentation Technologies
III. FIT: Further Business Structure Reinforcement (2) Resource-Saving Fermentation Technologies (R&D Leadership): Cost reductions of ¥3.0 billion achieved in FY2015, ¥1.0 billion planned in FY2016 Specific Measures FY2011-2013 FY2014 FY2015 FY2016 Introduced in Brazil High performance （FY13/Q1） (Hi
Slide 36: Pharmaceuticals Business: Outline of EA Pharma Co., Ltd.
III. FIT: Further Business Structure Reinforcement (3)-1. Structural Reinforcement of Businesses with Issues: Pharmaceuticals Business Created EA Pharma Co., Ltd., one of Japan’s largest gastrointestinal specialty pharmaceutical companies, through the integration of the former AJINOMOTO ＊2016年3月30日発
Slide 37: Pharmaceuticals Business: Extraordinary Losses
III. FIT: Further Business Structure Reinforcement (3)-2. Structural Reinforcement of Businesses with Issues: Pharmaceuticals Business Recorded extraordinary losses of approx. ¥16.6 billion in FY2015 for structural reform expenses in the pharmaceuticals business, etc. Breakdown of Extraordinary Loss
Slide 38: IV. Evolution of the Management Foundation
IV. Evolution of the Management Foundation
Slide 39: Three Linked Areas of Reform
IV. Evolution of the Management Foundation Three Linked Areas of Reform Toward Becoming a “Genuine Global Specialty Company” Three Linked Areas of Reform: Human三位一体の取り組み 人財・ルール・組織 Resources, Rules and Organization Setting One’s Own Career Path = Creating Opportunities for Self-Fulfillment Promotion
Slide 40: Establish a Global Corporate Department (April 2016)
IV. Evolution of the Management Foundation Reference: Establish a Global Corporate Department (April 2016) Establish a Global Corporate Department at Global HQ Objectives ・ Strengthen corporate brand power ・ Promote diversity ・ Enhance professional services Scheduled Global HR management, global com
Slide 41: Reform of Working Practices
IV. Evolution of the Management Foundation Newly Strengthen Foundation (Reform of Working Practices) Efforts to Establish Foundation for Promotion of Diversity Zero-Base Reform of三位一体の取り組み 人財・ルール・組織 Working Practices A company where diverse human resources participate, regardless of gender, national
Slide 42: Toward the FY2017-2019 Medium-Term Management Plan
IV. Evolution of the Management Foundation Toward the Formulation of the FY2017-2019 Medium-Term Management Plan Toward Becoming a “Genuine Global Specialty Company” As a member of a trusted corporate group with a global impact… Planning to Formulate “Integrated ASV Targets” That Combine Financial a
Slide 43: V. FY2016 Financial Strategy
V. FY2016 Financial Strategy
Slide 44: Investments for Growth and Shareholder Returns
V. FY2016 Financial Strategy Investments for Growth and Shareholder Returns No change from the policy in the FY2014-2016 Medium-Term Management Plan. Prioritize use of operating cash flow for investments for growth and schedule increases in dividends in FY2015 and FY2016. Generate Free Cash Flow Wei
Slide 45: FY2016 Financial Strategy: Share Repurchase
FY2016 Financial Strategy: Share Repurchase Decision to conduct a share repurchase to increase the level of shareholder returns and improve capital efficiency. 1. Class of shares: Common stock 2. Total number of shares to be repurchased: 15 million* (maximum) *2.58% of total shares outstanding, excl
Slide 46: Eat Well, Live Well.
Eat Well, Live Well. AJINOMOTO.
Slide 47: Assumptions of FY2016 Forecast
Reference Assumptions of FY2016 Forecast
Slide 48: [Reference] Assumptions of FY2016 Forecast
[Reference] Assumptions of FY2016 Forecast Foreign exchange rates (vs JPY) Feed-use amino acids Sensitivity of translation effects 1) Estimated market size (Thousand MT) Avg. rate FY2014 FY2015 FY2016 (Forecast) to full year O.P. USD 110.0 ±\1 → approx. \50 million Lysine around 2,300 around 2,200 a
Slide 49: Eat Well, Live Well.
Eat Well, Live Well. AJINQOMOTO. » 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. A number of factors could cause actual results to differ materially from expecta