Ezaki Glico Co., Ltd. · TSE:2206

Ezaki Glico — FY2021 Earnings Presentation

45 slides from Ezaki Glico's earnings presentation, Feb 21, 2022

1. Slide 1: Glico Group Financial Results for FYE December 2021

   [Notes of caution] This documents is an English translation of the Japanese original. In the event of any differences or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence. < Full Version > Glico Group Financial Results For the Fiscal Year

2. Slide 2: Contents

   Contents I. FYE December 2021 Earnings Report P. 3 – 19 II. Mid-Term Business Plan P. 20 – 31 III. FYE December 2022 Earnings Forecast P. 32 – 39 (Supplemental Materials) P. 40 – 44 ©2022 Ezaki Glico Co., Ltd. All Rights Reserved 2

3. Slide 3: I. FYE December 2021 Earnings Report

   I. FYE December 2021 Earnings Report ©2022 Ezaki Glico Co., Ltd. All Rights Reserved 3

4. Slide 4: Summary for FYE December 2021

   Summary for FYE December 2021 1. Overseas, revenues increased by 19.6% year-on-year due to robust performance in China and the U.S.A. However, in Japan, revenues continued to decrease at -5.3% year-on-year. Consolidated net sales decreased by -1.6% compared to the previous year.  Overseas, revenue

5. Slide 5: Status of Consolidated Performance

   Status of Consolidated Performance  Net sales: Despite increases in overseas business, net sales decreased by -1.6% YoY due to difficulties in Japan.  Operating income: There was a 4.2% increase YoY that was attributable to increases in the domestic Health category and overseas business. (Unit: 10

6. Slide 6: Status of Operating Income

   Status of Operating Income (Unit: 100 million yen) FYE Dec. 2020 FYE Dec. 2021 Results Sales Ratio Results Sales Ratio Net sales 3,440 100.0% 3,386 100.0% Cost of sales 1,816 52.8% 1,805 53.3% Gross profit 1,624 47.2% 1,580 46.7% Freight and charges 315 9.2% 319 9.4% Sales promotion 528 15.4% 479 14

7. Slide 7: Factors of Increases (Decreases) in Operating Income

   Factors of Increases (Decreases) in Operating Income <Change from previous period>  In Japan, despite a significant decrease in sales promotion ratio and advertising expenses, operating income fell due to a decrease in net sales and fluctuations in the composition of sales product varieties.  Over

8. Slide 8: Status of Net Sales by Segment

   Status of Net Sales by Segment  Despite posting increases in Other, including Health category, the domestic segment had a year-on-year decrease of -5.3% due to poor performance in Confectioneries and Food Products.  The overseas segment performed well in China and the U.S.A. and posted a year-on-y

9. Slide 9: Status of Operating Income by Segment

   Status of Operating Income by Segment  Despite a decrease in sales promotion and advertising expenses, the domestic segment posted a year-on-year decrease of -500 million yen due to decreased sales.  The overseas segment posted a year-on-year increase of 1.3 billion yen that was attributable to th

10. Slide 10: Domestic Business: Situation by Category

    Domestic Business: Situation by Category Category Net sales FYE Dec. 2021 Results (full year) (% of previous period) 39.9 billion yen Net sales decreased due to poor performance by “Kobe Roasted Chocolate,” “Pocky,” Chocolate (－10.2%) and other brands. 21.8 billion yen Cookies Net sales decreased du

11. Slide 11: Domestic Business: Situation by Category (Chocolate/Cookies)

    Domestic Business: Situation by Category (Chocolate/Cookies) Chocolate category Chocolate Market Net Sales Result Net Sales by Brand - Chocolate category - (When FYE Dec. 2019 net sales are set as 100) (Intage SRI＋) Unit: 100 FYE Dec. '19 FYE Dec. '20 FYE Dec. '21 Unit: 100 Unit: 100 million yen －2.

12. Slide 12: Domestic Business: Situation by Category (Ice Cream/Yoghurt)

    Domestic Business: Situation by Category (Ice Cream/Yoghurt) Ice Cream category Ice Cream Market Net Sales Result Net Sales by Brand (Intage SRI＋) - Ice Cream category - (When FYE Dec. 2019 net sales are set as 100) Unit: 100 Unit: Unit:100 100 FYE Dec. '19 FYE Dec. '20 FYE Dec. '21 million yen －0.1

13. Slide 13: Domestic Business: Situation by Category (Drinking Milk/Health Business)

    Domestic Business: Situation by Category (Drinking Milk/Health Business category ) Infant Formula category Infant Formula Market Net Sales Result Icreo (Infant Formula) Net Sales (Intage SDI/SCI＋) - Infant Formula category - (When FYE Dec. 2019 net sales are set as 100) Unit: 100 単位︓億円 150 million y

14. Slide 14: Overseas Business: Region-Specific Net Sales and Operating Income

    Overseas Business: Region-Specific Net Sales and Operating Income ◆China (Unit: 1 million CNY) FYE Dec. 2020 FYE Dec. 2021 Change from Change from Results Forecast Results Previous Period Forecast Net sales 1,705 1,949 1,899 ＋11.3% －2.6% Operating 150 182 141 －6.3% －22.5% income ◆ASEAN * (Unit: 1 mi

15. Slide 15: China

    China  Over the full year of 2021, China’s cookie market (POS) performed at roughly the same level as the previous year.  Glico’s net sales (shipments) grew +11.3% compared to the previous year based on local currencies. Demand via consumer purchasing channels changed and sales at local supermarke

16. Slide 16: China: Online

    China: Online  In 2021, the EC (POS) market in China’s cookie market shrank -1.9% compared to the previous year.  Glico’s EC business is growing faster than the market. (+37.5% growth based on the local currency) The EC business grew to accounted for 14.8% of our total China business.  We are mai

17. Slide 17: ASEAN

    ASEAN “Pocky Wholesome”  In ASEAN, despite negative effects on our supply chain that came From left, “Blueberry Yoghurt,” from delays in procuring raw materials and transport from sluggish “Chocolate Almond” demand attributable to COVID-19 in the first half, our sales recovered in the second half a

18. Slide 18: U.S.A.

    U.S.A.  In FYE Dec. 2021, net sales of Ezaki Glico USA, Glico’s local subsidiary in the U.S. confectionery business, increased by +27.8% year on year to 91 million USD based on local currencies.  Sales expanded at Walmart, an American retail store, with increased distribution of Glico products to

19. Slide 19: Responses to Non-Financial Matters

    Responses to Non-Financial Matters 1. Environmental initiatives ・ Presentation of the Glico Group Environmental Vision 2050 (March 2021): Sets targets and KPIs for 100% reduction of greenhouse gases, water consumption, plastic containers/recycling, and food waste 2. Social initiatives ・Promotion of

20. Slide 20: II. Mid-Term Business Plan

    II. Mid-Term Business Plan ©2022 Ezaki Glico Co., Ltd. All Rights Reserved 20

21. Slide 21: Changes in Net Sales and Operating Income

    Changes in Net Sales and Operating Income • Net sales grew in the launch of the Category Management system in Japan. • Sales have been decreasing in recent years as domestic business has stagnated. However, overseas business and Health category are performing strongly. Net Sales Operating Income (Un

22. Slide 22: Review of the Previous Mid-Term Business Plan (Quantitative)

    Review of the Previous Mid-Term Business Plan (Quantitative) ◆ Mid-Term Business Plan＜ FY2018－2020＞ Item 2020 Target 2021 Result Compound average growth Compound average growth Net sales rate of at least 5% rate－1.1% (FY2018-2021) Operating income At least 30.0 billion yen 19.3 billion yen *ROE: 5.8

23. Slide 23: Review of the Previous Mid-Term Business Plan (Qualitative)

    Review of the Previous Mid-Term Business Plan (Qualitative) 1. Strengthen competitiveness through “selection and concentration” of management resources. (1) Strengthen core brands and accelerate innovation. (2) Accelerate growth through the global involvement of the Health business. (3) Establish a

24. Slide 24: Philosophy of the New Mid-Term Business Plan

    Philosophy of the New Mid-Term Business Plan Corporate philosophy “A Wholesome Life in the Best of Taste” Five focus areas 1) Optimizing nutrition balance and babies’ growth 2) Supporting growth 3) Strengthening athletic ability and capacity 4) Improvement of cognitive function and sleep 5) Healthy

25. Slide 25: Three pillars of the new Mid-Term Strategy

    Three pillars of the new Mid-Term Strategy Three pillars of the new Mid-Term Strategy Offering “Great Taste and Good Realization of a customer- Transformation toward Health” driven value chain focused business fields Taste and health value with Implementation of globally Transformation from scientif

26. Slide 26: Realizing a customer-driven value chain

    Realizing a customer-driven value chain Value selection (data analytics) Value creation Customer feedback Value communication Touch points with society/customers ©2022 Ezaki Glico Co., Ltd. All Rights Reserved 26

27. Slide 27: Five focus areas for value proposition

    Five focus areas for value proposition Optimizing nutrition Strengthening athletic balance and babies’ Supporting growth ability and capacity growth Improving cognitive Healthy ageing function and sleep From From From R&D pursuit of creation of value materials food culture ©2022 Ezaki Glico Co., Ltd

28. Slide 28: Changes to Domestic Business in Mid-Term Business Plan

    Changes to Domestic Business in Mid-Term Business Plan Transformation from category marketing to business unit management Category management Business unit management Health H&W Innovation Business unit Chocolate Global Brand Business unit Confectionery/Supplement Dairy Food Business unit Cookies Ic

29. Slide 29: Overseas Business Strategy

    Overseas Business Strategy  Continue achieving significant acceleration in priority regions (China, ASEAN, China).  Invest in the creation and expansion of added-value health markets for further growth.  Strive to expand earnings together with net sales growth. ◆ China: Annual net sales growth ra

30. Slide 30: New Mid-Term Business Plan

    New Mid-Term Business Plan 2021 2024 Result Forecast Compound average growth Net sales 338.6 billion yen rate+ 3 to 5% Compound average growth Operating income 19.3 billion yen rate + 5 to 10% ©2022 Ezaki Glico Co., Ltd. All Rights Reserved 30

31. Slide 31: Capital Policy (Basic Policy for Profit Allocation)

    Capital Policy (Basic Policy for Profit Allocation)  Proactively invest to achieve growth while providing stable returns to shareholders in line with profit growth. ■ Ordinary investment/growth investment: 80.0 Ordinary billion yen Operating investment/ ・ Normal capital investments (total of 30.0 b

32. Slide 32: III. FYE December 2022 Earnings Forecast

    III. FYE December 2022 Earnings Forecast *As Glico will apply the “Accounting Standards for Revenue Recognition” (ASBJ Statement No. 29) beginning with the first quarter of FYE December 31, 2022., the following earnings forecasts are based on said accounting standards. *Some selling expenses (rebate

33. Slide 33: Consolidated Earnings Forecast

    Consolidated Earnings Forecast  Net sales: Although we forecast a double-digit year-on-year increase by overseas business, and we anticipate a 0.8% year-on-year increase by domestic business. We forecast a 3.7% year-on-year increase for the consolidated Group.  Operating income: Operating income:

34. Slide 34: Basic Policy for FY2022

    Basic Policy for FY2022 As the first year of the Mid-Term Business Plan, strengthen value creation to realize Glico’s corporate philosophy of “A Wholesome Life in the Best of Taste.” 1. Provide health value and build a customer-driven value chain • Launch new products with health function and accele

35. Slide 35: Operating Income Forecast

    Operating Income Forecast (Unit: 100 million yen) FYE Dec. 2021 FYE Dec. 2021 FYE Dec. 2022 (previous standards) (new standards) (new standards) Sales Results Results Sales Ratio Forecast Sales Ratio Ratio Net sales 3,386 100.0% 2,926 100.0% 3,033 100.0% Cost of sales 1,805 53.3% 1,805 61.7% 1,853 6

36. Slide 36: Factors of Increases (Decreases) in Operating Income (New Standards)

    Factors of Increases (Decreases) in Operating Income (New Standards) <Change from previous period>  In the domestic segment, although SG&A expenses and raw material price fluctuations are expected to increase, higher income is forecasted overall owing to increases in “increase/decrease in net sales

37. Slide 37: Net Sales Forecast by Segment

    Net Sales Forecast by Segment  In the domestic segment, although net sales are expected to increase mainly in Health category in Other, an overall year- on-year increase of just +0.8% is forecast due to struggles in Confectioneries and Food Products and Milk and Dairy Products.  The overseas segme

38. Slide 38: Operating Income Forecast by Segment

    Operating Income Forecast by Segment  We forecasts a +500 million yen for domestic business, and a +700 million yen for overseas business.  We forecast a +1200 million yen year-on-year increase for the entire consolidated Group. (Unit: 100 million yen) FYE Dec. 2021 FYE Dec. 2021 FYE Dec. 2022 (pr

39. Slide 39: Overseas Business: Region-Specific Net Sales and Operating Income Forecast

    Overseas Business: Region-Specific Net Sales and Operating Income Forecast ◆China (Unit: 1 million CNY) FYE Dec. 2021 FYE Dec. 2021 FYE Dec. 2022(new standards) (previous standards) (new standards) Change from Previous Results Results Forecast Period Net sales 1,899 1,410 1,583 +12.3% Operating inco

40. Slide 40: TTM Currency Rate

    Supplemental Materials TTM Currency Rate USD EUR THB CNY 100KRW 100IDR 3/31 106.24 130.52 3.40 16.92 9.99 0.78 6/30 110.54 127.91 3.33 16.66 9.88 0.77 2018 9/30 113.57 132.14 3.50 16.50 10.23 0.76 12/31 111.00 127.00 3.41 16.16 9.94 0.77 3/31 110.99 124.56 3.49 16.47 9.80 0.78 6/30 107.79 122.49 3.5

41. Slide 41: Net Sales by Category

    Supplemental Materials Net Sales by Category (Unit: 100 million yen) FYE Dec. 2020 FYE Dec. 2021 FYE Dec. 2021 FYE Dec. 2022 (previous (previous (new standards) (new standards) Segment Category standards) standards) Change from Results Results Results Forecast Previous Period (%) Chocolate 445 399 3

42. Slide 42: Status of Balance Sheet

    Supplemental Materials Status of Balance Sheet  Net worth ratio: 65.2% (end of December 2020) (Unit: 100 million yen) → 67.5% (end of December 2021) Assets End Dec. ’20 End Dec. ’21 Change from previous Major account items period Cash and deposits 979 1,020 +41 Current assets Notes and accounts rec

43. Slide 43: Status of Cash Flows

    Supplemental Materials Status of Cash Flows (Unit: 100 million yen) FYE Mar. 2018 FYE Mar. 2019 FYE Dec. 2019 FYE Dec. 2020 FYE Dec. 2021 Results Results Results Results Results Cash flows from operating 315 203 173 172 287 activities Cash flows from investing －250 －87 －90 －124 －292 activities FCF 6

44. Slide 44: Capital Investments, Depreciation, and R&D Expenditures

    Supplemental Materials Capital Investments, Depreciation, and R&D Expenditures (Unit: 100 million yen) FYE Dec. 2019 FYE Dec. 2020 FYE Dec. 2021 FYE Dec. 2022 Results Results Results Forecast Capital investment total 163 109 166 202 Confectioneries and Food Products 36 28 22 21 Ice Cream 34 20 25 27

45. Slide 45: Notes of caution

    [Notes of caution] *Current Glico and Glico Group plans, forecasts, and initiatives indicated in these materials reflect determinations made based on information available at the present time. As such, this information may include major risks and uncertainties. Please note that actual performance ma

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