Lacto Japan Co., Ltd. · TSE:3139
Lacto Japan — Q2 FY2020 Earnings Presentation
30 slides from Lacto Japan's earnings presentation, Jul 21, 2020
Slide 1: FY2020 Second Quarter Financial Results Briefing
FY2020 Second Quarter Financial Results Briefing July 21, 2020 Lacto Japan Co.,Ltd. © Lacto Japan Co., Ltd.
Slide 2: Contents
Contents 1 FY2020 Second Quarter Financial Results and Full-Year Earnings Forecasts P. 3 2 Overview of Business Divisions P. 10 3 Initiatives Related to Impact of Spread of COVID-19 and Growth P. 17 4 Reference Information: Foreign Exchange Fluctuation Risk P. 27 2 © Lacto Japan Co., Ltd.
Slide 3: FY2020 Second Quarter Financial Results and Full-Year Earnings Forecasts
FY2020 Second Quarter Financial Results and Full-Year Earnings Forecasts 3 © Lacto Japan Co., Ltd.
Slide 4: Financial Summary
Financial Summary Amid the severe economic environment caused by the coronavirus pandemic, we minimized the impact and secured YoY revenue and profit growth Consolidated Net Sales: +0.3% YoY / -6.6% vs. initial forecast ▍ Although net sales decreased in the Dairy Ingredients and Cheese Business due
Slide 5: FY2020 Second Quarter Financial Summary
FY2020 Second Quarter Financial Summary (Millions of Yen) FY11/2020 2Q FY11/2019 2Q YoY YoY Actual Difference Change (%) Net sales 57,712 57,912 +199 +0.3 Ordinary income 1,252 1,433 +181 +14.5 Ordinary income ratio 2.2% 2.5% - - (Foreign exchange impact on (-99) (17) - - ordinary income*) Net incom
Slide 6: Factors Contributing to Increase/Decrease in Sales and Ordinary Income
Factors Contributing to Increase/Decrease in Sales and Ordinary Income Sales rose due to an increase in sales volume. Ordinary income increased due to an improvement in the gross margin and the foreign exchange impact. ⃞ Net sales ⃞ Ordinary income (Millions of Yen) (Millions of Yen) Volume Foreign
Slide 7: Balance Sheets
Balance Sheets (Millions of Yen) FY11/2019-end May 2020-end Difference Major factors of change Current assets 45,774 48,222 2,447 Cash and cash equivalents 4,474 5,068 593 Increase in trade notes and Increase in trade notes and accounts receivable accounts receivable 17,852 18,632 780 Inventories 22
Slide 8: Cash Flow Statements
Cash Flow Statements (Millions of Yen) FY11/2019 FY11/2020 Major factors Difference 2Q 2Q of change Cash flows from operating 2,506 -569 -3,075 Decrease in operating CF activities Increase in accounts receivable Cash flows from investing 233 -4 -237 and inventories activities Cash flows from financi
Slide 9: FY11/2020 Consolidated Earnings Forecasts
FY11/2020 Consolidated Earnings Forecasts (Millions of Yen) FY11/2020 FY11/2019 Actual YoY YoY Forecasts Difference Change (%) Net sales 116,794 130,000 +13,205 +11.3 Ordinary income 2,746 3,000 +253 +9.2 Ordinary income ratio 2.4 2.3 - - Net income attributable to 1,963 2,100 +136 +7.0 owners of th
Slide 10: Overview of Business Divisions
Overview of Business Divisions 10 © Lacto Japan Co., Ltd.
Slide 11: Net Sales and Sales Volume by Business Division
Net Sales and Sales Volume by Business Division Although the Dairy Ingredients and Cheese Business was affected by the coronavirus pandemic, the Asian business was strong (Millions of Yen) FY11/2019 FY11/2020 Net sales YoY 2Q 2Q Difference Change (%) Cumulative Cumulative Dairy Ingredients and Che
Slide 12: Overview of Dairy Ingredients and Cheese Business
Overview of Dairy Ingredients and Cheese Business ⃞ Business environment in the first half □Net sales (Millions of Yen) ▏ Demand for dairy ingredients used in restaurants and Cumulative 42,675 39,927 souvenir confectionery declined. However, demand related to home meals and prepared foods was strong
Slide 13: Overview of Meat Products Business
Overview of Meat Products Business ⃞ Business environment □Net sales in the first half (Millions of Yen) ▏ While restaurant-related demand decreased, demand Cumulative 6,104 6,107 related to home meals and prepared foods was strong. ■ 2Q ▏ In the second half of April, U.S. pork manufacturers 3,162 3
Slide 14: Overview of Asian Business (Dairy Ingredients)
Overview of Asian Business (Dairy Ingredients) ⃞ Business environment □Net sales in the first half (Millions of Yen) ▏ In Singapore and the Philippines, movement restrictions Cumulative 10,138 against the coronavirus pandemic were stricter than in Japan, but production by food manufacturers continue
Slide 15: Overview of Asian Business (Cheese)
Overview of Asian Business (Cheese) ⃞ Business environment in the first half □Net sales (Millions of Yen) ▏ Demand for food services, including restaurants and Cumulative 1,284 1,352 bakeries, was sluggish especially from the second quarter onward due to the impact of COVID-19. On the other ■ 2Q 626
Slide 16: International Prices of Dairy Products
International Prices of Dairy Products □ Skim milk powder □ Butter □ Cheese 2016 2017 2018 2016 2017 2018 2016 2017 2018 2019 2020 2019 2020 2019 2020 (EUR/MT) (EUR/MT) (EUR/MT) 3,000 8,000 4,000 7,000 3,500 2,500 6,000 3,000 2,000 5,000 2,500 1,500 4,000 2,000 3,000 1,500 1,000 2,000 1,000 500 1,00
Slide 17: Initiatives Related to Impact of Spread of COVID-19 and Growth
Initiatives Related to Impact of Spread of COVID-19 and Growth 17 © Lacto Japan Co., Ltd.
Slide 18: Impact of COVID-19 on Business Environment in Second Half
Impact of Spread of COVID-19 Infection on Business Environment in Second Half Business Divisions Business environment expected in second half • Aim to eliminate surplus inventories of domestic dairy ingredients through government countermeasures Dairy Ingredients • Fears of tight supply and demand f
Slide 19: Overview of Project to Mitigate Supply and Demand Conditions ①
(Reference) Overview of Project to Mitigate Supply and Demand Conditions ① Cost of Summary of measures measures Total Support for price difference when changing school milk related ① ¥9.1 bn demand to skim milk powder and butter related demand, etc. Subsidies to promote sale of domestic skim milk po
Slide 20: Overview of Project to Mitigate Supply and Demand Conditions ②
(Reference) Overview of Project to Mitigate Supply and Demand Conditions ② ⃞ The aim is also to contribute to the early improvement of the business environment by contributing to the elimination of domestic inventories of skim milk powder ⃞ Securing a certain quantity of dairy ingredient sales volum
Slide 21: Changes in Environment with COVID-19 and after COVID-19
Changes in Environment with COVID-19 and after COVID-19 ⃞ Environmental changes ▍The key word for product development across the entire food industry is "health" ▍Stability of supply chain increasingly important ▍In Asia as well, awareness of “food” and “health” is increasing Using our strengths and
Slide 22: Our Initiatives Focused on with COVID-19 and after COVID-19
Our Initiatives Focused on with COVID-19 and after COVID-19 ⃞ Making our response to changes in the environment a driving force for new growth Key word for product Stability of supply chain is In Asia as well, awareness of development across the entire increasingly important “food” and “health” is f
Slide 23: Business Development Department (Functional Food Ingredients Team)
Business Development Department (Functional Food Ingredients Team) ⃞ Accelerate efforts to respond to growing product development needs of business partners focusing on "health” New business partners Other new Develop new sales products channels Functional food Also explore sales ingredients Continu
Slide 24: Corporate Business Plan “Next-LJ2022”
Corporate Business Plan “Next-LJ2022” ⃞ The policy of the corporate business plan will remain unchanged ⃞ We will implement measures in line with policies according to changes in the business environment with COVID-19 and after COVID-19 Corporate Business Plan "Next-LJ2022” Basic Policy "Evolve" bus
Slide 25: Responses to Spread of COVID-19 Infection
Responses to Spread of COVID-19 Infection ⃞ Regarding business partners To ensure a stable supply of products to our business partners, we are strengthening our cooperation with our suppliers while also making use of our overseas subsidiaries. ⃞ Regarding employees For the safety of employees and th
Slide 26: Please note
Please note This report contains projections of business performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections as a result of changes in the economic environment and
Slide 27: Reference Information: Foreign Exchange Fluctuation Risk
Reference Information: Foreign Exchange Fluctuation Risk 27 © Lacto Japan Co., Ltd.
Slide 28: Risk of foreign exchange fluctuation and separate accounting treatments
Risk of foreign exchange fluctuation at Lacto Japan and separate accounting treatments In principle, Lacto Japan's business model hedges risks of foreign exchange fluctuations. Lacto Japan enters into sales contracts with domestic customers at the same time as entering into foreign currency purchase
Slide 29: Model of Business Flow (Impact of Foreign Exchange Fluctuation)
Model of Business Flow (Impact of Foreign Exchange Fluctuation in Separate Accounting) Foreign exchange fluctuations have no impact on actual profit under our basic business model. Products sold during the same financial period as that ① Contract signed ② Shipment ③ Purchase settled ④ Products sold
Slide 30: Lacto Japan
hed Lacto Japan