Slide 1: Results Briefing Materials for FY2020
Results Briefing Materials for FY2020 Kagome Co., Ltd. Feb. 3rd, 2021 1
Slide 2: Topics
Topics 1. Summary of Business Results for FY2020 (the year ended December 31, 2020) • Firm results in the domestic business excluding the institutional and industrial business. Increases in both revenue and profit chiefly due to heightened health awareness and increased demand for products for consu
Slide 3: 1. Summary of Business Results for FY2020
1. Summary of Business Results for FY2020 (the year ended December 31, 2020) 3
Slide 4: FY2020 Consolidated Results
FY2020 Consolidated Results Unit: 100 million yen Results YoY Comparison to forecast*2 Rate of Rate of Margin change change Revenue 1,830 - 22 +1% 8 +0% Core Operating 136 7% 13 +11% 5 +4% Income Operating Income 107 6% (34) (24)% 5 +5% Net Income*1 74 4% (28) (27)% 4 +6% *1. Net income attributable
Slide 5: FY2020 Results by Segment
FY2020 Results by Segment Unit: 100 million yen Revenue Core Operating Income FY2019 FY2020 FY2019 FY2020 Rate of Rate of YoY YoY change change Beverages 720 743 22 +3% 58 77 18 +32% Food and others 604 602 (2) (0)% 54 51 (3) (5)% Domestic processed 1,325 1,345 20 +2% 112 128 16 +14% food business D
Slide 6: Impact of COVID-19 on Business (Timeline)
Impact of COVID-19 on Business (Timeline) Year-on-year changes in revenue in severely affected categories Household use category (Japan) Institutional and industrial use category YoY (United States) Institutional and industrial use category (Japan) First wave Second wave Third wave Household use cat
Slide 7: Domestic Processed Food Business (Beverages)
Domestic Processed Food Business (Beverages) Gains in revenue and profit mainly due to the “Let’s Eat Vegetables” campaign and health-related demand and consumption at home because of COVID-19 Unit: 100 million yen Revenue Core Operating Income Domestic Processed Food Business FY2019 FY2020 YoY FY20
Slide 8: Domestic Processed Food Business (Food and others)
Domestic Processed Food Business (Food and others) Both revenue and profit decreased due to decline in products for institutional and industrial use, despite brisk sales of products for home-cooked food and direct marketing sales Unit: 100 million yen Revenue Core Operating Income Domestic Processed
Slide 9: Domestic Agriculture Business
Domestic Agriculture Business Both revenue and profit increased, reflecting reform of the earnings structure Unit: 100 million yen Revenue Core Operating Income Domestic Agriculture FY2019 FY2020 YoY FY2019 FY2020 YoY Business 96 102 107% (2) 3 - Trends in fresh tomato sales (year-on-year comparison
Slide 10: Implementation of “Let’s Eat Vegetables” campaign
Domestic Business Implementation of “Let’s Eat Vegetables” campaign Measures Details Results Collaboration with other Collaboration with companies and Initiatives with 19 supporting companies and organizations organizations from other sectors to companies started with a kick-off (vegetable promotion
Slide 11: Implementation of “Let’s Eat Vegetables” campaign
Domestic Business Implementation of “Let’s Eat Vegetables” campaign Initiatives with supporting companies “Vegetables tours” to become Proposing home appliances Support for the health healthy at Resonare Nasu and recipes for new styles of promotion of employees • Experience of harvesting, preparing
Slide 12: International Business
International Business Decrease in revenue due to a drop in food service demand in the United States, and fall in profit chiefly due to the posting of impairment losses Unit: 100 million yen Revenue Core Operating Income International Business YoY YoY FY2020 YoY (excl. exchange FY2020 YoY (excl. exc
Slide 13: Reform in Earnings Structure at HIT and Its Future
Reform in Earnings Structure at HIT and Its Future Impairment losses were posted in FY2020, and the foundation was laid for growth from FY2021 Inventory quantity of tomato paste and profit margin at HIT at fiscal year end Inventory quantity (thousand tons) Profit margin 0% • Inventory quantity remai
Slide 14: Factors Contributing to Consolidated Core Operating Income
Factors Contributing to Consolidated Core Operating Income Unit: 100 million yen 123 Increase in income in the domestic processed food business (1) (2) (3) 136 (1) Increase in advertising expenses: Mainly TV commercials linked to the “Let’s Eat Vegetables” campaign (2) Cost reduction: Improvement of
Slide 15: Factors Contributing to Operating Income and Profit Changes
Factors Contributing to Operating Income and Profit Changes Unit: 100 million yen FY2019 FY2020 Core operating income 123 136 Other income 27 (1) 14 Other expenses 10 43 (2) Operating income 141 107 Profit before income tax 139 106 Income tax expense 36 45 Effective tax rate 26% 43% (3) Profit attri
Slide 16: Changes to Statement of Financial Position
Changes to Statement of Financial Position Assets/liabilities and equity ¥224.9 B (up ¥23.7 B from the end of FY2019) Equity attributable to owners of parent to total assets: 49.3% (down 4.6 points from the end of FY2019) Unit: 100 million yen Unit: 100 million yen Current assets: 1,416 (up 289) Cas
Slide 17: Changes in Cash Flow
Changes in Cash Flow Unit: 100 million yen FY2019 FY2020 Change Cash flows from operating activities (A) 122 204 82 Cash flows from investing activities (B) (93 (34) 59 Free cash flows (A+B) 30 170 141 Cash flows from financing activities (51) 121 172 Factors contributing to changes from the previou
Slide 18: 2. Initiatives in the Domestic Processed Food Business in FY2021
2. Initiatives in the Domestic Processed Food Business in FY2021 18
Slide 19: Domestic Processed Food Business’ 10 Years
Domestic Processed Food Business’ 10 Years Profitability increased from the First Mid-Term Management Plan from 2016 to 2018. The challenge is achieving growth in sales. Past Performance Trends Net sales/Revenue Operating income/ Unit: million yen Core operating income (FY) J-GAAP * FY2014 is nine m
Slide 20: Consumer Behavioral Change Due to COVID-19
Consumer Behavioral Change Due to COVID-19 Consumer behavioral change gives Kagome an opportunity to increase vegetable intake in Japan. Major consumer behavioral change includes: Increased opportunities Increased awareness of Change in purchasing to prepare and eat food health, immunity and behavio
Slide 21: Initiatives in FY2021
Initiatives in FY2021 Press ahead with the “Let’s Eat Vegetables” campaign to stimulate demand for vegetables and achieve top-line growth Priorities for achieving top-line growth Beverages Revenue + 1.6 billion yen Revenue + 0.7 billion yen Food, institutional and Enhance the value of mainstay indus
Slide 22: 3. Reform of Earnings Structure of Domestic Agriculture Business
3. Reform of Earnings Structure of Domestic Agriculture Business and Initiatives in FY2021 22
Slide 23: Domestic Agriculture Business’ 10 Years
Domestic Agriculture Business’ 10 Years Performance has been weak since FY2017. The earnings structure reform will continue. Past Performance Trends Net sales/Revenue Operating income/ Unit: million yen Core operating income (47) (70) (10) (236) (161) (97) (225) (FY) J-GAAP * FY2014 is nine months f
Slide 24: Establishment of KAF and Initiatives in FY2021
Establishment of KAF and Initiatives in FY2021 Kagome Agri-Fresh Co., Ltd. (KAF) has taken over the domestic agriculture business Purposes of the establishment of KAF Missions Building an advanced and sustainable agribusiness (1) Expediting decision making Cultivation of new vegetables Fresh tomatoe
Slide 25: 4. Reform of Earnings Structure of International Business
4. Reform of Earnings Structure of International Business and Initiatives in FY2021 25
Slide 26: International Business’ 10 Years
International Business’ 10 Years Net sales grew approximately threefold. However, earnings fell especially in the primary processing domain, and earnings structure reform has started. Past Performance Trends Net sales/Revenue Operating income/ Unit: million yen Core operating income (656) (683) (828
Slide 27: Initiatives in FY2021
Initiatives in FY2021 Optimize the scale of the primary processing domain and focus on cooperation between the U.S. bases and vegetable beverages in Asia Core operating income at HIT +0.2 billion yen Primary processing • Manage earnings by business and by customer and select businesses and customers
Slide 28: 5. Full-Year Consolidated Results Forecasts for FY2021
5. Full-Year Consolidated Results Forecasts for FY2021 (Final Year of the Second Mid-Term Management Plan) 28
Slide 29: FY2021 Full-Year Results Forecasts
FY2021 Full-Year Results Forecasts Unit: 100 million yen Revenue Core Operating Income FY2020 FY2021 FY2020 FY2021 Vs. Revised Vs. Revised YoY YoY forecast*2 forecast*2 Domestic processed 1,345 1,377 32 13 128 108 (20) 6 food business Domestic agriculture 102 109 7 3 3 7 4 2 business International 4
Slide 30: Factors Contributing to Consolidated Core Operating Income Changes in FY2021
Factors Contributing to Consolidated Core Operating Income Changes in FY2021 Significant income decline in the domestic processed food business leads to a decrease in consolidated core operating income Unit: 100 million yen (1) 136 (2) 131 Domestic processed food business Major factors contributing
Slide 31: Fixed Investment Plan
Fixed Investment Plan Fixed investment plan <Plan> <Progress/Plan> Total Fixed investment plan in the Second Mid-Term 31.8 billion yen Management Plan Fixed • Approx. 6.0 billion yen less than the plan, 37.7 billion yen investment plan • Although part of the plan was cancelled or postponed, an for S
Slide 32: Dividend
Dividend Dividend payout policy for the Second Mid-Term Annual dividend payouts per share Management Plan • FY2020: 36 yen • Payout at least 35 yen in annual dividends per share • FY2021 (expected): 37 yen • Total return ratio of 40% during the plan period Unit: yen 10 (Special dividend) 37 35 36 30
Slide 33: Initiatives before the Third Mid-Term Management Plan
Initiatives before the Third Mid-Term Management Plan 33
Slide 34: Sustainability
Sustainability Environmental conservation is necessary for the continuity of the Company’s business for which the raw materials are nature’s bounty. • Analyzing climate change scenarios, following the recommendations of the Reduction of greenhouse Task Force on Climate-related Financial Disclosures
Slide 35: Initiatives for Top-Line Growth
Initiatives for Top-Line Growth Two approaches to become a vegetable company Laying the foundation for new growth (1) Increasing the consumption of vegetables (1) Introducing ROIC-based management Consumption of vegetables in Japan: • Starting ROIC-based management for each business and KPI subsidia
Slide 36: Finally…
Finally… Growing consumer interest in a healthy diet and increasing immunity Survive in the “food and health” domain through the power of vegetables “Become a strong company 2025 Goal that can achieve sustainable growth resolving social issues through foods.” 2025 Transform from a “tomato company” L
Slide 37: Note
Note All information contained herein on the current plans, forecasts and strategies of Kagome that does not consist of historical facts is based on judgments made by Kagome’s management from currently available information. We therefore request that you refrain from relying comprehensively and sole