Meiji Holdings Co., Ltd. · TSE:2269

Meiji — FY2015 Earnings Presentation

40 slides from Meiji's earnings presentation, May 18, 2015

  1. Slide 1: Financial Results for FYE March 2015 and New Medium-term Management Plan

    Financial Results for FYE March 2015 and New Medium-term Management Plan May 18, 2015

  2. Slide 2: Contents

    Contents 1. Overview of TAKE OFF 14, the medium-term management plan ended March 2015 2. Outline of STEP UP 17, the medium-term management plan ending March 2018 3. Outlook for FYE March 2016  Business forecasts and other forward-looking statements are based on information available at the time of

  3. Slide 3: Medium-Term Management Plan Basic Policies

    Medium-Term Management Plan Basic Policies Higher profitability and strategic investments for future growth 1. Strengthen and expand existing businesses (growth and priority businesses) 2. Foster growth businesses (new and international businesses) 3. Improve profitability 3 ｜ May 18, 2015 ｜ Copyrig

  4. Slide 4: Overview of TAKE OFF 14 (Consolidated)

    Overview of TAKE OFF 14 (billion yen)  Focused on increasing Initial Targets Results Net sales 1,190.0 1,161.1 profitability  Achieved the profit [Consolidated] Meiji HD Op. income 40.0 51.5 Op. income ratio 3.4％ 4.4％ target and boosted ROE 7% 8.9% ROE Net sales 1,050.0 1,021.8  Steadily implemen

  5. Slide 5: Overview of TAKE OFF 14: Food and Pharmaceuticals

    Overview of TAKE OFF 14 Results Achieved Issues  Priority businesses of probiotics and  Develop the next growth drivers chocolate led growth  Continue structural reforms to offset the  Established business foundation for future increasing costs of raw materials and growth of the enteral formula

  6. Slide 6: Outline of STEP UP 17, the medium-term management plan ending March 2018

    2. Outline of STEP UP 17, the medium-term management plan ending March 2018 6 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd. All rights reserved.

  7. Slide 7: Environment

    Accelerate growth and achieve further improvement in profitability to realize the 2020 Vision 1. Changes in the market brought about by the decline in the population and an aging society with a lower birth rate Environment Business 2. Uncertainty about supply and demand or price of raw materials 3.

  8. Slide 8: Basic Policies

    Basic Policies Accelerate growth and achieve further improvement in profitability 1. Strengthen priority businesses and take on the challenge of future growth 2. Improve profitability to withstand harsh economic environment 3. Pursue global expansion 4. Evolve the management system 8 ｜ May 18, 2015

  9. Slide 9: STEP UP Numerical Targets

    STEP UP 17 Numerical Targets (billion yen) Change from TAKE OFF 14 Results Targets Rate Amount Net sales 1,161.1 1,260.0 +8.5% +98.8 Meiji HD Op. income 51.5 64.0 +24.2% +12.4 Op. income ratio 4.4% 5% ― +0.6pts ROE 8.9% More than 8% ― ― Net sales 1,021.8 1,080.0 +5.7% +58.1 Pharma Food Op. income 41

  10. Slide 10: Financial strategy aimed at sustained improvement in corporate value

    Financial strategy aimed at sustained improvement in corporate value Stabilizing the financial base  Op. income (ratio) ¥64.0 bn (5%) Improve the equity ratio: ≧45%  ROE More than 8% Maintain an issuer rating of A+ Investing cash Operating cash (Cum. 3-year total) ¥140.0 bn flows flows  Investm

  11. Slide 11: STEP UP Main Points of the Growth Strategy

    STEP UP 17 Main Points of the Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 11 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd

  12. Slide 12: Focus on core products that contribute to healthy dietary habits

    Food Focus on core products that contribute to healthy dietary habits Yogurt Functional Fresh and yogurt Drinking Fermented milk (Probiotics) Dairy Chocolate Confec- Processed tionery Food Healthy dietary habits Cheese Ice cream Nutri- Inter- tionals national Infant Enteral Sports formula formula nu

  13. Slide 13: Probiotics and Chocolate

    Food Innovate and take on new challenges to enhance core products/business Net sales (billion yen) Achieve a greater edge based on research into the Probiotics and 180.0 200 and more functions of lactobacillus 165.4 yogurt  Achieve ongoing growth for R-1 and LG21 and 100 establish PA-3 on the marke

  14. Slide 14: Pharma: Concentrate business resources on growth domains and markets

    Pharma Concentrate business resources on growth domains and growth markets Infectious Share in systemic antibacterial drug market: #3 → #2 diseases Consolidated net sales  Expand the drug line-up (billion yen) Domestic Overseas  R&D activities considering overseas markets 200 180.0 Share in antide

  15. Slide 15: R&D: Focus on specialized areas

    Pharma R&D: Focus on specialized areas R&D Pipeline (◆In-house) 16.3 17.3 18.3 ME1111 [Antionychomycosis] ◆ Phase II (Overseas) Infectious diseases ME1100 Arbekacin [HABP/VABP] ◆ Phase I (Overseas) OP0595 [β-lactamase inhibitor] ◆ Out-licensing Ethical pharmaceuticals SME3110 Fluvoxamine [SSRI, Pedi

  16. Slide 16: STEP UP Main Points of the Growth Strategy

    STEP UP 17 Main Points of the Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 16 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd

  17. Slide 17: Address cost increases of raw materials and drug price revisions

    Address to cost increases of raw materials and drug price revisions Consolidated operating income Main factors in profit decline  Increase in cost of raw materials (exchange rates, market prices)  Increase in the cost of energy -33.1  Drug price revisions +46.8 +17.7  Increase in expenses by str

  18. Slide 18: Food: Establish sound operational foundation against raw material costs

    Food Establish sound operational foundation to address the medium to long-term increase in raw material costs 1. Revise price appropriately exchange rates and Cost increases of raw materials and energy market prices Fluctuation in  Product competitiveness should be enhanced (e.g. add health value).

  19. Slide 19: Enhance production and procurement systems

    Pharma Enhance production and procurement systems to prepare for drug price revisions and stiffer competition 1. Achieve efficient production using our production facilities in Japan and overseas and alliances with partners 2. Build a production system in India for drugs for Japanese market 3. Estab

  20. Slide 20: STEP UP Main Points of the Growth Strategy

    STEP UP 17 Main Points of the Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 20 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd

  21. Slide 21: Expand business in growing overseas markets and improve profitability

    Expand business in growing overseas markets and improve profitability ●Overseas sales of Food segment ●Overseas sales of Pharmaceuticals segment Affiliates accounted for by equity method and non-consolidated companies Non-consolidated companies (billion yen) (billion yen) Consolidated subsidiaries a

  22. Slide 22: Food: Innovative products in overseas markets

    Food Achieve business growth by providing innovative products in overseas markets  Yogurt and drinking milk: Expand the sales area and extend product line-up  Chocolate and chocolate snacks: China Conduct effective marketing activities and expand sales channels  Ice cream: * Began production at f

  23. Slide 23: Pharma: Explore needs in growing markets and expand business

    Pharma Explore needs in growing markets and expand business 1. Increase presence in Asia and emerging countries  Expand sales of core products, MEIACT and ADANT  Promote “Specialty and Generic drugs” strategy utilizing the strength of the Meiji brand Global trend in CMO business  Pursue synergies

  24. Slide 24: STEP UP Main Points of the Growth Strategy

    STEP UP 17 Main Points of the Growth Strategy Strengthen priority businesses and take on 1 the challenge of new growth Improve profitability to withstand harsh 2 economic environment 3 Pursue global expansion 4 Evolve the management system 24 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd

  25. Slide 25: Focus on creating a base for sustained improvement in corporate value

    Focus on creating a base that will contribute to sustained improvement in corporate value 1. Improve the level of governance  Comply with the Corporate Governance Code  Manage with capital productivity  Disclose information in a timely and appropriate manner, increase transparency, and improve di

  26. Slide 26: Outlook for FYE March 2016

    3. Outlook for FYE March 2016 26 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd. All rights reserved.

  27. Slide 27: Full-year Forecasts for FYE March 2016

    Full-year Forecasts for FYE March 2016 (billion yen) 15.3 16.3 YoY Change Results Plan Rate Amount Net sales 1,161.1 1,194.0 +2.8% +32.8 Operating income 51.5 52.0 +0.9% +0.4 Meiji HD Op. income ratio 4.4% 4.4% ― -0pts Ordinary income 53.5 52.3 -2.4% -1.2 * Announced March 10, 2015. Includes the ass

  28. Slide 28: ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd. All rights

    28 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd. All rights reserved.

  29. Slide 29: Appendix

    Appendix 29 ｜ May 18, 2015 ｜ Copyright © 2015 Meiji Holdings Co., Ltd. All rights reserved.

  30. Slide 30: 15.3 Full-year: Consolidated Earnings

    15.3 Full-year: Consolidated Earnings (billion yen) YoY Change Change vs. Plan Revised Plan Results Rate Amount Rate Amount Net sales 1,141.0 1,161.1 +1.1% +13.0 +1.8% +20.1 Meiji HD Operating income 41.5 51.5 +41.2% +15.0 +24.2% +10.0 Ordinary income 42.5 53.5 +37.1% +14.4 +26.1% +11.0 Net income 2

  31. Slide 31: 15.3 Full-year: Analysis of Consolidated Op. Income

    15.3 Full-year: Analysis of Consolidated Op. Income (billion yen) (By Segment) Full-year Results Food Pharma Other Results - FYE March 2014 36.4 28.1 8.3 0.0 Due to increased/decreased +19.7 +10.7 +9.0 ― sales NHI drug price revision -9.2 ― -9.2 ― Procuremet costs of raw -9.1 -9.1 0.0 ― materials Co

  32. Slide 32: Financial Position as of March 2015

    Financial Position as of March 2015 (billion yen) (As of March 2014) (As of March 2015) Total Assets: 779.4 Total Assets: 877.3 Results (YoY Change) Results (YoY Change) Notes and 261.4 Cash and accounts 104.2 (+9.9) 329.0 22.4 (+2.9) deposits payable Current Current Notes and liabilities Short-term

  33. Slide 33: 15.3 Full-year: CAPEX, Depreciation, Cash Flows, and Returns to Shareholders

    15.3 Full-year: CAPEX, Depreciation, Cash Flows, and Returns to Shareholders (billion yen) TAKE OFF 14 (13.3-15.3) Initial 13.3 14.3 15.3 Targets Results Results Results (13.3-15.3) Capital expenditures 37.6 47.0 64.3 149.0 161.7 Depreciation and amortization 40.8 40.9 41.8 123.6 126.5 R&D expenses

  34. Slide 34: 16.3 Full-year: Consolidated Earnings Forecasts

    16.3 Full-year: Consolidated Earnings Forecasts (billion yen) H1 H2 Full-year Plan YoY Change Plan YoY Change Plan YoY Change +3.4% +2.3% +2.8% Net sales 578.0 +18.7 616.0 +14.0 1,194.0 +32.8 +0.1% +1.3% +0.9% Operating income 19.0 33.0 52.0 Meiji HD +0.0 +0.4 +0.4 -5.5% -0.6% -2.4% Ordinary income

  35. Slide 35: 16.3 Full-year: Analysis of Consolidated Op. Income

    16.3 Full-year: Analysis of Consolidated Op. Income (billion yen) (By Segment) Full-year Plan Food Pharma Other Results -- FYE March 2015 51.5 41.6 10.0 -0.1 Due to increased/decreased +2.5 +2.8 ― sales +5.3 Costs of goods sold increase -12.0 -12.0 0.0 ― Cost reduction +13.2 +12.0 +1.2 ― Changes in

  36. Slide 36: Partial reclassification of business divisions within Food segment

    Partial reclassification of the business divisions within Food segment from FYE March 2016 [Former Classification ( ~ FYE March 2015)] [New Classification (FYE March 2016 ~ )] Dairy business (*1) Fresh and Fermented Dairy business - Fresh dairy: Yogurt, drinking milk, beverages, etc. Yogurt, drinkin

  37. Slide 37: STEP UP 17: Consolidated Plan

    STEP UP 17: Consolidated Plan (billion yen) 15.3 16.3 ~ 18.3 Results Plan vs. 15.3 Plan vs. 15.3 +2.8% +8.5% Meiji HD Net sales 1,161.1 1,194.0 +32.8 1,260.0 +98.9 +0.9% +24.3% Operating income 51.5 52.0 +0.4 64.0 +12.5 +0.8% +5.7% Net sales 1,021.8 1,030.0 +8.1 1,080.0 +58.1 Food +0.8% +20.0% Opera

  38. Slide 38: STEP UP 17: Plan by Business in Food Segment

    STEP UP 17: Plan by Business in Food Segment (billion yen) 15.3 16.3 ~ 18.3 Results Plan vs. 15.3 Plan vs. 15.3 -2.9% -0.9% 479.4 465.3 475.4 Fermented Net sales Fresh and -14.1 -4.0 Dairy +2.3% +11.9% Operating income 28.3 29.0 +0.6 31.7 +3.3 -1.6% +5.0% 194.5 191.5 204.3 Processed Net sales -3.0 +

  39. Slide 39: STEP UP 17: Plan by Business in Food Segment (Other, Elimination)

    STEP UP 17: Plan by Business in Food Segment (billion yen) 15.3 16.3 ~ 18.3 Results Plan vs. 15.3 Plan vs. 15.3 +5.0% +11.7% Net sales 340.3 357.2 +16.9 380.1 +39.7 Other +145.4% +928.0% Operating income 0.4 1.0 +0.5 4.2 +3.7 and Corporate ― ― Net sales -236.9 -233.2 +3.6 -249.7 -12.7 Elimination Ex

  40. Slide 40: STEP UP 17: CAPEX, Depreciation, Cash Flows, and Returns to Shareholders

    STEP UP 17: CAPEX, Depreciation, Cash Flows, and Returns to Shareholders (billion yen) STEP UP 17 (16.3-18.3) Change from 16.3 TAKE OFF 14 ~ (13.3-15.3) Plan Capital expenditures 50.8 188.0 +7.7 Depreciation and amortization 40.8 126.0 +2.4 R&D expenses 27.0 81.7 +3.3 Free cash flows 42.0 60.0 +38.7

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