Lacto Japan Co., Ltd. · TSE:3139
Lacto Japan — H1 FY11/2024 Earnings Presentation
34 slides from Lacto Japan's earnings presentation, Jul 19, 2024
Slide 1: Financial Results Briefing for First Half FY11/2024
Financial Results Briefing for First Half FY11/2024 Lacto Japan Co., Ltd. July 19, 2024
Slide 2: Index
Consolidated Financial Results for H1 and Full-year Earnings 01 Forecasts for FY11/2024 02 Overview of Operations for H1 FY11/2024 INDEX 03 Future Outlook 04 Progress of the Corporate Business Plan “NEXT-LJ 2025” © Lacto Japan Co., Ltd. 2
Slide 3: Consolidated Financial Results for H1 and Full-year Earnings Forecasts for FY11/2024
Consolidated Financial Results for H1 and 01 Full-year Earnings Forecasts for FY11/2024 © Lacto Japan Co., Ltd. 3
Slide 4: Overview of Consolidated Financial Results for H1 FY11/2024
Overview of Consolidated Financial Results for H1 FY11/2024 ⚫ Domestic business is on a recovery trend as economic activity normalizes and inbound tourism increases. Cheese Manufacturing & Sales Division also recovering in our Asian Business. Increased sales volume and foreign exchange impact led to
Slide 5: H1 FY11/2024 Net Sales and Sales Volume by Business Division
H1 FY11/2024 Net Sales and Sales Volume by Business Division (YoY Changes) Dairy Ingredients and Cheese Business Division ◼Dairy Ingredients and Cheese Net sales 58,932Million yen YoY Change +3.8% ◼Others 1.3% 69.7% Sales volume 91,099tons YoY Change +6.8% ◼Asia (Cheese Manufacturing & Sales) Meat
Slide 6: Factors Contributing to YoY Changes in Net Sales and Ordinary Income
Factors Contributing to YoY Changes in Net Sales and Ordinary Income ⚫ Net sales: Exceeded revised forecast thanks to increased sales volume ⚫ Ordinary income: Profit margin improved in both domestic and Asian businesses Net sales Ordinary income Domestic business Sales unit prices have fallen Profi
Slide 7: Consolidated Balance Sheets
Consolidated Balance Sheets End-November End-May Difference (¥mn) 2023 2024 Main points regarding YoY changes Total current assets 67,068 73,373 6,304 Cash and deposits 7,779 8,905 1,125 Increase in notes and accounts POINT receivable/inventories Notes and accounts receivable 18,700 21,644 2,944 ❶ P
Slide 8: Consolidated Statements of Cash Flow
Consolidated Statements of Cash Flow ⚫ Due to an increase in transactions, accounts receivable and inventories increased, resulting in negative operating cash flow (¥mn) H1 FY11/2024 Main points regarding YoY changes POINT Cash flows from operating activities -1,590 ❶ Operating CF ❶ Increase in work
Slide 9: Revised FY11/2024 Consolidated Earnings Forecasts
Revised FY11/2024 Consolidated Earnings Forecasts ⚫ In the second half, despite anticipated impacts on consumption trends from the depreciating yen and rising food prices, as well as the effects of increasing raw milk production on domestic skim milk powder inventories, we have revised our earnings
Slide 10: Net Sales by Business
Net Sales by Business ⚫ In addition to revising the full-year earnings forecast, the underlying sales and sales volume forecasts for each division have also been revised (¥mn) FY11/2023 FY11/2024 Q1 Q2 Q3 Q4 Q1 Q2 Forecast Dairy Ingredients and Cheese 27,594 29,196 26,367 28,687 28,124 30,807 113,00
Slide 11: Sales Volume by Business
Sales Volume by Business (tons) FY11/2023 FY11/2024 Q1 Q2 Q3 Q4 Q1 Q2 Forecast Dairy Ingredients and Cheese 40,578 44,757 39,464 42,622 45,583 45,515 180,000 Business YoY -13.2% -10.0% -11.6% 1.8% 12.3% 1.7% 7.5% Meat and Ingredients 6,005 7,872 6,957 7,289 7,766 8,076 30,000 YoY 0.0% 29.2% 13.5% 11
Slide 12: Overview of Operations for H1 FY11/2024
02 Overview of Operations for H1 FY11/2024 © Lacto Japan Co., Ltd. 12
Slide 13: Overview of Each Division: Dairy Ingredients and Cheese Business
Overview of Each Division Dairy Ingredients and Cheese Business Overview Business Division Net sales ◼ Commercial demand recovered as the restaurant and leisure (¥mn) 56,791 58,932 industries picked up thanks to an increase in inbound tourism consumption. In particular, sales of ingredients for food
Slide 14: Dairy Ingredients and Cheese: Sales Volume of Major Products
Overview of Each Division Dairy Ingredients and Cheese Business Division ⚫ Sales volumes of major products showing signs of recovery at start of fiscal 2024 (tons) Changes in the sales volume of major products in the Dairy Ingredients and Cheese Business Division 60,000 50,000 40,000 Others 30,000 B
Slide 15: Overview of Each Division: Meat and Ingredients
Overview of Each Division Business Overview Meat and Ingredients Division ◼ Sales of North America pork have increased as the market price of European pork has risen. Sales volume in the division exceeded Net sales same period last year thanks to growth in sales prices of processed (¥mn) foods. 10,5
Slide 16: Overview of Each Division: Functional Food Ingredients
Overview of Each Division Functional Food Ingredients Division Business Overview Net sales ◼ Sales of milk proteins, which are ingredients for protein (¥mn) 1,587 1,608 products, continued to grow. Fueled by the boom in the sports-related sector due to increased health awareness, and the broader tr
Slide 17: Overview of Each Division: Asian Business (Dairy Ingredients Sales)
Overview of Each Division Asian Business Business Overview (Dairy Ingredients Sales Division) Net sales ◼ As Japan adjusted its excess inventory of skim milk powder, 10,564 (¥mn) 9,731 transactions related to exports of skim milk powder from Japan decreased significantly YoY. 5,316 5,523 2Q Q2 ◼ St
Slide 18: Overview of Each Division: Asian Business (Cheese Manufacturing & Sales)
Overview of Each Division Asian Business Business Overview (Cheese Manufacturing & Sales Division ◼ Sales of processed cheese related to Chinese demand remain Net sales sluggish. 2,679 (¥mn) 2,246 ◼ Thailand's economy is gradually recovering with sales volume to the country also trending upwards. H
Slide 19: Future Outlook
19 © Lacto Japan Co., Ltd. Future Outlook 03
Slide 20: Business Environment Outlook by Division (Domestic Business)
Business Environment Outlook by Division (Domestic Business) Division Second Half Outlook Sales trends Many inquiries for imported raw materials for both dairy and cheese, but demand trends vary depending on the product. Many buyers of dairy ingredients are planning to revise final product prices in
Slide 21: Business Environment for the Domestic Dairy Industry
Business Environment for the Domestic Dairy Industry ⚫ Progress has been made in adjusting the inventory of skim milk powder due to successful countermeasures and a reduction in raw milk production ⚫ Raw milk production from February 2024 onwards will continue to increase compared to the same month
Slide 22: Business Environment for the Domestic Dairy Industry: Dairy Farms
Business Environment for the Domestic Dairy Industry ⚫ The number of dairy farmers continues to fall Number of dairy farms (milk cow) (farms) 18,000 16,410 -680 15,680 (down 5.1% YoY) -720 16,000 15,040 (down 5.6% YoY) 14,890 14,360 13,830 14,000 13,300 12,620 11,900 12,000 10,100 9,540 9,070 8,900
Slide 23: Business Environment for the Domestic Dairy Industry: Dairy Cows
Business Environment for the Domestic Dairy Industry ⚫ The number of dairy cows is also declining Number of dairy cows (nationwide: 2 years or older) (thousand cows) Number of dairy cows (nationwide total) 1,000 (thousand cows) 1,500 950 Sep 2021 888 Jun 2024 900 851 Jun 2024 1,316 1,400 850 800 Jul
Slide 24: International Market Prices for Dairy Products
International Market Prices for Dairy Products ⚫ The market price of butter has risen at start of 2024. However, prices for cheese and skim milk powder continue to be stable. (EUR/ton) International market prices for major dairy products Jun 2022 8,000 7,270 Jun 2024 6,750 7,000 Oct 2022 Sep 2023 6,
Slide 25: Business Environment for the Dairy Ingredients and Cheese Business Division
Business Environment for the Dairy Ingredients and Cheese Business Division ⚫ Demand for fat-based ingredients is strong, providing a tailwind for the import business of related ingredients. ⚫ The Agriculture & Livestock Industries Corporation (ALIC) has increased the butter tender quota for this fi
Slide 26: Natural Cheese Import Volume
Business Environment for the Dairy Ingredients and Cheese Business Division ⚫ The import volume of natural cheese is showing signs of a potential turnaround. ⚫ Retail demand remains weak, and a full recovery to pre-COVID levels is expected to take time. However, efforts to expand sales, particularly
Slide 27: Business Environment of the Functional Food Ingredients Division
Business Environment of the Functional Food Ingredients Division ⚫ Import quantities of high-protein raw materials used as ingredients for protein products are on the rise. Global demand is rising, leading to a tightening of supply and demand. To expand sales volume, securing a reliable supply of
Slide 28: Business Environment Outlook by Division (Asian Business)
Business Environment Outlook by Division (Asian Business) Division Second Half Outlook Sales trends Sales of ingredients to local Japanese manufacturers are expected to remain strong in second half. Although sales of ingredients for powdered milk mixtures are on a recovery trend, there is a Asia pos
Slide 29: Asian Business Initiatives
Asian Business Initiatives ⚫ Strengthen sales structure to expand sales in the Dairy Ingredients Sales Division (trading company) ⚫ In the Cheese Manufacturing & Sales Division, steadily make preparations for operation of new factory, while focusing efforts on expanding share of the natural cheese m
Slide 30: Progress of the Corporate Business Plan NEXT-LJ 2025
04 Progress of the Corporate Business Plan “NEXT-LJ 2025” © Lacto Japan Co., Ltd. 30
Slide 31: Basic Policy
Basic Policy ⚫ Focus on strengthening the foundation for growth during the three-year period from FY11/2023 to FY11/2025 as the first step toward achieving the long-term vision Base Growth Challenge Build next-generation Existing business “evolution" Expansion of Asian business businesses Stable sup
Slide 32: Progress in Business Performance
Progress in Business Performance ⚫ The ordinary income target of the Corporate Business Plan is expected to be achieved ahead of schedule in the second year, FY11/2024. ⚫ In addition to revising the full-year earnings forecast, the dividend has also been revised. Plan to increase dividend by 14 yen
Slide 33: Caution
Caution This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections as a result of changes in the economic environment and other risks a
Slide 34: Lacto Japan
hed) Lacto Japan