Ajinomoto Co., Inc. · TSE:2802
Ajinomoto — Investor Presentation (February 2023)
57 slides from Ajinomoto's investor presentation, Feb 28, 2023
Slide 1: Purpose-Driven Management by Medium-Term ASV Initiatives: 2030 Roadmap
Ajinomoto Co., Inc. (2802) Purpose-Driven Management by Medium-Term ASV Initiatives 2030 Roadmap Resolve the Food and Health Issues of All Human Beings and Beyond Taro Fujie Member of the Board, Representative Executive Officer President & Chief Executive Officer February 28, 2023
Slide 2: Introduction
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials Note: Business profit (consolidated) in this material
Slide 3: Today's Topics
Today’s Topics Contribute to the well-being of all human beings, our society and our planet with AminoScience® Evolving our purpose beyond “Unlocking the power of amino acids to resolve the food and health issues” to “Contributing to the well- being of all human beings, our society and our planet wi
Slide 4: Contributing to the well-being of all human beings, our society and our planet with AminoScience
Evolution of vision | Where we want to be Unlocking the power of amino acids to resolve the food and health issues Contributing to the well-being of all human beings, our society and our planet with AminoScience® ＆ Reduce environmental Promote better impacts and health and life regenerate the enviro
Slide 5: What is AminoScience?
What is AminoScience ®? A collective term for the various materials, functions, technologies, and services derived from research and implementation processes with a rigorous focus on unlocking the power of amino acids. It also refers to the Ajinomoto Group’s unique scientific approach to connect the
Slide 6: Eat Well, Live Well.
“Our Philosophy” resolving food and health issues, for all human beings and beyond We will achieve “Eat Well, Live Well.” by going beyond resolving food and health issues, and contributing to the well-being of all human beings, our society and our planet with AminoScience®. Corporate Slogan Eat Well
Slide 7: Important issues for the Ajinomoto Group (Materiality)
Important issues for the Ajinomoto Group (Materiality) With a view to realizing our vision and further improving our corporate value over the long term, we have engaged in a series of dialogues at the Sustainability Advisory Council and have arranged important issues for the Ajinomoto Group (Materia
Slide 8: Transformation to purpose-driven management by medium-term ASV initiatives
Transformation to “purpose-driven management by medium- term ASV initiatives *” based on “ASV indicators” To continuously improve our corporate value, we have eliminated the process of formulating medium-term management plans with overly elaborate figures. Instead, we are setting challenging ASV ind
Slide 9: Shift from structural reform to growth
Shift from structural reform to growth We aim to achieve a highly profitable, unique, and robust structure by shifting to growth in the four outcome-driven growth areas through evolution of core businesses and business model transformation (BMX) . Four growth areas Healthcare ICT CAGR AminoScience C
Slide 10: Agenda: 2020–2025 MTP Phase 1 Review
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 11: FY20–22 (2020–2025 MTP Phase 1) Policies and major initiatives
FY20–22 (2020–2025 MTP Phase 1) | Policies and major initiatives 1 Foundation-Strengthening Initiatives E: Commitment to net zero greenhouse gas (GHG) emissions, etc. S: Establishment of the Sustainability Advisory Council, reporting to the Board of Directors, etc. G: Transitioning the organizationa
Slide 12: FY20–22 Structural reform and regrowth
FY20–22 (2020–2025 MTP Phase 1) | Structural reform and regrowth We have successfully speed up structural reforms and established a regrowth trajectory ahead of schedule. Copyright © 2023 Ajinomoto Co., Inc. All rights reserved 12
Slide 13: FY20–22 Improving corporate value
FY20–22 (2020–2025 MTP Phase 1) | Improving corporate value Our initiatives have also successfully led to improved corporate value. Approx. Market capitalization and stock price over the past decade 2.7times (January 31, 2013 – January 31, 2023) Market capitalization ¥2.29 trillion (As of January 31
Slide 14: FY20–22 Results forecast
FY20–22 (2020–2025 MTP Phase 1) | Results forecast 20-22 23-25 2030 Phase1 Phase2 Goal Structural reform Regrowth FY22 FY22 FY25 forecast* MTP target MTP target Efficiency ROIC（ >Capital Cost） 8.0% 8% 10-11% 13% （ ）：Excluding expenses for structural reform (Approx. 9%) Financial indicators Approx. G
Slide 15: Agenda: Key Strategies in the 2030 Roadmap
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 16: 2030 Roadmap overview
2030 Roadmap overview Under the 2030 Roadmap, we will carry out initiatives in three pillars to improve corporate value. Standard calculation of corporate value Steadily generate cash flow Speed Up Corporate ＝ with × value Capital costs （WACC） － Growth rate Scale Up 2030 Roadmap 1 2 3 Management Por
Slide 17: Management transformation to medium-term ASV initiatives
Management transformation to 1 “medium-term ASV initiatives” We will continue to pursue new value and BMX while being committed to achieve targets in the performance forecasts. Furthermore, we will promote “medium-term ASV initiatives” which improves our execution capabilities and continue to take o
Slide 18: Portfolio management
2 Portfolio management Despite progress in structural reforms, we need to evolve to an optimal business portfolio with a view to business and organizational restructuring during the growth stage as we get closer to our “vision for 2030,” a state of evolution in determined & ambitious ASV initiatives
Slide 19: Portfolio management: business portfolio evolution
2 Portfolio management We will redesign our business portfolio to realize our “vision for 2030” and sustainable growth beyond. Furthermore, we will nimbly capture signs of environmental changes, using them as opportunities to polish our business portfolio as needed. Illustration of business portfoli
Slide 20: Portfolio management: cross-organizational collaboration
2 Portfolio management By examining our business development from an outcome-driven perspective, we have begun to see the value of our current businesses’ contributions and their connections to “vision for 2030.“ We will strengthen cooperation with a focus on social value. 2025 2030〜 Outcome-driven
Slide 21: Intangible assets for the Ajinomoto Group
3 Intangible assets for the Ajinomoto Group We will invest in intangible assets to ensure that human resources empowered by purpose can use AminoScience® to co-innovate for the future by working closely with consumers and customers. Ajinomoto Group Strengths Points to improve Co-innovating Technolog
Slide 22: Intangible assets and the ROIC tree
3 Intangible assets and the ROIC tree We aim to achieve ROIC of about 17% and approximately triple our EPS by FY30 (vs. FY22) by improving efficiency and especially strengthening investments to accelerate growth, while maintaining awareness of the link between intangible assets and financial value.
Slide 23: Agenda: Ajinomoto Group Growth Strategy
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 24: Ajinomoto Group growth strategy: Basic policy
Ajinomoto Group growth strategy | Basic policy By leveraging the strengths of the Ajinomoto Group’s unique AminoScience ® offerings, we aim to achieve dramatic growth in four growth areas. These areas were defined through our basic policy to focus on areas where there is great market growth potentia
Slide 25: Healthcare
Healthcare In keeping with strengthening our core businesses, we will also accelerate business growth by focusing management resources on strategic businesses with growth market prospects. Steady growth of existing businesses Further growth driven by BMX Steady Growth of Core Businesses Accelerating
Slide 26: Food & Wellness
Food & Wellness In addition to greater earnings by strengthening regional strategies in the consumer food businesses and shifting the Frozen Food Business to a growth trajectory, we will accelerate growth by building a new business foundation that co-creates diverse value, including health and nutri
Slide 27: ICT
ICT We will capture growth areas such as semiconductors for HPC* (AI applications, etc.) and new packages (multi-chip, 3D-IC), as well as PC and server applications, and continue to evolve and expand ABF** and tackle new areas and materials. Steady growth of existing businesses Further growth driven
Slide 28: Green
Green We will co-create new food systems as we take leadership of achieving a “with Earth” society. In this society, there will be a sweeping new dietary style that harmonizes with co-existence with the Earth, passing on national and regional food cultures, and individual tastes and values. Steady g
Slide 29: Initiatives for strengthening business foundations
Initiatives for strengthening business foundations While achieving dramatic growth, we will continue to improve capital efficiency to achieve a streamlined profit structure that supports growth foundations. Examples of initiatives ・Timely response to procurement risks April 2023: Establishing ・Visua
Slide 30: Agenda: ASV Indicators
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 31: What are ASV Indicators?
What are “ASV Indicators”? We are adjusting existing KPIs for achieving our future vision, combining these with new needed metrics and changing to ASV indicators that will encourage further growth and challenges. Eat Well, Live Well. ASV Indicators Economic value Social value indicators indicators F
Slide 32: 2030 ASV indicators
2030 ASV indicators KPIs for Phase 2 of the 2020–2025 Medium-Term Management Plan will be partially retained, but changed to ASV indicators. Ref. Targeting FY22（forecast*) FY25 FY30 approx. 3x EPS （vs. FY2022） Approx. ROE 11% 18% 20% Approx. ROIC（>Capital Cost） 8.0% 13% 17% Economic ASV Indicators A
Slide 33: Reference: Growth paths by segment
Reference | Growth paths by segment Organic growth Business profit（BP） Segment （CAGR） （CAGR） ROIC EBITDA margin FY22forecast* FY25 FY22forecast* FY25 FY22forecast* FY25 FY22forecast FY25 （Sales） （FY22-25） （BP） （FY22-25） Seasonings Seasonings Quick Nourishment and ¥748.7 5％ ¥81.0 12％ Approx. 16％ 15％
Slide 34: 2030 ASV indicators: Social value
2030 ASV indicators | Social value We are working to reduce our environmental impact by 50% by 2030 and to achieve carbon neutrality by 2050. Issues KPIs Targets FY21 (Results) Scope 1, 2 Total 18％ reduction FY30：Reduced by 50％ (vs. FY18) Greenhouse gas Response to FY30：Reduced by 24％ (vs. FY18) Sco
Slide 35: 2030 ASV indicators: Social value (nutrition)
2030 ASV indicators | Social value We will contribute to extending the healthy life expectancy for one billion people by promoting initiatives based on the “Nutrition Without Compromise” approach. Ajinomoto Group’s approach to nutrition Nutrition commitment FY21 FY25/30 Quantitative Targets （Results
Slide 36: Agenda: Financial Strategy and Management Resource Allocation
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 37: Financial strategy: Three frameworks in 2030 roadmap
Financial strategy | Three frameworks in 2030 roadmap 1 Matching Business and Capital Strategies ・Cash allocation policy for maximizing corporate value 2 Continuously Improving Shareholder Value ・Continuous improvement of EPS (approx. 3x EPS in FY2030) 3 Updating Shareholder Return Policy ・Progressi
Slide 38: Financial strategy: Cash allocation policy
Financial strategy 1 | Cash allocation policy We will place the highest priority on investments in growth, M&A, etc. If there is excess capacity in operating CF, we will actively carry out share buybacks as a second tier of investments above WACC. Capital expenditures are expected to be High Resourc
Slide 39: Financial strategy: Continuous improvement of EPS
Financial strategy 2 | Continuous improvement of EPS ・Early identification of signs of changes in the business environment through rolling forecasts and timely implementation Continuous Growth in of countermeasures Business Profit ・ Profit growth through activities to improve TDC* margin and other p
Slide 40: Financial strategy: Continuous strengthening of shareholder returns
Financial strategy 3 | Continuous strengthening of shareholder returns We will strengthen shareholder returns by introducing a progressive dividend policy, adopting dividends based on normalized EPS, and continuing dynamic share buybacks. FY20–25 MTP Shareholder Shareholder Return Policy Going Forwa
Slide 41: Reference: Continuous strengthening of shareholder returns
Reference | Continuous strengthening of shareholder returns If the equivalent to 35% of normalized EPS is used as the dividend per share, dividends will increase compared to past amounts. Combined with our progressive dividend policy, we will continue to maintain the trend of increasing dividends. C
Slide 42: Agenda: Conclusion
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 43: Conclusion
Conclusion Pursue determined & ambitious ASV initiatives , evolving to ASV management , ・ improving execution ability. Realize the well-being of all human beings, our society and our planet ・ with AminoScience® Improve corporate value through steady cash flow generation , ・ improved growth rate , re
Slide 44: Forward-looking statements
⚫ Forward-looking statements, such as business performance forecasts, made in these materials are based on management's estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations. ⚫ This material includes s
Slide 45: Agenda: Supplementary Materials
Introduction 1 2020–2025 Medium-Term Management Plan Phase 1 Review 2 Key Strategies in the 2030 Roadmap 3 Ajinomoto Group Growth Strategy 4 ASV Indicators 5 Financial Strategy and Management Resource Allocation Conclusion Supplementary Materials
Slide 46: The Ajinomoto Group's growth trajectory
The Ajinomoto Group’s growth trajectory Our front-line human resources have accurately and rapidly grasped the changing needs of the times, helping us achieving sustainable growth by evolving our business portfolio while building a competitive advantage through AminoScience®. Copyright © 2023 Ajinom
Slide 47: FY20–22 Progress of structural reform
FY20–22 (2020–2025 MTP Phase 1) | Progress of structural reform Although we have achieved our asset light targets of 200 billion yen ahead of schedule, we will continue our efforts to further improve ROIC in FY23 and beyond. Copyright © 2023 Ajinomoto Co., Inc. All rights reserved 47
Slide 48: Group-Wide Project 1: Healthy and nutritional food products business
Healthy and nutritional food products business value creation Group-Wide Project | 1 and regional development through fusion of food and amino acids Creating new value in health and nutritional functions of amino acids and promoting business by proposing solutions to health issues and new food exper
Slide 49: Group-Wide Project 2: Global fermentation asset optimization
Group-Wide Project | 2 Global fermentation asset optimization Setting direction to convert/utilize/evolve tangible and intangible fermentation-related assets (facilities, technologies, human resources, etc.) cultivated by the Ajinomoto Group for future growth strategies, and achieving high-value-add
Slide 50: Strengthening intelligence functions to achieve medium-term ASV initiatives
Strengthening intelligence functions to achieve “medium-term ASV initiatives” Strengthening intelligence functions (search, access & partnering) for direct access to global markets, customers, and innovation activities to quickly review and make decisions for alliances and partnerships. …Healthcare
Slide 51: Launching an initiative to clarify an impact path: Ajinomoto Thailand
Launching an initiative to clarify an impact path | Example of Ajinomoto Thailand In Thailand, we clarified the impact path (cause and effect) from our business activities to the realization of ASV and implemented it ahead of the entire company. In the future, we will communicate effectively to maxi
Slide 52: Connections between business and social/economic value
Connections between business/Initiatives and social/economic value | Ajinomoto Group After drafting specific impact paths for each business domain, we will take a bird’s-eye view of the Group (including business interrelationships), drawing a path to maximize ASV toward 2030. Illustration of Busines
Slide 53: Ajinomoto Group human assets
Ajinomoto Group human assets Through dialogue between those inside and outside the Group who resonate with our purpose, we foster purpose and build resonance with it, and encourage diversity and challenge. By doing so, we co-create innovations for the future and strengthen our human resource assets
Slide 54: Ajinomoto Group human assets: HR investment
Ajinomoto Group human assets To enhance ASV, we will actively invest in human resources with a focus on fostering purpose and building resonance, as well as diversity and challenge. We will also link various initiatives with the ASV realization process, improving employee engagement. HR investment (
Slide 55: Accelerating innovation by strengthening R&D investment
Accelerating innovation by strengthening R&D investment We will accelerate growth by strengthening investments tied to the four areas driving growth toward FY2030, as well as R&D investments to create next-generation businesses that will be commercialized after FY2030. We will consider increasing R&
Slide 56: Capital investment
Capital investment After clarifying business priorities, we will strengthen investment in high-priority businesses. We will shift allocation between food and AminoScience to implement a well-rounded investment strategy. CAPEX (Information systems/capital investment) over time Total information syste
Slide 57: Reference Links
Reference Links Ajinomoto Group IR https://www.ajinomoto.co.jp/company/en/ir/ Ajinomoto Group ASV Report (Integrated Report) 2022 https://www.ajinomoto.co.jp/company/en/ir/library/annual.html Medium-Term ASV Initiatives 2030 Roadmap https://www.ajinomoto.co.jp/company/en/ir/event/medium_term.html Aj