Earth Corporation · TSE:4985
Earth — 2Q FY12/2022 Earnings Presentation
40 slides from Earth's earnings presentation, Aug 18, 2022
Slide 1: Earnings briefing materials for 2Q of the fiscal year ending December 2022
Earnings briefing materials for 2Q of the fiscal year ending December 2022 08/05/2022 update; 08/18/2022
Slide 2: Executive Summary ①
Executive Summary ① • Financial results overview * LFY results calculated and adjusted retroactively using the new Accounting Standard ‣ Sales : 89.3 billion yen; vs. the forecast: - 2.4%; YoY* : + 2.0% ‣ Operating Income : 11.9 billion yen; vs. the forecast: - 10.2%; YoY*: - 11.7% ‣ The initial ful
Slide 3: Executive Summary ②
Executive Summary ② • Impact of soaring material prices and currency fluctuations ‣ Impact amount on 2Q forecast : 300 million yen ‣ Estimate of impact amount on full year FY12/2022 forecast : approx.1.0 billion yen ‣ In case of the continuation of the current forex trend, we expect an impact amount
Slide 4: FY12/2022 2Q Results
CAN ‘es= Earth Corporation Act For Life FY12/2022 2Q Results
Slide 5: Financial Result Highlights
Financial Result Highlights As of the end of 2Q, the Earth Corporation registered an increase in sales accompanied by a decrease in profits. Operating income fell short of the plan by 10% The impact of soaring raw material prices and currency fluctuations is gradually starting to be seen Followi
Slide 6: Total Sales / Product Returns / Sales Deductions
Total Sales / Product Returns / Sales Deductions While total sales grew YoY, it fell short of the forecast (Unit: 0.1 billion JPY) Product returns increased both YoY and vs. the forecast. However, as of the end of 1H, the impact from this has not been a reason for concern. The ratio of sales d
Slide 7: Sales By Segment
Sales By Segment *To outside customers (excludes internal eliminations) (Unit: 0.1 billion JPY) Sales of insecticides & repellents were impacted by sluggishness in the overall market, decreasing YoY as of the end of 2Q, and falling short of the forecast for the same period Strong performance ove
Slide 8: Status Of The Insecticides & Repellents Segment (Domestic)
Status Of The Insecticides & Repellents Segment (Domestic) Market Trends Flagship Products - Trends (Unit: 0.1 billion JPY) （℃） 2020 Sales (Weekly) 2021 Sales (Weekly) • EARTH NO MAT 120 2022 Sales (Weekly) 2020 Max. Temp. 40 88% 2021 Max. Temp. 2022 Max. Temp. 100 Vs. forecast 30 80 • MUSHI YOKE NE
Slide 9: COGS – Status Overview
COGS – Status Overview Costs have soared, primarily for raw materials derived from palm oil and materials tied to the price of crude oil We have also been impacted by forex fluctuations when procuring goods overseas (including the impact on sea freight fares) Impact of soaring raw material price
Slide 10: SG&A Expenses – Status Overview
SG&A Expenses – Status Overview (Unit: 0.1 billion JPY) As of the end of 2Q, for the most most, SG&A expense items remained in an adequate range, as formulated in the forecast For the majority of items that fell below the forecast, this was due to a spillover in the timing of recognition 2Q FY12
Slide 11: Overseas Results (Including cross-border EC)
Overseas Results（Including cross-border EC) (Unit: 0.1 billion JPY) Sales YoY* : 115% Strong performance, primarily in Thailand and Vietnam Slight decrease in profit margin, due to a YoY decrease in export sales from Japan While the lockdown in Shanghai has effectively been lifted, a full reco
Slide 12: Overseas Results (Status By Country: China)
Overseas Results (Status By Country: China) Local Subsidiary Results* (0.1 B JPY) Effective YoY Sales On A Local Currency Basis : 78.7% 20 Sales 17.3 Progress Status Vs. The Forecast Measures In 2H OI Margin 16.2 15 • The lockdowns caused a series of irregular • Planned expansion in anticipation of
Slide 13: Overseas Results (Status By Country: Thailand & Vietnam)
Overseas Results (Status By Country: Thailand & Vietnam) Local Subsidiary Results* (0.1 B JPY) Effective YoY Sales On A Local Currency Basis : 114.5% Includes internal sales transactions 40 Sales Progress Status Vs. The Forecast Measures In 2H OI Margin 32.4 30 25.3 • Strong expansion of domestic sa
Slide 14: Overseas Results (Status By Country: Malaysia & Philippines)
Overseas Results（Status By Country: Malaysia & Philippines) Local Subsidiary Results (0.1 B JPY) Effective YoY Sales On A Local Currency Basis : ― Sales 3 Progress Status Vs. The Forecast Measures In 2H OI Margin 2 0.9 • Executed new product launches • Launch new air freshener products 1 according t
Slide 15: FY12/2022 Forecast
CAN ‘es= Earth Corporation Act For Life FY12/2022 Forecast
Slide 16: FY12/2022 Forecast
FY12/2022 Forecast While the impact of soaring raw material prices and currency fluctuations exceeds our estimates, the full year FY12/2022 forecast remains unchanged Prepare topline growth thanks to the release of new products not contained in the forecast, and recovery measures such as cost re
Slide 17: Initiatives Toward Achieving The Full-year Targets
Initiatives Toward Achieving The Full-year Targets Expand sales through the release of new products not accounted for in the initial forecast • Fall launch of 66 new household product SKUs, including products not accounted for in the initial forecast • Sales target: 2.6 billion yen Execute cost
Slide 18: Fall Season – New Product Releases
Fall Season – New Product Releases We plan to launch 66 SKUs. Sales* target : 2.6 billion yen Bath salts Oral Hygiene products ｃ Other Household products ｃ © Earth Corporation All Rights Reserved. *On the basis of Earth Corporation shipments 17
Slide 19: Management Policy Going Forward
Management Policy Going Forward
Slide 20: Cost Pass-through Policy
Cost Pass-through Policy Market expansion is the responsibility & obligation of top manufacturers Soaring raw material prices & forex fluctuations Build a foundation allowing us to sell products retailing at high price points Negative pressure on profits 2023: Execute cost pass-throughs, especia
Slide 21: Progress Update On Investment Projects
Progress Update On Investment Projects Pay close attention to capital efficiency and carry out investments toward profit growth Establish a hurdle rate for each project (Evaluate risk with a baseline of 7% as a rough estimate) Adequately carry out a decision-making process based on investment vi
Slide 22: ESG
ESG Social Governance Signed a donation agreement with Monash Sale of shares in Taiko Pharmaceutical Co., University • Collaborate with the World Mosquito Ltd. Program, established by researchers at • Part of the sustained review of the Earth Monash University in Australia, and Corporation’s str
Slide 23: Shareholder Returns
Shareholder Returns Target a Dividend on Equity Ratio (DOE) of 4 – 5% For FY2022, we forecast a dividend per share of 118 yen, a DOE of 4.2%, and a consolidated dividend payout ratio of 35.8% Adopt an agile approach and, should our performance and retained earnings levels allow it, consider ra
Slide 24: Forward-looking statements notice
This presentation contains forward-looking statements and financial results forecasts. These forward-looking statements and financial results forecasts were formulated on the basis of company assumptions based on the information available. These statements and forecasts are subject to risks and unce
Slide 25: APPENDIX.
APPENDIX. © Earth Corporation All Rights Reserved.
Slide 26: Effect of adoption of accounting standard for revenue recognition
Effect of adoption of accounting standard for revenue recognition
Slide 27: Estimated annual impact
Estimated annual impact Items like trades through intermediaries, sales promotion expenses, etc. are deducted from sales, impacting the P/L side, namely sales, gross profit and SG&A expenses; Impact on operating income and items below is minor Impact to the balance sheet is minor (Unit: 0.1 bill
Slide 28: Timing of recording sales promotion expenses (sales deductions)
Timing of recording sales promotion expenses (sales deductions) System is being built to more timely identify the actual status of revenue and to improve the efficiency of sales promotion expenses Reasonably estimate variable promotional expenses from the promotional expense plan tied to the sal
Slide 29: Quarterly Sales Promotion Plan
Quarterly Sales Promotion Plan Cf. Previous standard* (Unit: 0.1 billion JPY) Assume that from this fiscal year, sales promotion expenses will generally follow a curve in proportion to net sales ➡ Expenses are linked to highly seasonal sales trends, and profits are more even than before. 683.0 700
Slide 30: Operating Income Forecast (Quarterly/Cumulative total)
Operating Income Forecast （Quarterly/Cumulative total） Although visually, operating income in Q1-Q3 is expected to decline YoY, the impact on the year-to-date total is expected to be negligible (Unit: 0.1 billion JPY) Q1 Q2 Q3 Q4 Quarterly 81.0 52.0 80.5 105.2 17.9 7.0 - 96.9 - 32.5 FY2021 FY2022
Slide 31: Supplementary Materials; FY12/2022 2Q Results
Supplementary Materials; FY12/2022 2Q Results
Slide 32: Consolidated Statement of Income
Consolidated Statement of Income （Unit：million JPY） 2Q FY12/22 2Q FY12/22 2Q FY12/22 FY12/22 2Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast 2Q YTD Realized** Sales 87,569 91,500 89,305 102.0% 97.6% 155,000 57.6% 115,821 Cost of sales 47,536 49,200 49,372 103.9% 100.4% 88,150 56.0% 64,218
Slide 33: Consolidated Sales by Segment
Consolidated Sales by Segment （Unit：million JPY） 2Q FY12/21 2Q FY12/21 2Q FY12/21 FY12/21 2Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast 2Q YTD Realized** Insecticides & Repellents 44,319 45,405 44,086 99.5% 97.1% 61,431 71.8% 51,569 Oral hygene products 3,857 3,807 3,950 102.4% 103.7% 8
Slide 34: Operating Income Change Factors (YonY)
Operating Income Change Factors (YonY) （Unit：million JPY） 13,516 FY12/21.2 Q (Realized)* ＜Breakdown＞ Increase in gross • Increase in gross profit due to an ＋961 profit increase in sales -99 • Impact from changes in the sales composition ratio -1,060 • Impact from raw material prices and exchange rat
Slide 35: Operating Income Change Factors (VS. Forecast)
Operating Income Change Factors (VS. Forecast) （Unit：million JPY） 13,300 FY12/22.2Q (Forecast) ＜Breakdown＞ Gross Profit • Impact from sales plan not achieved -1,000 overperformance • Impact from changes in the sales -2,366 composition ratio -1,366 • Impact from raw material prices and exchange rate
Slide 36: SG&A Expenses
SG&A Expeses （Unit：million JPY） 2Q FY12/21 2Q FY12/22 2Q FY12/22 FY12/22 2Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast 2Q YTD Realized** Personal expenses 9,686 10,401 10,173 105.0% 97.8% 20,910 48.7% 9,686 Shipping costs 2,150 2,322 2,315 107.7% 99.7% 4,449 52.0% 2,150 Strage costs 1,2
Slide 37: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit：million JPY） End of 2021.2Q 2022.2Q YoY 2021 Current Cash & deposits 24,154 21,739 - 2,415 21,027 assets Trade receivable 36,693 37,223 529 22,941 Inventories 26,286 29,147 2,860 27,502 Others 2,256 2,809 553 2,547 Non-current Property, plant & equipment 27,940 28,50
Slide 38: Quarterly statement of Cash flows
Quarterly statement of Cash flows （Unit：million JPY） End of 2021.2Q 2022.2Q YoY 2021 Cash flows from operating activities 6,729 6,686 -43 4,814 Cash flows from investing activities -2,308 -3,173 -864 -3,220 Cash flows from financing activities -4,175 -3,642 533 -4,610 Effect of exchange rate change
Slide 39: Consolidated: Capital expenditure, Depreciation expenses
Consolidated: Capital expenditure, Depreciation expenses （Unit：million JPY） FY2018 FY2019 FY2020 FY2021 FY2022 FY2018 FY2019 FY2020 FY2021 FY2022 （単位：百万円） Realized Realized Realized Realized Forecast （単位：百万円） Realized Realized Realized Realized Forecast Depreciation Capital expenditure 2,442 1,953 3
Slide 40: Overview of Group Companies' Business Performance
Overview of Group Companies' Business Performance （Unit：million JPY） Earth Corporation BATHCLIN Corporation Hakugen Earth Co., Ltd. Earth Pet Co., Ltd. FY21.2Q FY22.2Q FY22.2Q FY21.2Q FY22.2Q FY22.2Q FY21.2Q FY22.2Q FY22.2Q FY21.2Q FY22.2Q FY22.2Q Realized* Forecast Realized Realized* Forecast Reali