Slide 1: Briefing Materials for FY2021 Results and Third Mid-Term Management Plan
Briefing Materials for FY2021 Results and Third Mid-Term Management Plan Kagome Co., Ltd. Securities code: 2811 Figures in these materials ・ Amounts are rounded down to the nearest 100 million yen. Part of amounts for core operating income are rounded down to the nearest 10 million yen. ・ Percentage
Slide 2: Topics
Topics 1. Summary of Business Results for FY2021 (the year ended December 31, 2021) 2. Review of Implementation of Second Mid-Term Management Plan 3. Third Mid-Term Management Plan 4. Sustainability at Kagome 2
Slide 3: 1. Summary of Business Results for FY2021
1. Summary of Business Results for FY2021 (the year ended December 31, 2021) 3
Slide 4: FY2021 Consolidated Results
FY2021 Consolidated Results Revenue in the domestic business was firm given rising health consciousness, continued stay-at-home demand and measures to stimulate demand for vegetables such as the "Let's Eat Vegetables" campaign. The international business meanwhile recovered. As a result, both revenu
Slide 5: FY2021 Results by Segment
FY2021 Results by Segment Achieved gains in revenue in all segments except the domestic agriculture business. Although profit fell in the domestic processed food business due to expenses resulting from active promotions, profit in the international business increased significantly. Consolidated inco
Slide 6: Results and Topics by Segment in FY2021
Results and Topics by Segment in FY2021 400 18.0% Revenue rose, Revenue 136.7 billion yen Core Operating Income 11.23 billion yen Domestic processed food but income fell. (up 1.7% YoY) (down 12.3% YoY) 350 13.0% ● Revenue increased in beverages, direct marketing, food and all other categories. ● Inc
Slide 7: Factors Contributing to Core Operating Income Changes
Factors Contributing to Core Operating Income Changes A fall in income in the domestic agriculture business was more than offset by a rise in income in the international business. FY2020 136 Unit: 100 million yen Increase in profit accompanying increase in sales Improvement in ratio of logistics exp
Slide 8: Factors Contributing to Operating Income and Profit Changes
Factors Contributing to Operating Income and Profit Changes Increases in operating income and income lines below that expanded due to the absence of impairment losses on fixed assets, which was posted in FY2020. Unit: 100 million yen FY2021 FY2020 Change Core operating income 141 135 +5 Other income
Slide 9: Changes to Statement of Financial Position, Changes in Cash Flow
Changes to Statement of Financial Position, Changes in Cash Flow Balance sheet shrank due to repayment of borrowings in preparation for tightness of financing conditions due to COVID-19 Consolidated Statement of Financial Position (As of December 31, 2021) Unit: 100 million yen Liabilities: 956 (dow
Slide 10: 2. Review of Implementation of Second Mid-Term Management Plan
2. Review of Implementation of Second Mid-Term Management Plan 10
Slide 11: Trends in Results in 2nd Mid-Term Management Plan Period
Trends in Results in 2nd Mid-Term Management Plan Period ● The top line started to grow chiefly due to the stimulation of demand through "Let's Eat Vegetables" campaign, rising health consciousness, and eat-at-home demand, but the growth rate was moderate. ● Profitability increased owing to earnings
Slide 12: Results and Issues by Segment
Results and Issues by Segment Results and issues (amounts in FY2018 and FY2021) Future direction, action Revenue 132.9 billion yen 136.7 billion yen ● Continue to achieve growth on the top line ● Stimulate demand for vegetables chiefly through the “Let’s Eat Core Operating Income 11.1 billion yen 11
Slide 13: Changes in Growth Investment, Equity Ratio and ROA
Changes in Growth Investment, Equity Ratio and ROA Investment in growth was low during the periods of the first and second Mid-Term Management Plans. The equity ratio was stable in the 50% range. ROA rose. 100 million yen FY 2015 2016 2017 2018 Total in 1st 2019 2020 2021 Total in Mid-Term 2nd Mid-
Slide 14: 3. Third Mid-Term Management Plan
3. Third Mid-Term Management Plan 14
Slide 15: Roadmap for 2025 Goal and Vision
Roadmap for 2025 Goal and Vision The 2025 goal and vision, which Kagome established in 2016, remain unchanged. To achieve the goals, Kagome will execute the Third Mid-Term Management Plan from 2022 to 2025, a four-year period that is positioned as the final stage. Roadmap Change the Start to grow. 2
Slide 16: Our Views on the Business Environment
Our Views on the Business Environment We will take advantage of changes in the business environment to create business opportunities. Diverse points of Rising awareness of Labor shortage in the Addressing supply customer contact Environmental issues health, immunity and agriculture and the chain iss
Slide 17: Two Goals to Achieve in 2025
Two Goals to Achieve in 2025 2025 Goal 2025 Vision Transform from a “tomato company” to a Become a strong company that can achieve “vegetable company” sustainable growth resolving social issues through foods. KGI ● Achieve medium-term quantitative targets in 2025 Revenue 212 billion yen; core operat
Slide 18: Image of Growth in Third Mid-Term Management Plan
Image of Growth in Third Mid-Term Management Plan Achieve the numerical targets for 2025 through organic growth in existing businesses. Pursue inorganic growth as well. 300-500 (inorganic growth) Unit: 100 million yen 2,120 2025 Numerical Targets 1,990 (only organic growth) 1,896 Revenue 212.0 billi
Slide 19: Quantitative Plan by Segment in Third Mid-Term Management Plan
Quantitative Plan by Segment in Third Mid-Term Management Plan The top line will grow in all segments. Income will fall in FY2022 due to high raw materials prices. Core operating income is expected to recover to the 7% range in 2025. Unit: 100 million yen FY2021 FY2022 FY2025 Under new system Plan P
Slide 20: Basic Strategy in Third Mid-Term Management Plan
Basic Strategy in Third Mid-Term Management Plan Basic strategy in 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 Pursue both o
Slide 21: Diagram of Strategies in Third Mid-Term Management Plan
Diagram of Strategies in Third Mid-Term Management Plan Achieve sustainable growth by Achieve the KGIs and KPIs for "2025 Goal" and "Vegetable Company." taking four actions that are organically connected. -1- Promote behavioral change by providing information and services for raising awareness of an
Slide 22: 1. Promotion of Behavioral Change in Terms of Vegetable Intake
1. Promotion of Behavioral Change in Terms of Vegetable Intake Contribute to extending healthy life expectancy, a social issue, by increasing the consumption of vegetables, the starting point of our growth strategy, and achieve the growth of the Company. Measuring vegetable intake using ● Raising co
Slide 23: 2. Change to Fan-Based Marketing
2. Change to Fan-Based Marketing Increase the number of customers who are fans, identifying with Kagome's business activities and the value of its brand. ● Change the advertising strategy from short-term advertising campaigns to strengthening communication that continues to strengthen relationships.
Slide 24: 3. Pursuit of Both Organic and Inorganic Growth
3. Pursuit of Both Organic and Inorganic Growth Organic growth: stable growth in the existing businesses Organic growth area Average sales growth rate Focus fields in the organic growth area (the figures are changes from 2021) of 2% or more Beverages (+7.0 billion yen) Vegetable soups (+3.5 billion
Slide 25: 3. Pursuit of Both Organic and Inorganic Growth
3. Pursuit of Both Organic and Inorganic Growth Inorganic growth: growth based on new resources acquired through M&A, etc. Example Investment areas Equity participation in TWO Inc., a plant-based food startup ● Accelerate the execution of strategies in the plant-based ●Plant-based domain food busine
Slide 26: 3. Pursuit of Both Organic and Inorganic Growth
3. Pursuit of Both Organic and Inorganic Growth Explore business opportunities in areas at both ends of the "smile curve" ((1), (2)) and draw up growth strategies Relationships between parts of the value chain of the international business and profitability at subsidiaries (The ROA is the average in
Slide 27: 4. Strengthening the Group's Management Foundation and Fostering a Culture for Tackling Challenges
4. Strengthening the Group's Management Foundation and Fostering a Culture for Tackling Challenges Strengthen the foundation for sustainable growth and create innovations Strengthen risk management under a new system headed by CRO and respond to a variety of risks Fostering a culture for tackling St
Slide 28: Financial Strategy for Third Mid-Term Management Plan
Financial Strategy for Third Mid-Term Management Plan Make growth investments and return profits, while maintaining a stable financial base (a) Stable financial base ● A stable financial base has to be maintained for sustainable growth and responding to major environmental changes. Equity capital ra
Slide 29: Financing, Demand for Funds, Cash Flow Plan
Financing, Demand for Funds, Cash Flow Plan Capital investments and shareholder returns will be paid from cash flows from operating activities. Funds for business investment for inorganic growth are treasury stock and borrowings. Investment and return Source of funding Capital investment: 45 billion
Slide 30: 4. Sustainability at Kagome
4. Sustainability at Kagome 30
Slide 31: Sustainability at Kagome
Sustainability at Kagome The Kagome Group believes that sustainability means business activities to become a strong company that can achieve sustainable growth by resolving social issues through food. Extension of healthy life Agricultural revitalization/Regional Sustainable global environment expec
Slide 32: Examples of Specific Initiatives (1)
Examples of Specific Initiatives (1) Promote energy conservation activities throughout the Group to achieve greenhouse gas emissions reduction targets Greenhouse gas emissions Renewal of Fujimi Plant (Nagano Prefecture) reduction targets Installation of solar panels ● Installed solar panels on the r
Slide 33: Examples of Specific Initiatives (2)
Examples of Specific Initiatives (2) Activities to conserve water and biodiversity, which are closely related to the Company's business activities Conservation of Water: placed on CDP's Conservation of Biodiversity Water Security 2021 A List Reservoir dam of Kagome Tomato farm Seed storage Australia
Slide 34: Survive in the "food and health" domain
Finally… Survive in the “food and health” domain through the power of vegetables “Become a strong company that can achieve 2025 Goal sustainable growth resolving social issues through foods.” Transform from a “tomato company” 2025 Vision to a “vegetable company” 2025 Vision Revenue 212 billion yen K
Slide 35: Reference
Owe BOLK RL. * KAGOME Reference
Slide 36: Monthly Revenue Compared with 2020 and 2019
Monthly Revenue Compared with 2020 and 2019 Revenue in the domestic beverages category and domestic food for household use exceeded 100% compared to 2019. Revenue in the domestic institutional and industrial use category fell below 100% compared to 2019. In the second half, it recovered to the 90% r
Slide 37: FY2021 Results: Topics in Domestic Processed Food Business Beverages
FY2021 Results: Topics in Domestic Processed Food Business Beverages Revenue increased, reflecting continued rises in health consciousness and active promotions, including the Let's eat vegetable campaign Income fell due to sharp rises in sales promotion expenses, and in the second half, in raw mate
Slide 38: FY2021 Results: Topics in Domestic Processed Food Business Direct Marketing
FY2021 Results: Topics in Domestic Processed Food Business Direct Marketing Posted gains in revenue due to growing use of the direct marketing channel and rising health consciousness Revenue rose, reflecting an increase in the number of regular customers, but income decreased chiefly due to an incre
Slide 39: Topics in Domestic Processed Food Business Food and Others
Topics in Domestic Processed Food Business Food and Others Revenue from products for household use fell in the absence of the previous year’s demand, while revenue from products for institutional and industrial use increased. Revenue increased, reflecting a recovery in the institutional and industri
Slide 40: Topics in Domestic Agriculture Business
Topics in Domestic Agriculture Business Revenue declined, reflecting a decrease in procurement volume due to a downturn in market conditions for fresh tomatoes in the first half and bad weather in the second half. Income increased due to structural reform through a company split-up and a recovery in
Slide 41: Topics in International Business
Topics in International Business Posted gains in revenue and profit due to recovery of food service demand and lower costs due to increased productivity Costs increased from the second half. Core operating income was on a par with the year-ago level, except for the effect of impairment losses in the
Slide 42: Change in Segment Management System
Change in Segment Management System The segment management system changes in accordance with the actual situation from the period of the third Mid-Term Management Plan. The management of part of head office expenses in the non-consolidated results that were included in the domestic processed food bu
Slide 43: Factors Contributing to Core Operating Income Changes in FY2022
Factors Contributing to Core Operating Income Changes in FY2022 Cost reductions will likely be more than offset by rises in raw materials prices and energy prices. As a result, income in the domestic processed food business is expected to decrease. Unit: 100 million yen FY2021 141 Increase in profit
Slide 44: Change in Dividends
Change in Dividends The dividend per share for FY2022 is planned to be 38 yen under the dividend policy in the third Mid-Term Management Plan (annual dividends of 38 yen or more per share, a total return ratio of 40%). Annual dividend 10 per share (yen) (Special dividend) 37 38 35 36 30 30 24.5 22 2
Slide 45: Initiatives for Sustainability
Initiatives for Sustainability Efforts to achieve sustainable growth ✓ Aim for effectively zero greenhouse gas emissions by 2050. Set reduction targets up to Sustainable 2030 and take steps to achieve them. global ✓ Conservation activities through business under policies on water and biodiversity en