Ajinomoto Co., Inc. · TSE:2802
Ajinomoto — H1 FY2021 Earnings Presentation
55 slides from Ajinomoto's earnings presentation, Nov 4, 2021
Slide 1: Forecast for FY2021 and Initiatives for the Structural Reform Phase of the MTP
Ajinomoto Co., Inc. (2802) Forecast for FY2021 (Ending March 31, 2022) and Initiatives for the Structural Reform Phase of the Medium-Term Management Plan Takaaki Nishii Member of the Board, Representative Executive Officer, President & Chief Executive Officer November 4, 2021
Slide 2: Contents
Contents I. Summary Results for the First Half Ended September 30, 2021 and FY2021 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Progress on Medium-Term Management Plan (MTP) Priority Themes Reference Material Appendixes: Consolidated Results First Half Ended September 30, 2
Slide 3: Our Message Today
Our Message Today The full-year FY2021 forecast is for increased sales and profit (upward revision). In Healthcare and Others, the electronic materials and amino acids businesses and Bio-Pharma Services business were strong, driving Group-wide performance. Sustained growth is expected from the next
Slide 4: Contents
Contents I. Summary Results for the First Half Ended September 30, 2021 and FY2021 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Progress on Medium-Term Management Plan (MTP) Priority Themes Reference Material Appendixes: Consolidated Results First Half Ended September 30, 2
Slide 5: I-1. FY2021 Results Digest
I-1. FY2021 Results Digest In first-half results, sales increased by ¥38.8 billion and profit increased by ¥7.3 billion. The full-year forecast is for increased sales and profit. Increased sales are expected in all segments due to strategic use of the marketing budget, etc. Business profit has been
Slide 6: I-2. FY2021: First-Half Summary
I-2. FY2021: First-Half Summary First-Half Results Summary Sales: ¥550.2 billion (107.6% of FY2020 results; excluding currency translation: 105.6%) Business profit: ¥69.3 billion (111.9% of FY2020 results; excluding currency translation: 109.3％) 1. Sales: Increased (¥38.8 billion) • Overall revenue
Slide 7: I-3. Changes in Business Profit (First-Half Results by P&L Factor)
I-3. Changes in Business Profit (First-Half Results by P&L Factor) Includes: Cost increases for raw materials and fuel, and food ingredients: -¥2.5 billion (net impact) Currency translation: +¥1.5 billion (¥ bil.) 原燃料・食品原料コスト上昇 ＋約 億円 80 為替影響 ▲約 億円を含む 75 0.5 - 9.0 70 15.0 Approx. 1.0 65 4.8 60 55 Inc
Slide 8: I-3. Changes in Business Profit (First-Half Results by Disclosed Segment)
I-3. Changes in Business Profit (First-Half Results by Disclosed Segment) (¥ bil.) 80 75 70 +0 65 10.9 60 - 2.0 - 1.6 55 69.3 50 61.9 45 40 売上増 販管費増 H1-FY21 H1-FY20 Seasonings Frozen Healthcare Others actual actual and Foods Foods and Others Copyright © 2021 Ajinomoto Co., Inc. All rights reserved.
Slide 9: I-4. Expect Pressure from Cost Increases, and Measures to Counter that Pressure
I-4. Expect Pressure from Cost Increases, and Measures to Counter that Pressure Recent prices for fermentation raw materials and fuel are close to the levels of 2011, which were the highest in the past 10 years. → We will overcome these with various measures. Circumstances that are expected to conti
Slide 10: Reference: Main and Sub Fermentation Raw Material Prices
Reference: Items that Impact Business Results (Main and Sub Fermentation Raw Material Prices ) Commodity prices impact Seasonings and Foods. Proceed with structural reform to achieve a business structure that is not affected by raw material prices. The weighted average of main and sub fermentation r
Slide 11: Reference: Asset reduction measures: umami seasonings for processed food manufacturers
Reference: Items that Impact Business Results (Revision of FY2019 First-Half Results Material) Asset reduction measures: umami seasonings for processed food manufacturers business 1. Achieve consumer ratio of 80% during the current Medium-Term Management Plan: change the sales ratio by increasing sa
Slide 12: I-5. Group, Consolidated (Business Profit, Business Profit Margin)
I-5. Group, Consolidated (Business Profit, Business Profit Margin) Group, Consolidated (BP, BP margin (until 2014: Operating Profit)) (¥ bil.) 1,500 150 IFRS 15% 1,000 100 10% 500 50 5% 00 0% 事業利益 BP 事業利益率 BP margin From FY2015 to FY2018, business profit growth stopped temporarily in line with commo
Slide 13: I-6. FY2021: Forecast (Revised)
I-6. FY2021: Forecast (Revised) The full-year forecast for FY2021 anticipates revenue and profit growth (upward revision). While the environment in the second half will also be difficult, we will achieve organic growth through appropriate measures and use of the budget, and will connect this organic
Slide 14: I-7. Changes in Business Profit (Results Forecast by P&L Factor)
I-7. Changes in Business Profit (Results Forecast by P&L Factor) Includes: Cost increases for raw materials and fuel, and food ingredients: -¥5.5 billion (net impact) Currency translation: +¥2.6 billion (¥ bil.) 150 140 1.5 130 - 25.5 29.0 Approx. 120 11.0 2.0 110 100 113.1 Includes: • Increased str
Slide 15: I-7. Changes in Business Profit (Results Forecast by Disclosed Segment)
I-7. Changes in Business Profit (Results Forecast by Disclosed Segment) (¥ bil.) 150 140 130 120 - 0.4 110 - 6.0 13.3 0 100 113.1 120.0 90 80 70 売上増 FY20 Seasonings Frozen 販管費増 Healthcare FY21 Others revised actual and Foods Foods and Others forecast Copyright © 2021 Ajinomoto Co., Inc. All rights r
Slide 16: I-8. Assets and Liabilities
I-8. Assets and Liabilities In FY2019, net D/E ratio* temporarily increased due to the acquisition of shares from overseas minority shareholders. Since FY2020, however, we have managed this to within the 50% set as a guideline in the MTP. Total assets Net D/E ratio FY20-25 MTP 2,000.0 60% 1,500.0 40
Slide 17: I-9. Cash Generation
I-9. Cash Generation FY2021 forecast: Approximately ¥163.0 billion. Since FY2020, cash generation ability has been increasing in line with the increase in business profit, against a backdrop of business growth. (¥ bil.) 営業CF Sales CF 200.0 FY20-25 MTP Cash generating ability is 150.0 increasing. 100
Slide 18: I-10. Strategic Investments
I-10. Strategic Investments Shift investments from tangible assets to intangible assets, including R&D, brands, DX, business model development, and human resources. Capex will decrease from FY2021, but we will carry out agile growth investments in core businesses such as electronic materials. Reorga
Slide 19: I-11. Profit Growth and Capital Productivity
I-11. Profit Growth and Capital Productivity Important management indicators are all expected to improve due to asset reduction and steady growth in business profit. Capital productivity is increasing. （％） ROE （％） ROA (BP basis) （事業利益ベース） 11.2 12.0 10.3 10.0 10.0 9.0 8.6 8.1 8.0 8.0 7.2 6.0 4.7 7.0
Slide 20: I-12. Shareholder Returns
I-12. Shareholder Returns Operating cash flow is expected to be about the same level as last year, approximately ¥163.0 billion. Plan to further increase the dividend (initial: ¥44, current: ¥48). EPS is expected to grow again in FY2021. Cash Flow Investments for Growth Shareholder Returns Payout ra
Slide 21: Contents
Contents I. Summary Results for the First Half Ended September 30, 2021 and FY2021 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Progress on Medium-Term Management Plan (MTP) Priority Themes Reference Material Appendixes: Consolidated Results First Half Ended September 30, 2
Slide 22: Priority KPIs (Company-wide Forecast)
Priority KPIs (Company-wide Forecast) Steady progress toward achieving the structural targets of the MTP. To ensure the achievement of FY2022 and FY2025 targets, we are moving to steadily execute the MTP priority themes. 20–22 23–25 Phase 1 Phase 2 2030 Goal Structural reform Regrowth FY19 FY20 H1-F
Slide 23: II-1. Priority KPIs (Forecast by Segment)
II-1. Priority KPIs (Forecast by Segment) Segments FY2020 Actual and FY2021 Revised Forecast Unit price growth Organic growth ROIC (International consumer products) (％) (％) (％) Sauce & FY20 FY21-H1 FY21 FY20 FY21-H1 FY21 FY20 * FY21 * MTP Targets Seasonings actual actual forecast actual actual forec
Slide 24: II-2. ASV Management: Management Vision 2030 and Strategy
II-2. ASV Management: Management Vision 2030 and Strategy Ajinomoto Group Vision Contribute to greater wellness for people worldwide, unlocking the power of amino acids to resolve the food and health issues associated with dietary habits and aging. ＆ Copyright © 2021 Ajinomoto Co., Inc. All rights r
Slide 25: II-3. ASV Management: Corporate Value Enhancement Cycle
II-3. ASV Management: Corporate Value Enhancement Cycle Synchronize the enhancement of value for all stakeholders Employees & Partners （Engagement） Corporate Value Shareholders & Investors Consumers & Customers (Market Capitalization, (Help Us Co-create CX*) Economic Value) *Customer experience Copy
Slide 26: II-4. Purpose (Aspiration) and Corporate Value
II-4. Purpose (Aspiration) “Solving Food and Health Issues,” and Corporate Value Purpose (aspiration) and Stakeholder relations Vision for 2030 Trust and empathy ＋Partners Directors and Employees ・Nutrition Without Compromise management （Engagement） ・Sustainability Remuneration, agile work styles, g
Slide 27: II-5. Employee Engagement
II-5. Employee Engagement ・In order to improve customer value, promote initiatives to enhance employee engagement. ・ASV as one’s one initiative dropped somewhat. Figure out why, including the impact of the pandemic, and move forward on improvement measures. Favorable response score (including FY2021
Slide 28: II-6. Development of DX Human Resources to Co-create CX
II-6. Development of DX Human Resources to Co-create CX with Consumers and Customers Started training of Business DX Employees, System Developers, and Data Scientists in FY2020. Also reinforced through appointment from outside. Group companies in Japan and overseas are also preparing and launching t
Slide 29: Contents
Contents I. Summary Results for the First Half Ended September 30, 2021 and FY2021 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Progress on Medium-Term Management Plan (MTP) Priority Themes Reference Material Appendixes: Consolidated Results First Half Ended September 30, 2
Slide 30: III. List of MTP Priority Themes
III. List of MTP Priority Themes 1. Status of Progress on Structural Reform 2. Organic Growth Rate 3. Business Model Transformation 4. Promotion of Sustainability (Health and Environment) Plan to report on enhancement of brand value in the May financial results Copyright © 2021 Ajinomoto Co., Inc. A
Slide 31: III-1. MTP Priority Themes and Mechanisms for Corporate Value Enhancement
III-1. MTP Priority Themes and Mechanisms for Corporate Value Enhancement Human resources OE Customers OE Tangible assets Structural reform and establishment of a new growth model with DX (Operational transformation, ecosystem transformation, business model transformation) Engagement and an initiati
Slide 32: III-2. Progress of Structural Reform (ROIC)
III-2. Progress of Structural Reform (MTP Priority Theme: 1. ROIC) ROIC expected to temporarily fall below real capability due to impairment accompanying structural reform Approx. 8% 8.3% (excludes impairment) (excludes structural reform expenses) Approx. 6％ (excludes impairment) 10-11％ ROIC Approx.
Slide 33: III-2. Structural reform in non-core businesses
III-2. Progress of Structural Reform (MTP Priority Theme: 1. ROIC) Structural reform in non-core businesses Financial impact Amount of asset 1. Animal Nutrition Business (commodities) reduction: Completed sale of company in Europe in April. Approx. ¥15.5 Shift to customer solution-providing business
Slide 34: III-3. Organic Growth: Nutrition Without Compromise
III-3. Organic Growth (MTP Priority Theme: 2. Organic Growth Rate) Nutrition Without Compromise Copyright © 2021 Ajinomoto Co., Inc. All rights reserved. 34
Slide 35: III-3. Many consumers are already reducing their salt intake
III-3. Organic Growth (MTP Priority Theme: 2. Organic Growth Rate) Many consumers are already reducing their salt intake. We will seize potential opportunities and provide our unique solutions to consumers. Online survey of understanding, awareness and uptake of salt reduction in major countries of
Slide 36: III-3. "Smart Salt" Project
III-3. Organic Growth (MTP Priority Theme: 2. Organic Growth Rate) “Smart Salt” Project Delicious salt reduction using umami and dashi broth! Advertising Owned media Products Stream videos for a wide range of Provide delicious salt reduction High quality based on Ajinomoto recipes proprietary techno
Slide 37: III-4. Business Model Transformation (Electronic Materials Business)
III-4. Business Model Transformation (Electronic Materials Business) (MTP Priority Theme: 3. Business Model Transformation) Continued adoption in PC and game markets Accelerating growth in Growth in data center servers and communication applications electronic materials Expansion of magnetic materia
Slide 38: III-4. Business Model Transformation (S&I Business)
III-4. Business Model Transformation (S&I Business) (MTP Priority Theme: 3. Business Model Transformation) ◆Kokumi substances* based on amino acids contribute to delicious salt reduction, delicious sugar reduction, and protein intake for consumers. ◆Contact points with customers are expected to expa
Slide 39: III-5. Promotion of Sustainability
III-5. Promotion of Sustainability (MTP Priority Theme: 4. Extend the Healthy Life Expectancy of 1 Billion People) Up to 2020 2021 2030 Two priority initiative items Creation of ecosystem Outcome Delicious salt Promote reduction Project Reduced salt “Nutrition without ANPS-M Extend the compromise” P
Slide 40: III-5. Leadership at international conferences
III-5. Promotion of Sustainability (MTP Priority Theme: 4. Extend the Healthy Life Expectancy of 1 Billion People) Leadership at international conferences UN Food Systems Summit Actively participated in CEO consultation meetings1 Endorsed Business Declaration for Food Systems Transformation2 As the
Slide 41: III-5. Promotion of Sustainability: Reduce Environmental Impact by 50%
III-5. Promotion of Sustainability (MTP Priority Theme: 4. Reduce Environmental Impact by 50%) Up to 2020 2021 2022 2025 2030 ▲SBTi target validation ▲RE 100 commitment 100% renewable energy by 2050 Adopt internal carbon pricing Scope 1 Climate Scope 2 change Convert fuel and procure renewable energ
Slide 42: Message from the CEO
Message from the CEO We are progressing with development of frameworks to unleash the potential of talent through DX toward our aim of becoming a solution-providing group of companies for food and health issues by turning issues such as increasing resource prices and the impact of sustainability cos
Slide 43: Forward-looking statements, such as business performance forecasts, made in these materials are based on
Forward-looking statements, such as business performance forecasts, made in these materials are based on management's estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations. This material includes summa
Slide 44: FY2021: Q2 Results Summary
FY2021: Q2 Results Summary FY2021 Q2 Results Summary Sales: ¥273.8 billion (104.0% of FY2020 results; excluding currency translation: 102.4%) Business profit: ¥30.3 billion (108.0% of FY2020 results; excluding currency translation: 106.5％) 1. Sales: Increased (¥10.4 billion) • Overall revenue increa
Slide 45: Seasonings and Foods Segment (Business Profit, Business Profit Margin)
Seasonings and Foods Segment (Business Profit, Business Profit Margin) Seasonings and Foods (BP, BP margin (until 2014: Operating Profit)) （億円） (¥ bil.) IFRS 1,200 120 20% 800 80 15% 400 40 0 10% 事業利益 BP 事業利益率 BP margin Shared expenses are not considered in BP Profitability has improved steadily sin
Slide 46: Frozen Foods Segment (Business Profit, Business Profit Margin)
Frozen Foods Segment (Business Profit, Business Profit Margin) (¥ bil.) Frozen Foods (BP, BP margin (until 2014: Operating Profit)) (¥ bil.) 150 IFRS 15 10% 100 10 5% 50 5 00 0% (From FY2015, North American Frozen 事業利益 BP 事業利益率 BP margin Foods consolidated) Shared expenses are not considered in BP A
Slide 47: Business Profit in the Food Products Business
Business Profit in the Food Products Business Will plan to steadily come back in Seasonings and Foods and Frozen Foods from the second half. Impacts will remain throughout the fiscal year in the Solution & Ingredients business but we will implement additional measures for the next fiscal year. 事業利益額
Slide 48: Healthcare and Others Segment (Business Profit, Business Profit Margin)
Healthcare and Others Segment (Business Profit, Business Profit Margin) Healthcare and Others (BP, BP Margin (until 2014: Operating Profit)) (¥ bil.) 500 50 IFRS 25% 400 40 300 30 15% 200 20 100 10 00 5% 事業利益 BP 事業利益率 BP margin Shared expenses are not considered in BP In Healthcare and Others, struc
Slide 49: First-Half Results (Consolidated Statements of Income)
First-Half Results (Consolidated Statements of Income) H1-FY21 H1-FY20 vs. Prev. vs. Prev. year Difference (excluding currency (¥ Billion); -: losses Actual Actual year （A）-（B） translation) (A) (B) (A)/(B) (A)/(B) Sales 550.2 511.3 38.8 107% 105% Gross profit 211.7 196.1 15.5 107% (Gross profit marg
Slide 50: First-Half Results (Sales and Business Profit by Segment)
First-Half Results (Sales and Business Profit by Segment) H1-FY21 H1-FY20 H1-FY19 vs Prev. year vs FY19 (¥ Billion); -: losses Actual Actual Actual (A)/(B) (A)/(C) (A) (B) (C) Sales 550.2 511.3 107% 532.2 103% Seasonings and Foods 316.0 295.3 107% 308.3 102% Frozen Foods 106.3 98.8 107% 103.2 103% H
Slide 51: First-Half Results (Sales and Business Profit by Region)
First-Half Results (Sales and Business Profit by Region; Change from Prev. Year) Japan Asia Americas EMEA Other Total (¥ Billion); -: losses H1- H1- H1- H1- H1- H1- Differ- Differ- Differ- Differ- Differ- Differ- FY21 FY21 FY21 FY21 FY21 FY21 ence ence ence ence ence ence Actual Actual Actual Actual
Slide 52: Forecast (Consolidated Statements of Income)
Forecast (Consolidated Statements of Income) FY21 FY20 vs. Prev. year Difference vs. Prev. year (excluding currency (¥ Billion); -: losses Forecast Actual (A)-(B) (A)/(B) translation) (A) (B) (A)/(B) Sales 1,148.0 1,071.4 76.5 107% 105% Gross profit 436.5 406.2 30.3 107% (Gross profit margin) 38.0%
Slide 53: Forecast (Sales and Business Profit by Segment)
Forecast (Sales and Business Profit by Segment) FY21 FY20 FY19 vs. Prev. year vs. FY19 (¥ Billion); -: losses Forecast Actual Actual (A)/(B) (A)/(C) (A) (B) (C) Sales 1,148.0 1,071.4 107% 1,100.0 104% Seasonings and 665.1 620.5 107% 641.7 103% Foods Frozen Foods 217.0 198.2 109% 211.2 102% Healthcar
Slide 54: Forecast (Sales by Region; Change from Prev. Year)
Forecast (Sales by Region; Change from Prev. Year) Japan Asia Americas EMEA Total (¥ Billion); -: losses FY21 Differ- FY21 Differ- FY21 Differ- FY21 Differ- FY21 Differ- forecast rence forecast rence forecast rence forecast rence forecast rence Sales 493.7 22.8 287.0 23.2 256.8 37.7 110.3 -7.3 1,148
Slide 55: Reference Links
Reference Links Ajinomoto Group IR https://www.ajinomoto.co.jp/company/en/ir/ Ajinomoto Group Integrated Report 2021 https://www.ajinomoto.co.jp/company/en/ir/library/annual.html Ajinomoto Group Medium-Term Management Plan https://www.ajinomoto.co.jp/company/en/ir/event/medium_term.html Ajinomoto Gr