Kirin Holdings Co. Ltd. · TSE:2503
Kirin — FY2007 Earnings Presentation
50 slides from Kirin's earnings presentation, February 2008
Slide 1: 2007 results presentation
2007 results presentation Fiscal year ended December 31, 2007 February 2008 KIRIN HOLDINGS COMPANY, LIMITED
Slide 2: Contents
Contents KIRIN
Slide 3: Management summary 1: The business environment
Management summary 1: The business environment The business environment is changing even more rapidly than envisaged when formulating Kirin’s current medium-term business plan. This means that our management decision making process must also be rapid. External factors The global beer industry is con
Slide 4: Management summary 2: Management issues & strategy
Management summary 2: Management issues & strategy Key Key strategic strategic management management issues issues 1. Pursuing rapid PMI of Mercian, Kyowa Hakko and National Foods 2. Maximizing group synergies domestically and overseas 3. Optimizing business portfolio to match changing business envi
Slide 5: Management summary 3: Strategy
Management summary 3: Strategy (Continued from previous page) Overseas alcohol and soft drinks Æ Develop presence in Asia and Oceania Further integrate overseas operations and create structure to maximize synergies Pursue strategy as comprehensive beverage group also in overseas markets (China, Aust
Slide 6: Results Overview 2007 (Consolidated)
Results Overview 2007 (Consolidated)
Slide 7: Results overview 2007: consolidated
Results overview 2007: consolidated Operating Income Although the domestic alcohol and soft drinks business environment was extremely tough because of the impact of high raw material costs and softening consumption, we achieved increase in profit through a combination of cost reduction measures at e
Slide 8: Alcohol beverages segment: 2007 results
Alcohol beverages segment: 2007 results (billion yen) 2007 results 2006 results Change in % Change in yen Alcohol Consolidated sales 1,189.4 1,099.3 +8.2% +90.1 Operating income is before eliminations beverages Operating income 96.5 86.5 +11.6% +100 Kirin Brewery Domestic Beer + happo-shu + new genr
Slide 9: Soft drinks segment: 2007 results
Soft drinks segment: 2007 results (billion yen) 2007 results 2006 results Change in % Change in yen Operating income is before eliminations Soft drinks Consolidated sales 411.2 392.7 +4.7% +18.5 Operating income 17.9 19.7 (8.7%) (1.8) Kirin Beverage Domestic sales volumes at record level, up 5% (com
Slide 10: Pharmaceuticals segment: 2007 results
Pharmaceuticals segment: 2007 results (billion yen) 2007 results 2006 results Change in % Change in yen Operating income is before eliminations Pharmaceuticals Consolidated 69.9 67.2 +4.0% +2.7 sales Operating income 13.0 12.0 +7.9% +1.0 Higher sales and earnings at both consolidated and non-consoli
Slide 11: Other businesses segment: 2007 results
Other businesses segment: 2007 results (billion yen) 2007 results 2006 results Change in % Change in yen Operating income is before eliminations Other Consolidated 130.5 106.6 +22.4% +23.9 sales Operating income 4.3 0.5 +677.5% +3.8 Kirin Holdings acquired all shares in National Foods Limited, Austr
Slide 12: 2008 Kirin Group basic policy
2008 Kirin Group basic policy 1. Achieve steady growth in our core alcohol beverages and soft drinks businesses and pursue an integrated beverages group strategy 2. In pharmaceuticals, develop a system targeting growth through the alliance with Kyowa Hakko 3. Clearly outline our strategy for the hea
Slide 13: Alcohol beverages: 2008 forecasts and plans (1)
Alcohol beverages: 2008 forecasts and plans (1) (billion yen) 2008 forecasts 2007 results Change in % Change in yen Alcohol beverages Consolidated sales 1,223.0 1,189.4 +2.8 +33.6 Consolidated 107.3 96.5 +11.2 +10.8 operating income Develop business and product strategies aiming to maximize profits
Slide 14: Alcohol beverages: 2008 forecasts and plans (2)
Alcohol beverages: 2008 forecasts and plans (2) Alcohol beverages Overseas Set sights on a quantum leap in growth Lion Nathan Continue to promote shift to premium brands in the beer business and enhance core brands in wines Advance alliance with Australian premium beer company J Boag & Son acquired
Slide 15: Soft drinks: 2008 forecasts and plans
Soft drinks: 2008 forecasts and plans 2008 forecasts 2007 results Change in % Change in yen (billion yen) Operating income is before Soft drinks Consolidated sales 518.0 411.2 +26.0% +106.8 eliminations Consolidated 24.0 17.9 +34.1% +6.1 operating income Kirin Beverage Target a 12% year-on-year incr
Slide 16: Pharmaceuticals segment: Key issues for 2008
Pharmaceuticals segment: Key issues for 2008 (billion yen) 2007 results 2006 results Change in % Change in yen Operating income is stated prior to All Pharmaceuticals Consolidated 75.0 69.9 +7.2% +5.1 company and eliminations sales Consolidated 16.0 13.0 +23.1% +3.0 operating income Enhance renal li
Slide 17: Pharmaceuticals pipeline
Pharmaceuticals pipeline As of end January 2008 *Items updated since Aug. 2007 Product code Anticipated indications Stage Comments Acts on calcium receptor of hyperparathyroid, Secondary *Launched (Jan inhibits hormone secretions from thyroid gland, hyperparathyroidism 25) Cinacalcet hydrochloride R
Slide 18: Other segment: 2008 forecast
Other segment: 2008 forecast (billion yen) 2008 forecast 2006 results Change in % Change in yen Other Consolidated sales 284.0 130.5 +7.6% +153.5 Consolidated 3.7 4.3 (14.0%) (6) operating income Define scope of health foods and functional foods as “all foods that customers consume for the benefit o
Slide 19: 2008 financial strategy: Management from shareholders' perspective
2008 financial strategy: Management from shareholders’ perspective and improving capital efficiency We will continue efforts to maximize corporate value, considering shareholders’ perspectives while pursuing a financial strategy to realize a quantum leap in growth Aim to generate approx. ¥150bn in o
Slide 20: Slide 20
Slide 21: Changes in disclosure with shift to holding company structure in July 2007
Changes in disclosure with shift to holding company structure in July 2007 Changes related to shift to holding company structure Non-consolidated: Results for the first half of 2007 are for the former Kirin Brewery Company, Limited. Results for the second half are for Kirin Holdings Company, Limited
Slide 22: Performance trends
Performance trends Steady growth in consolidated Sales (billion yen) Income (billion yen) operating income and EBITDA 2200 240 2000 200 1800 160 120 1600 Sales 80 1400 EBITDA Op income 40 1200 Ordinary income Net income 0 1000 2003 2004 2005 2006 2007 2008 est. EBITDA: Income before income taxes and
Slide 23: Consolidated sales and operating income by segment
Consolidated sales and operating income by segment (2006 2007 2008 forecasts) Sales: Significant growth forecast with consolidation of National Foods and higher sales volumes at Kirin Beverage 2006 Alcohol beverages: 90.1 Alcohol beverages: 33.6 Soft drinks: 18.5 2007 Soft drinks: 106.8 2008 (foreca
Slide 24: Alcohol Beverages Business Consolidated Results and Forecasts
Alcohol Beverages Business Consolidated Results and Forecasts (billion yen) 2006 Change 2007 Change 2008 forecasts Consolidated segment sales 1,099.3 90.1 1,189.4 33.6 1,223.0 Consolidated segment operating income 86.5 10.0 96.5 10.8 107.3 Domestic alcohol business sales at Kirin 885.1 (4.1) 881.0 2
Slide 25: Soft Drinks Business Consolidated Results and Forecasts
Soft Drinks Business Consolidated Results and Forecasts (billion yen) 2006 Change 2007 Change 2008 forecasts Consolidated segment sales 392.7 18.5 411.2 106.8 518.0 Consolidated segment operating income 19.7 (1.8) 17.9 6.1 24.0 For reference: Kirin Beverage consolidated sales 386.7 13.8 400.5 49.5 4
Slide 26: Pharmaceuticals Business Consolidated Results and Forecasts
Pharmaceuticals Business Consolidated Results and Forecasts (billion yen) 2006 Change 2007 Change 2008 forecasts Consolidated segment sales 67.2 2.7 69.9 5.1 75.0 Non-consolidated sales 61.8 1.7 63.5 4.5 68.0 Consolidated segment operating income 12.0 1.0 13.0 3.0 16.0 R&D expense 18.2 - 18.2 0.8 19
Slide 27: Changes in 2007 consolidated ordinary and net income
Changes in 2007 consolidated ordinary and net income Non-operating income (loss) (1.8) Ordinary Ordinary (2.2) Financial revenues (3.1) (5.3) income income 2.1 Equity in earnings of affiliates (San Miguel 2.9*, other) (1.0) Loss on sale and disposal of finished goods Unit: Billion yen (0.7) Others u
Slide 28: Forecast changes in 2008 consolidated ordinary and net income
Forecast changes in 2008 consolidated ordinary and net income Non operating income (loss) (11.7) Ordinary Ordinary (11.7) Financial revenues (5.3) (17.0) income income 1.2 Equity in earnings of affiliates Kyowa Hakko 7.2*1, Depreciation of investment appraisal differences (4.1)*2 Unit: Billion yen K
Slide 29: Main factors influencing consolidated balance sheet
Main factors influencing consolidated balance sheet Increases in current assets, fixed and intangible assets and current liabilities arising from consolidation of National Foods Increase in investment securities arising from capital alliance with Kyowa Hakko Increase in short-term debt arising from
Slide 30: Appendix
Appendix
Slide 31: Kirin Group Vision 2015 (KV2015)
Kirin Group Vision 2015 (KV2015) <Announced in May 2006> KV2015 Group Vision We will create various bonds close to customers and give them the sense of well being that comes from food and health We will closely link our Fermentation and Bio, Manufacturing, Research and Marketing expertise to pur
Slide 32: 2007-2009 Kirin Group medium-term business plan progress
2007-2009 Kirin Group medium-term business plan progress Targets for 2009 look set to be met Significant growth in 2008 with consolidation of National Foods and Kyowa Hakko for reference 2008 plan 2009 medium 2009 Quantitative targets 2006 2007 2008 plan 2015 target Kyowa Hakko term plan simulation
Slide 33: Guide to Kirin Group consolidated financial indices
Guide to Kirin Group consolidated financial indices Excluding impact of goodwill amortization for reference 2009 medium 2006 2007 2009 2008 plan 2008 plan term plan simulation results results Kyowa Hakko 3 (billion yen) consolidated from April targets Operating income (after goodwill amortization) 1
Slide 34: Guide to Kirin Group consolidated management indices
Guide to Kirin Group consolidated management indices By segment for reference 2009 2006 2009 Guideline 2007 results 2008 plan 2008 plan medium term (billon yen) results Kyowa Hakko simulation plan targets 3 consolidated from April Alcohol 1,099.3 1,189.4 1,223 1,223 1340.0 1,340.0 beverages Sales by
Slide 35: Group Organizational Structure (as of January 2008)
35 Separate service companies Kirin Real Kirin Real Estate Estate *Equity method affiliates As of January 2008 Kirin Business Kirin Business System System Kirin Business Kirin Business Expert Expert KirinHotel Kirin HotelDevelopment, Development,Kamakura KamakuraKaihin KaihinHotel, Hotel, Other Tsur
Slide 36: Holding company: revenue structure and capital flows
Holding company: revenue structure and capital flows Holding company income is based on dividends, management fees and brand royalties from operating companies. The operating companies provide 100% of their dividends to the holding company which pools the funds procured for investing in each company
Slide 37: Lion Nathan results overview
Lion Nathan results overview 2007 results (Oct. 2006 – Sept. 2007) Unit: Aus$ million Net revenue: 1,967.0 (up 6.6% YoY) Sales volume increased only slightly in both Australia and New Zealand (0.3-0.6%), but the shift to premium products continued to progress well. In wine, contribution came from in
Slide 38: Incorporation of Lion Nathan in Kirin's consolidated results
Incorporation of Lion Nathan in Kirin’s consolidated results (billion yen) Operating Ordinary Consolidated Average rates during period 2007 Sales income income Net income net income as used in Lion Nathan P/L LN P/L 190.2 45.1 36.2 27.5 12.7 2007 1A$ = ¥96.72 Amortization of consol. Adjust 2006 1A$
Slide 39: San Miguel results overview
San Miguel results overview Business outline Alcoholic beverage business : Production and sale of beer, spirits and soft drinks. Sales areas for beer products include Philippines, Vietnam, Thailand, Hong Kong, China and Indonesia Food business San Miguel Pure Foods Company, Inc : Processing and sale
Slide 40: Incorporation of San Miguel in Kirin's consolidated results
Incorporation of San Miguel in Kirin’s consolidated results (billion yen) Operating Ordinary Consolidated 2007 Sales income income Net income net income SMC P/L 593.2 45.4 38.9 28.7 5.7 Equity in earnings of af f iliates 5.7 5.7 5.7 Amortization of inv estment Average rates during period amount dif
Slide 41: National Foods 2008 Forecasts (1)
National Foods 2008 Forecasts (1) Focus is the recovery of raw material input costs, then try to increase both in sales and profits 2008B/ A$m 2008B 2007A VOLUMES 1,500 4% GROSS SALES 2,700 11% NET SALES 2,200 11% EBIT 140 15% % t o Net Sales 6% EBITDA 190 15% % t o Net Sales 9% 41
Slide 42: National Foods 2008 Forecasts (2)
National Foods 2008 Forecasts (2) In 2008 the key focus is to continue to restore margins • Adjust prices to cover forecast increase in raw material costs of around ¥10.0 billion • Pursuit of TBT program will increase costs in 2008, but is expected to realize cost reductions from 2009 TBT program: A
Slide 43: National Foods 2010 EBITDA growth
National Foods 2010 EBITDA growth Target to approx. A$100m growth for 2 years $350 EBITDA $m $300 $250 $200 $190m Growth of approx. A$100m $150 A$50m price up + cost reductions (integrate systems in each business) $100 A$50m sales growth and gross profit at a 5% per annual rate $50 $0 2008 Budget 20
Slide 44: Kyowa Hakko/Kirin Pharma merger schedule
Kyowa Hakko/Kirin Pharma merger schedule Oct. 22, 2007 Signing of integration agreement/share exchange agreement Oct. 31-Dec. 6, 2007 Tender offer by Kirin Holdings for shares of Kyowa Hakko Late Feb. 2008 Kyowa Hakko extraordinary shareholders’ meeting (approval of share exchange) Late Mar.
Slide 45: Kyowa Hakko/Kirin Pharma structure (1)
Kyowa Hakko/Kirin Pharma structure (1) Step 1: Tender offer by Kirin Holdings for shares of Kyowa Hakko (Oct. 31 – Dec. 6, 2007) Tender offer for shares of Kyowa Hakko Purchase price Kyowa Hakko Kirin Holdings ¥1,500 per share (32.2% premium compared general shareholders to simple average closin
Slide 46: Kyowa Hakko/Kirin Pharma structure (2)
Kyowa Hakko/Kirin Pharma structure (2) Step 2: Share exchange with Kirin Pharma becoming a wholly owned subsidiary of Kyowa Hakko (Apr. 1, 2008) Share exchange ratio Kyowa Hakko 1 8,862 (Allocation and delivery of 8,862 general shareholders Kirin Holdings ordinary shares of Kyowa Hakko for every
Slide 47: Kyowa Hakko/Kirin Pharma structure (3)
Kyowa Hakko/Kirin Pharma structure (3) Step 3: Merger with Kyowa Hakko as the surviving company and Kirin Pharma as the company being absorbed (Oct. 1, 2008) Absorption-type merger with Kyowa Hakko as Kyowa Hakko Kirin Holdings the surviving company and Kirin Pharma as the general shareholders com
Slide 48: Kirin Group CSR
Kirin Group CSR Kirin Group views CSR as a commitment to earning the trust of society, and operates a CSR program that is active in three main ways: 1. Core initiatives as a company to address compliance, quality assurance, and alcohol-related social issues 2. Communication with society through init
Slide 49: Pursuing Kirin Group CSR
Pursuing Kirin Group CSR Communicating with society Fostering the next generation Food culture Brewery tours Kirin Food culture research center Soccer program Fermentation-themed food lifestyle proposals Beer, wine and tea culture Environmental communication Support for sport Utilizing fermentation
Slide 50: This material is intended for informational purposes only
This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial instruments. 50
Kirin Holdings Company — FY2007 Earnings Presentation on 6ix