Meiji Holdings Co., Ltd. · TSE:2269

Meiji — H1 FY2020 Earnings Presentation

45 slides from Meiji's earnings presentation, Nov 12, 2020

  1. Slide 1: Financial Results for H1 of FYE March 2021 (FY2020)

    Financial Results - For the H1 of FYE March 2021 (FY2020) - (From April 1, 2020 to September 30, 2020) November 12, 2020

  2. Slide 2: Agenda

    Agenda 1. Response to Novel Coronavirus Pandemic 2. FY2020 First Half Summary 3. Outlook for the Second Half and Full-year 4. Business-specific Strategy  Information in this material is not intended to solicit sale or purchase of shares in Meiji Holdings. The final decision relating to investments

  3. Slide 3: 1. Response to Novel Coronavirus Pandemic

    1. Response to Novel Coronavirus Pandemic 3 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  4. Slide 4: Response to Novel Coronavirus (COVID-19) Pandemic

    Response to Novel Coronavirus (COVID-19) Pandemic Impact on business • Expanding 2nd wave in Europe and US • Shifting to deflationary environment due to spreading of defensive Overall stance arise from lower wages and concerns about future • Increased health and prevention awareness • Increased cons

  5. Slide 5: Basic Concept for the Meiji Group 2023 Medium-Term Business Plan

    Basic Concept for the Meiji Group 2023 Medium-Term Business Plan Concept for 2020 Medium-Term Business Plan 2023 Medium-Term Business Plan 1. Expand share and achieve 1. Adopt ROIC to reinforce high revenues in core business portfolio management businesses 2. Achieve business growth linked 2. Expand

  6. Slide 6: 2. FY2020 First Half Summary

    2. FY2020 First Half Summary 6 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  7. Slide 7: H1 Summary – FY2020

    H1 Summary – FY2020 (JPY bn) FY2019 FY2020 FY2020 Meiji HD (consolidated) H1 Results H1 Results vs. Full-year Full-year Plan YoY Change Plan -5.4% Net sales 618.0 584.9 -33.1 46.7% 1,253.0 +5.9% Operating profit 47.5 50.4 +2.8 45.8% 110.0 Op. profit margin 7.7% 8.6% +0.9pt － 8.8% Profit attributable

  8. Slide 8: Food H1 Summary – FY2020

    Food H1 Summary - FY2020 (JPY bn) FY2019 FY2020 FY2020 Food Segment H1 Results H1 Results vs. Full-year Full-year Plan YoY Change Plan -5.1% Net sales 523.2 496.5 -26.6 47.7% 1,041.4 +11.1% Operating profit 39.5 43.9 +4.3 47.2% 93.0 YoY Change in Operating Profit (JPY bn) H1 Results – FY2019 39.5 De

  9. Slide 9: Pharma H1 Summary – FY2020

    Pharma H1 Summary – FY2020 (JPY bn) FY2019 FY2020 FY2020 Pharmaceutical H1 Results H1 Results vs. Full-year Full-year Plan YoY Change Segment Plan -6.6% Net sales 95.3 89.1 -6.2 42.0% 212.3 -19.7% Operating profit 8.2 6.6 -1.6 36.7% 18.0 YoY Change in Operating Profit (JPY bn) Antibacterial drugs de

  10. Slide 10: 3. Outlook for the Second Half and Full-year

    3. Outlook for the Second Half and Full-year 10 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  11. Slide 11: Full-year Outlook – FY2020 No Revision

    Full-year Outlook – FY2020 (JPY bn) FY2019 Results FY2020 Plan YoY Change +0.0% Net sales 1,252.7 1,253.0 +0.2 +7.1% Operating profit 102.7 110.0 +7.2 Op. profit margin 8.2% 8.8% +0.6pt +3.2% Profit attributable to owners of parent 67.3 69.5 +2.1 EPS (JPY) 464.08 479.05 +14.97 Cash dividends per sha

  12. Slide 12: H2 Outlook - FY2020

    H2 Outlook - FY2020 (JPY bn) FY2019 FY2020 H2 Results H2 Plan* YoY Change +5.3% Net sales 634.6 668.0 +33.3 (consolidated) +8.1% Meiji HD Operating profit 55.1 59.5 +4.4 Op. profit margin 8.7% 8.9% +0.2pt +15.0% Profit attributable to owners of parent 35.4 40.7 +5.3 +3.5% Net sales 526.3 544.8 +18.4

  13. Slide 13: 4. Business-specific Strategy

    4. Business-specific Strategy 13 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  14. Slide 14: Food: Promote health value of functional yogurt and yogurt

    Food Promote health value of functional yogurt and yogurt Monthly Sales of Functional Yogurt Sales of Functional yogurt year-on-year ratio ■ Q3-Q4 (JPY bn) +30% ■ Q1-Q2 +20% 112.9 110.9 117.5 +10% 0% Functional yogurt +0% 60.7 60.9 4月 Apr 5月 May 6月 Jun 7月 Jul 8月 Aug 9月 Sep 61.3  Favorable on increa

  15. Slide 15: Food: Confectionary

    Food Chocolate sales recovering, gummy and gum products continued to struggle Sales of Chocolate  Sales in supermarkets were favorable but in ■ Q3-Q4 (JPY bn) convenience stores struggled ■ Q1-Q2 95.4 97.1 100.0  Increased production capacity for family-sized Chocolate Koka; Acquire new 61.8 custo

  16. Slide 16: Food: Sports Nutrition (SAVAS, VAAM)

    Food Nutrition Business: Aggressively expand sales of strong-performing SAVAS brand Sales of Sports Nutrition  Sports nutrition: Promote solution in Sports Nutrition (SAVAS, VAAM) ■ Q3-Q4 (JPY bn) addressing lack of exercise and diet ■ Q1-Q2 benefits 19.7 20.5 20.6 • SAVAS remained favorable, expan

  17. Slide 17: Food: Sales of products for professional use on recovery trend

    Food Sales of products for professional use on recovery trend Monthly Sales of Products for Professional Use year-on-year ratio April 4月 May 5月 June 6月 July 7月 August 8月 September 9月 +10% 0% -10% -20% -30%  Sales of products for professional use is recovering gradually, trend varies between product

  18. Slide 18: Food: Advancing towards profitability for Milk Business in FY2021

    Food Advancing towards profitability for Milk Business in FY2021 Sales of Oishii Gyunyu  Oishii Gyunyu ■ Q3-Q4 (JPY bn) ■ Q1-Q2 • 900 ml sales grew on increased at-home consumption 56.2 57.9 58.9 • Completed nationwide launch of Meiji Oishii Gyunyu (450 ml) 26.4 28.0 26.2 (September 2020) 29.7 29.9

  19. Slide 19: Food: Overseas business: Net sales steady YoY amid COVID-19

    Food Overseas business: Net sales steady YoY amid COVID-19 pandemic Sales in Mainland China ■ Q3-Q4 (JPY bn)  China ■ Q1-Q2 • Milk and yogurt: Sales of consumer products favorable, 17.5 14.6 15.5 products for professional use on recovery trend 7.5 10.0 • Confectionery: Sales of consumer products fi

  20. Slide 20: TANPACT contributing to resolving protein deficiency

    Food TANPACT contributing to resolving protein deficiency; One of the current social issues ＴＡＮＰＡＣＴ  Corporate philosophy: Energize Japan with milk protein • Current protein intake down to 1950s levels • Meiji products can contribute to resolving the problem of malnutrition  Details of initiatives

  21. Slide 21: Pharma: Expand supply volume of influenza vaccine

    Pharma Expand supply volume of influenza vaccine in humans vaccine business Total Sales of Human Vaccine  Influenza vaccine (JPY bn) • H1 significantly outperformed previous fiscal year thanks to ■ Q3-Q4 30.2 steady production, aiming for significant full-year increase ■ Q1-Q2 26.1 YoY in supply vo

  22. Slide 22: Pharma: Domestic pharmaceutical segment struggling

    Pharma Domestic pharmaceutical segment struggling because people reluctant to go to hospitals and impact of NHI price revisions Advancing structural reforms to increase income by reducing fixed costs and increasing productivity Sales in H1 (JPY bn) □ Brand name drugs (excl. Vaccine)  Wearing masks

  23. Slide 23: Pharma: Overseas, Medreich contracted manufacturing

    Pharma Overseas, Medreich: Contracted manufacturing business favorable but there are some concerns Sales of Medreich (JPY bn) ■ Q3-Q4  COVID-19 pandemic caused decline in plant ■ Q1-Q2 24.8 operating rates and a disruption in logistics 22.4 20.7 system. However overall sales increased YoY Medreich

  24. Slide 24: Development of COVID-19 vaccine

    Pharma Development of COVID-19 vaccine  Development of inactivated vaccine*1 in KM Biologics • Selected to participate in the Japan Agency for Medical Research and Development (AMED) to the COVID-19 Vaccine Development (Corporate-led) Public R&D Project in May 2020. Received funding to start basic

  25. Slide 25: Appendix: Financial data

    Appendix: Financial data 25 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  26. Slide 26: Consolidated Financial Results for H1 of FY2020

    Consolidated Financial Results for H1 of FY2020 (JPY bn) FY2020 H1 Results YoY Change Main factors for the change -5.4% Net sales 584.9 -33.1 ― Details on p7-9 +5.9% Operating profit 50.4 +2.8 ― Details on p7-9 -30.3% Non-operating profit 2.1 -0.9 ― - Foreign exchange losses (-0.3) -1.8% Non-operati

  27. Slide 27: Analysis of Operating Profit – H1 FY2020

    Analysis of Operating Profit – H1 FY2020 Consolidated Food Pharma Other H1 Results - FY2019 47.5 39.5 8.2 -0.2 Due to increased/decreased… -3.0 -0.2 -2.8 ― Decrease due to NHI drug price revision -4.3 ― -4.3 ― Change in COGS +5.0(*1） +3.7 +1.3 ― Changes in SG&A expenses +1.5（*2） -0.0 +1.5 ― Other (i

  28. Slide 28: Financial Position as of September 2020

    Financial Position as of September 2020 (JPY bn) Results as of Sep. 2020 Change Main Factors for Change - Cash and deposits (+25.9) +8.1% Current assets 450.6 +33.7 - Raw materials and supplies (+5.0) - Merchandise and finished goods (+3.9) +6.4% Non-current assets 619.2 +37.2 - Investment securitie

  29. Slide 29: Consolidated Cash Flows – H1 FY2020

    Consolidated Cash Flows – H1 FY2020 (JPY bn) FY2020 H1 Results YoY Change Main Factors for Change - Income taxes paid (+9.1) Cash flows from 40.8 +6.8 - Increase in trade payables (+7.1) operating activities - Increase in trade receivables (-13.5) - Purchase of investment securities (-32.0) Cash flo

  30. Slide 30: Consolidated Plan for FY2020

    Consolidated Plan for FY2020 (JPY bn) FY2020 FY2020 FY2020 YoY YoY YoY H1 Results H2 Plan* Full-year plan Change Change Change -5.4% +5.3% +0.0% Net sales 584.9 -33.1 668.0 +33.3 1,253.0 +0.2 (consolidated) +5.9% +8.1% +7.1% Meiji HD Operating profit 50.4 +2.8 59.5 +4.4 110.0 +7.2 +3.9% +10.5% +7.4%

  31. Slide 31: Food Plan by Business – H1 FY2020

    Food Plan by Business – H1 FY2020 (JPY bn) FY2020 FY2020 FY2020 YoY YoY YoY H1 Results H2 Plan* Full-year plan Change Change Change Fermented Dairy +1.1% -4.9% -2.0% Net sales 164.1 157.3 321.4 Fresh and +1.7 -8.1 -6.4 +40.1% -8.4% +12.4% Operating profit 29.0 +8.3 25.3 -2.3 54.4 +6.0 -0.7% +3.5% +1

  32. Slide 32: Food Plan by Business – Overseas Subsidiaries

    Food Plan by Business – H1 FY2020 (JPY bn) FY2020 FY2020 FY2020 YoY YoY YoY H1 Results H2 Plan* Full-year plan Change Change Change +0.4% +22.0% +11.6% Net sales 23.3 30.7 54.0 Overseas +0.0 +5.5 +5.6 -25.2% +38.3% +7.0% Operating profit 0.6 -0.2 1.1 +0.3 1.7 +0.1 -16.0% +6.9% -5.0% Net sales 123.2

  33. Slide 33: Analysis of Operating Profit by Business – H1 FY2020

    Food Analysis of Operating Profit by Business – H1 FY2020 (JPY bn) Food Fresh and Other Processed Corporate Segment Fermented Confectionery Nutrition Overseas Domestic Food Expenses Total Dairy Subsidiaries FY2019 H1 Operating profit 39.5 20.7 4.8 6.8 8.8 0.8 2.0 -4.6 Due to increased/ decreased sal

  34. Slide 34: Analysis of Operating Profit by Business, Excluding Cost Accounting Change

    Food Analysis of Operating Profit by Business – H1 FY2020 [Excluding the impact of change in cost accounting method] (JPY bn) Food Fresh and Other Processed Corporate Segment Fermented Confectionery Nutrition Overseas Domestic Food Expenses Total Dairy Subsidiaries FY2019 H1 Operating profit 39.5 20

  35. Slide 35: Analysis of Operating Profit by Business – Q1 FY2020

    Food Analysis of Operating Profit by Business – Q1 FY2020 We corrected the figures inside the red frame. (JPY bn) Food Fresh and Other Processed Corporate Segment Fermented Confectionery Nutrition Overseas Domestic Food Expenses Total Dairy Subsidiaries FY2019 Q1 Operating profit 19.6 10.4 1.8 4.0 4

  36. Slide 36: Food: Sales by Mainstay Products – H1 FY2020

    Food Sales by Mainstay Products – H1 FY2020 (JPY bn) FY2019 FY2020 FY2020 H1 Results H1 Results vs. Full-year Full-year Plan YoY Change Plan Yogurt 43.3 44.3 +2.3% 50.5% 87.9 Meiji Bulgaria Yogurt 39.0 40.6 +4.1% 51.0% 79.7 Functional yogurt 49.5 56.5 +14.1% 48.1% 117.5 Drinking milk 58.5 56.8 △2.9%

  37. Slide 37: Pharma Plan by Business – H1 FY2020

    Pharma Plan by Business – H1 FY2020 (JPY bn) FY2020 FY2020 FY2020 YoY YoY YoY H1 Results H2 Plan* Full-year plan Change Change Change -3.9% +8.0% +2.5% Domestic Net sales 63.1 -2.5 82.1 +6.0 145.3 +3.5 ― +81.7% -31.1% Operating profit -1.1 -6.5 7.7 +3.4 6.6 -3.0 -15.3% +34.6% +9.1% Overseas Net sale

  38. Slide 38: Pharma: Sales by Mainstay Products – H1 FY2020

    Pharma Sales by Mainstay Products – H1 FY2020 (JPY bn) FY2019 FY2020 FY2020 H1 Results H1 Results vs. Full-year Full-year Plan YoY Change Plan Ethical pharmaceuticals (Japan) (Meiji Seika Pharma non-consolidated results) SYCREST 2.0 2.0 -1.6% 39.2% 5.2 BILANOA 2.1 2.4 +15.4% 23.1% 10.6 REFLEX (inclu

  39. Slide 39: 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 For FY2020 (JPY) (JPY) 140.00 USD 110 129.39 129.89 129.19 125.70 123.29 123.71 119.83 120.65 120.68 118.94 120.00 EUR 120 112.83 110.46 110.00 108.71 111.55 107.70 108.98

  40. Slide 40: Appendix: Topics

    Appendix: Topics 40 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights reserved.

  41. Slide 41: Market Prices of Main Raw Materials Imported

    Market Prices of Main Raw Materials Imported (USD/MT) Nonfat Dry Milk (USD/MT) Cheese 3,000 7,000 6,000 2,500 5,000 4,000 2,000 3,000 1,500 2,000 (GBP/MT) Cocoa beans (Cent/Bushel) Sugar 2,500 25 2,000 20 1,500 15 1,000 10 500 5 41 ｜Nov. 12, 2020 ｜ Copyright © Meiji Holdings Co., Ltd. All rights res

  42. Slide 42: R&D Pipeline – Infectious diseases, CNS disorders, Others

    R&D Pipeline – 1 R&D Pipeline (◆: discovered in-house) FY3/21 FY3/22 FY3/23 Infectious diseases ME1100 Arbekacin inhalation [HABP/VABP] ◆ P Ib (Overseas) PI OP0595 Nacubactam [β-lactamase inhibitor] ◆ with β-Lactams disorders CNS ME2112 Ziprasidone [Antipsychotic] Phase III [Relapsed or refractory A

  43. Slide 43: R&D Pipeline – Human vaccines, Blood Plasma Products

    R&D Pipeline – 2 R&D Pipeline (◆: discovered in-house) FY3/21 FY3/22 FY3/23 Phase III Apply KD-370 [Pentavalent vaccine against diphtheria, tetanus, pertussis, polio, and haemophilus influenza type b] Phase II Human vaccines (Overseas) KD-382 [Quadrivalent vaccine against dengue fever] Phase I KD-40

  44. Slide 44: R&D Pipeline – Agricultural chemicals, Veterinary drugs

    R&D Pipeline – 3 R&D Pipeline (◆: discovered in-house) FY3/20 FY3/21 FY3/22 Agricultural chemicals ME5382 [Insecticide/Flupyrimin] ◆ Approved (Overseas) ME5343 [Insecticide] Licensing agreement with BASF ◆* Approved (Overseas) ANM-138 [Insecticide] Joint development with Nippon Kayaku ◆ Approved App

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