Meiji Holdings Co., Ltd. · TSE:2269

Meiji — FY2017 Earnings Presentation

37 slides from Meiji's earnings presentation, May 16, 2017

  1. Slide 1: Financial Results For the FYE March 2017

    Financial Results - For the FYE March 2017 - May 16, 2017

  2. Slide 2: Contents

    Contents 1. Overview for the FYE March 2017 2. Outlook for the FYE March 2018 3. The Meiji Group 2026 Vision (outline)  Business forecasts and other forward-looking statements are based on information available at the time of the release of this presentation and reasonable assumptions made by the C

  3. Slide 3: Food

    Food Increased Income - Sales Growth of Core Products, Cost Reduction and Decrease in Raw Material Costs (JPY bn) FYE March 2016 FYE March 2017 FYE March 2017 Results Plan Results Change vs. YoY Change Plan -0.5% +2.0% Net sales 1,061.3 1,088.0 1,082.1 Food -5.8 +20.7 +3.7% +21.5% Operating income 6

  4. Slide 4: Pharma

    Pharma Decreased Income - NHI Price Revisions and Increased Expenses, Despite Promotion of Newly Launched Products (JPY bn) FYE March 2016 FYE March 2017 FYE March 2017 Results Plan Results Change vs. YoY Change Plan -2.0% -1.8% Pharma Net sales 164.5 165.0 161.6 -3.3 -2.9 +15.6% -42.9% Operating in

  5. Slide 5: Summary - FYE March 2017

    Summary - FYE March 2017 (JPY bn) FYE March 2016 FYE March 2017 FYE March 2017 Results Plan Results Change vs. YoY Change Plan -0.7% +1.5% Net sales 1,223.7 1,251.0 1,242.4 -8.5 +18.7 +4.6% +13.6% Operating income 77.7 84.5 88.3 +3.8 +10.6 Op. income margin 6.4% 6.8% 7.1% +0.4pt +0.8pt Meiji Holding

  6. Slide 6: Changes in Profitability after Management Integration

    Changes in Profitability after Management Integration Consolidated operating income and operating income margin (■OPM: %) 180 8 7.1 160 6.4 7 140 6 (■ Op. income: 120 JPY bn) 4.4 5 100 4 3.2 88.3 2.6 2.7 77.7 80 3 2.3 1.8 60 51.5 2 40 36.4 1 28.7 29.9 25.8 20.1 20 0 Earth- quake 0 (1) FY3/10 FY3/11

  7. Slide 7: 2. Outlook for the FYE March 2018

    2. Outlook for the FYE March 2018 7 ｜ May 16, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights reserved.

  8. Slide 8: Food

    Food Increase Income - Grow Sales of Core Products and Reduce Cost (JPY bn) FYE March 2017 FYE March 2018 Results Plan YoY Change +0.5% Net sales 1,082.1 1,087.0 Food +4.8 +1.3% Operating income 82.9 84.0 +1.0 (JPY bn) YoY Change in Operating Income Results -- FYE March 2017 82.9 +2.4 : Sales growth

  9. Slide 9: Expand Domestic Share of Core Products

    Food Expand Domestic Share of Core Products - Accelerate Selection and Concentration Meiji’s sales (JPY bn)  Probiotics (Functional yogurt): Stable growth Probiotics and 206.2 212.0 189.9  Marketing to convey the benefit of lactobacillus yogurt and importance of continued consumption  Yogurt: Exp

  10. Slide 10: Continue Structural Reforms

    Food Continue Structural Reforms Sales and Marketing JPY 5.5 bn • Expand sales of Core products of profit increase factors • Reduce SKUs for the FYE March 2018 • Control promotion and advertising expenses Improving Production profitability • Invest in expanding production capacity for Core Products

  11. Slide 11: Overseas Business - Stabilize Profitability and Challenge for Further Growth

    Food Overseas Business - Stabilize Profitability and Challenge for Further Growth Overseas sales (JPY bn) Become income-generating business ■Affiliates accounted for by equity method and non-consolidated companies Meiji’s Sales (RMB mm)  Increase product recognition by 83.2 ■Consolidated subsidiari

  12. Slide 12: Pharma

    Pharma Increase Income - Focus Resources on Core Domains, Steady Sales Growth and Further Low-Cost Operations (JPY bn) FYE March 2017 FYE March 2018 Results Plan YoY Change +8.6% Pharma Net sales 161.6 175.6 +13.9 +90.3% Operating income 5.7 11.0 +5.2 (JPY bn) YoY Change in Operating Income Results

  13. Slide 13: Steady sales growth in Japan and overseas

    Pharma Steady sales growth in Japan and overseas Sales for ethical pharmaceuticals business Grow sales - focus on main products  Antidepressant drug, Reflex (JPY bn) NHI Drug Price Revision 1,645 1,756 Maximize product value; use latest evidence 1,616 Domestic business  Antipsychotic drug, Sycrest

  14. Slide 14: Further Expand Generic Drug Business - Add New Business Model

    Pharma Further Expand Generic Drug Business - Add New Business Model environment  Government policies for achieving 80% share for generic drugs Business → Market expansion  Policy for fundamental review of drug pricing → low cost production, competitive advantage Product portfolio • Expand sales v

  15. Slide 15: Plan - FYE March 2018 Meiji Holdings

    Plan - FYE March 2018 (JPY bn) FYE March 2017 FYE March 2018 Results Plan YoY Change +1.5% Net sales 1,242.4 1,261.0 +18.5 +6.9% Operating income 88.3 94.5 +6.1 Operating income margin 7.1% 7.5% +0.4pt Meiji Holdings Net income attributable to shareholders +0.4% of parent company 60.7 61.0 +0.2 EPS

  16. Slide 16: Use of Cash Flows

    Use of Cash Flows Improve profitability Grow both margin and total income Plan - FYE March 2018 Investing cash flows JPY 59.6 bn Operating cash flows Accelerate investment to drive future growth, because Generate stable cash of favorable performance for STEP UP 17 ahead of plan flow by increasing -

  17. Slide 17: Summary - Progress in STEP UP 17 Strategy

    Summary - Progress in STEP UP 17 Strategy 1. Strengthen priority businesses and take on the challenge of future growth  Food: Selection and concentration - Sales ratio of core products increased  Pharma: Launched new products in core domains, contribution to income should be in and after FYE March

  18. Slide 18: 3. The Meiji Group 2026 Vision (outline)

    3. The Meiji Group 2026 Vision (outline) 18 ｜ May 16, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights reserved.

  19. Slide 19: Important Operating Environment

    Important Operating Environment Population projections for Japan 1. Changes in social structure - Ageing Elderly population (age 65 & older) (1,000 people) Production age population (age 15-64) Minor age population (age 0-14)  By 2025, 30% of Japan’s population 29,484 will be 65 and older (23%) 34,

  20. Slide 20: Key Strategies

    Key Strategies 1 Secure an overwhelming advantage in core businesses In the areas of “Tastiness, Enjoyment, Health and Reassurance,” we will propose unique values and capture latent growth opportunities and increasing medical and healthcare needs on the domestic market. We will establish an overwhel

  21. Slide 21: Key Strategies

    Key Strategies Focus on overseas business using our Domestic business strength; Strong Challenge selves to Grow further, improve products and revenue create values unique profitability base in Japan to Meiji Group 1. Secure an overwhelming 2. Establish growth foundation 3. New challenge in health ad

  22. Slide 22: Realizing Sustainable Growth and Enhancing Corporate Value

    Realizing Sustainable Growth and Enhancing Corporate Value Our promise and commitment for the 2026 Vision We will combine the strengths, the Meiji Group has cultivated over the past 100 years, with the latest technology and new findings. Thus we create innovative ways to meet our customers’ needs wi

  23. Slide 23: Appendix

    Appendix 23 ｜ May 16, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights reserved.

  24. Slide 24: Results - FYE March 2017

    Results - FYE March 2017 (JPY bn) Consolidated Results YoY Change Main Factors for Change +1.5% Net sales 1,242.4 +18.7 ― (cf. Page 3-4) +13.6% Operating income 88.3 +10.6 ― (cf. Page 3-4) - Decrease in interest income (-1.0) -53.5% Non-operating income 3.3 - Decrease in factory construction subsidy

  25. Slide 25: Results - FYE March 2017: Analysis of Consolidated Operating Income

    Results - FYE March 2017: Analysis of Consolidated Operating Income (JPY bn) (By Segment) Full-year Food Pharma Other Results -- FYE March 2015 77.7 68.2 10.1 -0.6 Due to increased/decreased sales +15.9 +10.2 +5.7 ― Impact of drug price revision -9.2 ― -9.2 ― Changes in costs of goods sold +6.8 (*1)

  26. Slide 26: Financial Position as of March 2017

    Financial Position as of March 2017 (JPY bn) Results as of Mar. 2017 YoY Change Main Factors for Change +4.1% Current assets 377.7 +14.7 - Increase in inventories (+10.6): for newly launched drugs, etc +2.6% Fixed assets 506.1 +12.9 - Increase in property, plants and equipment (+16.6) +3.2% Total as

  27. Slide 27: Cash Flows and Shareholders' Return - FYE March 2017

    Cash Flows and Shareholders’ Return - FYE March 2017 (JPY bn) Consolidated Results YoY Change Main Factors for Change - Increase in income taxes paid (-17.4) Net cash flow from 81.8 -23.2 - Increase in inventories (-15.9): for newly launched drugs, etc. operating activities - Increase in payments fo

  28. Slide 28: Plan - FYE March 2018 Meiji Holdings, Food, Pharma

    Plan - FYE March 2018 (JPY bn) First Half Second Half Full Year Plan YoY Change Plan YoY Change Plan YoY Change +0.4% +2.6% +1.5% Net sales 609.0 +2.2 652.0 +16.3 1,261.0 +18.5 Meiji Holdings +10.9% +4.0% +6.9% Operating income 41.4 +4.0 53.1 +2.0 94.5 +6.1 +14.5% +1.8% +6.9% Op. income margin 41.3

  29. Slide 29: Plan by Business in Food Segment

    Plan by Business in Food Segment - FYE March 2018 (JPY bn) First Half Second Half Full Year Plan YoY Change Plan YoY Change Plan YoY Change Fermented Dairy +0.9% +1.3% +1.1% Net sales 272.3 +2.5 278.4 +3.5 550.7 +6.0 Fresh and Operating -0.5% +1.6% +0.6% income 23.9 -0.1 28.2 +0.4 52.1 +0.3 -5.6% -2

  30. Slide 30: Plan by Business in Food Segment - Other and Elimination

    Plan by Business in Food Segment - FYE March 2018 (JPY bn) First Half Second Half Full Year Plan YoY Change Plan YoY Change Plan YoY Change +0.3% -0.9% -0.3% Net sales 178.9 +0.4 178.9 -1.6 357.8 -1.1 Other Operating -3.1% -8.9% -6.2% income 2.5 -0.0 2.7 -0.2 5.2 -0.3 ― ― ― and Corporate Net sales -

  31. Slide 31: Plan - FYE March 2018: Analysis of Consolidated Operating Income

    Plan - FYE March 2018: Analysis of Consolidated Operating Income (JPY bn) (By Segment) Full-year Food Pharma Other Results -- FYE March 2017 88.3 82.9 5.7 -0.3 Due to increased/decreased sales +6.0 +2.4 +3.6 ― Changes in costs of goods sold -3.4 (*1) -3.4 0.0 ― Changes in other SG&A expenses +4.3 (*

  32. Slide 32: Cash Flows and Returns to Shareholders - FYE March 2018

    Cash Flows and Returns to Shareholders - FYE March 2018 (JPY bn) Consolidated Plan YoY Change Main Factors for Change Net cash flow from 97.9 +16.1 - Increase in profits operating activities - Increase in capital expenditures Net cash flow from -59.6 -15.4 [Amounts] Food 55.8 bn (+11.4bn, yoy) inves

  33. Slide 33: Key Currencies and Our Average Exchange Rates

    Key Currencies and Our Average Exchange Rates Key Currencies and Our Average Exchange Rates Foreign exchange target USD EUR RMB in the FYE March 2018 (JPY) 136.10 133.86 136.00 Food: 108 yen 140.00 132.37 128.94 USD 123.03 120.81 Pharma: 110 yen 117.70 120.00 114.59 Food and Pharma: 119.56 121.34 12

  34. Slide 34: Sales by Region

    Sales by Region (JPY bn) <Net sales of Food segment> [Sales of domestic business] [Sales of international business*] 1,061.3 1,082.1 1,087.0 Ratio to net sales: 4% 1,021.8 1,023.0 1,043.9 1,046.2 992.3 43.2* 38.3 ←Impact 29.4 of FX 5.0 38.1 40.7 FY3/15 FY3/16 FY3/17 FY3/18E FY3/15 FY3/16 FY3/17 FY3/

  35. Slide 35: R&D Pipeline - Ethical pharmaceuticals

    R&D Pipeline - Ethical pharmaceuticals R&D Pipeline (◆: compounds discovered in-house) FYE March 2018 FYE March 2019 FYE March 2020 Infectious diseases ME1111 [Antionychomycosis] ◆ P II ME1100 Arbekacin inhalation [HABP/VABP] ◆ Phase Ib (Overseas) OP0595 [β-lactamase inhibitor] ◆ Phase I * Depromel

  36. Slide 36: R&D Pipeline - Agricultural chemicals and veterinary drugs

    R&D Pipeline – Agricultural chemicals and veterinary drugs R&D Pipeline (◆: compounds discovered in-house) FYE March 2018 FYE March 2019 FYE March 2020 Agricultural Chemicals ME5382 [Insecticide] ◆ Applied Approve ME5343 [Insecticide] Licensing agreement with BASF ◆* Applied Approve (Overseas) (Over

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