Meiji Holdings Co., Ltd. · TSE:2269

Meiji — H1 FYE March 2019 Earnings Presentation

39 slides from Meiji's earnings presentation, Nov 12, 2018

  1. Slide 1: Financial Results for the First Half of FYE March 2019

    Financial Results - For the First Half of FYE March 2019 - November 12, 2018

  2. Slide 2: Agenda

    Agenda 1. Overview for the First Half 2. Outlook for the Second Half and Full-year 3. Overview of Business Results and Future Business Strategy  Information in this material is not intended to solicit sale or purchase of shares in Meiji Holdings.  Business forecasts and other forward-looking state

  3. Slide 3: 1. Overview for the First Half

    1. Overview for the First Half 3 ｜ Nov. 12, 2018 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  4. Slide 4: H1 Summary - FYE March 2019

    H1 Summary - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Meiji HD (consolidated) H1 Results H1 Plan H1 Results YoY Change Change vs. Plan (as of Aug. 7) +0.1% +0.8% Net sales 611.4 607.0 611.9 +0.4 +4.9 -2.9% +6.9% Operating income 45.1 41.0 43.8 -1.2 +2.8 Op. income margin

  5. Slide 5: Food H1 Summary

    Food H1 Summary - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Food Segment H1 Results H1 Plan H1 Results YoY Change Change vs. Plan (as of Aug. 7) -1.8% -1.0% Net sales 534.2 529.9 524.8 -9.4 -5.0 -4.6% +0.3% Operating income 40.9 38.9 39.0 -1.9 +0.1 YoY Change in Operating

  6. Slide 6: Pharma H1 Summary

    Pharma H1 Summary - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Pharmaceutical Segment H1 Results H1 Plan H1 Results YoY Change Change vs. Plan (as of Aug. 7) +12.6% +12.4% Net sales 77.7 77.9 87.6 +9.8 +9.6 +17.5% +96.2% Operating income 4.3 2.6 5.1 +0.7 +2.5 YoY Change in

  7. Slide 7: 2. Outlook for the Second Half and Full-year

    2. Outlook for the Second Half and Full-year 7 ｜ Nov. 12, 2018 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  8. Slide 8: H2 Outlook - FYE March 2019

    H2 Outlook - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Meiji HD (consolidated) H2 Results H2 Plan H2 Plan (as of Aug. 7) (as of Nov. 7) YoY Change +3.8% Net sales 629.3 653.0 653.5 +24.1 +15.4% Operating income 49.5 58.5 57.1 +7.6 Op. income margin 7.8% 9.0% 8.8% +1.0pt Ne

  9. Slide 9: Food H2 Outlook

    Food H2 Outlook - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Food Segment H2 Results H2 Plan H2 Plan (as of Aug. 7) (as of Nov. 7) YoY Change +0.5% Net sales 539.3 560.0 542.2 +2.9 +13.5% Operating income 43.2 51.1 49.1 +5.8 YoY Change in Operating Income (JPY bn) H2 Result

  10. Slide 10: Pharma H2 Outlook

    Pharma H2 Outlook - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Pharmaceutical Segment H2 Results H2 Plan H2 Plan (as of Aug. 7) (as of Nov. 7) YoY Change +23.9% Net sales 90.6 93.7 112.3 +21.7 +25.7% Operating income 6.6 7.3 8.3 +1.7 YoY Change in Operating Income (JPY bn)

  11. Slide 11: Full-year Outlook - FYE March 2019

    Full-year Outlook - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Meiji HD (consolidated) Results Plan Plan YoY (as of Aug. 7) (as of Nov. 7) Change Net sales +2.0% 1,240.8 1,260.0 1,265.5 +24.6 Operating income +6.7% 94.6 99.5 101.0 +6.3 Op. income margin 7.6% 7.9% 8.0% +0.4p

  12. Slide 12: 3. Overview of Business Results and Future Business Strategy

    3. Overview of Business Results and Future Business Strategy 12 ｜ Nov. 12, 2018 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  13. Slide 13: Yogurt: Sustainable growth

    Food Yogurt: Sustainable growth Functional yogurt: Return to growth with strategic marketing Meiji’s Sales YoY Change in Our Sales (■Probiotics + ■Yogurt) [Market trends] (JPY bn) 10.0% - Yogurt market overall in 206.2 203.5 205.3 H1 decreased slightly YoY. Probiotics Plain yogurt market 5.0% 86.5 8

  14. Slide 14: Regain chocolate sales momentum, drive for future growth

    Food Regain chocolate sales momentum, drive for future growth Meiji’s Sales YoY Change in Our Sales [Market trends] (Chocolate) 10.0% (JPY bn) - Market decreased YoY 102.6 104.0 in Q1. Recovering since 99.0 0.0% Q2, despite hot summer. Chocolate - Firm growth continued for dark chocolate -10.0% addr

  15. Slide 15: Develop new shelf space for sports nutrition

    Food Develop new shelf space for sports nutrition to achieve dynamic growth Meiji’s Sales (■Sports nutrition + ■SAVAS Milk) (JPY bn) 25.7 [Market trends] 21.6 4.6 - Market is growing. Increasing sporting population and various sporting events seeking 18.5 dynamic and active lifestyles. Market growth

  16. Slide 16: Steady growth in growth areas

    Food Steady growth in 3 Growth areas Meiji’s Sales (JPY bn) 36.4  H1: Strong demand drove revenue growth. Revised 35.5 35.2 pricing and product net weight in June and August Cheese  H2: Maintain growth pace. Started new camembert cheese production line to expand production capacity FY3/17 FY3/18 F

  17. Slide 17: Overseas business: expand profit contributions, especially China

    Food Overseas business Expand profit contributions, especially fast-growing China Consolidated Sales Breakdown by Area (Based on plan for FY3/19, JPY) China Export 17% China  Confectionery 32% - Continuing stable growth in mainstay Meltykiss and The Asia nuts chocolate (chocolate coated nuts) U.S.

  18. Slide 18: Domestic growth continuing on core ethical pharmaceutical products

    Pharma Domestic growth continuing on Core ethical pharmaceutical products Consolidated Sales in Japan ■Others  Bilanoa, Drug for anti-allergic ■Generic drugs - Sales exceeded previous year and plans ■Reflex + Sycrest + Bilanoa NHI Drug Price Revision NHI Drug Price Revision* - Positive feedback fro

  19. Slide 19: Solid progress in R&D

    Pharma Solid progress in R&D R&D Pipeline (◆: compounds discovered in-house) FY3/19 FY3/20 FY3/21 ME2125 Safinamide [Anti-Parkinson’s disease] * P II/III Applied Approve Infectious diseases ME2112 Ziprasidone [Antipsychotic] Phase III Apply Approve OP0595 [β-lactamase inhibitor] ◆ * SingleP Iagent P

  20. Slide 20: Consolidated KM Biologics in Q2, contributing to revenues and income

    Pharma Consolidated KM Biologics in Q2, contributing to revenues and income KM Biologics (non-consolidated) forecast for nine-month period Breakdown Net sales JPY 30.0 bn Others Poultry, swine, bovine, equine, canine and feline Operating income JPY 3.5 bn Veterinary Vaccines 10% (Note) Eliminations

  21. Slide 21: KM Biologics, need to recover credibility

    Pharma KM Biologics, need to recover credibility Governance and compliance Improve training, management, and supervisory functions based on Meiji Group governance system to ensure management transparency  Establish internal audit system  Improve organizational structure, reform to function interna

  22. Slide 22: Appendix: Financial data

    Appendix: Financial data 22 ｜ Nov. 12, 2018 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  23. Slide 23: H1 Results - FYE March 2019

    H1 Results - FYE March 2019 (JPY bn) FYE March 2019 （単位：億円） H1 Results YoY Change Main Factors for Change +0.1% Net sales 611.9 +0.4 ― (See P4-6 for details by segment) -2.9% Operating income 43.8 -1.2 ― (See P4-6 for details by segment) -23.4% - Change in equity in income or losses of affiliates (-

  24. Slide 24: H1 Results: Analysis of Consolidated Operating Income

    H1 Results - FYE March 2019: Analysis of Consolidated Operating Income (JPY bn) Consolidated Results Food Pharma Other H1 Results -- FYE March 2018 45.1 40.9 4.3 -0.1 Due to increased/decreased sales -0.5 -2.8 +2.3 ― Decrease due to NHI drug price reduction -6.0 ― -6.0 ― Changes in costs of goods so

  25. Slide 25: Financial Position as of September 2018

    Financial Position as of September 2018 (JPY bn) Results as of Sep. 2018 YoY Change Main Factors for Change - Notes and accounts receivable (+7.5) +8.6% Current assets 415.8 +32.8 - Goods and products (+19.0), Raw materials and supplies (+7.5): due to consolidation of KM Biologics - Buildings and st

  26. Slide 26: H1 Results: Cash Flows and Shareholders' Return

    H1 Results - FYE March 2019: Cash Flows and Shareholders’ Return (JPY bn) FYE March 2019 H1 Results YoY Change Main Factors for Change Net cash flow from 38.3 -0.3 ― operating activities - Payments for purchase of shares of subsidiaries resulting in change in scope of consolidation (-33.8) Net cash

  27. Slide 27: Plan - Meiji Holdings, Food, Pharma

    Plan - FYE March 2019 (JPY bn) First Half Second Half Full Year Results Plan Plan YoY Change (as of Nov. 7) YoY change (as of Nov. 7) YoY Change +0.1% +3.8% +2.0% Net sales 611.9 +0.4 653.5 +24.1 1,265.5 +24.6 Meiji Holdings -2.9% +15.4% +6.7% Operating income 43.8 -1.2 57.1 +7.6 101.0 +6.3 -4.9% +1

  28. Slide 28: Plan by Business in Food Segment

    Plan by Business in Food Segment - FYE March 2019 (JPY bn) First Half Second Half Full Year Results Plan Plan YoY Change (as of Nov. 7) YoY change (as of Nov. 7) YoY Change Fermented Dairy -3.0% -0.6% -1.8% Net sales 165.5 166.9 332.4 Fresh and -5.0 -0.9 -6.0 -9.0% -3.4% -6.0% Operating income 22.4

  29. Slide 29: Plan by Business in Food Segment - Subsidiaries

    Plan by Business in Food Segment - FYE March 2019 (JPY bn) First Half Second Half Full Year Results Plan Plan YoY Change (as of Nov. 7) YoY change (as of Nov. 7) YoY Change +5.8% +19.2% +12.9% Net sales 21.7 27.3 49.0 Overseas +1.1 +4.4 +5.5 +48.3% +41.4% +44.8% Operating income 0.5 +0.1 0.5 +0.1 1.

  30. Slide 30: Full-year Plan: Analysis of Consolidated Operating Income

    Full-year Plan - FYE March 2019: Analysis of Consolidated Operating Income (JPY bn) Consolidated Plan Food Pharma Other Results -- FYE March 2018 94.6 84.1 11.0 -0.5 Due to increased/decreased +0.9 +4.0 ― sales +4.9 Decrease due to NHI drug ― -12.5 ― price reduction -12.5 Changes in costs of goods +

  31. Slide 31: Food Full-year Outlook

    Food Full-year Outlook - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Results Plan Plan (as of Aug. 7) (as of Nov. 7) YoY Change -0.6% Net sales 1,073.6 1,090.0 1,067.1 -6.5 +4.7% Operating income 84.1 90.0 88.1 +3.9 YoY Change in Operating Income (JPY bn) Results -- FYE Marc

  32. Slide 32: Pharma Full-year Outlook

    Pharma Full-year Outlook - FYE March 2019 (JPY bn) FYE March 2018 FYE March 2019 FYE March 2019 Results Plan Plan (as of Aug. 7) (as of Nov. 7) YoY Change +18.7% Net sales 168.4 171.6 200.0 +31.5 +22.4% Operating income 11.0 10.0 13.5 +2.4 YoY Change in Operating Income (JPY bn) KM Biologics Full-ye

  33. Slide 33: Plan: Cash Flows and Shareholders' Return

    Plan - FYE March 2019: Cash Flows and Shareholders’ Return (JPY bn) FYE March 2019 Plan YoY Change Main Factors for Change Net cash flow from 113.4 +4.6 - Mainly due to consolidation of KM Biologics operating activities - Increase in CAPEX [The amounts of CAPEX for FY3/19] Food: 68.1 (+4.2, yoy) Net

  34. Slide 34: 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 (JPY) For FYE March 2019 140.00 130.45 133.09 132.96 129.39 129.89 Food: JPY 115 120.81 123.14 USD 117.70 Pharma: JPY 110 120.00 114.59 Food: JPY 135 113.76 111.61 111.38 1

  35. Slide 35: Appendix: Topics

    Appendix: Topics 35 ｜ Nov. 12, 2018 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  36. Slide 36: Market Trends in Imported Raw Materials Prices

    Market Trends in Imported Raw Materials Prices (USD/MT) Nonfat Dry Milk (USD/MT) Cheese 2,500 4,500 4,000 2,000 3,500 1,500 3,000 1,000 2,500 (GBP/MT) Cacao beans (Cent/Bushel) Sugar 2,500 25 2,000 20 1,500 15 1,000 10 500 5 36 ｜ Nov. 12, 2018 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserv

  37. Slide 37: R&D Pipeline

    R&D Pipeline R&D Pipeline (◆: compounds discovered in-house) FY3/19 FY3/20 FY3/21 ME1111 [Antionychomycosis] ◆ Phase II Infectious diseases ME1100 Arbekacin inhalation [HABP/VABP] ◆ P Ib (Overseas) OP0595 [β-lactamase inhibitor] ◆ * SingleP Iagent PI with β-Lactams CNS disorders ME2125 Safinamide [A

  38. Slide 38: R&D Pipeline

    R&D Pipeline R&D Pipeline (◆: compounds discovered in-house) FY3/19 FY3/20 FY3/21 Agricultural chemicals ME5382 [Insecticide] ◆ Applied Apply Approve (Overseas) ME5343 [Insecticide] Licensing agreement with BASF ◆* Applied Approve (Overseas) (Overseas) ANM-138 [Insecticide] Joint development with Ni

  39. Slide 39: 39

    39

Meiji Holdings — H1 FYE March 2019 Earnings Presentation on 6ix