Kirin Holdings Co. Ltd. · TSE:2503
Kirin — Q3 2010 Earnings Presentation
41 slides from Kirin's earnings presentation, November 2010
Slide 1: Strong action for lean management
Strong action for lean management ~ Ready for further Qualitative Expansion in Asia and Oceania ~ November, 2010 Kirin Holdings Company, Limited
Slide 2: Contents
Contents Review of Results for the Third Quarter From the Third Quarter to the End of the Year: Qualitative Information 2010 3Q Highlights and Measures Through the End of the Year (1) Domestic Alcohol Beverages, Soft Drinks and Foods (2) Australia, Pharmaceuticals, and others Progress of Cro
Slide 3: Review of Results for the Third Quarter
Review of Results for the Third Quarter Measures to address issues in the first year of the Implementation and Qualitative Expansion Medium- Term Business Plan are moving ahead as planned Business results are progressing strongly towards the targets revised in the first half, and we will boost ac
Slide 4: From the Third Quarter to the End of the Year: Qualitative Information
From the Third Quarter to the End of the Year: Qualitative Information Progress towards achieving the group plan has been good [Conditions through the Third Quarter] In the domestic alcohol beverage, soft drink, and foods businesses, measures to launch new products with value and to raise profitab
Slide 5: 2010 3Q Highlights and Measures (1): Domestic Alcohol Beverages, Soft Drinks and Foods
2010 3Q Highlights and Measures Through the End of the Year (1): Domestic Alcohol Beverages, Soft Drinks and Foods Measures to bolster the Kirin brand and to propose new value have been successful “Kirin Nodogoshi Nama” and the new “Kirin Honkaku Karakuchi Mugi” have sold well Sales also enjoyed
Slide 6: 2010 3Q Highlights and Measures (2): Australia, Pharmaceuticals, and others
2010 3Q Highlights and Measures Through the End of the Year (2): Australia, Pharmaceuticals, and others ＜Alcohol beverages＞ Continued to drive premiumisation and innovation, such as low-carb, and delivered a solid revenue performance despite of challenging conditions. Though Though the the condi
Slide 7: Progress of Cross Company Teams
Progress of Cross Company Teams Contribution Year to date target for （Progress %） Major efforts (Billion yen) FY2010 Cost reduction through KB / KBC production site optimization Production/ 0.48 0.8 KB / KBC (Supply and demand) Cost reduction through overhaul of Distribution （58.3%） logistical fun
Slide 8: Progress on Medium-Term Business Plan
Progress on Medium-Term Business Plan Asset Asset Reduction Reduction (CCT) (CCT) Have achieved approx.28 billion yen through Q3 out of our annual plan of 40 billion yen. Proceeding forward as planned, working mostly with fields such as real estate, investment securities, and held assets of group
Slide 9: Kirin Group Business Infrastructure Conditions in the Asia-Oceania Region
Kirin Group Business Infrastructure Conditions in the Asia-Oceania Region Fraser and Neave has joined our group, accelerating international integrated beverages group strategy Chinese Market Promote integrated beverages group strategy Japanese Japanese MarketMarket through KCI while keeping an att
Slide 10: Strong Brand Families Produced by Group Partner Companies
Strong Brand Families Produced by Group Partner Companies Possessing both powerful alcohol and food/beverage brand families in each region Further strengthening of each brand through creation of group synergies Kirin Brewery Domestic Alcohol Mercian Business Southeast Asia Business Alcohol San Mig
Slide 11: Appendix
Appendix
Slide 12: Kirin Group Vision 2015 (KV2015)
Kirin Group Vision 2015 (KV2015) (announced May 2006) Continuing Kirin’s leap in growth outlined in KV2015 long-term vision Moving to Stage II with the 2010—2012 Medium-term Business Plan KV2015 Group Vision Nurture close links with customers through products that provide the enjoyment of food and
Slide 13: 2010 MTBP—from quantity to quality
2010 MTBP—from quantity to quality Address key issues through implementation-focused plan to further advance shift from quantity to quality ⇒achieve long-term management vision (KV2015) Stage Stage 3: 3: 2013 2013 MTBP MTBP (2013-2015) (2013-2015) Stage Stage 2: 2: 2010 2010 MTBP MTBP (2010-2012) (2
Slide 14: 2010 Kirin Group Basic Policy
2010 Kirin Group Basic Policy Group-wide effort to make new value propositions in line with customer needs Pursue profitability and efficiency: implement lean management, eliminating strain, waste and irregularity 1．Increase Group enterprise value by realizing growth and synergies at operating c
Slide 15: 2010 Kirin Group quantitative targets
2010 Kirin Group quantitative targets Target substantial increase in pre-goodwill operating income, EBITDA and other cash-based earnings indices Improve profitability (reduce costs) across Group and enhance resilience to changes in business environment Targets 2009 2010 plan Change 2012 （Unit: b
Slide 16: Breakdown of target increase in operating income
Breakdown of target increase in operating income Centering activities on CCT to reform earning structure (lower costs) and increase resilience to changes in business environment Targeting higher earnings in Australia (prior to amortization of LN 100% goodwill) with continued strong performance a
Slide 17: 2010 financial strategy: Increase cash flow
2010 financial strategy: Increase cash flow Significantly increase cashflow by realizing Group synergies, adopting lean management, improving investment efficiency and reducing assets Increased Shareholder returns operating CF Dividends: Consolidated payout ratios over 30% Shareholder returns Aim to
Slide 18: Investment for growth
Investment for growth Options for quantum leap in growth Investment Strategy ◆Actively direct cash towards attractive projects that are WORTH INVESTMENT, though we have not set a quota for strategic investment during this MTBP. ◆Worth Investment 1. Projects that match our approach to becoming a lead
Slide 19: Engaging with society through CSR
Engaging with society through CSR Kirin is helping realize a sustainable society with CSR through business and CSR as a corporate citizen. Becoming a low-carbon corporate group Preventing driving under the influence Kirin aims to become a low-carbon corporate group, based on a CSR With the 0.00% alc
Slide 20: MOU Reached on Sale of KHC
MOU Reached on Sale of KHC KHK has signed Memorandum of Understanding to transfer all the shares of Kyowa Hakko Chemical, which is a consolidated subsidiary company of KHK. Objective （KHK）To focus effectively its business resources to its pharmaceutical business （KHC）To implement actively the capi
Slide 21: Share Exchange to Acquire 100% of Mercian
Share Exchange to Acquire 100% of Mercian KH has reached an agreement with Mercian under which Mercian will become a wholly owned subsidiary of KH. Objective To reinforce Mercian’s management base and corporate governance To create synergies and improve competitiveness by enhancing the group allia
Slide 22: Reorganization of the KB Sales Department
Reorganization of the KB Sales Department The KB Sales Department will integrate with Kirin Merchandising to form a new company. Aim Aim of of the the integration integration and and New New Company Company Achieving Achieving further further improvement improvement of of KIRIN KIRIN Brand Brand to
Slide 23: Organizational Changes to KBE
Organizational Changes to KBE KBE will be restructured to separate the indirect services shared by the group. This will provide the group with more efficient operations at cost levels offering greater market competitiveness. Reorganization Reorganization Overview Overview The new KBE and KGO are s
Slide 24: Kirin FREE growing further in the second year
Kirin FREE growing further in the second year Kirin FREE is driving non-alcohol beer-taste beverage market, as the NO.1 brand of this category. Growth of non-alcohol beer-taste The 2010 annual sales target for Kirin FREE, （million cases） beverage market launched in April 2009, was revised from 4.3
Slide 25: Kirin Plus-I: Health and Functional Foods Project
Kirin Plus-I : Health and Functional Foods Project The first wave of products from four group companies under the crossover Kirin Plus-i brand went on sale in April. Sales have already exceeded the yearly objective of 5 billion yen in only four months. Ornithine, commonly utilized in all products
Slide 26: Overview of F&N
Overview of F&N Company Name Fraser and Neave Limited. Headquarters Singapore Incorporation 1898 Chairman Lee Hsien Yang Shareholder's Equity: SGD 5.6 billion (JPY 353.7 billion)1 Assets2 Total assets: SGD 13.9 billion (JPY 878.2 billion)1 Revenue: SGD 5.3 billion (JPY 337.7 billion)1 Financials3 PB
Slide 27: F&N Financials Overview by Segment
F&N Financials Overview by Segment Financial information regarding business segments Composition of total revenue by (Fiscal year ending September 2009, SGD in millions) business segments3 (Fiscal year ending September 2009) Business Segment Total Revenue2 PBIT Soft Drinks Others Group 5,333 811
Slide 28: Strong Beverages Brand Portfolio of F&N
Strong Beverages Brand Portfolio of F&N F&N have a compelling brand portfolio in each isotonic, carbonated and dairies categories Strong position as a No.1 brand of isotonic and carbonates especially in Malaysia and Singapore Isotonic 100PLUS Carbonated F&N Major Soft Drinks, Dairies Brands Asian SE
Slide 29: F&N Food & Beverage Business Overview
F&N Food & Beverage Business1 Overview F&N operates its Food & Beverage business1 primarily through Fraser & Neave Holdings Bhd (Malaysia listed company; “FNH”) based in Malaysia Consolidated Revenue of FNH: MYR 3,737 million (Fiscal year ending September 2009) 2009 Revenue by Business Segment of
Slide 30: Lion Nathan National Foods
Lion Nathan National Foods Lion Lion Nathan Nathan National National Foods Foods (¥Billions) Sales Operating Revenue Income *2 Soft Drinks & Foods Alcohol Beverages *2 (OP difference) 2009 3Q *1 305.9 16.8 (OP difference) *2 2010 3Q ＋1.9 2010 3Q 265.4 13.9 2010 3Q (1.8) FY2010 (E) ＋2.6 FY2010 (E) 38
Slide 31: LNNF Position in Primary Categories
【Oceania / Market 】 LNNF Position in Primary Categories LNNF has strong market positions in a range of key beverage categories Market Market share share Beer – Australia1 Beer - New Zealand1 43% 51% Milk – Australia2 Chilled Juice – Australia3 63% 54% Source: 1 AC Nielsen MAT September 2009 2 AC Nie
Slide 32: Market growth by dairy products
【Australia / Market 】 Market growth by dairy products All Dairy Products Market growing steadily and more rapid growth expected especially in Milk and Juice Market from 2006. Growth in the Australia Milk Market by Value Growth in the Australia Juice Market by Value CAGR (A$ in mm) (A$ in mm) AGR1,53
Slide 33: San Miguel Brewery
San Miguel Brewery KH KH Consolidated Consolidated Net Net Income Income Local Local Sales Sales Sales Income Billion yen SMB SMC 60,000 18,000 2009 Q3 0.2 (0.6) （Mi l l i onpes os ） 16,000 2010 Q3 4.5 50,000 14,000 FY2010 4.4* 40,000 12,000 *FY2010 forecast based on actual result in pesos from Oct.
Slide 34: Overseas Alcohol: Focus areas in China
【Overseas Alcohol】 Focus areas in China Building business platform in three areas in China Northeast China ：Dalian Daxue Brewery Yangtze River Delta： Hangzhou Qiandaohu Brewery Kirin (China) Investment 黒龍江省 Pearl River Delta：Kirin Brewery (Zhuhai) ハルビン 長春 Dalian Daxue Brewery 内モンゴル 吉林省 Production
Slide 35: Overseas Beverage: Focus areas in Asia
【Overseas Beverage】 Focus areas in Asia Beijin Beijin ①北京飛騰麒麟飲料有限公司 ①北京飛騰麒麟飲料有限公司 （Beijing （Beijing Flying Flying Kirin Kirin Beverage Beverage Co.,Ltd．） Co.,Ltd．） ・Established ・Established inin 2009 2009 Shanghais Shanghais ②上海錦江麒麟飲料食品有限公司 ②上海錦江麒麟飲料食品有限公司 （Shanghai （Shanghai JinJiang JinJiang Kirin
Slide 36: Antibody pharmaceutical pipeline (as of October 2010)
Antibody pharmaceutical pipeline (as of October 2010) : POTELLIGENT® Technology : KM-Mouse Technology 35
Slide 37: 2010 Cash Flows
2010 Cash Flows Controls on capital investment and asset liquidation has resulted in repayment of interest-bearing liabilities, setting the stage for a quantum leap in growth and a restoration of financial health. (Billion yen) 2009 2010 forecast Remarks actual (mid-quarter revision) Operating CF 18
Slide 38: Goodwill Amortization List for FY2010
Goodwill Amortization List for FY2010 37
Slide 39: Change in accounting periods
Change in accounting periods ●FY2008 FY2007 FY2008 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Kirin HD Kirin Pharma Kyowa Hakko Kyowa Hakko Kirin Lion Nathan National Foods San Miguel ●FY2009 FY2008 FY2009 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Kirin HD
Slide 40: Forex Sensitivity (Australian dollar)
Forex Sensitivity (Australian dollar) Impact Impact of of changes changes in in foreign foreign exchange exchange (AU$) (AU$) on on operating operating results results (compared (compared to to previous previous fiscal fiscal year) year) （Billion Yen） 2010 3Q 2010 Actual Forecast Sales 42.6 44.0 Ope
Slide 41: This material is intended for informational purposes only and is not a solicitation or
This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial instruments. 40
Kirin Holdings Company — Q3 2010 Earnings Presentation on 6ix