Meiji Holdings Co., Ltd. · TSE:2269

Meiji — FY2016 Earnings Presentation

31 slides from Meiji's earnings presentation, May 13, 2016

  1. Slide 1: Financial Results for the FYE March 2016

    Financial Results - For the FYE March 2016 - May 13, 2016

  2. Slide 2: Contents

    Contents 1. Overview for FYE March 2016 2. Initiatives to Address Issues 3. Meiji’s Approach to Realize Sustainable Growth  Business forecasts and other forward-looking statements are based on information available at the time of the release of this presentation and reasonable assumptions made by t

  3. Slide 3: Basic Policies

    Basic Policies Accelerate growth and improve profitability 1. Strengthen priority businesses and take on the challenge of future growth 2. Improve profitability to withstand harsh economic environment 3. Pursue global expansion 4. Evolve the management system 3 ｜ May 13, 2016 ｜ Copyright © 2016 Meij

  4. Slide 4: FYE March 2016, 1st Year of STEP UP 17, Greatly Exceeds Targets

    FYE March 2016, 1st Year of STEP UP 17, Greatly Exceeds Targets (JPY bn) 16.3 16.3 16.3 Initial Target Revised Plan Results Change vs. YoY Change （As of May 12） （As of Nov. 11） Revised Plan +1.3% +5.4% Net sales 1,194.0 1,208.5 1,223.7 +15.2 +62.5 +17.0% +50.9% Meiji HD Operating income 52.0 66.5 77

  5. Slide 5: FYE March 2016 Greatly Exceeds Targets

    FYE March 2016 Greatly Exceeds Targets (JPY bn) YoY Change in Operating Income FYE March 2015 41.6 -6.7 : Raw materials and energy costs increase Food +21.7 : Price hikes and growth in income including from subsidiaries +11.6 : Sales growth of core products* FYE March 2016 68.2 * Yogurt, probiotics,

  6. Slide 6: Free Cash Flows Increased Significantly, and We Increased Dividends

    Free Cash Flows Increased Significantly, and We Increased Dividends (JPY bn) 16.3 16.3 Plan Results Change vs. Plan YoY Change -16.6% -34.2% Capital expenditures1) 50.8 42.3 -8.4 -21.9 Depreciation and +3.1% +0.5% 40.8 42.0 +1.2 +0.1 amortization -3.1% +4.6% R&D expenses 28.1 27.3 -0.8 +1.1 Meiji HD

  7. Slide 7: 2. Initiatives to Address Issues

    2. Initiatives to Address Issues 7 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  8. Slide 8: FYE March 2017 Guidance

    FYE March 2017 Guidance (JPY bn) Economic environment 16.3 17.3 and risk factors Results Plan YoY Change - Domestic and overseas +2.2% Net sales 1,223.7 1,251.0 +27.2 economic uncertainty -4.2% - Downturn in consumer Meiji HD Operating income 77.7 74.5 -3.2 confidence Op. income margin 6.4% 6.0% -0.

  9. Slide 9: FYE March 2017 will Focus on Gaining Secure Foothold for Continued Growth

    FYE March 2017 will Focus on Gaining Secure Foothold for Continued Growth (JPY bn) YoY Change in Operating Income • Increased retirement benefit costs • Income decline due to SKU reduction Results -- FYE March 2016 68.2 -3.4 : Negative impact of special factors Food -2.1 : Increase in raw materials

  10. Slide 10: Growth Strategy

    Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 10 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  11. Slide 11: Health-oriented Food Market is Expanding

    Food Health-oriented Food Market is Expanding – Promote Our Unique Value to Increase Market Share Net Sales Boost its solid market position (JPY bn) Functional and 200 189.9 190.8 plain yogurt 165.4  Probiotics keep stable growth 150 – Reduce seasonal fluctuations in sales and 100 popularize PA-3 5

  12. Slide 12: Promote Structural Reforms

    Food Promote Structural Reforms Selection and concentration  Increase market share of core products  Reduce SKUs and eliminate low-profitable products and businesses production system  Reduce lost sales opportunities by increasing production capacity Rebuild • Probiotics: increased production cap

  13. Slide 13: Offset NHI Drug Price Revisions to Achieve Further Growth

    Pharma Offset NHI Drug Price Revisions to Achieve Further Growth Consolidated net sales  Increase volume of Reflex and other Drugs for Infectious (JPY bn) ■Agricultural chemicals and veterinary drugs ■Ethical pharmaceuticals mainstay products diseases/CNS NHI Drug Price Revision Domestic pharmaceut

  14. Slide 14: Focus on Our Expertise to Develop New Drugs

    Phar ma Focus on Our Expertise to Develop New Drugs R&D Pipeline (◆: compounds discovered in-house) 16.3 17.3 18.3 ME1111 [Antionychomycosis] ◆ Phase II (PoC) Infectious (Overseas) diseases ME1100 Arbekacin inhalation [HABP/VABP] ◆ Phase I (Overseas) OP0595 [β-lactamase inhibitor] ◆ Out-licensing Et

  15. Slide 15: Growth Strategy

    Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 15 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  16. Slide 16: Realize Solid Growth in Overseas Markets

    Food Realize Solid Growth in Overseas Markets Overseas sales Maximize sales in current sales areas Drinking milk ■Affiliates accounted for by equity method and Yogurt/ non-consolidated companies (JPY bn) ■Consolidated subsidiaries and exports  Enhance marketing to increase recognition 79.2 80 69.9

  17. Slide 17: Expand overseas business into core business

    Pharma Expand overseas business into core business that rivals domestic operations Consolidated overseas sales Manufacture pharmaceutical products for Medreich Ltd. (JPY bn) 60 Japanese market 46.1 41.9  Invest to supply over 3 billion tablets to Japan 40 23.9  Start supply by FYE March 2018 20 In

  18. Slide 18: Growth Strategy

    Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 18 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  19. Slide 19: Strengthen Corporate Governance and Quality Assurance/Control System

    Strengthen Corporate Governance and Quality Assurance/Control System 1. Enhance corporate governance  Establish corporate governance policy  Incorporate board of director evaluations  Set up regular meetings to exchange and share information between outside directors and auditors (*1)  Increase

  20. Slide 20: 3. Meiji's Approach to Realizing Sustainable Growth

    3. Meiji’s Approach to Realizing Sustainable Growth 20 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  21. Slide 21: Big Picture for Medium- and Long-term Growth

    Big Picture for Medium- and Long-term Growth 77.7 74.5  Increase profitability and grow in Consolidated 51.5 both profit margin and total Operating Income income (JPY bn) 36.4  Maintain ROE of 10% and higher 28.7 29.9 25.8 20.1 10.3 11.3 12.3 13.3 14.3 15.3 16.3 17.3E STEP UP 17  Address outstand

  22. Slide 22: Use of Cash Flows and Returns to shareholders

    Use of Cash Flows and Returns to shareholders Improve profitability Grow both margin and total income Investments Operating cash flows Invest for future growth and higher efficiency Generate stable cash ・Increase production structure for core products ・Consolidate distribution sites flow by increasi

  23. Slide 23: ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights

    23 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  24. Slide 24: Appendix

    Appendix 24 ｜ May 13, 2016 ｜ Copyright © 2016 Meiji Holdings Co., Ltd. All rights reserved.

  25. Slide 25: FYE March 2016 Results: Analysis of Consolidated Operating Income

    FYE March 2016 Results: Analysis of Consolidated Operating Income (JPY bn) (By Segment) Full-year Food Pharma Other Results -- FYE March 2015 51.5 41.6 10.0 -0.1 Due to increased/decreased sales +14.2 +11.6 +2.6 ― Costs of goods sold increase -6.7 -6.7 0.0 ― Cost reduction (incl. price revision of p

  26. Slide 26: Financial Position as of March 2016

    Financial Position as of March 2016 (JPY bn) (As of March 2015) (As of March 2016) Total Assets: 877.3 Total Assets: 856.1 Results (Change) Results (Change) 298.5 Cash and Notes and 352.0 31.8 (+9.3) deposits Current accounts 104.0 (-0.2) payable Current Notes and Liabilities Assets accounts 181.4 (

  27. Slide 27: FYE March 2017 Sales and Profits Plan

    FYE March 2017 Sales and Profits Plan (JPY bn) H1 H2 Full-year Plan YoY Change Plan YoY Change Plan YoY Change +2.3% +2.1% +2.2% Net sales 606.0 +13.7 645.0 +13.5 1,251.0 +27.2 -2.7% -5.4% -4.2% Meiji HD Operating income 32.5 -0.9 42.0 -2.3 74.5 -3.2 -8.6% -9.9% -9.3% Ordinary income 32.5 -3.0 41.7

  28. Slide 28: FYE March 2017 Plan by Business in Food Segment

    FYE March 2017 Plan by Business in Food Segment (JPY bn) H1 H2 Full-year Plan YoY Change Plan YoY Change Plan YoY Change Fermented Dairy +2.4% -3.7% -0.7% Net sales 254.5 +5.9 253.4 -9.6 508.0 -3.6 Fresh and Operating +9.1% -14.3% -4.4% income 19.3 +1.6 20.7 -3.4 40.0 -1.8 -6.2% -6.5% -6.4% 92.3 87.

  29. Slide 29: FYE March 2017 Plan by Business: Other, Elimination and Corporate

    FYE March 2017 Plan by Business in Food Segment (JPY bn) H1 H2 Full-year Plan YoY Change Plan YoY Change Plan YoY Change +5.1% +2.5% +3.8% Net sales 180.0 +8.7 182.4 +4.3 362.5 +13.1 Other Operating -16.9% +2.9% -4.4% income 0.9 -0.2 2.1 +0.0 3.0 -0.1 ― ― ― and Corporate Net sales -117.9 +2.8 -120.0

  30. Slide 30: FYE March 2017 Plan: Analysis of Consolidated Operating Income

    FYE March 2017 Plan: Analysis of Consolidated Operating Income (JPY bn) (By Segment) Full-year Food Pharma Other Results -- FYE March 2016 77.7 68.2 10.1 -0.6 Due to increased/decreased sales +11.2 +0.4 +10.8 ― Impact of drug price revision -9.2 ― -9.2 ― Changes in costs of goods sold +0.6 +0.6 0.0

  31. Slide 31: FYE March 2017 Plan: Cash Flows and Dividends

    FYE March 2017 Plan: Cash Flows and Dividends (JPY bn) Full-year Plan YoY Change +10.3% Capital expenditures 46.7 +4.3 +1.6% Depreciation and amortization 42.7 +0.6 -2.6% R&D expenses 26.5 -0.7 Meiji HD ― Free cash flows 21.0 -74.3 -5.3% Interest bearing debt 140.0 -7.8 * Compared to ROE excluding t

Meiji Holdings — FY2016 Earnings Presentation on 6ix