Meiji Holdings Co., Ltd. · TSE:2269

Meiji — H1 FYE March 2018 Earnings Presentation

38 slides from Meiji's earnings presentation, Nov 13, 2017

  1. Slide 1: Financial Results for the First Half of FYE March 2018

    Financial Results - For the First Half of FYE March 2018 - November 13, 2017

  2. Slide 2: Contents

    Contents 1. Overview for the First Half 2. Outlook for the Second Half and Full-year  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 Company. Actual results could diffe

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

    1. Overview for the First Half 3 ｜ Nov. 13, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights reserved.

  4. Slide 4: Meiji Holdings H1 Summary

    H1 Summary - FYE March 2018 (JPY bn) FYE March 2017 FYE March 2018 FYE March 2018 Change vs. H1 Results H1 Plan H1 Results Plan YoY Change +0.4% +0.8% Net sales 606.7 609.0 611.4 +2.4 +4.7 +9.0% +20.9% Operating income 37.3 41.4 45.1 +3.7 +7.8 Op. income margin 6.2% 6.8% 7.4% +0.6pt +1.2pt Meiji Hol

  5. Slide 5: Food: H1 Results

    Food Operating Income Increased Year-on-Year Despite Favorable Results in the Previous Year (JPY bn) FYE March 2017 FYE March 2018 FYE March 2018 H1 Results H1 Plan H1 Results Change vs. YoY Change Plan +0.6% -0.2% Net sales 535.2 531.0 534.2 Food +3.2 -1.0 +5.4% +5.4% Operating income 38.8 38.8 40.

  6. Slide 6: Pharma: H1 Results

    Pharma Significant Increase in Income – Made a One-off Payment in FYE March 2017, Receipted Milestone Revenue in FYE March 2018 (JPY bn) FYE March 2017 FYE March 2018 FYE March 2018 H1 Results H1 Plan H1 Results Change vs. YoY Change Plan -1.5% +7.8% Pharma Net sales 72.1 79.0 77.7 -1.2 +5.6 +61.3%

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

    2. Outlook for the Second Half and Full-year 7 ｜ Nov. 13, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights reserved.

  8. Slide 8: Meiji Holdings Plan Summary

    Summary - FYE March 2018 (JPY bn) FYE March 2017 FYE March 2018 FYE March 2018 Results Initial Plan Revised Plan YoY Change +1.6% Net sales 1,242.4 1,261.0 1,262.3 +19.9 +9.2% Operating income 88.3 94.5 96.5 +8.1 Op. income margin 7.1% 7.5% 7.6% +0.5pt Net income attributable Meiji Holdings +6.2% to

  9. Slide 9: Use of Cash Flows

    Use of Cash Flows Improve profitability Grow both margin and total income Plan - FYE March 2018 Investing cash flows JPY 64.8 bn Operating cash Accelerate investment to drive future growth, because flows of favorable performance for STEP UP 17 ahead of plan Generate stable cash - Increase in product

  10. Slide 10: Food: Full-year Plan

    Food Grow in Sales of Domestic Core Products and International Business, and Reduce Cost (JPY bn) FYE March 2017 FYE March 2018 FYE March 2018 Results Initial Plan Revised Plan YoY Change +0.8% Net sales 1,082.1 1,087.0 1,090.2 Food +8.1 +3.8% Operating income 82.9 84.0 86.1 +3.2 (JPY bn) YoY Change

  11. Slide 11: Steadily Grow Sales of Probiotics and Yogurt

    Food Steadily Grow Sales of Probiotics and Yogurt Meiji’s Sales YoY Change in Our Probiotics and Yogurt Sales [Yogurt market] (Probiotics and Yogurt) (JPY bn) 30.0% • Expanded in FY3/17 -- 210.4 Probiotics Increase in media 206.2 189.9 20.0% exposure of yogurt’s Yogurt health benefits attracted 10.0

  12. Slide 12: Continue Sales Growth of Chocolate - Health and Premium

    Food Continue Sales Growth of Chocolate - Health and Premium Meiji’s Sales Sales Ratio of Chocolate Kouka and meiji THE Chocolate (Chocolate) in our Total Chocolate Sales (JPY bn) 102.6 105.2 H1 Results -- H1 Results -- meiji THE Chocolate 95.6 FYE March 2017 FYE March 2018 11％ 17％ Chocolate Kouka Y

  13. Slide 13: Bean to Bar - Meiji's Strength

    Food Bean to Bar - Meiji’s strength Procurement • Procure variety of cocoa beans • Sustainable procurement R&D and Production Competitive • Years of research activities on health benefits products of cocoa beans (Cacao Polyphenols) • Integrated production; cocoa bean selection, fermentation, roastin

  14. Slide 14: Change the Packaging for Drinking Milk

    Food Change the Packaging for Drinking Milk Previous New Released Area of New Container (As of November 2017) Western and central Japan (with the exception of some areas) Net volume: Net volume: 1000mL 900mL  Expanded sales area • Start from Kyushu in September 2016 • Chubu area from October 2017 a

  15. Slide 15: Business in China - Realize Solid Growth with Profit Increase

    Food Business in China – Realize Solid Growth with Profit Increase Meiji’s Sales (RMB mm) Consolidated Sales  Sales increased in chocolate Confectionery Breakdown by Area 183 196 (Based on full-year plan for 164 products FYE March 2018, JPY)  Focus business resources in Export China developing sal

  16. Slide 16: Establish Integrated R&D System and Create Unique Values

    Food Establish Integrated R&D System and Create Unique Values Meiji Innovation Center (in Hachioji, Tokyo) Odawara • Complete in November Research Lab. Milk, lactobacilli 2017 • Complete integration Tsurugashima by March 2018 Research Lab. • Investment: JPY 20.0 bn Confectionery  Integrate all rese

  17. Slide 17: Pharma: Full-year Plan

    Pharma Steady Sales Growth and Further Low-Cost Operation (JPY bn) FYE March 2017 FYE March 2018 FYE March 2018 Results Initial Plan Revised Plan YoY Change +7.2% Pharma Net sales 161.6 175.6 173.2 +11.6 +90.3% Operating income 5.7 11.0 11.0 +5.2 (JPY bn) YoY Change in Operating Income Receipted one

  18. Slide 18: Steady Sales Growth Focusing on Mainstay Brand-name and Generic Drugs

    Pharma Steady Sales Growth Focusing Mainstay Brand-name Drugs and Generic Drugs in Japan Sales for Ethical Pharmaceuticals Business  REFLEX, Antidepressant drug NHI Drug Price Revision Maximize product value using latest evidence for patients (JPY bn) 173.2 in Japan 164.5 161.6 YoY Change in Sales

  19. Slide 19: Steady Sales Growth Focusing on Mainstay Brand-name and Generic Drugs

    Pharma Steady Sales Growth Focusing Mainstay Brand-name Drugs and Generic Drugs in Japan [Gvmt Share in Volume for Generic Drugs in Japan Target] New Business Model for Our Generic Drugs Business 80% • Injectable antibacterial 80% MR [Estimated] Specialty • Oral antibacterial promotions 65.1% generi

  20. Slide 20: Started Selling Generic Drugs Manufactured in Medreich

    Pharma Started Selling Generic Drugs Manufactured in Medreich on Schedule in Japan Our Worldwide Drug Production for Japanese Market 1. PT. Meiji Indonesian Pharmaceutical Industries (Est. 1974)  Started to export ethical pharmaceuticals to Japan in 1994  Manufacturing penicillin drug after expand

  21. Slide 21: Establish Quality Control System Comply with Japanese GMP

    Pharma Establish Quality Control System Comply with Japanese GMP Medreich : Production Bulk product • Sent Japanese experts to Medreich and transferred manufacturing tech. : Testing, packaging • Manufacture products comply with Meiji Seika Pharma and approval or Meiji Reliability Assurance Policy re

  22. Slide 22: Appendix

    Appendix 22 ｜ Nov. 13, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights reserved.

  23. Slide 23: H1 Results - FYE March 2018

    H1 Results - FYE March 2018 (JPY bn) Consolidated H1 Results YoY Change Main Factors for Change +0.8% Net sales 611.4 +4.7 ― (cf. Page 5-6) +20.9% Operating income 45.1 +7.8 ― (cf. Page 5-6) +39.8% - Change in equity in income of affiliates (+0.4, yoy) Non-operating income 1.9 +0.5 [H1 for FY3/17] E

  24. Slide 24: H1 Analysis of Consolidated Operating Income

    H1 Results - FYE March 2018: Analysis of Consolidated Operating Income (JPY bn) (By Segment) First Half Food Pharma Other H1 Results -- FYE March 2017 37.3 38.8 -1.3 -0.2 Due to increased/decreased sales +1.7 -0.0 +1.7 ― Changes in costs of goods sold -1.3 (*1) -1.3 0.0 ― Changes in other SG&A expen

  25. Slide 25: Financial Position as of September 2017

    Financial Position as of September 2017 (JPY bn) Results as of Sep. 2017 YoY Change Main Factors for Change +2.7% - Increase in notes and accounts receivable (+10.8) Current assets 387.7 +10.0 - Increase in inventories (+8.7): for raw materials, newly launched drugs, etc - Increase in property, plan

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

    H1 Results - FYE March 2018: Cash Flows and Shareholders’ Return (JPY bn) Consolidated H1 Results YoY Change Main Factors for Change - Increase in income before income taxes (+7.9) - Decrease in income taxes paid (+11.3) Net cash flow from 38.7 +15.0 - Increase in trade receivables (-18.8) and incre

  27. Slide 27: Plan - FYE March 2018

    Plan - FYE March 2018 (JPY bn) First Half Second Half Full Year Results YoY Change Plan YoY Change Plan YoY Change +0.8% +2.4% +1.6% Net sales 611.4 +4.7 650.8 +15.2 1,262.3 +19.9 Meiji Holdings +20.9% +0.4% +9.2% Operating income 45.1 +7.8 51.3 +0.3 96.5 +8.1 +27.8% -2.6% +9.7% Op. income margin 46

  28. Slide 28: Plan by Business in Food Segment

    Plan by Business in Food Segment - FYE March 2018 (JPY bn) First Half Second Half Full Year Results YoY Change Plan YoY Change Plan YoY Change Fermented Dairy +0.9% +1.3% +1.1% Net sales 272.2 +2.4 278.4 +3.5 550.7 +6.0 Fresh and Operating +2.5% +1.6% +2.0% income 24.6 +0.5 28.2 +0.4 52.8 +1.0 -2.7%

  29. Slide 29: Elimination and Corporate

    Plan by Business in Food Segment - FYE March 2018 (JPY bn) First Half Second Half Full Year Results YoY Change Plan YoY Change Plan YoY Change +1.6% -0.9% +0.3% Net sales 181.2 +2.8 178.9 -1.6 360.2 +1.1 Other Operating +18.2% -8.9% +3.6% income 3.0 +0.4 2.7 -0.2 5.8 +0.2 ― ― ― and Corporate Net sal

  30. Slide 30: Plan: 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 +3.4 +1.5 +1.9 ― Changes in costs of goods sold -3.3 (*1) -3.3 0.0 ― Changes in other SG&A expenses +8.4 (*

  31. Slide 31: Plan: Cash Flows and Shareholders' Return

    Plan - FYE March 2018: Cash Flows and Shareholders’ Return (JPY bn) Consolidated Plan YoY Change Main Factors for Change Net cash flow from 91.8 +10.0 - Increase in profits operating activities - Increase in capital expenditures Net cash flow from -64.8 -20.6 [Amounts] Food 59.9 bn (+15.5bn, yoy) in

  32. Slide 32: 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) 136.00 Food: 108 yen 140.00 132.37 128.94 130.45 USD 123.03 120.81 123.14 Pharma: 110 yen 117.70 120.00 114.59 Food: 120 yen 121.91 121.07 EUR 1

  33. Slide 33: 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 3,000 30 25 2,500 20 2,000 15 1,500 10 1,000 5 33 ｜ Nov. 13, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rig

  34. Slide 34: Market Share of Our Main Products in Japan

    Market Share of Our Main Products in Japan Drinking Milk Yogurt Natural Cheese Share 22.3％ Share 41.9％ Share 10.8％ <No.1> <No.1> <No.3> Ice Cream Chocolate Infant Formula Share 8.9％ Share 25.8％ Share 39.2％ <No.5> <No.1> <No.1> 34 ｜ Nov. 13, 2017 ｜ Copyright © 2017 Meiji Holdings Co., Ltd. All rights

  35. Slide 35: 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 1,090.2 Ratio to net sales: 4% 1,021.8 1,023.0 1,043.9 1,047.1 992.3 43.2* 38.3 ←Impact 29.4 of FX 5.0 38.1 43.0 FY3/15 FY3/16 FY3/17 FY3/18E FY3/15 FY3/16 FY3/17 FY3/

  36. Slide 36: 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] ◆ P Ib (Overseas) OP0595 [β-lactamase inhibitor] ◆ Phase I * Depromel (SME

  37. Slide 37: 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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