Watami Co., Ltd. · TSE:7522
Watami — FY2010 Earnings Presentation
57 slides from Watami's earnings presentation, May 2010
Slide 1: Results Briefing for the Fiscal Year Ended March 2010
Watami Co., Ltd. Results Briefing for the Fiscal Year Ended March 2010 (24th Period) 1
Slide 2: General Overview
General Overview Chairman & CEO Miki Watanabe 2
Slide 3: Consolidated Financial Results for the Year Ended March 2010
Consolidated Financial Results for the Year Ended March 2010 (hundred million yen) (%) Year ended Year ended Year ended Comparison March 2009 March 2010 March 2010 Year on year with plan Actual Actual Plan Sales 1,112 1,154 1,208 103.7% 95.5% Operating 60.4 62.8 71.0 103.9% 88.5% Income Ordinary 61.
Slide 4: Consolidated Plan for the Year Ending March 2011
Consolidated Plan for the Year Ending March 2011 (hundred million yen) (%) Year ended Year ending March 2010 March 2011 Year on year Actual Plan Sales 1,154 1,300 112.6% Operating 62.8 77.0 122.4% Income Ordinary 63.4 75.0 118.1% Income Net Income 32.5 32.6 100.0% 4
Slide 5: Financial Results Analysis and Summary of Plan for the Year Ending March 2011
Financial Results Analysis for the Year Ended March 2010 and Summary of Plan for the Year Ending March 2011 Corporate Officer, Corporate Planning Department Hiroo Yamanouchi 5
Slide 6: Consolidated Financial Result Highlights
Consolidated Financial Result Highlights Sales and net income increased by 3.7% and 27.1% respectively compared to the previous year, but fell short of the plan. (hundred million (hundred million yen) Sales increased by 4.2 billion yen yen) Restaurant business in Japan ▲42 Nursing care business 27 1
Slide 7: Cash Flow Performance
Cash Flow Performance Maintained positive cash flow while investing in growth opportunities within operating cash flow. Cash flow for the year ended March 2010 and its breakdown (hundred million yen) (hundred million yen) Net Deprecia Caution Investm Free Income tion and Money ent Cash After Goodwil
Slide 8: Interest-bearing Debt
Interest-bearing Debt Improved cash flow enabled reduction of interest-bearing debts by 2.6 billion yen. Net debt/equity ratio improved from 0.67 to 0.43. 0.96 0.93 Net D/E ratio 0.67 ¥28.5B 0.52 ¥ 26.4B ¥ 21.7B 0.43 Interest-bearing Debt ¥ 18.9B ¥ 19.1B End of End of End of End of End of March Marc
Slide 9: Dividend Payout Ratio
Dividend Payout Ratio Planned dividend per share for the entire year is 20 yen; the same as the previous term. (%) 38.6% 31.4% 25.9% 24.7% (projected) 21.2% End of End of End of End of March 2006 March 2007 March 2008 March 2009 (projected) Dividend Per Share 10 yen 10 yen 20 yen 20 yen 20 yen 9
Slide 10: Consolidated Plan for the Year Ending March 2011
Consolidated Plan for the Year Ending March 2011 (hundred million yen) (%) Year ending 1st half of the Compared with Year ending Year ended Compared with st March 2011 year ended 1 half of the March 2011 March 2010 year ended year ended Mid-term March 2010 March2010 Plan Actual March 2010 Plan Actua
Slide 11: Financial Objectives for the Year Ending March 2011
Financial Objectives for the Year Ending March 2011 Increase sales by 12.6%, operating income by 22.4% and ordinary income by 18.1% on a year-on-year basis. (hundred million yen) (hundred million yen) Sales to be increased by ¥14.6B Restaurant business in Japan 32 1,300 Nursing care business 47 Home
Slide 12: Investment Plan for the Year Ending March 2011
Investment Plan for the Year Ending March 2011 Plant and equipment investment (excl. lease) is planned to be up to 8.5 billion yen (an increase of 93% compared to 2010) (hundred million yen) (hundred million yen) Year Ended Year Ending March 2010 March 2011 Actual Plan 85 Net Income after tax 32 32
Slide 13: Summary of Results and Plans for the Year Ending March 2011
Summary of Results for the Year Ended March 2010 Plans for the Year Ending March 2011 Yutaka Kuwabara President & COO 13
Slide 14: Business Performance Review for the Year Ended March 2010
Business Performance Review for the Year Ended March 2010 We maintained upward momentum by increasing revenue and income and established a foundation for the further growth in spite of failing to achieve the plan for the year in a tough business climate. z Accomplishments -Achieved operating income
Slide 15: Major Plans for the Year Ending March 2011
Major Plans for the Year Ending March 2011 We will strengthen and further develop our three core businesses, consisting of food service, nursing care and home delivered boxed lunches for the elderly and establish a strong business structure less susceptible to swings in external environment. z Accel
Slide 16: Restaurant Business in Japan - Financial Results
Restaurant Business in Japan - Financial Results for the Year Ended March 2010 (hundred million yen) Year ended Year ended Year on Year ended Comparison March 2009 March 2010 March 2010 year (%) with plan Actual Actual Plan Sales 854 813 95.1% 867 93.7% Operating Income 38.9 38.3 98.4% 41.4 92.4% Th
Slide 17: Restaurant Business (Japan) – Plan for the Year Ending March 2011
Restaurant Business (Japan) – Plan for the Year Ending March 2011 Operating income is expected to increase. Cost reduction and sales from new restaurants will offset decreasing profit from existing restaurants. Factors of year-on year difference in operating income Year ending Year on year * Includi
Slide 18: Restaurant Business in Japan - Objectives
Restaurant Business in Japan - Objectives ① Achieve an increase in sales and ② Promote DFC (Direct Franchising) customer numbers compared to the previous year at existing • 68 restaurants as of March 2010 restaurants. (11% of total) • Change standard menus (April) → Simplify price lines and appeal l
Slide 19: Customer Satisfaction and Complaint Rate
①-1 Customer Satisfaction and Complaint Rate Customer Satisfaction： Improved by 9.3% (68.5% to 77.8%) over the year Complaint Rate: Improved by 4% (7.4% to 3.4%) over the year 80% (Customer Satisfaction) 77.8% 77.8% 75.3% 74.5% 75% FY2008 Actual = 71% 70% 68.5% 65% ～ ～ (Complaint Rate) 10% 7.4% FY20
Slide 20: Number of Customers at Existing Restaurants and Customer Spend
①-2 Number of Customers at Existing Restaurants and Customer Spend An increase was made in the number of customers on a year-on-year comparison in the fourth quarter. Average customer spend did not meet the level of the previous year. 99.8% 100.8% 100% 98.4% 97.7% 98% 96.6% 95.4% 96% 96.7% 95.5% 95.
Slide 21: Employee Turnover Rate
①-3 Employee Turnover Rate Employee turnover rate declined for three consecutive years. ÆThis resulted in an improvement in customer satisfaction and a recovery of customer numbers to the level of the previous year. 30% 25% 20% 15% 27.5% 22.8% 10% 14.8% 12.8% 5% 0% Year ended Year ended Year ended Y
Slide 22: Introduction of New Menus
①-4 Introduction of New Menus 【Purpose of New Menus】 ① Simplified price lines→ Low price appeal (while maintaining the average customer spend and cost to sales ratio) Wataminchi： three price lines of 199 yen, 299 yen and 399 yen Watami, Za Watami, Nagomitei: six price lines from 199 yen to 699 y
Slide 23: Promotion of the DFC (Direct Franchise) System
② Promotion of the DFC (Direct Franchise) System Number of DFC restaurants as of March 2010： 68 (an increase of 27 from the previous year) Compared with budget for the year ended March 2010： 【sales】 100.7% 【operating income】 102.1% Æ This term there were 25 new owners. There will be 110 DFC rest
Slide 24: Expansion of New Restaurants
③-1 Expansion of New Restaurants Number of new restaurants for the year： Opened 23 new restaurants as opposed to the 17 that were planned. Sales from new restaurants for the year ended Mach 2010 achieved 106.9% of the budget (Watami & Watamin-chi). Æ Plan to open 40 new restaurants by the end of Mar
Slide 25: Performance of New Restaurants
③-2 Performance of New Restaurants Sales performance of restaurants newly opened in April 2010 (percentage of budget) わたみん家 A店 263% わたみん家 B店 150% わたみん家 C店 137% わたみん家 D店 196% わたみん家 E店 169% 炭旬 綾瀬店 159% 合計： 171% 25
Slide 26: Purpose of Development of New Categories
Purpose of Development of New Categories Position of business categories Position of business (average customer spend and purpose) categories (location) (Yen) Large In front of a Suburban, 3,000 station roadside 【 Average Customer Spend (Dinner) ← 【 size of trading area Casual dining T.G.I. (mea
Slide 27: Purpose of Development of New Categories
Purpose of Development of New Categories New way of developing business categories Develop business categories flexibly rather than fixing them. Business category Directly managed Franchised Ishokuya Watami Watami Existing Kataraidokoro Za Watami Za Watami Business Categories Sumibiyaki dining Wat
Slide 28: Launch of New Category: Gochiso Chubo Kyo-no-ya
④ Launch of New Category: Gochiso Chubo “Kyo-no-ya” 【Position of the business category】 • Average Customer Spend： Lunch 1,000yen, dinner 2,100yen • Ratio spent on alcoholic drinks： 15% 【Performance for the year ended March 2010】 • The first restaurant was opened in Minamikamata on November 12, 2009
Slide 29: Launch of New Category: Ishokuya Sumishun
④ Launch of New Category－ Ishokuya “Sumishun” 【Position of the business category】 • Estimated Average Customer Spend: 2,650 yen • Area： 50 to 66 m2 (30 to 40 seats) 【Plan/progress for the year ending March 2011】 • The first directly managed restaurant opened in Ayase on April 12 Æ Sales achieved 159
Slide 30: Launch of New Category: Gyouten Sakaba Wasshoi
④ Launch of New Business Category – Gyouten Sakaba “Wasshoi” 【Position of the business category】 • Estimated average customer spend: 1,800 yen • Average price per dish: ① 250 yen (70%) tax inclusive, ② 500yen (30%) tax inclusive • Cost to sales ratio: 37.5% (Meals 42.5%, Drinks 30%) • Semi-self serv
Slide 31: Financial Results of Nursing Care Business
Financial Results of Nursing Care Business for the Year Ended February 2010 (hundred million yen) Year ended Year ended Year ended Year on year Comparison Feb 2009 Feb 2010 Feb 2010 (%) with plan (%) Actual Actual Plan Sales 146 174 119.0% 181 96.1% Operating income 22.8 26.8 117.7% 23.5 114.0% Due
Slide 32: Nursing Care Business - Plan for the Year Ending February 2011
Nursing Care Business - Plan for the Year Ending February 2011 Aim to increase both sales and profit through the establishment of 14 new nursing homes and the expansion of 1 existing home. Factors of year-on-year difference of operating income Plan for the Year on year year ending (compared with Inc
Slide 33: Nursing Care Business - Topics
Nursing Care Business -Topics ①Business expansion and maintenance of high occupancy rate • 14 new facilities are planned to be opened and 1 existing facility is planned to be expanded. • Occupancy rate at existing facilities achieved a record high of 95.2% as of the end February 2010. ② Further impr
Slide 34: Business Expansion and Maintenance of High Occupancy Rate
① Business Expansion and Maintenance of High Occupancy Rate Plan to open 14 new facilities and expand 1 existing facility (1,116 beds to be added) Number of facilities 70 61 (Projected) 60 47 Total number 50 38 of facilities 40 32 30 21 20 16 14 (Projected) 11 9 Number 10 Acquisition of 5 6 of new “
Slide 35: Expansion in the Metropolitan Area
① Business Expansion and Maintenance of High Occupancy Rate Substantial expansion in the metropolitan area. Total of 14 new facilities are opening; 7 in Saitama, 3 in Tokyo and 4 in other prefectures. Numbers and proportions Numbers and proportions of facilities by prefecture of facilities by prefec
Slide 36: Average Occupancy Rate Improved
① Business Expansion and Maintenance of High Occupancy Rate Average occupancy rate improved while number of facilities increased and a record high of 95.2% was achieved as of February 2010. Occupancy rate 100% 95% 90% 85% 35 35 36 37 37 37 38 31 31 32 32 34 34 34 34 34 80% 28 28 28 28 29 25 20 20 20
Slide 37: Further Improvement of Service Level: Four Major Zeros Policy
②Further Improvement of Service Level and the Brand Enhancement Promotion of systematized “the four major zeros policy”; zero adult diapers, zero wheelchairs, zero tube feedings and zero special bathtubs. Zero adult diapers Feb 2009 Feb 2010 Systemization of the four major zeros policy 189 people 16
Slide 38: The Izakaya Caravan
② Further Improvement of Service Level and the Brand Enhancement “The Izakaya Caravan” was started as a means to further expand recreation The Summer The Izakaya “Watami” Caravan The Sushi Caravan (twice a year) (Once a year) 38
Slide 39: Maintain and Enhance Watami's Branding Power
② Further Improvement of Service Level and the Brand Enhancement Maintain and enhance Watami’s branding power in the nursing care business through regular advertisement. Enhancement September of the branding August power July Enjoyment of going out Pleasure of eating May Gratitude of having ability
Slide 40: Service Level Enhanced as Employee Turnover Improved
② Further Improvement of Service Level and Brand Enhancement Service level has been enhanced as the employee turnover rate has improved. Change in employee turnover rate 50% 40% 40.3% 38.2% 30% 33.5% 32.6% 32.5% (no data available for 2009) 27.2% 26.5% 24.6% 20% 19.8% 18.2% 17.2% 10% 0% 2006 2007 20
Slide 41: Home-delivered Box Lunches for the Elderly - Financial Results
Home-delivered box lunches for the elderly Financial Results for the Year Ended February 2010 (hundred million yen) Year ended Year ended Year ended Comparison Feb 09 Feb 10 Year on year Feb 10 with plan Actual Actual Plan Sales 43 101 233.2% 90 112.2% Operating income 3.4 7.9 232.9% 10.2 78.3% Due
Slide 42: Home-delivered Box Lunches - Plan for the Year Ending February 2011
Home-delivered box lunches for the elderly - Plan for the Year Ending February 2011 Aim to increase sales through active prior investment and business expansion. Factors of year-on-year difference of operating income Plan for the year ending Year on year Opening of new outlets Feb-2010 (%) ▲¥0.3B (h
Slide 43: Home-delivered Boxed Lunches - Topics
Home-delivered boxed lunches for the elderly- Topics for the Year Ending February 2011 ① Opening of new outlets and establishment of a new plant ●Open 36 new outlets -Operation started in the Kansai area (from April 12): 16 outlets -Expansion in the Kanto area (from April 12): 20 outlets ●Establish
Slide 44: Opening of New Outlets and Establishment of a New Facility
① Opening of New Outlets and Establishment of a New Facility Aim to increase the number of boxed lunches sold per day by more than 60,000 compared to the previous year. To be achieved through increased market share of existing outlets and by opening new outlets. Number of boxed lunches sold per day
Slide 45: Plan to Open 36 New Outlets
① Opening of New Outlets and Establishment of a New Facility Plan to open 36 new outlets in the Kanto and Kansai areas by the end of the first half of the year Number of outlets* projected for the year ending Feb 2011 (Total number of outlets) 151 151 146 135 135 123 115 3月 4月 5月 6月 7月 8月 9月 * Outle
Slide 46: New Outlets Opened in April
① Opening of New Outlets and Establishment of a New Facility New outlets opened in April (6 in Kanto and 2 in Kansai) successfully achieved a result of 163% against the plan in the number of boxed lunches sold. Number of boxed lunches sold per day (week day) through newly opened outlets as of the en
Slide 47: Enhancement of Product Competitiveness
① Enhancement of Product Competitiveness Introduced new products under new brands from March by leveraging the Group’s capabilities through consolidation of the product development division in Tokyo. Before renewal After renewal 47
Slide 48: Other Businesses – Financial Results
Other Businesses – Financial Results for the Year Ended March 2010 (hundred million yen) Year ended Year ended Year ended Comparison March 2009 March 2010 Year on year March 2010 with plan Actual Actual Plan Other Sales 125 108 86.3% 117 92.4% Total Operating income 2.2 ▲0.2 ー 2.4 ー Overseas Sales 4
Slide 49: Other Businesses – Plan for the Year Ending March 2011
Other Businesses – Plan for the Year Ending March 2011 Actively open new restaurants overseas, improve productivity in the agricultural business and reinforce external sales in the maintenance and environmental business Factors of year-on-year difference of operating income Year ending March 2011 Ma
Slide 50: Overseas Operations
Overseas Operations Year-on-year rates in sales are recovering especially in China and Hong Kong where business confidence is improving, laying the foundation for expansion of restaurant openings. “Watami” year on year percentage of Sales 和民 既存店前年比（売上） 130% China 125% WC WSZ WT 120% 115% Hong Kong 1
Slide 51: Overseas Operations
Overseas Operations Actively expand restaurant business mainly in China and Hong Kong where existing restaurants are performing well. Plan to increase the number of restaurants from 33 as of the end of December 2009 to 47 by the end of December 2010. Projected openings of new overseas restaurants fo
Slide 52: Agriculture
Agriculture A new farm 5 hectares in size was opened in Oita. Plan to invest resources in upland farming and rebuild a model for full business expansion ・ Continue to secure farm fields through close communication with local communities and local governments. ・ Reinforce mail-order business and incr
Slide 53: Maintenance and Environmental Business
Maintenance and Environmental Business While providing the Group companies with maintenance and environmental services as a cost center, the expansion of services for external customers is sought by bolstering the sales department. Development of Maintenance of Recycling loop of services to reduce a
Slide 54: Maintenance and Environmental Business
Maintenance and Environmental Business A recycling loop of raw garbage is to be implemented within 55 restaurants in the metropolitan area and 15 external companies from June (the first alliance in the food service industry to implement a recycle loop between multiple companies). Aim to achieve zero
Slide 55: Consolidated Plan for the Year Ending March 2011
Consolidated Plan for the Year Ending March 2011 (hundred million yen) (%) Year ending 1st half of the Year on year Year ending Year ended (compared with March 2011 year ended Year on March 2011 March 2010 1st half of year Mid-term March 2010 year ended March Annual plan Actual plan Actual 2010 Sale
Slide 56: Topics
Topics 56
Slide 57: 24th Regular General Meeting of Shareholders / Watami Thank You Event
Topics 24th regular general meeting of shareholders/ Watami “thank you” event Saturday, June 19 at the Ryogoku Kokugikan Sumo Arena From 10:00 am to 12:00 pm: Regular general meeting of shareholders From 12:30 pm: Watami “thank you” event (admission free/invitation only) From this year, the sharehol