Lacto Japan Co., Ltd. · TSE:3139
Lacto Japan — H1 FY2021 Earnings Presentation
35 slides from Lacto Japan's earnings presentation, July 2021
Slide 1: FY2021 First Half Financial Results Briefing
FY2021 First Half Financial Results Briefing July 2021 Lacto Japan Co., Ltd. © Lacto Japan Co., Ltd.
Slide 2: Contents
Contents FY2021 First Half Financial Results 1 and Revision of Full-Year Earnings Forecasts P. 3 2 Overview of Business Divisions P. 10 3 Overview of Business Environment and Future Initiatives P. 17 (Reference Information) 4 Risk of Foreign Exchange Fluctuation P. 32 2 © Lacto Japan Co., Ltd.
Slide 3: FY2021 First Half Financial Results and Revision of Full-Year Earnings Forecasts
FY2021 First Half Financial Results and Revision of Full-Year Earnings Forecasts 3 © Lacto Japan Co., Ltd.
Slide 4: Financial Summary
Financial Summary Although the severe business environment continued due to the impact of the prolonged COVID-19 pandemic, we limited the YoY declines in net sales and profit and profit exceeded our initial forecast. Consolidated Net Sales: -9.1% YoY ／ -4.3% vs. initial forecast ▍ In the Dairy Ingre
Slide 5: FY11/2021 First Half Financial Results
FY11/2021 First Half Financial Results (Millions of Yen) FY11/2021 1st Half FY11/2020 Initial 1st Half Forecast vs. Initial YoY Actual Forecast Change (%) Change (%) Net sales 57,912 55,000 52,648 -9.1 -4.3 Ordinary income 1,433 1,100 1,412 -1.5 +28.4 Ordinary income ratio 2.5% 2.0% 2.7% － － (Foreig
Slide 6: Factors Contributing to Increase/Decrease in Sales and Ordinary Income
Factors Contributing to Increase/Decrease in Sales and Ordinary Income Sales declined mainly due to a decrease in sales volume. In the case of ordinary income, the impact of decreased sales was offset by an improvement in the gross margin and other factors. ⃞ Net sales ⃞ Ordinary income (Million yen
Slide 7: Consolidated Balance Sheets
Consolidated Balance Sheets (Millions of Yen) FY11/2020-end May 2021-end Difference Major factors of change Current assets 40,623 43,797 3,174 Increase in inventories Cash and cash equivalents 5,004 5,273 268 Increase in products related to the Trade notes and accounts Project to Mitigate Supply and
Slide 8: Consolidated Cash Flow Statements
Consolidated Cash Flow Statements (Million yen) FY11/2021 Major factors of change 1st Half Decrease in cash flows from -283 operating activities Cash flows from operating activities Increase in accounts receivable and inventories related to the Project to Cash flows from investing activities -102 Mi
Slide 9: FY11/2021 Consolidated Earnings Forecasts
FY11/2021 Consolidated Earnings Forecasts Ordinary income forecast was revised upward. Ordinary income is projected to increase for the sixth consecutive fiscal year. (Million yen) FY11/2021 FY11/2020 Actual Initial Revised YoY YoY Disclosed on Forecast 13 July Difference Change (%) Net sales 110,83
Slide 10: Overview of Business Divisions
Overview of Business Divisions 10 © Lacto Japan Co., Ltd.
Slide 11: Net Sales and Sales Volume by Business Division
Net Sales and Sales Volume by Business Division (Million yen) FY11/2020 FY11/2021 YoY Net sales 2Q 2Q Difference Change (%) Cumulative Cumulative Dairy Ingredients and Cheese 39,927 36,952 -2,975 -7.5% Business Meat Products Business 6,107 6,769 +662 +10.8% Asian Business (Dairy Ingredients) 10,13
Slide 12: Overview of Dairy Ingredients and Cheese Business Division
Overview of Dairy Ingredients and Cheese Business Division ⃞ Business environment in the first half □Net sales ▏ Owing to the issuance of a series of state of emergency Cumulative 39,927 (Million yen) declarations caused by the COVID-19 pandemic and other 36,952 factors, demand, especially for comme
Slide 13: Overview of Meat Products Business Division
Overview of Meat Products Business Division ⃞ Business environment □Net sales in the first half 6,769 ▏ While restaurant-related demand was weak, Cumulative 6,107 (Million yen) demand for home meals and prepared foods 3,653 remained strong. ■ 2Q 3,206 ■ 1Q 2,900 3,116 ⃞ Sales trends FY11/2020 FY11/2
Slide 14: Overview of Asian Business Division (Dairy Ingredients)
Overview of Asian Business Division (Dairy Ingredients) ⃞ Business environment □Net sales in the first half Cumulative 10,138 (Million yen) ▏ Due to excess inventories of domestic dairy ingredients in Japan, demand for dairy preparation ingredients for the Japanese market was weak. 6,809 5,726 ■ 2Q
Slide 15: Overview of Asian Business Division (Cheese)
Overview of Asian Business Division (Cheese) ⃞ Business environment □Net sales in the first half ▏ Owing to the impact of the spread of COVID-19, 1,689 Cumulative (Million yen) food service-related demand was sluggish in 1,352 Thailand, Singapore, etc.. ■ 2Q 887 672 ▏ However, home meal demand remai
Slide 16: International Prices of Dairy Products
International Prices of Dairy Products □ Skim milk powder □ Butter □ Cheese (EUR/MT) (EUR/MT) (EUR/MT) 2019 2020 2021 2019 2020 2021 2019 2020 2021 2,800 5,000 3,400 2,600 4,500 3,200 2,400 4,000 3,000 2,200 3,500 2,000 2,800 3,000 1,800 2,600 2,500 1,600 2,400 2,000 1,400 1,500 2,200 1,200 1,000 1,
Slide 17: Overview of Business Environment and Future Initiatives
Overview of Business Environment and Future Initiatives 17 © Lacto Japan Co., Ltd.
Slide 18: Overview of Business Environment in Second Half
Overview of Business Environment in Second Half Business Business environment expected in second half Divisions • Along with the progress of vaccination, demand from restaurants, which had been declining due to COVID-19, is likely to gradually recover from the end of this fiscal year to the next. Da
Slide 19: State of Domestic Dairy Ingredient Inventories
State of Domestic Dairy Ingredient Inventories □Skim Milk Powder Domestic inventory volume (MT) 100,000 ▍ Reasons for delay in 80,000 60,000 inventory reduction 40,000 20,000 Prolongation of COVID-19 0 pandemic Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr 2018 2019 2020 2021 Serie
Slide 20: FY2021 Countermeasures to Mitigate Supply and Demand Conditions for Domestic Dairy Ingredients
FY2021 Countermeasures to Mitigate Supply and Demand Conditions for Domestic Dairy Ingredients ▍ ALIC*: Emergency Countermeasures Project to Expand Demand for Domestic Dairy Products (FY2020-FY2021) FY2020 Third Supplementary Budget amount: ¥1.69 billion Countermeasures will support dairy industry o
Slide 21: Effects based on response to countermeasure project
Dairy Ingredients and Cheese Business Division: Effects based on response to countermeasure project The handling of domestically produced dairy ingredients, triggered by the countermeasure project, not only supplements sales of imported raw materials, but also serves as a foothold for the developmen
Slide 22: Secure sales volume by handling domestic dairy ingredients
Dairy Ingredients and Cheese Business Division: Secure sales volume by handling domestic dairy ingredients Imported dairy preparations are being replaced by domestic products but the decline in sales of imported dairy preparations has been limited Domestic skim milk powder will make up for the decli
Slide 23: Utilization of TPP and Japan-EU EPA
Dairy Ingredients and Cheese Business Division: Utilization of TPP and Japan-EU EPA Sales of dairy ingredients using the TPP and Japan-EU EPA quotas increased sharply. This is expected to continue in 2H as well. □ Sales volume based on TPP and Japan-EU EPA (MT) ▍ Strong demand for imported dairy 8,0
Slide 24: Towards a business environment where global supply sources can be utilized
Dairy Ingredients and Cheese Business Division: Towards a business environment where global supply sources can be utilized Prices of cheese produced in Oceania are rising due to strong demand in China We are focusing on sales expansion by leveraging our strength of having supply sources outside Ocea
Slide 25: Meat Products: Product diversification and stabilization of procurement
Meat Products Business Division: Keys to growth are product diversification and stabilization of procurement While working to further diversity products handled, we aim to raise profitability □ Meat Products Business Division: Sales volume (MT) 7,000 ▍ Stable procurement of pork, including Others 6,
Slide 26: Asian Business (Dairy Ingredients): Expansion of sales channels
Asian Business Division (Dairy Ingredients):Expansion of sales channels We will strengthen the dairy ingredient sales system and begin full-scale expansion of sales channels in China. □Dairy Ingredients Sales Business: Sales volume （MT） ▍ Focus on capturing Chinese demand and sales 35,000 expansion
Slide 27: Asian Business (Cheese): Progress of growth-oriented strategy
Asian Business Division (Cheese):Progress of growth-oriented strategy Steadily implementing growth-oriented initiatives in line with the medium-term plan despite the challenging environment □Cheese Manufacturing and Sales Business: ▍ Sales expansion strategy in major regions Sales volume (MT) Chin
Slide 28: Asian Business (Cheese): Increasing degree of profit contribution
Asian Business Division (Cheese):Increasing degree of profit contribution Profit contribution reached nearly 20% in 1H FY11/2021 □ Composition of profit* Cheese Manufacturing and Sales Business 13% 19% FY11/2019 FY11/2021 1H *Profit in management accounting, concept similar to gross profit 28 © Lact
Slide 29: Others (Functional Food Ingredients): New business development
Others (Functional Food Ingredients): State of progress of new business development Although sales of new products are sluggish due to the effects of the COVID-19 pandemic, sales volume is on an upward trend, especially for milk protein. Strengthening marketing to expand sales. □ Functional Food Ing
Slide 30: Growth-oriented Strategy (summary)
Growth-oriented Strategy (summary) Dairy Ingredients Establish a firm foothold in new businesses, while expanding sales channels and and Cheese improving profit margins Business Aim to further expand sales by leveraging our strength of having diverse supply sources Division Meat Products Promo
Slide 31: New Corporate Business Plan NEXT-LJ2023
New Corporate Business Plan “NEXT-LJ2023”:Basic Policy and Numerical Targets "Evolve" businesses of existing customers and build new businesses to support next generation of Lacto Japan Group FY11/2023 Targets Net sales ¥141.0 bn Ordinary income ¥3.5 bn Net income attributable to owners of the paren
Slide 32: Reference Information
Reference Information Risk of Foreign Exchange Fluctuation 32 © Lacto Japan Co., Ltd.
Slide 33: Risk of Foreign Exchange Fluctuation and Separate Accounting Treatments
Risk of Foreign Exchange Fluctuation at Lacto Japan and Separate Accounting Treatments In principle, Lacto Japan's business model does not bear foreign exchange risk. Lacto Japan enters into sales contracts with domestic customers at the same time as entering into foreign currency purchase contracts
Slide 34: Illustration of Business Flow (Impact of Foreign Exchange Fluctuation)
Illustration of Business Flow (Impact of Foreign Exchange Fluctuation) Foreign exchange fluctuations have no impact on actual profit. Completion of transaction ① Contract signed ② Shipment ③ Purchase settled ④ Products sold (completed up to ④) When completed up to sale at 2–3 months 2–3 months ④, tr
Slide 35: 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 business environment and other risks a