Kagome Co., Ltd. · TSE:2811
Kagome — FY2023 Earnings Presentation
43 slides from Kagome's earnings presentation, February 2024
Slide 1: Briefing Materials for FY2023
Briefing Materials for FY2023 Kagome Co., Ltd. Securities Code: 2811 Figures in these materials ・ Amounts are rounded down to the nearest 0.1 billion yen. Part of amounts for core operating income are rounded down to the nearest 10 million yen. ・ Percentages are rounded to one decimal place. 1 ©2024
Slide 2: Topics
Topics 1. Summary of Financial Results for FY2023 2. Progress of Third Mid-Term Management Plan 3. Consolidation of Ingomar 4. FY2024 Earnings Forecast 5. Sustainability Initiatives Reference: FY2023 Topics 2 ©2024 Kagome Co., Ltd.
Slide 3: 1. Summary of Financial Results for FY2023
1. Summary of Financial Results for FY2023 3 ©2024 Kagome Co., Ltd.
Slide 4: FY2023 Consolidated Results
FY2023 Consolidated Results ・ Revenue: Rose in both the Domestic and International businesses after price revisions. ・ Core operating income: Increased on growth of the International Business, despite soaring raw materials prices. FY2023 Result YoY vs. Revised Plan FY2022 FY2023 Unit: billion yen Re
Slide 5: FY2023 Results by Segment
FY2023 Results by Segment ・ Domestic Processed Food Business: Revenue increased in Food-Other, but declined in Beverages and Direct Marketing. ・ Domestic Agri-Business: Revenue increased on higher sales volume, but income declined due to higher costs. ・ International Business: Revenue and income bot
Slide 6: FY2023 Domestic Processed Food Business
FY2023 Domestic Processed Food Business ・ Beverages saw revenue decline despite a recovery in sales volume, while Food-Other posted an increase in revenue as demand remained resilient following price revisions. ・ Overall income was down due to surging raw materials costs. Revenue Core operating inco
Slide 7: FY2023 Domestic Processed Food Business: Trend After Price Revisions
FY2023 Domestic Processed Food Business —Trend After Price Revisions Vegetable Beverages: Recovering despite diminished sales volume since price revisions. Foods for consumer use / Institutional and industrial use: Consumer use sales quickly recovered amid measures to spur demand and sales of produc
Slide 8: FY2023 Domestic Agri-Business
FY2023 Domestic Agri-Business ・Revenue rose on the larger procurement volume of fresh tomatoes. ・Core operating income declined due to rising energy prices and fertilizer prices. Revenue Core operating income Unit: billion yen Unit: billion yen 9.5 10.1 4.7% 10.00 Core operating income margin 4.0% 8
Slide 9: FY2023 International Business
FY2023 International Business ・ Strong performance in the secondary processing business for food service companies in the US and the tomato primary processing business in Europe. ・ Core operating income rose amid price revisions linked to market prices. Revenue Core operating income Unit: billion ye
Slide 10: FY2023 Factors Contributing to Core Operating Income Changes
FY2023 Factors Contributing to Core Operating Income Changes Changes in core operating income were as follows: Unit: billion yen FY2022 12.8 Increase in income …(1) accompanying increase in sales Decline in income of Domestic …(2) -7.4 Processed Food Business Change in cost Cost reduction, etc. Decr
Slide 11: FY2023 Factors Contributing to Operating Income and Net Income Changes
FY2023 Factors Contributing to Operating Income and Net Income Changes ・ Operating income, profit before income taxes, and net income increased over the previous year attributable to the increase in core operating income. FY2023 Result FY2022 Unit: billion yen YoY Change Result Core operating income
Slide 12: FY2023 Changes to Statement of Financial Condition
FY2023 Changes to Statement of Financial Condition ・ Inventories and borrowings increased as a result of soaring raw materials prices and accumulation of stable inventories. Assets/Liabilities and Equity Details of Changes from the Previous Fiscal Year End 265.6 billion yen (+40.2 billion yen vs. pr
Slide 13: FY2023 Changes in Cash Flow
FY2023 Changes in Cash Flow Free cash flows: Increased year on year due to the decrease in cash flows from investing activities. Cash flows from financing activities: Increased year on year owing to the acquisition of treasury shares and increased borrowings in the previous year. FY2023 Result FY202
Slide 14: 2. Progress of Third Mid-Term Management Plan
2. Progress of Third Mid-Term Management Plan 14 ©2024 Kagome Co., Ltd.
Slide 15: Third Mid-Term Management Plan: First Years/Second Years
Third Mid-Term Management Plan: First 2 Years/Second 2 Years ・ Sudden changes in management environment (COVID-19, war in Ukraine, yen depreciation, and natural disasters) ・ Unprecedented increases in raw materials costs First 2 years（2022-23) Second 2 years (2024-25) ・Revised prices of nearly all p
Slide 16: Basic Strategy of the Third Mid-Term Management Plan
Basic Strategy of the Third Mid-Term Management Plan Basic strategy of the third Mid-Term Management Plan: “achieve sustainable growth by taking four actions that are organically connected.” Promote behavioral change in terms of vegetable intake Achieve sustainable growth by Change to fan-based Purs
Slide 17: Third Mid-Term Management Plan: First 2 Years/Second 2 Years
Third Mid-Term Management Plan: First 2 Years/Second 2 Years ・ Domestic business: Turnaround the decline in core operating income caused by rising raw materials prices. ・ International business: Accelerate growth by selling to food service companies and capturing food service demand. Revenue Unit: b
Slide 18: Initiatives in Second Half (Domestic Business)
Third Mid-Term Management Plan: Initiatives in Second Half (Domestic Business) ・ Restoring profit the top priority. ・ Provide diverse products and menu ideas that increase opportunities to eat vegetables and make vegetables tastier and more enjoyable to eat. Measures to spur demand and increase oppo
Slide 19: Initiatives in Second Half (Domestic Business)
Third Mid-Term Management Plan: Initiatives in Second Half (Domestic Business) ・ Develop pillars for sales growth and expand business domains. ・ Continue earnings structure reforms. Strengthen growth domains (vs. 2023) Earnings structure reforms ■Initiatives for strengthening earnings structure Vege
Slide 20: Initiatives in Second Half (International Business)
Third Mid-Term Management Plan: Initiatives in Second Half (International Business) ・ Further accelerate growth with price revisions and capturing food service demand. ・ Increase sales to food service companies as demand for processed tomato products remains strong. Strengthen Group collaboration us
Slide 21: Initiatives in Second Half (Strengthening Management Foundation)
Third Mid-Term Management Plan: Initiatives in Second Half (Strengthening Management Foundation) ・ Streamline logistics ahead of expected cost increases. ・ Consolidate R&D departments into a single organization. Crystallize supply network concept Concentrate investments in research resources ■Stream
Slide 22: 3. Consolidation of Ingomar
3. Consolidation of Ingomar 22 ©2024 Kagome Co., Ltd.
Slide 23: About Ingomar
About Ingomar ・ Primary processor of tomatoes that manufactures and sells tomato paste and diced tomatoes. ・ Production capacity of primary processed tomato products: 2nd largest in US (4th largest worldwide). ■Overview Established 1983 Ingomar (Los Banos) Location Los Banos, California USA Tomato p
Slide 24: Purpose of Consolidation
Purpose of Consolidation ・ Acquire the world’s largest production area for processing tomatoes in the U.S. and develop solutions using cutting edge technologies from the US. ・ Build a sustainable tomato processing business with competitive advantages by strengthening initiatives in agriculture. Expa
Slide 25: Investment Amount and Future Outlook
Investment Amount and Future Outlook ・ The consolidation of Ingomar is Kagome’s largest ever investment. ・ Acceleration of growth through synergistic effects Estimated Investment Effect (Unit: billion yen) Investment amount Revenue Synergistic effect Build sustainable Equity stake 20% → 70% Core ope
Slide 26: 4. FY2024 Earnings Forecast
4. FY2024 Earnings Forecast 26 ©2024 Kagome Co., Ltd.
Slide 27: FY2024 Earnings Forecast
FY2024 Earnings Forecast Domestic business: Revenue will remain unchanged and core operating income will decline due to higher raw materials prices and logistics costs. International business: Revenue will increase substantially with the inclusion of Ingomar and core operating income will rise on hi
Slide 28: FY2024 Factors Contributing to Core Operating Income Changes
FY2024 Factors Contributing to Core Operating Income Changes ・ Price revisions are expected to result in higher core operating income (1) but there is a risk of a downturn in core operating income as a result of diminished sales volume after price revisions (2). ・ The Domestic Processed Food Busines
Slide 29: Factors Behind Rising Cost of Sales in Domestic Processed Food Business in FY2024
Factors Behind Rising Cost of Sales in Domestic Processed Food Business in FY2024 Cost of sales in the Domestic Processed Food Business will become higher due to the continuation of soaring prices starting on tomato raw materials. Higher Cost of sales YoY (after cost of sales reductions) Cost of sal
Slide 30: FY2024 Operating income/Net income
FY2024 Operating income/Net income ・ Operating income/Net income: Increase because of marking to market the existing 20% equity stake in Ingomar. FY2024 Plan YoY FY2023 Unit: billion yen Margin Change Result Revenue 289.0 - +64.3 +28.6% 224.7 Core operating income 17.0 5.9% -2.4 -12.7% 19.4 Operatin
Slide 31: Dividends
Dividends Plan to pay a dividend of 52 yen per share for FY2024, including a 10-yen commemorative dividend for the company’s 125th anniversary, based on the dividend policy in the third Mid-Term Management Plan (annual dividend per share of 38 yen or higher and total return ratio of 40% for the peri
Slide 32: 5. Sustainability Initiatives
5. Sustainability Initiatives 32 ©2024 Kagome Co., Ltd.
Slide 33: Sustainability Initiatives
Sustainability Initiatives ・ Received Energy Conservation Grand Prize award for ongoing energy saving activities at our domestic plants. ・ Response to the 2024 problem of logistics (in Japan) Received the ECCJ Chairman’s Prize at the FY2023 Initiatives at F-LINE to address the 2024 problem Energy Co
Slide 34: Kagome's goals remain the same despite the dramatic changes in business environment
Kagome’s goals remain the same despite the dramatic changes in business environment What Kagome Become a “strong company capable of sustainable growth, strives for by 2025 using food as a means of resolving social issues” 2025 Transform from a “tomato company” Vision to a “vegetable company” 34 ©202
Slide 35: Reference
Reference 35 ©2024 Kagome Co., Ltd.
Slide 36: FY2023 Domestic Processed Food Business: Factors Controlling Costs
FY2023 Domestic Processed Food Business —Factors Controlling Costs Change in cost has been reined in by 2.6 billion yen compared to the interim forecast, despite soaring raw materials prices centered on imported products. Change in cost (including cost of sales reductions) YoY ■Energy -0.4 from inte
Slide 37: Topics in Domestic Processed Food Business: Beverages
Topics in Domestic Processed Food Business Beverages ・ Tomato juice sales were strong after converting beauty-minded consumers to customers, resulting in record high shipments. ・ Sales recovered in convenience stores, but sales at mass retailers were below the previous year, but showed signs of a tu
Slide 38: Topics in Domestic Processed Food Business: Direct Marketing
Topics in Domestic Processed Food Business Direct Marketing ・ The number of regular customers of Kenko Chokusobin declined centered on vegetable beverages and supplements. ・ Core operating income declined due to higher contact center operating cost. The number of regular customers declined due to cu
Slide 39: Topics in Domestic Processed Food Business: Food and Others
Topics in Domestic Processed Food Business Food and Others ・ Tomato ketchup sales quickly recovered after price revisions, and institutional and industrial use maintained roughly the same volume as the previous year even after price revisions. ・ Core operating income was up on revenue growth despite
Slide 40: Topics in Domestic Agri-Business
Topics in Domestic Agri-Business Revenue increased amid higher selling prices on strong market conditions for fresh tomatoes up to April and higher procurement volume. Core operating income declined due to rising energy costs and a rapid weakening in market conditions since May. Revenue by core prod
Slide 41: Topics in International Business
Topics in International Business ・ Strong performance in tomato secondary processing business for food services companies in the US and in tomato primary processing business in Europe. ・ Core operating income increased on price revisions linked to market prices. Unit: billion yen Revenue Core operat
Slide 42: Third Mid-Term Management Plan: Investment Outlook
Third Mid-Term Management Plan: Investment Outlook ・ Set to accelerate investments for sustainable growth in the second half, both organically and inorganically. First 2 years (2022-2023) Second 2 years (2024-2025) Respond to environmental changes Fully accelerate growth investment caused by rapid i
Slide 43: Sustainability Initiatives
Sustainability Initiatives ・ Further improve employee health and engagement by promoting health and productivity management measures. ・ Established the Kagome Group Human Rights Policy and promoting response to human rights risks. Actualize health and productivity management Established Kagome Group