T. Hasegawa Co., Ltd. · TSE:4958
T. Hasegawa — FY2020 Earnings Presentation
49 slides from T. Hasegawa's earnings presentation, Nov 25, 2020
Slide 1: Financial Results for the Year Ended September 30, 2020
Financial Results for the Year Ended September 30, 2020 T．HASEGAWA CO., LTD. November 25, 2020
Slide 2: Agenda
Agenda Ⅰ. Overview of Consolidated Financial Statement Ⅱ. Impact of COVID-19 Ⅲ. Management Policy Ⅳ. Global Strategies Ⅴ. Three-Year-Plan Ⅵ. Capital Policy Ⅶ．Appendix 1
Slide 3: Overview of Consolidated Financial Statement
Ⅰ. Overview of Consolidated Financial Statement 2
Slide 4: Market Environment
Market Environment Domestic Market ・2020 Market Trends by Product Category Category Trend ・Low consumer spending affected by declaration of state of emergency and avoidance of outing from April to May 2020 associated with expansion of COVID-19 infection 2020 ・Beverages for restaurants were sluggish
Slide 5: Performance Overview
Performance Overview ・Compared to Previous Year Income decreased mainly due to sales decrease at Parent company(Flavors, Fragrances) Operating income increased mainly from improvement of Cost of Sales ratio, SG&A expense decrease Net income increased mainly because impairment loss reported at the pr
Slide 6: Net Sales by Product Segments
Net Sales by Product Segments ・Contributing Factor for Decrease Decrease at Parent company (Flavors , Fragrances) (Million Yen) FY2019 FY2020 yr/yr Category Remark Actual Actual Value % Sales increase at U.S. subsidiary and Chinese subsidiary Flavors 43,018 43,159 141 0.3% covered sales decrease at
Slide 7: Net sales by Group Company
Net sales by Group Company ・Contributing Factor for Decline Currency FY2019 FY2020 Yr/Yr 1US$ ¥110.09 ¥107.88 2.0% higher Decrease at Parent company 1RMB ¥16.00 ¥15.39 3.8% higher 1MYR ¥26.58 ¥25.61 3.6% higher （Million Yen） (Million Yen) FY19 FY20 yr/yr % Actual Actual Parent 37,646 36,821 -825 -2.
Slide 8: Operating Income by Group Company
Operating Income by Group Company ・Contributing Factor for Operating income Increase Currency FY2019 FY2020 Yr/Yr 1US$ ¥110.09 ¥107.88 2.0% higher Increase at subsidiary in the U.S. and China 1RMB ¥16.00 ¥15.39 3.8% higher 1MYR ¥26.58 ¥25.61 3.6% higher （Million Yen） (Million Yen) FY19 FY20 yr/yr %
Slide 9: Impact of COVID-19
i SSuean WHat © THASEGAWACO, LTD I. Impact of COVID-19
Slide 10: Impact of COVID-19
Impact of COVID-19 ・Impact of COVID-19 has been recognized in all regions T. Hasegawa Group companies operate ・Impact on annual sales for Fiscal Year ended September 2020 was approx. 980mil yen decrease FY ending Sept. 2020 Region Impact on Business Impact on Sales (Actual) 1st Half 2nd Half Annual
Slide 11: Management Policy
Th BS eX At © THASEGAWACO, LTD Il. Management Policy 10
Slide 12: Management Policy
Management Policy Become an Organization that Takes on Challenges Strengthen Proposal Focus Areas Capabilities Promote Reform Concentration and Selection Enhance Human Resources (Develop Human Resources, Hire Experienced Personnel) Accelerate Expansion in Overseas Market Basic Strategy Expand Compou
Slide 13: Global Strategies
IV. Global Strategies Th BS eX At © THASEGAWA CO, LTD. 12
Slide 14: Domestic Strategy
Domestic Strategy Basic Strategy：Expand market share by anticipating new market demands stemming from aging society and heightening of health consciousness Fragrances Ongoing Project and Progress 14％ Organizational ・Reinforced cooperation among Sales, R&D, Marketing Divisions Change ⇒Established Bus
Slide 15: Established Business Solution Division
Established Business Solution Division Purpose ・Promote reform based on below policies: ① Build organization willing changes, ② Speed-up operations, ③ Information sharing across divisions ・Integrate Sales, R&D and Marketing through organizational reform Organizational Structure ・Reinforce cooperatio
Slide 16: Overseas Strategy - U.S.
Overseas Strategy － U.S. － Basic Strategy：Expand sales of savory flavors, flavors for health & wellness products and flavors for beverages Ongoing Project and Progress ・Promote U.S. 2nd Factory construction plan to set up a new production Set up New system Flavors 100％ Production System ⇒Purchased l
Slide 17: Overseas Strategy - China
Overseas Strategy －China－ Basic Strategy： Expand performance through various measures under reinforced organizational base Fragrances Ongoing Project and Progress 29％ ・Utilize Marketing Function ⇒Deploy strategic approach to clients, develop new market and potential demands Reinforce Sales Focus on
Slide 18: Overseas Strategy - Southeast Asia
Overseas Strategy －Southeast Asia－ Basic Strategy：Expand sales through cooperation of sales base in Thailand, Indonesia and production base in Malaysia Fragrances Ongoing Project and Progress 12％ ・ Hire sales personnel/reinforce organization for new clients development ・Assign General Manager coveri
Slide 19: Three-Year-Plan
V. Three-Year-Plan Th BS eX At © THASEGAWACO, LTD 18
Slide 20: Preconditions for Drawing up Mid-term 3-year Plan
Preconditions for Drawing up Mid-term 3-year Plan ・ COVID-19 Impact Anticipate that it will continue up to 2nd Quarter of Fiscal Year ending Sept. 2021, but will have no impact from 3rd Quarter ⇒ Estimated impact on sales for full Fiscal Year ending Sept. 2021 is approx. 1.02bil yen decrease FY Endi
Slide 21: Three-Year Plan (consolidated)
Three-Year Plan (consolidated) Anticipate sales recovery by promotion of solution-oriented sales activities through reinforcement of cooperation Parent company among Sales, R&D and Marketing divisions, focus on expansion of fragrance use, and promotion of various measures aiming at sales expansion A
Slide 22: Capital Investment, Depreciation & Amortization, R&D Expenses
Capital Investment, Depreciation & Amortization, R&D Expenses ・U.S. 2nd Factory Construction Plan: Approx. 2.8bil yen (Actual – FY ended Sept. 2020: Approx. 1.1bil yen) (Projection – FY ending Sept. 2021: Approx. 1.4bil yen, FY ending Sept. 2022: Approx. 0.1bil yen, FY ending Sept. 2023: Approx. 0.2
Slide 23: Capital Policy
VI. Capital Policy Th BS eX At © THASEGAWACO, LTD 22
Slide 24: Capital Policy
Capital Policy Basic Policy ・For sustained growth of corporate value for future and its maximization, maintain equity capital at a level sufficient for investments for growth and proper countermeasures against risks Fund Utilization Policy ・Properly utilize funds by considering maintenance of sound
Slide 25: Capital Policy
Capital Policy Shareholder Redemption ・While securing required reserves for further reinforcement of group management base and future business development, seek to provide profit returns to shareholders according to business performance ・Aiming at approx. 35% of consolidated dividend ratio, paid div
Slide 26: Capital Policy
Capital Policy Sale of Shares Held for Facilitation of Business Relationships (Completed) ・March 27, 2020, “Notification of Expected Reporting of Extraordinary Profit Associated with Sale of Investment Securities” announced ・April 2020, completed the sale of the said investment securities 【Reason】 R
Slide 27: Appendix
VI. Appendix Th BS eX At © THASEGAWACO, LTD 26
Slide 28: Outline of Flavors and Fragrance Business
Outline of Flavors and Fragrance Business 27
Slide 29: Flavors and Fragrance Business
Flavors and Fragrance Business Ingredients Products (Compound Flavors and Fragrances) 1. Natural Aromatics 3. Flavors 調合 Compounding 2. Synthesized Recipes 4. Fragrances Aroma Chemicals Integration of research and development capabilities Flavorists : Experts who formulate flavors Perfumers : Expert
Slide 30: Market Size of Flavor and Fragrance Industry
Market Size of Flavor and Fragrance Industry 29
Slide 31: Market Environment
Market Environment Overseas Market Transition of world market size for Fragrances and Flavors grew 6% YOY basis. (Million US$) CAGR 8.1% 4.5% 2.9% 3.1% *Figures are estimated by T. Hasegawa 30
Slide 32: Global Market Size of Flavors and Fragrance Industry
Global Market Size of Flavors and Fragrance Industry Estimated sales volume in global market： 3,000 billion yen ( 27.9 billion USD) North Amrica Europe, Africa and Middle East ‐ Market Size : Approx. 770 bil. yen - Market Size : Approx. 1,100 bil.yen ‐ As many of manufacturing companies using flavor
Slide 33: Sales Ranking of Flavors and Fragrance companies worldwide
Sales Ranking of Flavors and Fragrance companies in worldwide Million USD Company name Country Sales(2017Yr) Market Share 1 Givaudan Switzerland 6,156 24.1% 2 IFF USA 5,140 20.1% 3 Firmenich Switzerland 3,872 15.1% 4 Symrise Germany 3,054 11.9% 5 ADM/Wild Flavors Germany 2,745 10.7% 6 Mane SA France
Slide 34: Market Size in Domestic
Market Size in Domestic Flavor market accounts for 80% of Flavors and fragrance total market share in domestic. (Flavors market covers 50% of flavor and fragrance market in world wide) Transition of sales in domestic market (Billion yen) 2015 2016 2017 2018 2019 Total 201.4 212.5 216.2 223.8 227.5 Y
Slide 35: Outline of Current Status of parent company
Outline of Current Status of parent company 34
Slide 36: Market share of top companies in domestic flavor and fragrance market
Market share of the top 10 companies in domestic flavor and fragrance market Others 14.3％ Company T 31.8％ Company N 5.1％ Company S 6.5％ Company G 11.5％ Company O T. Hasegawa 12.2％ 18.6％ (As of Mar. 2020) *Data is based on non-consolidated sales breakdown of top 10 companies in domestic market, calcu
Slide 37: Sales Composition Comparison
Sales Composition Comparison < Policy in T. Hasegawa> • Focus on sales of compound flavors and fragrances with high added value. • Sells a kind of approximately 12,000 products of fragrance and flavor per year. (Million Yen) T. Hasegawa Company T (Consolidated） (Consolidated） FY ended in Sep. 2020 F
Slide 38: Flavor Sales Share by market
Flavor Sales Share by market Sales share for beverages is high and the sales for beverages has fluctuation in line with seasons. Others Approx. 10% Seasoning Beverages Approx. 10% Approx. 33% Instant noodle Approx. 9% Confectionary Dairy Approx. 13% Approx. 25% *The share indicated above is calculat
Slide 39: Additional Financial Information
Additional Financial Information 38
Slide 40: Consolidated Income Statement Highlights
Consolidated Income Statement Highlights Operating income increased due to decrease of cost of sales ratio and SG&A expenses (Million Yen) FY2019 FY2020 yr/yr Remarks Actual Actual Value ％ ・Sales decreased at parent company Net sales 50,493 100.0% 50,192 100.0% -301 -0.6% ・Sales increased at U.S. su
Slide 41: Consolidated Balance Sheet Highlights
Consolidated Balance Sheet Highlights (Million Yen) September 30 September 30 Increase or Remarks 2019 2020 Decrease ・Increase in Cash and Cash equivalents: 854 million Yen ・Increase in Securities: 4,000 million Yen Current assets 56,620 59,013 2,393 ・Declease in Account Receivable: -320 million Yen
Slide 42: Consolidated Statement of Cash Flows Highlights
Consolidated Statement of Cash Flows Highlights (Million Yen) FY2019 FY2020 Increase or Remarks Actual Actual Decrease ・Profit before income taxes: 7,028 million Yen Cash flows from operating activities 9,230 6,387 -2,843 ・Depreciation & Amortization: 2,868 million Yen ・Income taxes paid: -2,712 mil
Slide 43: Capital Investment, Depreciation & Amortization, R&D Expenses (Actual)
Capital Investment, Depreciation & Amortization, R&D Expenses (Actual) (Million Yen) FY2020 FY2020 Progress Plan Actual (%) Consolidated 2,563 3,481 135.8% Capital Investment Non-consolidated 1,815 1,507 83.0% Depreciation Consolidated 2,953 2,869 97.2% & Amortization Non-consolidated 2,007 1,959 97
Slide 44: Non-consolidated (Actual)
Non-consolidated (Actual) (Million Yen) FY2020 FY2019 Plan FY2020 Achievement Actual (Revised in Actual 8 May,2020) yr/yr vs Plan Value Share Value Share Value Share Value ％ Value ％ Net sales 37,646 100.0% 37,650 100.0% 36,821 100.0% -825 -2.2% -828 -2.2% Cost of sales 23,425 62.2% 23,430 62.2% 22,9
Slide 45: U.S. Subsidiaries (consolidated base) (Actual)
U.S. Subsidiaries (consolidated base) (Actual) (Million Yen) FY2019 FY2020 yr/yr Yen Basis Value Share Value Share Value ％ Net Sales 5,719 100.0% 6,146 100.0% 427 7.5% Cost of sales 3,526 61.7% 3,642 59.3% 116 3.3% Gross profit 2,192 38.3% 2,503 40.7% 310 14.2% SG&A expenses 2,042 35.7% 1,953 31.8%
Slide 46: Chinese Subsidiaries (consolidated base) (Actual)
Chinese Subsidiaries (consolidated base) (Actual) • Consolidated Profit and Loss Statement of two of our Chinese Consolidated Subsidiaries (Million Yen) FY2019 FY2020 yr/yr Yen Basis Value Share Value Share Value ％ Net Sales 6,693 100.0% 6,870 100.0% 177 2.6% Cost of sales 4,558 68.1% 4,382 63.8% -1
Slide 47: Malaysian Subsidiary (Actual)
Malaysian Subsidiary (Actual) * Profit and Loss Statement of T HASEGAWA FLAVOURS (KUALA LUMPUR) SDN. BHD. (Million Yen) FY2019 FY2020 yr/yr Yen Basis Value Share Value Share Value ％ Net Sales 898 100.0% 902 100.0% 4 0.5% Cost of sales 535 59.6% 504 55.9% -31 -5.8% Gross profit 362 40.4% 398 44.1% 35
Slide 48: Three-Year-Plan (Consolidated Income Statement)
Three-Year-Plan (Consolidated Income Statement) (Million yen) FY2020 FY2021 FY2022 FY2023 (Actual) (Plan) (Plan) (Plan) Value Share yr/yr Value Share yr/yr Value Share yr/yr Value Share yr/yr Net sales 50,192 100.0% -0.6% 52,100 100.0% 3.8% 54,000 100.0% 3.6% 56,200 100.0% 4.1% Cost of sales 30,783
Slide 49: Caution with Respect to Forward-Looking Statements
Caution with Respect to Forward-Looking Statements: This material is composed based on data as of Nov. 6th 2020 and the purpose to publish this material is to offer information of management plan and consolidated financial statement. This material contains forward-looking statements about the future