Earth Corporation · TSE:4985
Earth — Q3 FY2022 Earnings Presentation
38 slides from Earth's earnings presentation, Nov 8, 2022
Slide 1: Earnings briefing materials for 3Q of the fiscal year ending December 2022
Earnings briefing materials for 3Q of the fiscal year ending December 2022 08/11/2022
Slide 2: BARTH - Conclusion of business transfer agreement
BARTH - Conclusion of business transfer agreement
Slide 3: Purpose of business acquisition
Purpose of business acquisition [ Strategic Significance ] • Acquisition of "world view" and "brand value" of the BARTH brand ‣ The BARTH brand has established its own unique worldview by appealing for "Night Routine" from bath time to sleep time by evoking the latent needs of customers through the
Slide 4: Overview
Overview • Details of business acquired ‣ Development, manufacture, and sale of products containing neutral bicarbonate including medicinal BARTH neutral bicarbonate bath salt, and other BARTH brand products, and any other business related to these operations • Assets and liabilities to be acquired
Slide 5: Timetable & Overview of accounting treatments
Timetable & Overview of accounting treatments • Timetable ‣ Date of conclusion of the agreement: November 8, 2022 ‣ Date of acquisition of business: March 1, 2023 (scheduled) • Overview of accounting treatments ‣ The impact of this matter on our group's consolidated financial results for the fiscal
Slide 6: FY12/2022 3Q Results
KAS ba Earth Corporation FY12/2022 3Q Results
Slide 7: Executive Summary ① (vs. Forecast)
Executive Summary ①（vs. Forecast） • Financial results overview ‣ Sales ：124.4 billion yen; vs. the forecast: - 2.1% ‣ Operating Income ： 12 billion yen; vs. the forecast: - 14.2% （vs. Forecast） ‣ 3 billion yen downward swing in gross profit • Sales of insecticides & repellents fell short of the plan
Slide 8: Executive Summary ② (YoY)
Executive Summary ②（YoY） * LFY results calculated and adjusted retroactively • Financial results overview using the new Accounting Standard ‣ Sales ：124.4 billion yen; YoY* : + 1.9% ‣ Operating Income ： 12 billion yen; YoY*: - 19.4% （YoY） ‣ 1.0 billion yen decrease in gross profit • Sales of insecti
Slide 9: Financial Result Highlights
Financial Result Highlights As of the end of 3Q, the Earth Corporation registered an increase in sales accompanied by a decrease in profits. Operating income fell short of the plan by 14% Impacted by raw material price hikes, in addition to the underachievement of insecticides & repellents , whi
Slide 10: Sales By Segment
Sales By Segment *To outside customers (excludes internal eliminations) (Unit: 0.1 billion JPY) Sales of insecticides & repellents were affected by unstable weather, decreasing YoY as of the end of 3Q, and falling short of the forecast for the same period Bath salts, which have been growing at a
Slide 11: 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 2021 Max. Temp 2022 Max. Temp 100 30 Vs. forecast 89% 80 20 • MUSHI YOKE NE
Slide 12: COGS – Status Overview
COGS – Status Overview Overall cost increase in raw materials, packaging materials, etc. Impacted by soaring ocean transportation costs and container prices due to yen depreciation, etc. Impact of soaring raw material prices [Major raw & packaging materials experiencing soaring prices] Diff. vs.
Slide 13: SG&A Expenses – Status Overview
SG&A Expenses – Status Overview (Unit: 0.1 billion JPY) SG&A expense items remained in an adequate range, as formulated in the forecast Ongoing application of cost controls 3Q FY12/2021 3Q FY12/2022 3Q FY12/2022 Realized* Forecast Realized Vs. Forecast Points Personal expenses 147.5 156.7 155.0
Slide 14: Overseas Results (Including cross-border EC)
Overseas Results（Including cross-border EC) (Unit: 0.1 billion JPY) Sales YoY*：125.1% In addition to growth in Thailand and Vietnam, there were positive effects from exchange rate fluctuations (+1.51 billion yen) and the consolidation of new subsidiaries in Malaysia and the Philippines (+0.37 bill
Slide 15: 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 : 94.9% Sales OI Margin 30 Progress Status Vs. The Forecast Measures in the 4th quarter and beyond 24.2 22.9 25 • Sales began to recover when the lockdown was • Systematic
Slide 16: 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 : 143.6% Sales Includes internal sales transactions OI Margin Progress Status Vs. The Forecast Measures in the 4th quarter and beyond 50 45.7 40 • Strong expan
Slide 17: 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 OI Margin 3 Progress Status Vs. The Forecast Measures in the 4th quarter and beyond 2 1.5 • Sales exceeded plan due to promotional • Continued pro
Slide 18: FY12/2022 Forecast
FY12/2022 Forecast The full year FY12/2022 forecast remains has not changed as of yet, but we are attentively analyzing it in light of the present circumstances. Source: FY12/2021 earnings briefing materials © Earth Corporation All Rights Reserved. 17
Slide 19: 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 20: ESG
ESG Environment／Social Established a new specialized department. • The internal organization was reviewed, and the ensuing new departments were created. To expedite efforts, the entire firm will collaborate. - CSR & Sustainability Promotion Dept.: The Earth Group's sustainability-related efforts w
Slide 21: 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 22: 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 23: APPENDIX
APPENDIX. © Earth Corporation All Rights Reserved.
Slide 24: Effect of adoption of accounting standard for revenue recognition
Effect of adoption of accounting standard for revenue recognition
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: Supplementary Materials; FY12/2022 3Q Results
Supplementary Materials; FY12/2022 3Q Results
Slide 31: Consolidated Statement of Income
Consolidated Statement of Income （Unit：million JPY） 3Q FY12/22 3Q FY12/22 3Q FY12/22 FY12/22 3Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast 3Q YTD Realized** Sales 122,102 127,100 124,445 101.9% 97.9% 155,000 80.3% 165,167 Cost of sales 67,949 71,000 71,362 105.0% 100.5% 88,150 81.0% 94,
Slide 32: Consolidated Sales by Segment
Consolidated Sales by Segment （Unit：million JPY） 3Q FY12/21 3Q FY12/21 3Q FY12/21 FY12/21 3Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast 3Q YTD Realized** Insecticides & Repellents 56,684 58,711 56,517 99.7% 96.3% 61,431 92.0% 67,072 Oral hygene products 5,867 5,513 5,910 100.7% 107.2% 8
Slide 33: Operating Income Change Factors (YoY)
Operating Income Change Factors (YoY) （Unit：million JPY） 14,913 FY12/21.3Q (Realized)* ＜Breakdown＞ Decrease in gross • Increase in gross profit due to an +1,079 profit increase in sales - 1,069 • Impact from changes in the sales composition ratio -2,148 • Impact from raw material prices and exchange
Slide 34: Operating Income Change Factors (vs. Forecast)
Operating Income Change Factors (vs. Forecast) （Unit：million JPY） 14,000 FY12/22.3Q (Forecast) ＜Breakdown＞ Gross Profit • Impact from sales plan not achieved -1,157 overperformance • Impact from changes in the sales -3,017 composition ratio -1,860 • Impact from raw material prices and exchange rate
Slide 35: Consolidated: SG&A Expenses
Consolidated: SG&A Expeses （Unit：million JPY） 3Q FY12/21 3Q FY12/22 3Q FY12/22 FY12/22 3Q FY12/21 Realized* Forecast Realized YoY vs.FCT Forecast 3Q YTD Realized** Personal expenses 14,750 15,677 15,507 105.1% 98.9% 20,910 74.2% 14,750 Shipping costs 3,225 3,453 3,476 107.8% 100.7% 4,449 78.1% 3,225
Slide 36: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit：million JPY） End of 2021.3Q 2022.3Q YoY 2021 Current Cash & deposits 28,190 25,322 ▲ 2,868 21,027 assets Trade receivable 27,520 27,414 ▲ 106 22,941 Inventories 24,989 29,351 4,362 27,502 Others 2,394 3,105 711 2,547 Non-current Property, plant & equipment 27,585 28,
Slide 37: 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 38: 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. FY21.3Q FY22.3Q FY22.3Q FY21.3Q FY22.3Q FY22.3Q FY21.3Q FY22.3Q FY22.3Q FY21.3Q FY22.3Q FY22.3Q Realized* Forecast Realized Realized* Forecast Reali