T. Hasegawa Co., Ltd. · TSE:4958
T. Hasegawa — FY2021 Earnings Presentation
51 slides from T. Hasegawa's earnings presentation, Nov 25, 2021
Slide 1: Financial Results for the Fiscal Year Ended September 30, 2021
Financial Results for the Fiscal Year Ended September 30, 2021 November 25, 2021 T. HASEGAWA CO., LTD.
Slide 2: Contents
Contents I. Summary of Consolidated Financial Results II. Impact of COVID-19 III. Management Policy IV. Global Strategy V. Medium-Term Three-Year Plan Summary VI. Capital Policy VII.Accompanying Materials 1
Slide 3: I. Summary of Consolidated Financial Results
I. Summary of Consolidated Financial Results 2
Slide 4: Market Environment: Japanese Market
Market Environment Japanese Market • Trends by category FYE September 2021 (October 2020 to September 2021) Category Trend • Sluggish consumption owing partly to consumers refraining from going out as a result of COVID-19 • Sluggish demand from the office sector, particularly in large cities, with c
Slide 5: Summary of Consolidated Performance
Summary of Consolidated Performance • YoY Sales increased mainly due to the contribution of MISSION (U.S.), which T. HASEGAWA U.S.A. Inc. acquired in December 2020, as well as higher sales at Chinese subsidiaries Operating profit, ordinary profit, and net profit increased mainly due to an increase i
Slide 6: Net Sales by Segment
Net Sales by Segment • Sales growth factors Contribution of MISSION (U.S.) and higher sales at Chinese subsidiaries (Million yen) Change FY 2020 FY 2021 Segment Change Factor (actual) (actual) Amount (%) Contribution of MISSION Flavors 43,159 48,115 4,955 11.5% Higher sales at Chinese subsidiaries F
Slide 7: Net Sales by Group Company
Net Sales by Group Company Currency FY2020 FY2021 Change(%) • Sales growth factors 1US$ ¥107.88 ¥107.50 Yen up 0.4% Contribution of MISSION (U.S.) 1RMB ¥15.39 ¥16.54 Yen down 7.5% Higher sales at Chinese subsidiaries 1MYR ¥25.61 ¥26.08 Yen down 1.8% （Million Yen） (Million yen) FY 2020 FY 2021 Change
Slide 8: Operating Profit by Group Company
Operating Profit by Group Company Currency FY2020 FY2021 Change(%) • Profit growth factors 1US$ ¥107.88 ¥107.50 Yen up 0.4% Higher operating profit at Chinese subsidiaries 1RMB ¥15.39 ¥16.54 Yen down 7.5% 1MYR ¥25.61 ¥26.08 Yen down 1.8% （Million Yen） (Million yen) FY 2020 FY 2021 Change YoY (actual
Slide 9: II. Impact of COVID-19
1) RS WS MASK SS At © THASEGAWA CO, LTD. Il. Impact of COVID-19
Slide 10: Impact of COVID-19
Impact of COVID-19 • Japan and Southeast Asia continued to be affected by COVID-19 ⇒ Negative impact of approx. 1.30 billion yen on full-year net sales for FYE September 2021 Fiscal year ended September 30, 2021 (actual) Region Business impact Net sales impact • Sluggish consumption of beverages (in
Slide 11: III. Management Policy
Management Policy 1) RS WS MASK SS At © THASEGAWA CO, LTD. 10
Slide 12: Management Policy: Focus Areas and Basic Strategies
Management Policy Become an Organization that Takes on Challenges Strengthen Proposal Capabilities Focus Areas Promote Reform Concentration and Selection Enhance Human Resources (Develop Human Resources, Hire Experienced Personnel) Accelerate Expansion in Overseas Market Strengthen Sustainability In
Slide 13: Basic Policies Related to Business Portfolio
Basic Policies Related to Business Portfolio • Develop our businesses based on three basic strategies: (1) expand flavors and fragrances, (2) secure earnings in Japan, and (3) expand overseas businesses • Achieve abundant and healthy living through aromas and contribute to the creation of a sustaina
Slide 14: IV. Global Strategy
IV. Global Strategy 1) RS WS MASK SS At © THASEGAWA CO, LTD. 13
Slide 15: Summary of Global Strategies
Summary of Global Strategies • Business Solutions Division established in October 2020 • Promote proposal-based sales utilizing collaboration among sales, research, and marketing Japan • Focus on the development of flavors to substitute for food ingredients and strengthen response to SDGs • Entered
Slide 16: Domestic Strategies
Domestic Strategies Basic strategy: Expand market share by anticipating new market demand caused by declining birthrate and aging population, as well as growing health consciousness Current initiatives and progress Strengthen • Strengthen collaboration among sales, research, and marketing department
Slide 17: Business Solutions Division Initiatives
Business Solutions Division Initiatives Purpose • Promote reforms based on the following policies: (1) Create an organization that is willing to change, (2) accelerate management, and (3) share information across divisions • Through the Business Solutions Division: Strengthen collaboration among s
Slide 18: Capital and Business Alliance Agreement with DAIZ Inc.
Conclusion of Capital and Business Alliance Agreement with DAIZ Inc. • A "protein crisis" is expected to occur in 2030 as a result of global population growth • The Company has been focusing on the development of flavors to substitute for food Background ingredients and on responding to the alternat
Slide 19: Overseas Strategy –U.S.–
Overseas Strategy –U.S.– Basic strategy: Increase sales in the savory, health, and beverage sectors, and quickly achieve synergies from acquisitions Current initiatives and progress • Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020 Acquisition of ⇒ PMI completed at the end of Sept
Slide 20: Overseas Strategy –China–
Overseas Strategy –China– Basic strategy: Grow earnings through various measures based on a stronger organizational foundation Current initiatives and progress • Utilize marketing functions ⇒ Develop strategic approaches to customers, tap unentered sectors and potential demand Strengthen sales Focus
Slide 21: Overseas Strategy –Southeast Asia–
Overseas Strategy –Southeast Asia– Basic strategy: Increase sales through collaboration between manufacturing and sales bases in Malaysia (THKL) and sales sites in Thailand and Indonesia Current initiatives and progress • Acquire sales personnel for new customer development and strengthen organizati
Slide 22: V. Medium-Term Three-Year Plan Summary
V. Medium-Term Three-Year Plan Summary 21
Slide 23: Medium-Term Three-Year Plan (Consolidated)
Medium-Term Three-Year Plan (Consolidated) We expect COVID-19 to continue to impact performance in FYE September 2022 The Company We expect sales growth partly from the promotion of solution sales based on stronger collaboration between (non- sales, research, and marketing departments, as well as me
Slide 24: Capital Expenditures, Depreciation, and R&D Expenses
Capital Expenditures, Depreciation, and R&D Expenses • The Company (non-consolidated) DX promotion and IT reform project: Approx. 3.0 billion yen (Plan: FY9/22: Approx. 0.5 billion yen, FY9/23: Approx. 1.0 billion yen, FY9/24: Approx. 1.5 billion yen) • U.S. second plant construction plan: Approx. 2
Slide 25: VI. Capital Policy
VI. Capital Policy 1) RS WS MASK SS At © THASEGAWA CO, LTD. 24
Slide 26: Capital Policy
Capital Policy Basic Policy • Maintain a level of shareholders' equity that will enable us to execute growth investments and appropriately respond to risks, in order to achieve sustainable growth in corporate value and maximize it going forward Policy on Use of Funds • Appropriately use funds, takin
Slide 27: Capital Policy: Shareholder Returns
Capital Policy Shareholder returns • Strive to return profits to shareholders in accordance with business performance, while also securing the necessary internal reserves to further strengthen the Group's management foundations and engage in future business development • Pay dividends from surplus t
Slide 28: Capital Policy: Sale of Investment Securities, Treasury Stock
Capital Policy Sale of Investment Securities (Completed) FYE September 2021: Recorded extraordinary income on sales of investment securities [Reason] Review of investment securities [Shares sold] 10 listed securities held by the Company [Gain on sale] Gain on sales of FYE September 2021 investment s
Slide 29: VII. Accompanying Materials
VII. Accompanying Materials 28
Slide 30: Flavors and Fragrances Industry
Flavors and Fragrances Industry 29
Slide 31: Flavor and Fragrance Business
Flavor and Fragrance Business Ingredients Products (Compound Flavors and Fragrances) 1. Natural Aromatics 3. Flavors 調合 Compounding 2. Synthesized Recipes 4. Fragrances Aroma Chemicals Integration of research and development capabilities Flavorists : Experts who formulate flavors Perfumers : Experts
Slide 32: Market Size
Market Size Th BSS A task 8 At (© THASEGAWA CO, LTD. 31
Slide 33: Global Flavors and Fragrances Market (Our Estimate)
Global Flavors and Fragrances Market (Our Estimate) • Global flavors and fragrances market in 2019: Grew approx. 7% YoY Global Flavors and Fragrances Market (Our Estimate) (Million US$) CAGR 7.9% 4.8% 3.3% 3.5% 32
Slide 34: Size of Global Flavors and Fragrances Market (Our Estimate)
Size of Global Flavors and Fragrances Market (Our Estimate) • Worldwide flavors and fragrances sales: Approx. 3.2 trillion yen (approx. 29.8 billion U.S. dollars) Europe, Africa, Middle East North America ‐ Market size: Approx. 1,170 billion yen* ‐ Market size: Approx. 820 billion yen* ‐ Many users
Slide 35: Top Companies by Share in Global Flavors and Fragrances Market
Top 10 Companies by Share of Net Sales in the Global Flavors and Fragrances Market Million USD Company name Country Sales(2020Yr) Market Share 1 Givaudan Switzerland 5,926 23.4% 2 IFF U.S. 5,084 20.1% 3 Firmenich Switzerland 3,656 14.5% 4 Symrise Germany 3,096 12.3% 5 ADM/Wild Flavors Germany 2,812
Slide 36: Japanese Flavors and Fragrances Market Size
Japanese Flavors and Fragrances Market Size • Flavors account for approximately 80% of the Japanese flavors and fragrances market (approx. 50% of the global market). Domestic flavor and fragrance market sales Breakdown of flavors and fragrances (Billion yen) (FY2020) Source of reference : 2016 2017
Slide 37: Current Status of the Company
Current Status of the Company 36
Slide 38: Top Companies by Share in Japanese Flavors and Fragrances Market
Top 10 Companies by Share of Net Sales in the Japanese Flavors and Fragrances Market Others 14.9% Company T Company SI 31.2% 5.2% Company SO 6.3% Company O 11.4% Company G T.Hasegawa 12.1% 18.9% (As of Mar. 2021） *1 Market shares calculated by taking the total non-consolidated net sales of the top 1
Slide 39: Sales Breakdown
Sales Breakdown • The Company specializes in high value-added blended flavors and fragrances • High-mix low-volume: Sales of approximately 12,000 flavors and fragrances per year (Million yen) T. Hasegawa Company T (Consolidated） (Consolidated） FY ended in Sep. 2021 FY ended in Mar. 2021 Sales Share
Slide 40: Breakdown of Flavor Segment Customers by Industry
Breakdown of Flavor Segment Customers by Industry • Many sales are to the beverage industry, and sales are seasonal To other industries Approx. 10% To seasoning industry Approx. 11% To beverage industry Approx. 32% To instant noodle industry Approx. 9% To sweet and savory snacks industry To dairy in
Slide 41: Other: Financial Statements
Other: Financial Statements 40
Slide 42: Analysis of Changes in Consolidated Statement of Income
Analysis of Changes in Consolidated Statement of Income • Operating profit growth factors Increase in net sales (contribution from MISSION and increased sales at subsidiaries in China) and improvement in cost-of-sales ratio are main factors (Million yen) FY2020 FY2021 Change Factor (actual) (actual)
Slide 43: Analysis of Changes in Consolidated Balance Sheet
Analysis of Changes in Consolidated Balance Sheet (Million yen) Sep. 30 Mar. 31 Increase or Factor 2020 2021 Decrease ・Increase in cash and deposits: 2,453 million yen Current assets 59,013 55,242 -3,771 ・Increase in accounts receivable: 1,591 million yen ・Decrease in securities: (8,000) million yen
Slide 44: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows (Million yen) FY2020 FY2021 Increase or Major Account Item for Current Fiscal Year (actual) (actual) Decrease ・Profit before income taxes: 9,692 million yen ・Depreciation: 3,186 million yen Cash flows from 6,387 9,980 3,593 ・Amortization of goodwill: 572 million
Slide 45: Capital Expenditures, Depreciation, and R&D Expenses (Consolidated)
Capital Expenditures, Depreciation, and R&D Expenses (Consolidated) (Million yen) FY2021 FY2021 Progress (plan) (actual) (%) Capital Investment 3,605 2,767 76.8% Depreciation & 3,158 3,186 100.9% Amortization R&D Expenses 4,682 4,675 99.9% 44
Slide 46: T. Hasegawa Non-consolidated (Actual)
T. Hasegawa Non-consolidated (Actual) (Million yen) FY2020 FY2021 FY2021 Change (actual) (targets revised on May 7,2021) (actual) YoY Vs. target Amount Share Amount Share Amount Share Amount ％ Amount ％ Net sales 36,821 100.0% 36,900 100.0% 37,362 100.0% 541 1.5% 462 1.3% Cost of sales 22,914 62.2% 2
Slide 47: Consolidated U.S. Subsidiaries (Actual)
Consolidated U.S. Subsidiaries (Actual) * Consolidated statements of income of the Company's two U.S. subsidiaries (T. HASEGAWA U.S.A. INC. and MISSION FLAVORS & FRAGRANCES, INC.) * MISSION FLAVORS & FRAGRANCES, INC.'s financial results for the fiscal year under review are for the nine months from J
Slide 48: Consolidated China Subsidiaries (Actual)
Consolidated China Subsidiaries (Actual) * Consolidated statements of income of the Company's two consolidated subsidiaries in China (T. HASEGAWA FLAVOURS AND FRAGRANCES (SHANGHAI) CO., LTD. and T. HASEGAWA FLAVOURS (SUZHOU) CO., LTD.) (Million yen) FY2020 FY2021 YoY Yen Basis Amount Share Amount Sh
Slide 49: Malaysian Subsidiaries (Actual)
Malaysian Subsidiaries (Actual) * Statement of income of T HASEGAWA FLAVOURS (KUALA LUMPUR) SDN. BHD. (Million yen) FY2020 FY2021 YoY Yen Basis Amount Share Amount Share Amount ％ Net Sales 902 100.0% 998 100.0% 96 10.7% Cost of sales 504 55.9% 570 57.1% 66 13.1% Gross profit 398 44.1% 428 42.9% 30 7
Slide 50: Medium-Term Three-Year Plan (Consolidated)
Medium-Term Three-Year Plan (Consolidated) (Million yen) FY2021 FY2022 FY2023 FY2024 (actual) (plan) (plan) (plan) Amount Share YoY Amount Share YoY Amount Share YoY Amount Share YoY Net sales 55,755 100.0% 11.1% 59,200 100.0% 6.2% 61,500 100.0% 3.9% 64,200 100.0% 4.4% Cost of sales 33,106 59.4% 7.5
Slide 51: This presentation is based on data as of November 12, 2021, and was created
This presentation is based on data as of November 12, 2021, and was created with the intention of providing information on future management plans and results for the fiscal year ended September 30, 2021. The views expressed in this material are those of the Company at the time of preparation. No gu