Meiji Holdings Co., Ltd. · TSE:2269

Meiji — FY2019 Earnings Presentation

59 slides from Meiji's earnings presentation, May 22, 2020

  1. Slide 1: Financial Results for FYE March 2020

    Financial Results for FYE March 2020 May 22, 2020

  2. Slide 2: Agenda

    Agenda 1. Impacts of the Novel Coronavirus 2. Overview for FYE March 2020 3. Outlook for FYE March 2021 4. For the Future Growth  Information in this material is not intended to solicit sale or purchase of shares in Meiji Holdings. The final decision relating to investments should be made based on

  3. Slide 3: 1. Impacts of the Novel Coronavirus

    1. Impacts of the Novel Coronavirus 3 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  4. Slide 4: Response to Novel Coronavirus Pandemic

    Response to Novel Coronavirus Pandemic  Stable supply products to customers – Our mission • Continue production at all Japanese and overseas plants • Responsible as a manufacturer of essential food and pharmaceutical products  Cooperation with business partners • Strengthen partnerships with raw m

  5. Slide 5: Impact on production and sales

    1) Production/Sales  Production: All food and pharmaceuticals plants are operating in Japan and overseas No significant impact so far  Sales: Demand of essential food products favorable Commercial use products and nutritional products down due to stay-at-home orders Pharmaceuticals impacted by dec

  6. Slide 6: 2) Earnings

    2) Earnings  Q4 consolidated earnings: Net sales largely unchanged YoY, operating income increased. Contributions from product mix improvements and reduced expenses.  Net sales from Feb. to Apr. 2020: Favorable products compensated for stagnant products, overall net sales stayed within range of +/

  7. Slide 7: 2. Overview for FYE March 2020

    2. Overview for FYE March 2020 7 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  8. Slide 8: Summary for FYE March 2020

    Summary for FYE March 2020 (JPY bn) FY3/19 FY3/20 FY3/20 Meiji HD (consolidated) Results Plan Results YoY Change vs. Plan -0.1% -4.3% Net sales 1,254.3 1,309.0 1,252.7 -1.6 -56.2 +4.4% -4.9% Operating income 98.3 108.0 102.7 +4.3 -5.2 Op. income margin 7.8% 8.3% 8.2% +0.4pt -0.1pt Net income attribu

  9. Slide 9: Food Results of FYE March 2020

    Food Results of FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan -0.7% -3.7% Net sales 1,056.6 1,090.0 1,049.5 -7.0 -40.4 Operating +3.0% -3.0% 84.7 90.0 87.3 +2.5 -2.6 income (JPY bn) YoY Change in Operating Income FY3/19 84.7 : Increased revenues due to price i

  10. Slide 10: Pharma Results of FYE March 2020

    Pharma Results of FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan +2.9% -7.3% Net sales 198.6 220.5 204.3 +5.6 -16.1 Operating +12.2% -13.6% 14.2 18.5 15.9 income +1.7 -2.5 YoY Change in Operating Income (JPY bn) 14.2 : NHI price revision FY3/19 -3.5 : Increased

  11. Slide 11: 3. Outlook for FYE March 2021

    3. Outlook for FYE March 2021 11 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  12. Slide 12: Key Strategy Corona response

    FYE March 2021 Plan Key Strategy 1. Expand share and achieve high revenues in core businesses 2. Expand aggressively in overseas markets and establish growth platform 3. Propose new value in health care domain 4. Continue structural reforms and resolve specific business issues in each business 5. En

  13. Slide 13: Outlook for FYE March 2021

    Outlook for FYE March 2021 (JPY bn) FY3/20 FY3/21 Meiji HD (consolidated) Results Plan YoY Change +0.0% Net sales 1,252.7 1,253.0 +0.2 +7.1% Operating income 102.7 110.0 +7.2 Op. income margin 8.2% 8.8% +0.6pt Net income attributable to +3.2% shareholders of parent 67.3 69.5 +2.1 company EPS (JPY) 4

  14. Slide 14: Food Analysis of Operating Income for FYE March 2021

    Food Analysis of Operating Income for FYE March 2021 (JPY bn) FY3/20 FY3/21 Results Plan YoY Change JPY 18.9 billion from -0.8% Asahi Broiler and 2 Net sales 1,049.5 1,041.4 -8.1 other companies outside scope of +6.5% Operating income 87.3 93.0 +5.6 consolidation YoY Change in Operating Income (JPY

  15. Slide 15: Food Market health value of probiotics and yogurt

    Food Market health value of probiotics and yogurt Sales of ■ Functional yogurt ■ Yogurt Functional Yogurt (JPY bn)  Respond to increase in sentiment for prevention 203.5 197.8 205.4 and health consciousness. Promote appealing 195.3 added value for sustainable growth Propose new value: 84.1 84.9 87.

  16. Slide 16: Food Expand market for healthy chocolate

    Food Expand market for healthy chocolate Sales of chocolate  Healthy chocolate (JPY bn) 104.0 100.0 • Chocolate Kouka: Promote health value, 95.4 97.1 increase brand recognition • Expand sales by expanding production capacity for large bags • Oligo Smart: Promote functions  Specialty Chocolate • P

  17. Slide 17: Food Nutritionals Business: Expand major brands

    Food Nutritionals Business: Expand major brands Sales of ■ Nutritional products Sports nutrition ■ SAVAS Milk ■ Sports Nutrition 94.8  Aggressively promote towards 92.7 (JPY bn) insufficient physical activity due to 81.1 74.5 stay-at-home orders 58.7 60.5 • SAVAS: Promote quality improvements 55.2

  18. Slide 18: Food Overseas Business: Grow in each area

    Food Overseas Business: Grow in each area Overseas Sales ■ Exports (JPY bn)  Mainland China ■ The U.S. • Grow existing products significantly and ■ ASEAN ■ Mainland China 54.0 strengthen e-commerce 47.1 48.4 • Promote new SAVAS sports protein 8.6 43.4 H1 2020: Sales launch (planned) 7.9 7.3 9.0 20.

  19. Slide 19: Food Strengthen China Chilled Milk and Yogurt Business

    Food Strengthen China Chilled Milk and Yogurt Business Sales of Chilled milk and Yogurt (RMB mm) double Aggressive investments to expand sales double  Spring 2021: Expand production line in 492 Suzhou Plant  2H/FY3/23: Start operation Tianjin plant FY3/20 ・・ FY3/24E ・・ FY3/27E  By FY3/27: Start p

  20. Slide 20: Business partnership with Danone for infant formula production in Europe

    Food Business partnership with Danone for infant formula production in Europe  Overview of partnership × DANONE • Production and sales of cube-type infant formula in European markets Exclusive agreement with Danone • Meiji provides manufacturing technology, Danone sales cubes under their brand name

  21. Slide 21: Food Monthly profitability for milk business in 2H of FY3/2021

    Food Monthly profitability for milk business in 2H of FY3/2021 Sales of Milk （except for SAVAS Milk） 1. Promote value-added products (JPY bn) ■ Meiji Oishii Gyunyu ■ Others • Promote value of edge container 104.6 102.1 100.0 Shading, air tightness 90.7 46.8 45.9 42.1 31.7 • Nationwide sales expansio

  22. Slide 22: Pharma Analysis of Operating Income for FYE March 2021

    Pharma Analysis of Operating Income for FYE March 2021 FY3/20 FY3/21 (JPY bn) Results Plan YoY Change +3.9% Net sales 204.3 212.3 +7.9 +12.6% Operating income 15.9 18.0 +2.0 YoY Change in Operating Income (JPY bn) FY3/20 Results 15.9 : NHI price revision -5.9 : Increased sales of vaccines, mainstay

  23. Slide 23: Pharma Domestic sales: Grow on vaccines, BILANOA, SYCREST

    Pharma Domestic sales: Grow on vaccines, BILANOA, SYCREST Sales of ■ Vaccines  Expand sales in Q1, which had low ■ BILANOA ■ SYCREST sales in previous FY (soon after the ■ REFLEX transfer of vaccine sales) (JPY bn)  Influenza HA vaccine KMB: Increase Vaccine 30.2 supply in response to expected inc

  24. Slide 24: Pharma New business model to strengthen generics business

    Pharma New business model to strengthen generics business  Approx. 2 trillion yen*1 in sales Sales of ■ Formulations to other companies will shift to generics market in 5 ■ Me Pharma years ■ Meiji Seika Pharma  Antibacterial and CNS domain: Group sales Expand sales through promotion by MR (JPY bn)

  25. Slide 25: Pharma Overseas: CMO business and antibacterial sales favorable

    Pharma Overseas: CMO business and antibacterial sales favorable Overseas Sales ■ Medreich ■ Others 47.4  Continuing market growth in emerging (JPY bn) 41.0 43.5 countries 39.4 Population growth and economic development Medreich 22.4 24.8  Ready to start expanded production 19.6 20.7 Completing pro

  26. Slide 26: Reform structure for agricultural chemicals and veterinary drugs business

    Reform structure for agricultural chemicals and veterinary Pharma drugs business Improvement of profitability in agricultural chemicals and  Sales of rice blast preventative veterinary drugs business ORYZEMATE decreased significantly Status of FY3/20 (JPY bn) (Compared to FY3/18) Operations suspend

  27. Slide 27: Capex, Depreciation and amortization, Cash flow

    Capex, Depreciation and amortization, Cash flow Capex and Depreciation and amortization Cash flow Capex （JPY bn） （JPY bn） 85.2 Depreciation and amortization 11.7 1.2 71.7 71.2 71.1 7.8 9.7 11.8 10.7 43.2 44.3 49.0 46.5 46.1 43.0 10.1 6.0 9.6 9.0 120.9 73.2 108.7 112.1 114.1 63.8 100.2 119.7 61.3 60.

  28. Slide 28: Returns to shareholders

    Returns to shareholders  FY3/20 was JPY 150 (dividend payout ratio: 32.3%), dividends increased for 6 consecutive years  Planning to maintain JPY 150 (dividend payout ratio: 31.3%) for FY3/21 86.6% 61.7% Dividend payment ratio 45.0% 35.4% 30.9% 30.8% 32.8% 32.3% 31.3% 23.8% 21.2% 26.6% Dividend pe

  29. Slide 29: 4. For the Future Growth

    4. For the Future Growth 29 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  30. Slide 30: 1) Co-Creation Center Initiatives

    1) Co-Creation Center Initiatives Create unique health value and contribute to resolving societal issues as an ageing society  Mission for Co-Creation Center Food 1. Create unique value that leads to extending the ● Nutrition science expertise healthy lifespan by fusing knowledge gained ● Milk, lac

  31. Slide 31: 2) New market creation

    2) New market creation  New market creation (g/Day) Transitions in protein consumption volume Meiji TANPACT 90 • Our protein consumption has fallen to 1950s 80 levels 70 • Propose +10g/day in protein consumption 60 Ministry of Health, Labour and Welfare • Promote products unique to Meiji that can b

  32. Slide 32: 3) Donating snacks to Foodbank

    3) Donating snacks to Foodbank For children and households practicing stay-at-home Presents that will make children smile • Funded by donations gathered through the Meiji Group internal charitable contribution system (Meiji Happiness Fund) and donations from Meiji Holdings • The Meiji Happiness Fund

  33. Slide 33: 4) Our approach to ESG - Environment and human rights

    4) Our approach to ESG - Environment and human rights Item Period Details 1. TCFD Mar. 2020 Published scenario analysis to the Ministry of the Environment website Apr. 2020 Established the Group TCFD Committee to examine analysis Aug. 2020 Publish integrated report and disclose to Meiji HD website 2

  34. Slide 34: 5) Our approach to ESG - Governance

    5) Our approach to ESG - Governance  Introduce Chief Officer system, shift to uniform management structure for entire Group (Effective after June 2020 General Shareholders Meeting)  CEO （Chief Executive Officer） Oversees management of entire Group  CFO （Chief Financial Officer） Oversees Group fin

  35. Slide 35: Development of Vaccine for Novel Coronavirus

    Development of Vaccine for Novel Coronavirus  KM Biologics started development of vaccine  Selected for the Japan Agency for Medical Research and Development (AMED) public R&D theme Development of a Vaccine for the Novel Coronavirus Infection(COVID-19)  Develop inactivated vaccine* using existing

  36. Slide 36: Appendix: Financial data

    Appendix: Financial data 36 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  37. Slide 37: FYE March 2020

    FYE March 2020 37 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  38. Slide 38: Analysis of Operating Income for FYE March 2020

    Analysis of Operating Income for FYE March 2020 (JPY bn) Consolidated Results Food Pharma Other FYE March 2019 18年度 98.3 84.7 14.2 -0.6 Due to increased/ decreased売上増減 sales +7.5 +5.6 +1.9 ― Decrease due to NHI 薬価改定 drug price revision -3.5 ― -3.5 ― Change in原価の変動 COG sold -4.2 *1 -2.3 -1.9 ― Change

  39. Slide 39: Food Results for FYE March 2020

    Food Results for FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan Fermented Dairy -0.7% -1.2% Net sales 330.1 331.8 327.9 Fresh and -2.2 -3.9 +1.2% -0.8% Operating income 47.8 48.8 48.4 +0.5 -0.4 +1.1% +0.2% Net sales 176.5 178.0 178.4 Processed +1.8 +0.3 Food +1

  40. Slide 40: Food Results for FYE March 2020 (Nutrition, Overseas)

    Food Results for FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan +6.4% +2.6% Net sales 85.1 88.3 90.6 Nutrition +5.4 +2.2 +21.2% +18.4% Operating income 12.9 13.3 15.7 +2.7 +2.4 +2.6% -9.3% Overseas Net sales 47.1 53.4 48.4 +1.2 -4.9 +34.4% +30.7% Operating inco

  41. Slide 41: Food Sales by Main Products - FYE March 2020

    Food Sales by Main Products - FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan Yogurt 84.9 90.6 84.4 -0.6% -6.9% Meiji Bulgaria Yogurt 78.8 78.8 76.1 -3.5% -3.4% Probiotic yogurt 112.9 114.2 110.9 -1.7% -2.9% Drinking milk 108.3 104.8 113.5 +4.8% +8.2% Meiji Oish

  42. Slide 42: Food Analysis of Operating Income FYE March 2020

    Food 食品 Analysis of Operating Income FYE March 2020 Food Fresh and Other Processed Corporate (JPY bn) Segment Fermented Confectionery Nutrition Overseas Domestic Food Expenses Total Dairy Subsidiaries FY3/19 Operating income 84.7 47.8 8.2 20.4 13.0 1.2 3.8 -9.8 Due to increased/ decreased sales +5.6

  43. Slide 43: Pharma Results for FYE March 2020

    Pharma Results for FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan +8.5% -9.9% Net sales 130.6 157.3 141.8 Domestic +11.1 -15.5 -2.6% -14.5% Op. income 9.9 11.3 9.6 -0.2 -1.6 +6.1% -2.4% Net sales 41.0 44.5 43.5 Overseas +2.4 -1.0 +27.9% +25.1% Op. income 2.1 2.

  44. Slide 44: Pharma Sales by Main Products - FYE March 2020

    Pharma Sales by Main Products - FYE March 2020 FY3/19 FY3/20 FY3/20 (JPY bn) Results Plan Results YoY Change vs. Plan Ethical pharmaceuticals (Japan) SYCREST 3.7 7.7 4.3 +17.2% -43.7% BILANOA 7.4 9.0 7.2 -3.6% -19.7% REFLEX (includes Mirtazapine "meiji") ― 12.3 8.6 -49.0% -30.0% MEIACT (includes Cef

  45. Slide 45: Consolidated Statements of Comprehensive Income for FY3/20

    Consolidated Statements of Comprehensive Income for FY3/20 Results (JPY bn) FY3/20 YoY change Main factors for the change Net sales -0.1% 1,252.7 -1.6 ― Details on p38-44 Operating income +4.4% 102.7 +4.3 ― Details on p38-44 Non-operating income +28.5% 4.9 +1.0 ・ Insurance income (+1.2) +71.8% ・ Sha

  46. Slide 46: Consolidated Balance Sheets for FYE March 2020

    Consolidated Balance Sheets for FYE March 2020 Results (JPY bn) FY3/20 YoY change Main factors for the change -1.1% ・ Notes and accounts receivable (-22.2) Current assets 416.8 -4.5 ・ Cash and deposit (+12.0) ・ Goods and products (+5.2) -0.2% ・ Investment securities (-8.9) ・ Construction in progress

  47. Slide 47: Consolidated Statement of Cash Flow for FY3/20, Return to shareholders

    Consolidated Statement of Cash Flow for FY3/20, Return to shareholders Results (JPY bn) FY3/20 YoY change Main factors for the change ・ Decrease in notes and accounts receivable (+21.4) Cash flows from 114.1 +2.0 ・ Decrease in notes and accounts payable (-13.4) operating activities ・ Impairment loss

  48. Slide 48: Outlook for FYE March 2021

    Outlook for FYE March 2021 48 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  49. Slide 49: Consolidated plan for FYE March 2021

    Consolidated plan for FYE March 2021 (JPY bn) Full Year YoY Change +0.0% Net sales 1,253.0 +0.2 Consolidated +7.1% Operating income 110.0 +7.2 +7.4% Ordinary income 111.0 +7.6 Net income or net losses attributable to +3.2% shareholders of parent company 69.5 +2.1 -0.8% Net sales 1,041.4 Food -8.1 +6

  50. Slide 50: Food Plan by Business - FYE March 2021

    Food Plan by Business - FYE March 2021 (JPY bn) Full Year YoY Full Year YoY Change Change +11.6% Fermented Dairy -2.0% Net sales 321.4 Net sales 54.0 Overseas +5.6 Fresh and -6.4 +12.4% +7.0% Operating income 54.4 +6.0 Operating income 1.7 +0.1 Other Domestic +1.3% -5.0% Net sales 180.8 Net sales 26

  51. Slide 51: Pharma Plan by Business - FYE March 2021

    Pharma Plan by Business - FYE March 2021 (JPY bn) Full Year YoY Change +2.5% Net sales 145.3 Domestic +3.5 Operating -31.1% 6.6 -3.0 income +9.1% Net sales 47.4 Overseas +3.9 Operating +113.5% 5.8 +3.0 income KM Biologics +7.0% Net sales 43.3 +2.8 Operating +2.6% 4.0 +0.1 income Adjustment and ― Net

  52. Slide 52: Analysis of Consolidated Operating Income for FYE March 2021

    Analysis of Consolidated Operating Income for FYE March 2021 (JPY bn) Consolidated Plan Food Pharma Other FYE 19年度実績 March 2020 102.7 87.3 15.9 -0.6 Due to increased/ 売上増減 +6.7 +2.8 +3.9 ― decreased sales Decrease due to NHI ― -5.9 ― 薬価改定 drug price revision -5.9 Change in原価の変動 COG sold -2.7 *1 -1.1

  53. Slide 53: Key Currencies and Our Average Exchange Rates

    Key Currencies and Our Average Exchange Rates Key Currencies and Our Average Exchange Rates Foreign exchange target USD EUR RMB For FYE March 2021 (JPY) (JPY) 140.00 133.09 132.96 USD 110 129.39 129.89 129.19 125.70 123.29 119.83 120.65 120.68 120.00 EUR 120 112.74 112.83 110.46 110.00 108.85 108.71

  54. Slide 54: Appendix: Topics

    Appendix: Topics 54 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  55. Slide 55: Market Trends in Imported Raw Materials Prices

    Market Trends in Imported Raw Materials Prices (USD/MT) Nonfat Dry Milk (USD/MT) Cheese 3,000 5,000 4,500 2,500 4,000 3,500 2,000 3,000 2,500 1,500 2,000 (GBP/MT) Cacao beans (Cent/Bushel) Sugar 2,500 25 2,000 20 1,500 15 1,000 10 500 5 55 ｜May 22, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rig

  56. Slide 56: R&D Pipeline

    R&D Pipeline R&D Pipeline (◆: compounds discovered in-house) FY3/20 FY3/21 FY3/22 ME1111 [Antionychomycosis] ◆ Phase II Infectious diseases P Ib ME1100 Arbekacin inhalation [HABP/VABP] ◆ (Overseas) PI OP0595 Nacubactam [β-lactamase inhibitor] ◆ with β-Lactams disorders ME2125 Safinamide [Anti-Parkin

  57. Slide 57: R&D Pipeline

    R&D Pipeline R&D Pipeline (◆: compounds discovered in-house) FY3/20 FY3/21 FY3/22 Human vaccines KD-370 [Pentavalent vaccine against diphtheria, tetanus, pertussis, polio, and haemophilus influenza type b] Phase III KD-382 [Quadrivalent vaccine against dengue fever] Phase I (Overseas) KD-404 [Egg-de

  58. Slide 58: R&D Pipeline

    R&D Pipeline R&D Pipeline (◆: compounds discovered in-house) FY3/20 FY3/21 FY3/22 Agricultural chemicals ME5382 [Insecticide/Flupyrimin] ◆ Applied Approved (Overseas) ME5343 [Insecticide] Licensing agreement with BASF ◆* Approved (Overseas) ANM-138 [Insecticide] Joint development with Nippon Kayaku

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Meiji Holdings — FY2019 Earnings Presentation on 6ix