Slide 1: Earnings briefing materials for the fiscal year ended December 2022
Earnings briefing materials for the fiscal year ended December 2022 02/13/2023 Representative Director, President & CEO Katsunori Kawabata
Slide 2: Executive Summary
Executive Summary • FY 2022 Financial Results ‣ Sales : 152.3 billion yen; vs. the forecast: -1.7% (-2.66 billion yen) ‣ Gross Profit : 62.4 billion yen; vs. the forecast: -6.6% (-4.38 billion yen) ‣ Operating Income : 7.4 billion yen; vs. the forecast: -30.8% (-3.12 billion yen) ‣ Sales of insectic
Slide 3: Financial Result Highlights of FY 12/2022
Financial Result Highlights of FY 12/2022
Slide 4: Financial Result Highlights
Financial Result Highlights n Amidst an increase in sales and decrease in profits, results for both sales and profits fell short of the forecast (Excluding the impact from the adoption of the new Accounting Standard) n Performance was significantly impacted by sluggishness in the market for insectic
Slide 5: Sales By Segment
Sales By Segment *To outside customers (excludes internal eliminations) (Unit: 0.1 billion JPY) n A decrease in sales of insecticides & repellents and an underperformance vs. the forecast negatively impacted results n While the segment of bath salts registered a slight decrease, sales remained at el
Slide 6: Status Of The Insecticides & Repellents Segment (Domestic)
Status Of The Insecticides & Repellents Segment (Domestic) (Unit: 0.1 billion JPY) （℃） 2020 Sales (Weekly) 120 40 2021 Sales (Weekly) 2022 Sales (Weekly) 100 2020 Max. Temp. 30 2021 Max. Temp. 80 2022 Max. Temp. 20 96.2% 60 YoY 10 40 0 20 Results were impacted by sluggish sales due to unseasonable w
Slide 7: COGS – Status Overview
COGS – Status Overview n In addition to cost increases across the board (raw materials, packaging materials, etc.) foreign exchange rate fluctuations also had a negative impact, weighing down on profits n YoY: 2.75 billion yen; Vs. forecast: 1.5 billion yen - cost increase factor Impact from soaring
Slide 8: Successful Initiatives: Sales Contribution Of High Price Point Products
Successful Initiatives : Sales Contribution Of High Price Point Products n Pioneered the market for products at higher price points through new launches n In the market for insecticides & repellents, in particular, we prepared the foundation for consumer acceptance of high value-added products with
Slide 9: Successful Initiatives: Contribution From New Product Releases In The Fall Season
Successful Initiatives: Contribution From New Product Releases In The Fall Season n Agile product development allowed us to launch additional products in the fall season, not originally included in our initial plans n Sales contribution exceeded expectations New products released during the fall sea
Slide 10: Successful Initiatives: Scale Expansion Of Overseas Operations
Successful Initiatives: Scale Expansion Of Overseas Operations n Expansion continues taking place at a strong pace, especially in ASEAN, with sales from overall overseas operations growing 19.1% YoY n Malaysia / Philippines newly added to the scope of consolidation: +490 million yen; organic growth
Slide 11: Successful Initiatives: Cost Controls
Successful Initiatives: Cost Controls n -1.06 billion yen vs. the forecast, thanks to the execution of cost controls appropriate to result trends (Unit: 0.1 billion JPY) 2021 2022 2022 (Realized*) (Forecast) (Realized) Vs. Forecast Topics Personnel costs 208.8 209.1 206.8 - 2.2 Salary raises as plan
Slide 12: Successful Initiatives: Normalize Quarterly OI Results
Successful Initiatives: Normalize Quarterly OI Results (Unit: 0.1 billion JPY) n Reduce the impact of seasonality on performance through the timely recording of promotion expenses n There remains further room for improvement, in terms of Q4 (Oct. – Dec.) operating income Q1 Q2 Q3 Q4 Quarterly 81.0 6
Slide 13: FY 12/2023 Forecast Outline
ON. wc Earth Corporation FY 12/2023 Forecast Outline
Slide 14: Act For SMILE - COMPASS 2023 - Progress Status
Act For SMILE -COMPASS 2023- Progress Status n The business climate has changed significantly when compared to the assumptions the Company made in the formulation of its Medium-Term Business Plan n While we have temporarily withdrawn profit guidance, the polices and measures to be executed remain th
Slide 15: FY 12/2023 Forecast Highlights
FY 12/2023 Forecast Highlights n Achieve both an expansion in future profits resulting from investment toward sustainable growth, as well as a profit increase from reform to the profit structure n Although we expect to continue being impacted by soaring raw material prices, as we were in 2022, we wi
Slide 16: FY 2023 Operating Income Change Factors
FY 2023 Operating Income Change Factors n We expect to be able to absorb the negative impact of soaring raw material prices through the execution of cost pass-throughs n We expect a profit increase resulting from sales growth in Japan and Overseas. Simultaneously, we also intend to carry out adequat
Slide 17: Expected Increase In COGS
Expected Increase In COGS n In addition to the impact of an overall increase in raw materials, packaging materials, processing costs, etc., 2022 was also marked by forex impact n We estimate the impact from soaring raw material prices and foreign exchange rate fluctuations at +2.5 billion yen (Unit:
Slide 18: Sales At Prices Matching Value
Sales At Prices Matching Value n Absorb the impact of soaring COGS in FY 2023 through the execution of cost pass-throughs n Over time, we have built a foundation allowing high value-added products at higher price points to be well received by consumers. Against this backdrop, we will be launching ne
Slide 19: Overseas Growth: Expand Revenue Base In Asia
Overseas Growth 〜Expand Revenue Base In Asia〜 n The number of countries we operate in has increased, and there has been a steady increase in the scale of sales, although there remains significant potential for further growth n Toward achieving medium-term growth overseas, we executed organizational
Slide 20: BARTH
BARTH © Earth Corporation All Rights Reserved. 19
Slide 21: Significance & Objective Of The Business Transfer Of BARTH
Significance & Objective Of The Business Transfer Of BARTH 【Strategic Significance】 • Acquire BARTH’s [Worldview] and [Brand Value] ‣ BARTH taps into consumers’ latent needs through the vectors of [beauty], [sleep] and [recovery], possessing its own unique brand worldview offering product solutions
Slide 22: Progress Update On Investment Projects
Progress Update On Investment Projects n Pay close attention to capital efficiency and carry out investments toward profit growth. Establish a hurdle rate for each project (evaluate risk with a baseline of 7% as an estimate), and adequately carry out a decision-making process based on investment via
Slide 23: Shareholder Returns
Shareholder Returns 【Shareholder Returns Policy】 n Adopt an agile approach and, should our performance and retained earnings levels allow it, consider raising dividends and/or executing share buybacks n KPI: DOE (Dividend on Equity Ratio) 4〜5% Dividend-related KPIs Ordinary Dividend Per Share - Tren
Slide 24: Forward-looking statements disclaimer
This presentation contains forward-looking statements and financial results forecasts. These forward-looking statements and financial results forecasts were formulated on the basis of company assumptions based on the information available. These statements and forecasts are subject to risks and unce
Slide 25: Appendix
Appendix © Earth Corporation All Rights Reserved. 24
Slide 26: Initiatives By Country: Thailand
Initiatives By Country: Thailand Local Subsidiary Results (0.1 B JPY) 2023 Sales Forecast (Local Currency Basis): Vs. 2022 +2.6% Sales OI Margin Review of 2022 Initiatives in 2023 and beyond 65 • Market share in Thailand • Enhance sales and marketing 60 58.9 58.6 Insecticides & repellents: activitie
Slide 27: Initiatives By Country: Vietnam
Initiatives By Country: Vietnam Local Subsidiary Results (0.1 B JPY) 2023 Sales Forecast (Local Currency Basis): Vs. 2022 +11.6% Sales OI Margin Review of 2022 Initiatives in 2023 and beyond 60 • Significant increase in sales, partly • Grow our market share thanks to an 53.0 due to the fact that loc
Slide 28: Initiatives By Country: Malaysia / Philippines
Initiatives By Country: Malaysia / Philippines Local Subsidiary Results (0.1 B JPY) 2023 Sales Forecast (Local Currency Basis): Vs. 2022 +114.5% Malaysia 4 Sales Review of 2022 Initiatives in 2023 and beyond OI Margin 3.2 3 • Sales exceeded the forecast, • Expand scale of sales toward -42.5% thanks
Slide 29: Initiatives By Country: China
Initiatives By Country: China Local Subsidiary Results (0.1 B JPY) 2023 Sales Forecast (Local Currency Basis): Vs. 2022 +13.7% Sales OI Margin Review of 2022 Initiatives in 2023 and beyond 30 • Business and the economy • Carry out sales more pro-actively 26.8 stagnated resulting from on new EC chann
Slide 30: Supplementary Materials; FY12/2022 Results
Supplementary Materials; FY12/2022 Results
Slide 31: Consolidated: Statement of Income
Consolidated: Statement of Income （Unit：million JPY） 4Q FY12/22 4Q FY12/22 4Q FY12/22 FY12/23 4Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast YoY Realized** Sales 148,793 155,000 152,339 102.4% 98.3% 160,000 105.0% 203,785 Cost of sales 84,174 88,150 89,870 106.8% 102.0% 93,500 104.0% 121
Slide 32: Consolidated: Sales by Segment
Consolidated: Sales by Segment （Unit：million JPY） 4Q FY12/21 4Q FY12/22 4Q FY12/22 FY12/23 4Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast YoY Realized** Insecticides & Repellents 59,623 61,431 59,368 99.6% 96.6% 61,713 104.0% 69,000 Oral hygene products 7,957 8,280 8,191 102.9% 98.9% 8,4
Slide 33: Operating Income Change Factors (YoY)
Operating Income Change Factors (YoY) （Unit：million JPY） 9,477 FY12/21.4Q (Realized)* ＜Breakdown＞ Decrease in gross • Increase in gross profit due to an +1,604 profit increase in sales - 2,151 • Impact from changes in the sales composition ratio -3,755 • Impact from raw material prices and exchange
Slide 34: Operating Income Change Factors (vs. Forecast)
Operating Income Change Factors (vs. Forecast) （Unit：million JPY） 10,750 FY12/22.4Q (Forecast) ＜Breakdown＞ Gross Profit • Impact from sales plan not achieved -1,133 overperformance • Impact from changes in the sales - 4,382 composition ratio -3,249 • Impact from raw material prices and exchange rate
Slide 35: Consolidated: SG&A Expenses
Consolidated: SG&A Expenses （Unit：million JPY） 4Q FY12/21 4Q FY12/22 4Q FY12/22 FY12/23 4Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast YoY Realized** Personal expenses 20,882 20,910 20,685 99.1% 98.9% 21,795 94.9% 14,750 Shipping costs 4,276 4,449 4,502 105.3% 101.2% 4,821 93.4% 3,225 St
Slide 36: Consolidated: Balance Sheet
Consolidated: Balance Sheet （Unit：million JPY） End of End of YoY 2021 2022 Current Cash & deposits 21,027 14,772 ▲ 6,254 assets Trade receivable 22,941 24,163 1,222 Inventories 27,502 32,253 4,750 Others 2,547 2,772 225 Non-current Property, plant & equipment 27,551 29,483 1,932 assets Intangible as
Slide 37: Consolidated: Statement of Cash Flows
Consolidated: statement of Cash flows （Unit：million JPY） FY2021 FY2022 YoY Cash flows from operating activities 4,814 3,901 ▲ 912 Cash flows from investing activities ▲ 3,220 ▲ 6,266 ▲ 3,046 Cash flows from financing activities ▲ 4,610 ▲ 4,464 145 Effect of exchange rate change on cash and cash equi
Slide 38: Consolidated: Capital Expenditure, Depreciation Expenses
Consolidated: Capital expenditure, Depreciation expenses （Unit：million JPY） FY2019 FY2022 FY2021 FY2022 FY2023 FY2019 FY2020 FY2021 FY2022 FY2023 Realized Realized Realized Realized Forecast Realized Realized Realized Realized Forecast Depreciation CAPEX 1,953 3,548 2,928 5,878 7,100 3,334 3,334 3,5
Slide 39: Overview of Group Companies' Business Performance
Overview of Group Companies' Business Performance （Unit：million JPY） Earth Corporation BATHCLIN Corporation Hakugen Earth Co., Ltd. Earth Pet Co., Ltd. FY21.4Q FY22.4Q FY22.4Q FY21.4Q FY22.4Q FY22.4Q FY21.4Q FY22.4Q FY22.4Q FY21.4Q FY22.4Q FY22.4Q Realized* Forecast Realized Realized* Forecast Reali
Slide 40: Forward-looking statements disclaimer
This presentation contains forward-looking statements and financial results forecasts. These forward-looking statements and financial results forecasts were formulated on the basis of company assumptions based on the information available. These statements and forecasts are subject to risks and unce