Ajinomoto Co., Inc. · TSE:2802
Ajinomoto — FY2021 Earnings Presentation
66 slides from Ajinomoto's earnings presentation, May 11, 2022
Slide 1: Forecast for FY2022 and Initiatives for Enhancing Corporate Value
Ajinomoto Co., Inc. (2802) Forecast for FY2022 (Ending March 31, 2023) and Initiatives for Enhancing Corporate Value Taro Fujie Representative Executive Officer, President & Chief Executive Officer May 11, 2022
Slide 2: Contents
Contents I. FY2021 Summary Results and FY2022 Forecast II. Management Policies under the New Administration and Initiatives for Enhancing Corporate Value Reference Material Appendixes: Consolidated Results FY2021 (Ended March 31, 2022) FY2022 Forecast by Segment Note: Business profit (consolidated)
Slide 3: Today's Message
Today’s Message The environment surrounding our business is extremely challenging, with prices of raw materials and fuel currently soaring. However, profits increased in FY2021 and are expected to increase in FY2022 as well. While enhancing the value provided by our products and services, we will re
Slide 4: Contents
Contents I. FY2021 Summary Results and FY2022 Forecast II. Management Policies under the New Administration and Initiatives for Enhancing Corporate Value Reference Material Appendixes: Consolidated Results FY2021 (Ended March 31, 2022) FY2022 Forecast by Segment Note: Business profit (consolidated)
Slide 5: I-1. Financial Results Digest
I-1. Financial Results Digest In FY2021 financial results, revenue increased by ¥77.9 billion and profit increased by ¥7.7 billion. Sales was ¥1,149.3 billion, the highest since we started using IFRS in FY2016. Business profit was ¥120.9 billion, setting a record high for the third year in a row. Th
Slide 6: I-2. Summary for the FY2021
I-2. Summary for the FY2021 Sales: ¥1,149.3 billion (107.3% of FY2020 results; excluding currency translation: 104.6%) Business profit: ¥120.9 billion (106.9% of FY2020 results; excluding currency translation: 103.9%) 1. Sales: Increased (up ¥77.9 billion) • Revenue increased, led overall by Sauce &
Slide 7: I-3. Factors Leading to Changes in Business Profit (by P&L)
I-3. Factors Leading to Changes in Business Profit (by P&L) Includes: Cost increases for raw materials and fuel, and food ingredients: approx. -¥10.0 billion (net impact) Currency translation: approx. +¥3.3 billion (¥ bil.) 150 140 -9.9 130 29.5 Approx. -11.6 120 18.0 -0.3 110 100 Includes: 120.9 90
Slide 8: I-3. Factors Leading to Changes in Business Profit (by Segment)
I-3. Factors Leading to Changes in Business Profit (by Segment) (¥ bil.) 150 140 130 120 -0.7 110 -5.5 17.0 -2.9 100 120.9 90 113.1 80 70 売上増 FY2020 Seasonings Frozen 販管費増 Healthcare Other FY2021 and Foods Foods and Others Actual Actual Copyright © 2022 Ajinomoto Co., Inc. All rights reserved 8
Slide 9: I-4. Items that Impact Business Results
I-4. Items that Impact Business Results Recent prices for fermentation raw and sub raw materials and fuel are at levels higher than in 2011, which were the highest in the past 10 years. → We will overcome these with various measures. Circumstances expected to continue from FY2022 to FY2023 1. Sustai
Slide 10: I-4. Main and Sub Fermentation Raw Material Prices
I-4. Items that Impact Business Results (Main and Sub Fermentation Raw Material Prices ) ・コモディティ価格は、調味料・食品事業に影響。原料価格に左右され The Seasonings and Foods business was affected by commodity prices. Along with timely price increases, we will proceed with greater structural reform to achieve a business struct
Slide 11: I-4. Volume Growth in Sauce & Seasonings Overseas
I-4. Items that Impact Business Results (Volume Growth in Sauce & Seasonings Overseas) Sales volume has increased steadily despite ongoing price changes over the past 15 years. We are carrying out price changes while enhancing added value through constant product improvements. Sales Volume of Major
Slide 12: I-4. Respond to the Effect of Costs & Expenses
I-4. Items that Impact Business Results (Respond to the Effect of Costs & Expenses) In FY2021 we minimized the impact from substantial price increases in raw materials and fuel and the downward pressure on GP by changing prices, and will do the same in FY2022. In FY2022, in addition to increasing un
Slide 13: I-5. Forecast for FY2022
I-5. Forecast for FY2022 Full-year FY2022 forecast: Increased revenue and profit While the business environment will be challenging, we will take appropriate measures and strengthen our business foundation, and connect this to sustainable growth while achieving organic growth. Sales: ¥1,310.0 billio
Slide 14: I-6. Changes in Business Profit (Forecast by P&L)
I-6. Changes in Business Profit (Forecast by P&L) Includes: Cost increases for raw materials and fuel, and food ingredients: approx. -¥10.0 billion (net impact) Currency translation: approx. +¥ 5.5 billion (¥ bil.) Cost decreases: approx. +¥ 4.0 billion 1 USD= 1 USD= 190 ¥112 Effect of currency ¥120
Slide 15: I-6. Changes in Business Profit (Forecast by Segment)
I-6. Changes in Business Profit (Forecast by Segment) (¥ bil.) 150 140 130 4.1 0.3 120 -4.7 3.3 110 100 120.9 124.0 90 80 70 FY2021 売上増 FY2022 Seasonings and Frozen Healthcare Other Actual Forecast Foods Foods and Others Copyright © 2022 Ajinomoto Co., Inc. All rights reserved 15
Slide 16: Priority KPIs (Group-wide Forecast)
Priority KPIs (Group-wide Forecast) Steady progress toward achieving the structural targets of the MTP. To ensure the achievement of FY2022 and FY2025 targets, we are moving to steadily execute the MTP priority themes. 20–22 23–25 Phase 1 Phase 2 2030 Goal Structural reform Regrowth FY19 FY20 FY21 F
Slide 17: I-7. Priority KPIs (Forecast by Segment)
I-7. Priority KPIs (Forecast by Segment) Segments FY2021 Actual and FY2022 Forecast Unit price growth Organic growth ROIC (International consumer products) (％) (％) (％) Sauce & FY20 FY21 FY22 FY20 FY21 FY22 FY20* FY21* FY22* MTP Targets Seasonings actual actual forecast actual actual forecast actual
Slide 18: I-8. Progress of Structural Reform
I-8. Progress of Structural Reform ROIC expected to temporarily fall below real capability due to Proceed with even greater structural reform to impairment accompanying structural reform make sure we reach our ROIC target Approx. 8.5% Approx. 9% Approx. 8% (excluding impairment loss) (excluding stru
Slide 19: I-8. Progress of Structural Reform (Frozen Foods Business)
I-8. Progress of Structural Reform (Frozen Foods Business) Frozen Foods Business ROIC: Measures to achieve our major indicators and to make sure we reach 5% ROIC in FY2025 (¥ bil.) Sales and BP margin (turnovers) Turnover of invested capital 200.0 BP does not take shared 10% Dashed line: excluding 2
Slide 20: I-9. Initiatives for Organic Growth (Seasonings and Foods Business)
I-9. Initiatives for Organic Growth (Seasonings and Foods Business) In existing businesses, we will increase the value we provide while increasing unit prices and quantities. We will also anticipate market changes and create adjacent new businesses that meet the unsatisfied needs peripheral to exist
Slide 21: I-10. Business Model Transformation (Electronic Materials Business)
I-10. Drive Growth with Business Model Transformation (Electronic Materials Business) Continued adoption in PC and game markets Accelerating growth in Growth in data center servers and communication applications electronic materials Growth in various types of functional materials business continues
Slide 22: I-10. Quantity by ABF application
I-10. Drive Growth with Business Model Transformation (Electronic Materials Business) Products for data center servers and for networks are contributing to the growth of ABF. The amount of ABF required per IC package is also increasing due to the increased size and complexity of the packages. Demand
Slide 23: I-10. Business Model Transformation (Bio-Pharma Services Business)
I-10. Drive Growth with Business Model Transformation (Bio-Pharma Services Business) Basic strategy of our Bio-Pharma Services business GrowthCDMO事業の成長戦略 strategy in the CDMO business 250 (FY20の売上を100とした場合の売上高） (Sales with FY2020 sales set to 100) 200 We will accelerate organic growth through new bu
Slide 24: I-10. Business Model Transformation (Oligonucleotides)
I-10. Drive Growth with Business Model Transformation (Oligonucleotides) (¥ bil.) 2,500 Scale of the oligonucleotide drug market Global oligonucleotide drug market (Global) 2,000 • The scale of the oligonucleotide drug グラフ、後では 2020-2030 market is currently about ¥500–600 billion. 1,500 CAGR +17% りかえ
Slide 25: I-11. Assets and Liabilities
I-11. Assets and Liabilities In FY2019, net D/E ratio* temporarily increased due to the acquisition of shares from overseas minority shareholders. In FY2021, total assets increased due to fixed assets and increases in inventory due to currency translation effects and increases in raw materials price
Slide 26: I-12. Cash Generation
I-12. Cash Generation Operating cash flow in FY2021 was ¥145.5 billion. While our ability to generate cash is increasing with a backdrop of business growth, working capital, such as accounts receivable and inventories in particular, was affected by currency translation in the FY2021 results. We will
Slide 27: I-13. Strategic Investments
I-13. Strategic Investments We will shift investments from tangible to intangible assets such as research and development, marketing, DX, business model development, and human resources. In capex, we will agilely make growth investments in core businesses such as electronic materials. 200.0 80% FY20
Slide 28: I-14. Important Management Indicators
I-14. Important Management Indicators Important management indicators in FY2021 all improved due to steady growth of business profit. In FY2022, improvement will be limited due to deterioration of the business environment, but we will continue to improve them from FY2023. （％） ROE （％） ROA （事業利益ベース） (
Slide 29: I-15. Investment for Growth and Shareholder Returns (Approach for FY2020–2022)
I-15. Investment for Growth and Shareholder Returns (Approach for FY2020–2022) Throughout the MTP, shift investments from tangible to intangible assets, from non-core to core businesses. Operating cash flow in FY2020-2022 is expected to exceed the ¥400.0 billion target in the MTP. Cash Flow (Approac
Slide 30: I-15. Dividends
I-15. Investment for Growth and Shareholder Returns (FY2022 Forecast) In FY2021, we decided to further increase the annual dividend (interim forecast: ¥48 ⇒ FY2021 actual: ¥52). We expect to increase the dividend in FY2022, too. Dividends (FY2010-2022 forecast) Shareholder Returns (Approach for FY20
Slide 31: Contents
Contents I. FY2021 Summary Results and FY2022 Forecast II. Management Policies under the New Administration and Initiatives for Enhancing Corporate Value Reference Material Appendixes: Consolidated Results FY2021 (Ended March 31, 2022) FY2022 Forecast by Segment Note: Business profit (consolidated)
Slide 32: II-1. The Ajinomoto Group Vision
II-1. The Ajinomoto Group Vision Broaden empathy toward our purpose, co-create value with partners through the functions of amino acids, and, seeking to realize our vision, enhance corporate value continually and dramatically through “Purpose x Passion x Operational Excellence (OE)” & “Speed Up x Sc
Slide 33: II-2. What We Will Value to Achieve the Group Vision
II-2. What We Will Value in Order to Achieve the Ajinomoto Group Vision Soil, which enriches intangible assets = Corporate culture Roots, which take nourishment from that soil = Intangible assets The Ajinomoto Group’s Tree of Happiness Intangible assets we value • Our quest to further seek functions
Slide 34: II-3. ASV Management (What should be carried forward)
II-3. ASV* Management: Management under the New Administration (What should be carried forward) Purpose Speed Up Passion Scale Up OE Purpose = Unlocking the power of amino acids to resolve food and health issues Passion = Passion of employees toward the purpose, and empathy from the diverse people w
Slide 35: II-3. ASV Management (What should be evolved)
II-3. ASV Management: Management under the New Administration (What should be evolved) Purpose Speed Up Passion Scale Up OE Speed Up = Transformation of corporate culture and appropriate top-down and bottom-up communication Accelerate "Stop and Reduce" to earnestly tackle what we want to do Scale Up
Slide 36: II-3. ASV Management (100-day plan)
II-3. ASV Management: Management under the New Administration (100-day plan) 100-day plan : Specific action plan for the 100 days beginning April 1, 2022, when the new administration was launched Objective: Achieve our vision for 2030. We will indicate the major directions of our strategy (where to
Slide 37: II-3. ASV Management (Investment strategy)
II-3. ASV Management: Management under the New Administration (Investment strategy) We will establish and execute investment strategies that support sustainable growth. For steady growth and drive growth aimed at 2030, and as future stepping stones to 2050, we will establish and execute policies for
Slide 38: II-3. Enhancement of corporate value
II-3. ASV Management: Management under the New Administration (Enhancement of corporate value) Introduction of mechanisms to support the enhancement of corporate value. We will synchronize the enhancement of value for all stakeholders. Plan to establish a Value Creation Advisory Board (tentative nam
Slide 39: II-3. ASV Management (Speed Up)
II-3. ASV Management: Management under the New Administration (Speed Up) • Further reinforcement of the supervisory functions of the Board of Directors • Quick execution • Selection of a Company with Three Committees = Easier understanding of design of governance Board of Directors CEO (Executive Co
Slide 40: II-3. ASV Management (Scale Up)
II-3. ASV Management: Management under the New Administration (Scale Up) Overall growth strategy 1. Strengthen organic growth through further selection and concentration in the six core businesses and bring about solid growth. 2. Drive growth through business model transformation with the use of DX
Slide 41: II-4. Next-Generation Businesses for Business Growth
II-4. Next-Generation Businesses for Business Growth (Innovation areas) To capture growing opportunities for innovation related to, social changes, the growing healthcare and IT markets, and digital, bio, and sustainability and contribute to the global environment in 2050, we have established four a
Slide 42: II-5. Management that Raises the Value of Human Resources
II-5. Management that Raises the Value of Human Resources as an Intangible Asset Accelerate innovation and bring about the speedy co-creation of value through the diverse experiences, capabilities, and expertise of individuals and including them in organizations that utilize their qualities. Growth
Slide 43: II-5. Human Resources as an Intangible Asset (ASV)
II-5. Management that Raises the Value of Human Resources as an Intangible Asset In parallel with our priority KPI of "ASV as one's own initiative," we will make the processes that go up to the creation of ASV outcomes visual, and will monitor our progress toward achieving ASV through engagement sur
Slide 44: II-6. Brand Value as an Intangible Asset
II-6. Brand Value as an Intangible Asset Our brand value has greatly increased in recognition of our ASV management strategy, strong leadership by top management, and purpose branding. Ajinomoto Group's brand value over time Large increase (Interbrand Best Japan Brands 2022) of 30% in Importance pla
Slide 45: II-7. Sustainability Topics (Nutrition)
II-7. Sustainability Topics (Nutrition) At international conferences in FY2021, we communicated the importance of sustainable and healthy food and led discussions. We were recognized and endorsed for our activities (delicious salt reduction, health management, etc.) from governments and internationa
Slide 46: II-7. Sustainability Topics (Environment)
II-7. Sustainability Topics (Environment) Ajinomoto Group aims to be carbon neutral by 2050. We submitted a commitment letter to the Science Based Targets Initiative in March 2022. We will set targets within two years. We expect to achieve a 50% reduction in GHGs (Scope 1 + 2) by 2030. Purchased ene
Slide 47: Reference: Construction of an MSG Ecosystem in Thailand
Reference: Construction of an MSG Ecosystem in Thailand We will promote the construction of an ecosystem aimed at realizing our concept of opportunities. Highlighting our sustainability activities to consumers and gaining their empathy will lead to enhancement of brand value and conversion to opport
Slide 48: Message from the CEO
Message from the CEO In order to pursue ASV to the end, we will carry forward ASV management and Purpose x Passion X OE under the new administration as well, and will accelerate Speed Up x Scale Up. Toward that end, we will shift gears and make a starting dash throughout our 100-day plan (100-day ac
Slide 49: Forward-looking statements
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 expectations. This material includes summa
Slide 50: Seasonings and Foods (Organic growth supporting the entire company)
Seasonings and Foods (Organic growth supporting the entire company) Strengthened the business and promotion of initiatives to capture changes in consumers. Increased revenue from increased sales volume and price increases. ■ Changes in the environment in FY2021 1. Consumers: Percentage of at-home di
Slide 51: Key strategies for FY2022 in Seasonings and Foods
Seasonings and Foods (Organic growth supporting the entire company) We will adapt to changes in the environment and advance further sustainable organic growth and capital efficiency to achieve a company-wide ROIC target of 10–11% in FY2025. ■Key strategies for FY2022 in Seasonings and Foods 1. Impro
Slide 52: Frozen Foods (Initiatives for ROIC of 5% in FY2025)
Frozen Foods (Initiatives for ROIC of 5% in FY2025) In FY2021, we promoted strengthening of the business according to plan. Profit increased in Japan and Europe but decreased in North America due to sharp inflation and shortages of labor. ■ Changes in the environment in FY2021 Sharp inflation and on
Slide 53: Frozen Foods: Initiatives for FY2022
Frozen Foods (Initiatives for ROIC of 5% in FY2025) In FY2022, we will focus on profit recovery in North America. In Japan and Europe, we will complete ongoing strengthening of the business and will head toward the regrowth stage. ■ Initiatives for FY2022 strengthening of the business in Frozen Food
Slide 54: Healthcare and Others (Acceleration of growth)
Healthcare and Others (Acceleration of growth and business model transformation) Improved capital efficiency by expanding core businesses and structural reform of the animal nutrition business. ■ Changes in the environment in FY2021 1. Accelerated expansion of electronic materials due to robust semi
Slide 55: Key strategies for FY2022 in Healthcare and Others
Healthcare and Others (Acceleration of growth and business model transformation) Further advance sustainable organic growth and greater capital efficiency to achieve ROIC target (FY2022: 13% or more (tentative)). ■ Key strategies for FY2022 in Healthcare and Others 1. Accelerate growth in core busin
Slide 56: FY2021: Q4 Results Summary
FY2021: Q4 Results Summary Sales: ¥295.1 billion (106.7% of FY2020 results; excluding currency translation: 103.3%) Business profit: ¥12.5 billion (94.9% of FY2020 results; excluding currency translation: 89.8%) 1. Sales: Increased (up ¥18.6 billion) • Revenue increased, led overall by Sauce & Seaso
Slide 57: FY2021: Summary Results
FY2021: Summary Results vs. Prev. year FY21 FY20 Difference vs. Prev. year (excluding currency (¥ Billion); -: losses Actual Actual （A）-（B） (A)/(B) translation) (A) (B) (A)/(B) Sales 1,149.3 1,071.4 77.9 107% 104% Gross profit 425.8 406.2 19.6 104% - (Gross profit margin) 37.0% 37.9% Business profit
Slide 58: FY2022: Forecast
FY2022: Forecast vs. Prev. year FY22 FY21 Difference vs. Prev. year (excluding currency (¥ Billion); -: losses Forecast Actual （A）-（B） (A)/(B) translation) (A) (B) (A)/(B) Sales 1,310.0 1,149.3 160.6 114% 109% Business profit 124.0 120.9 3.0 102% 98% Other operating income & expenses -7.9 3.6 -11.6
Slide 59: 100-day action plan and roadmap
ASV Management: Management under the New Administration (100-day action plan and roadmap) We have set specific points for transformation and have begun a 100-day plan. We will regain strong growth potential through Speed Up x Scale Up. Road map 100-Day Item Transformation points Plan 2023 2024 2025
Slide 60: Progress in Structural Reform
Progress in Structural Reform Structural reform in non-core businesses Financial impact Amount of asset 1. Animal Nutrition Business (commodities) reduction: Completed sale of company in Europe in April. Approx. ¥15.5 Shift to customer solution-providing business. billion (FY2021) 2. Part of MSG Bus
Slide 61: Business Model Transformation (Update of plan from March 2021 IR Day)
Business Model Transformation (Update of plan from March 2021 IR Day) We expect the creation of about ¥50.0 billion in sales and about ¥16.0 billion in business profit in FY2025 through business model transformation. Progress is being made in-line. (¥ bil.) 売上高 Sales (¥ bil.) Business 事業利益 Profit 10
Slide 62: Addressing Inflation (FY2021 actual–FY2022 forecast)
Addressing Inflation (FY2021 actual–FY2022 forecast) (Price actions in major countries of business: only executed and announced actions) H1-FY2021 H2-FY2021 ・Indonesia (Umami seasonings, June and September) ・Brazil (Flavor seasonings, October) ・Brazil (Flavor seasonings, July) ・Philippines (Menu-spe
Slide 63: Path toward Reducing Environmental Impact by 50%
Path toward Reducing Environmental Impact by 50% Up to 2020 2021 2022 2025 2030 ▲SBTi target validation Carbon neutral ▲RE 100 commitment 100% renewable ▲Declaration of carbon neutrality energy by 2050 Climate Adopt internal carbon pricing change Convert fuel and procure renewable energy action Redu
Slide 64: Path toward Extending the Healthy Life Expectancy of 1 Billion People
Path toward Extending the Healthy Life Expectancy of 1 Billion People In our commitment to nutrition, we have established specific targets for improved nutrition by the year 2030. 2019 2030 Currently Providing Provide delicious, deliciousness well-balanced foods to -focused 1 billion people 3% annua
Slide 65: FY2022 Assumed Exchange Rate and Exchange Rate Sensitivity
FY2022 Assumed Exchange Rate and Exchange Rate Sensitivity Assumed exchange rate (vs. JPY) FY22 FY21 Actual FY20-25 Forecast Q4 Q3 Q2 Q1 MTP USD 120.00 116.34 113.71 110.11 109.52 107.00 EUR 133.00 130.40 130.04 129.83 131.94 123.00 THB 3.63 3.52 3.41 3.34 3.49 3.42 BRL 26.09 22.35 20.36 21.05 20.71
Slide 66: Reference Links
Reference Links Ajinomoto Group IR https://www.ajinomoto.co.jp/company/en/ir/ Ajinomoto Group Integrated Report 2021 https://www.ajinomoto.co.jp/company/en/ir/library/annual.html Ajinomoto Group Medium-Term Management Plan https://www.ajinomoto.co.jp/company/en/ir/event/medium_term.html Ajinomoto Gr