Ajinomoto Co., Inc. · TSE:2802

Ajinomoto — FY2014 Earnings Presentation

38 slides from Ajinomoto's earnings presentation, May 12, 2014

1. Slide 1: Forecast for the Fiscal Year Ending March 31, 2015 (FY2014) and Outlook

   Ajinomoto Co., Inc. Forecast for the Fiscal Year Ending March 31, 2015 (FY2014) and Outlook May 12, 2014 Masatoshi Ito President & CEO

2. Slide 2: Contents

   Contents I. Overview of FY2014 Forecast FY2014 Forecast ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・2 Factors in Changes in FY2014 Operating Income Forecast ・・・・・・・ 3 FY2014 Forecast by Segment ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・4 FY2014 Forecast - Ordinary Income and Net Income ・・・・・・・・・・・・・5 Targ

3. Slide 3: I. Overview of FY2014 Forecast

   I. Overview of FY2014 Forecast Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

4. Slide 4: FY2014 Forecast

   FY2014 Forecast Net Sales: Increase as accelerated growth of overseas food products and shift to specialty products in bioscience products & fine chemicals offset a decrease in pharmaceuticals sales. Operating Income: Growth in every segment except pharmaceuticals. FY2014 FY2013 YoY (\ Billion) Fore

5. Slide 5: Factors in Changes in FY2014 Operating Income Forecast

   Factors in Changes in FY2014 Operating Income Forecast Impact of exchange rates will revert to negative; moderate upturn in prices of raw material and fuel for fermentation. Increase in income forecast as improved profitability in every business except pharmaceuticals offsets the above factors. Impa

6. Slide 6: FY2014 Forecast by Segment

   FY2014 Forecast by Segment FY2014 FY2013 YoY Change O.P.% O.P.% Forecast Amount % Net sales 1,008.0 952.1 55.9 6% Domestic Food Products 312.3 300.7 11.6 4% Overseas Food Products 322.2 292.4 29.8 10% Bioscience Products & Fine 238.4 228.1 10.3 5% Chemicals Pharmaceuticals 44.0 51.2 -7.2 -14% Other

7. Slide 7: FY2014 Forecast - Ordinary Income and Net Income

   FY2014 Forecast - Ordinary Income and Net Income Extraordinary gains (losses): No substantial items are expected. Net income: Increase forecast associated with increases in each level of income. FY2014 FY2013 Difference Main Factors Forecast Results Net sales 1,008.0 952.1 55.9 Ne t sal e s base d o

8. Slide 8: Targeted Composition of Operating Income

   Targeted Composition of Operating Income: Raise earnings quality by controlling the ratio of bulk businesses and pursuing specialty company-wide. (¥ Billion) Feed-use amino acids 150.0 150.0 Pharmaceuticals 10.0 Calpis 9.0 (until FY2012) 91.0 8.0 Food Products, Bioscience Products 4.6 and Fine Chemi

9. Slide 9: Roadmap to a Genuine Global Specialty Company

   Roadmap to a Genuine Global Specialty Company: Accelerate growth to take aim at becoming one of the global top 10 companies. Achieve stable profit growth with a shift to specialty EPS growth of around 10%/year Transition to a End in profit global food Get out of the red Accelerate company growth mom

10. Slide 10: II-1. GROW: Accelerate Growth Momentum, Consumer Foods

    II. – 1. GROW: Accelerate Growth Momentum Consumer Foods (1) Domestic Consumer Foods (2) Overseas Consumer Foods Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

11. Slide 11: Impact of the Consumption Tax Rate Increase on Domestic Food Products

    GROW: Accelerate Growth Momentum Impact of the Consumption Tax Rate Increase on the Domestic Food Products Business Expected level of last-minute surge in Stimulate demand after the tax rate increase demand before consumption tax rate Minimize the reactive decrease during increase. April-June 2014 S

12. Slide 12: Domestic Food Products: Frozen Foods, Restore Profitability in FY2014

    GROW: Accelerate Growth Momentum (1) Domestic Food Products: Frozen Foods Work to Restore Profitability in FY2014 Return to income growth by continuing sales expansion in Japan and overseas and further reinforcing the earnings structure. FY2013 Operating income: ¥5.4 billion Increase in costs Surge

13. Slide 13: Domestic Food Products: Frozen Foods, Restore Profitability in FY2014

    GROW: Accelerate Growth Momentum (1) Domestic Food Products: Frozen Foods Work to Restore Profitability in FY2014 Return to income growth by continuing sales expansion in Japan and overseas and further reinforcing the earnings structure. Operating Income Forecast ¥6.5 billion (+¥1.1 billion YoY, aim

14. Slide 14: Overseas Consumer Foods

    GROW: Accelerate Growth Momentum (2) Overseas Consumer Foods Create country/area pillars to follow Japan with rapid growth originating in the core “Five Stars” countries where the Ajinomoto Group does business outside Japan. “Five Stars” Aim for Doubling/Tripling Growth: over 10% sales growth in FY2

15. Slide 15: Overseas Consumer Foods: Rising Stars

    GROW: Accelerate Growth Momentum (2) Overseas Consumer Foods Accelerate rapid growth in “Rising Stars” countries. “Rising Stars” Core Strategies Africa/Middle East Europe/North America Accelerate rollout to adjacent countries Strengthen products and establish Middle centered on umami seasoning sales

16. Slide 16: II-2. GROW: Amino Science, Life Support

    II. – 2. GROW: Accelerate Growth Momentum Amino Science (3) Life Support Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

17. Slide 17: Life Support Field: Customer-Driven Evolution into Specialty

    GROW: Accelerate Growth Momentum (3) Life Support Field: Promote Customer-Driven Evolution into Specialty - Chemicals Business- Expand non-PC applications for ABF to reduce dependence on PCs and achieve stable growth. Develop new materials based on ABF technology and begin sales of applications of o

18. Slide 18: III. FIT: Further Business Structure Reinforcement

    III. FIT: Further Business Structure Reinforcement Shift from Bulk Commodities toward Specialty Businesses Technology for Fermentation Using Fewer Resources Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

19. Slide 19: Shift Commodity Bulk Business toward Specialty

    FIT: Further Business Structure Reinforcement Shift Commodity Bulk Business toward Specialty and Reduce Dependence on Bulk Based on Our Strengths in Materials and Technologies and Our Ability to Identify Customer Needs and Create Customer Value Umami Seasonings for MSG (% based on weight) Processed

20. Slide 20: Conduct Full-Scale Structural Reform for Continuous Growth

    FIT: Further Business Structure Reinforcement Conduct Full-Scale Structural Reform for Continuous Growth ■ Commodity Lysine/Threonine: The market continues to grow stably by around 5%. Restore earnings As market inventory drops due to production by strengthening Growth of Specialty Earnings adjustme

21. Slide 21: Progress of Lower Resource Fermentation Technology

    FIT: Further Business Structure Reinforcement Progress of Lower Resource (R&D Leadership) Fermentation Technology Achieve ¥3.0 Billion in Cost Reductions in FY 2014 FY2011-2013 FY2014 FY2015 FY2016 Introduced in Brazil High performance （FY13/Q1） (Higher reduction rate) ★ Rollout to other regions （FY

22. Slide 22: IV. FY2014 Financial Strategy

    Ⅳ. FY2014 Financial Strategy Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

23. Slide 23: FY2014 Financial Strategy

    FY2014 Financial Strategy Increase earnings and strengthen cash flow generation with business structure reinforcement and acceleration of growth momentum. Use free cash flow for continuous and stable shareholder returns while prioritizing investments for growth.  Generation of cash based on profit

24. Slide 24: Investment for Growth and Shareholder Returns

    FY2014 Financial Strategy - Investment for Growth and Shareholder Returns - Generate free cash flow (FCF) and prioritize investment in growth. Further enhance shareholder returns. Generate FCF Weighted Allocation toward Investment in Growth Shareholder Returns Increase operating income and net incom

25. Slide 25: V. Animal Nutrition Business Strategy in FY2014

    V. Animal Nutrition Business Strategy in FY2014 May 12, 2014 Yoichiro Togashi, President Ajinomoto Animal Nutrition Group, Inc. Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

26. Slide 26: Animal Nutrition: Basic Principle and Specific Measures in FY2014

    FY 2014 Animal Nutrition Business Strategy - Basic Principle and Specific Measures in FY 2014 - FY2014-2016 Medium-Term Management Plan Business Principle: Conduct Full-Scale Structural Reform for Continuous Business Growth (1) Commodity Businesses (2) Specialty Businesses Restore earnings by streng

27. Slide 27: Animal Nutrition Business Strategy: Market Environment

    FY 2014 Animal Nutrition Business Strategy - Market Environment - • Grain Market Conditions FY2013 FY2014 Most and Spread Assumptions recent Spread (USD/ST) 255 Approx. 230 Approx.300 YoY Market Lysine +8% +5% Growth Threonine +21% +5% Tryptophan +56% +35% FY2013 Review FY2014 Plan Commodity Lysine/

28. Slide 28: Changes in Competition and Ajinomoto's Strategy

    FY 2014 Animal Nutrition Business Strategy Changes in Competition and Ajinomoto’s Strategy 3 million tons Ajinomoto’s Strategy 2 million tons  Fermentation technology capability (strengthen cost competitiveness  Reduction of business volatility  Location/supply strategy (region-based/production i

29. Slide 29: Animal Nutrition Operating Income Plan

    FY 2014 Animal Nutrition Business Strategy Operating Income Plan Strengthen Commodity Business Promote Specialty Businesses (over 40% of total) Competitiveness • Increase productivity and reduce costs by introducing • Expand business for AjiPro®-L Lysine for dairy cattle new technology (fermentation

30. Slide 30: VI. Pharmaceuticals Business Strategy in FY2014

    VI. Pharmaceuticals Business Strategy in FY2014 May 12, 2014 Takashi Nagamachi President & CEO AJINOMOTO PHARMACEUTICALS CO., LTD. Copyright © 2014 Ajinomoto Co., Inc. All rights reserved.

31. Slide 31: Pharmaceuticals: Composition of FY2014

    FY 2014 Pharmaceuticals Business Strategy Composition of FY2014 １．FY2014 Forecast (¥ Billions) FY2013 Results （A） FY2014 Forecast （B） YoY Change （B） - （A） Net Sales 51.3 44.0 (7.3) Operating Income 3.8 3.5 (0.3) O.P. Margin 7.4% 8.0% Analysis of Variance in Operating Income National Health -0.3 Insu

32. Slide 32: Pharmaceuticals: Specific Initiatives for FY2014

    FY 2014 Pharmaceuticals Business Strategy Specific Initiatives for FY2014 1) Structural Reform of R&D: 2) Expand into Adjacent Categories: Shift investment from discovery to development, Develop ELENTAL® in the PEG field Improve pipeline productivity with emphasis on potential Ratio of researchers I

33. Slide 33: Pharmaceuticals: Overseas Development and IBD Treatment Field

    FY 2014 Pharmaceuticals Business Strategy Specific Initiatives for FY2014 3) Accelerate overseas business development 4) Expand into the IBD treatment field Build a business foundation for portfolio expansion Strengthen the development pipeline Therapeutic agents for inflammatory bowel disease ・ Exp

34. Slide 34: Reference

    Reference Trends in Overseas Consumer Food Products Assumptions of FY2014 Forecast Feed-Use Lysine Market Price and CBOT Spread Trend

35. Slide 35: FY2013 Trends in Overseas Consumer Food Products

    (Reference) FY2013 Trends in Overseas Consumer Food Products <Instant noodles and North powdered beverages> Other America < Europe & Africa> Expanded bases for rollout 2% High potential in 1% in future African market Europe Other <Asia> <Beverages> 7% processed Profit source as Core product foods 15

36. Slide 36: Assumptions of FY2014 Forecast

    【参考】2015年3月期予想の前提条件等 Foreign exchange rates (vs JPY) Feed-use amino acids 1) Estimated market size (Thousand MT) Sensitivity of translation effects to FY2012 FY2013 FY2014 (Forecast) Avg. rate full year O.P. Lysine 1,950 2,100 around 2,200 USD 100.0 ±¥1→ approx. ¥50 million Threonine 330 400 around

37. Slide 37: Feed-Use Lysine Market Price and CBOT Spread Trend

    (Reference) Feed-Use Lysine Market Price and CBOT Spread* Trend *The spread is the price difference between soybean meal and corn on the Chicago Board of Trade (CBOT). Spread Lysine Market Price Copyright © 2014 Ajinomoto Co., Inc. All rights reserved. 36

38. Slide 38: Eat Well, Live Well.

    Eat Well, Live Well. AJINOMOTO. » Forward-looking statements, such as business performance forecasts, made in these materials are based on management’s estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectat

Ajinomoto — FY2014 Earnings Presentation on 6ix