Ajinomoto Co., Inc. · TSE:2802
Ajinomoto — H1 FY2022 Earnings Presentation
64 slides from Ajinomoto's earnings presentation, Nov 7, 2022
Slide 1: Forecast for FY2022 and Initiatives for Enhancing Corporate Value
Ajinomoto Co., Inc. (2802) Forecast for FY2022 (Ending March 31, 2023) and Initiatives for Enhancing Corporate Value Taro Fujie Member of the Board, Representative Executive Officer President & Chief Executive Officer November 7, 2022
Slide 2: Agenda
I. Summary Results for the First Half Ended September 30, 2022 and FY2022 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Medium-Term ASV Initiative for the 2030 Roadmap Reference Materials Appendixes: Consolidated Results First Half Ended September 30, 2022 FY2022 Revised For
Slide 3: Today's Message
Today’s Message • In the first-half, we achieved revenue and profit(Business Profit) growth. Sales and business profit on a half-year basis were the highest since the introduction of IFRS in FY2016. • In Seasonings and Foods and in Frozen Foods, even though we raised unit prices, we were unable to o
Slide 4: I. Summary Results for the First Half and FY2022 Forecast
I. Summary Results for the First Half Ended September 30, 2022 and FY2022 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Medium-Term ASV Initiative for the 2030 Roadmap
Slide 5: I-1. First-Half Results Digest
I-1. First-Half Results Digest Profit attributable to owners Sales: Increased Business profit: Increased of the parent company ¥659.8 billion ¥74.3 billion ¥47.0 billion 119.9% of FY2021 results 107.2% of FY2021 results 86.8% of FY2021 results Excluding currency translation: 109.5% Excluding currenc
Slide 6: I-2. Changes in Business Profit (First-Half Results by P&L Factor)
I-2. Changes in Business Profit (First-Half Results by P&L Factor) (¥ bil.) 120 100 -20.1 42.1 Approx. -17.3 80 18.3 0.2 60 Includes: (approx.) Change in investment in marketing +¥1.5 bil. 69.3 Increased logistics costs due to more product shipments and -¥3.5 bil. 74.3 40 higher shipping fees Other
Slide 7: I-2. Changes in Business Profit by Disclosed Segment
I-2. Changes in Business Profit (First-Half Results by Disclosed Segment) (¥ bil.) 80 75 0.4 70 8.0 -2.0 -1.3 65 74.3 60 69.3 55 50 H1-FY21 H1-FY21 Seasonings Frozen Healthcare Other H1-FY22 and Foods Foods and Others Actual Actual Copyright © 2022 Ajinomoto Co., Inc. All rights reserved 7
Slide 8: I-3. Items that Impact Business Results (Raw Material Prices)
I-3. Items that Impact Business Results (Main and Sub Fermentation Raw Material Prices) We will respond to rising raw material costs by carrying out agile price increases, and will continue working to increase unit prices from the second half of FY2022 and bring business profit margin back up. The w
Slide 9: I-3. Respond to the Effect of Costs & Expenses
I-3. Items that Impact Business (Respond to the Effect of Costs & Expenses) In the first half of FY2022, raw material and fuel prices rose more than expected. We are responding to this with price revisions in excess of plans (including pull-ins) to minimize the impact. In the second half of FY2022,
Slide 10: I-4. Forecast for FY2022
I-4. Forecast for FY2022 Full-year FY2022 forecast: Increased revenue and profit (upward revision, Past top update） While the business environment will be challenging, we will take appropriate measures and strengthen our business foundation, and connect this to sustainable growth while achieving org
Slide 11: I-5. Changes in Business Profit (Forecast by P&L Factor)
I-5. Changes in Business Profit (Forecast by P&L Factor) (¥ bil.) 200 -21.0 Approx. 160 81.0 39.5 -50.5 3.5 120 Includes: (approx.) Increased investment in marketing -¥14.0 bil. Increased logistics costs due to 133.0 120.9 more product shipments and -¥5.0 bil. higher shipping fees Other -¥8.0 bil. N
Slide 12: I-5. Changes in Business Profit (Forecast by Segment)
I-5. Changes in Business Profit (Forecast by Segment) FY2022 Revised Forecast vs FY2021 Actual (¥ bil.) 150 12.4 -1.0 130 -0.1 0.8 110 120.9 133.0 90 70 FY2021 Seasonings and Frozen Healthcare Other FY22 FY2022 Actual Foods Foods and Others Revised forecast Revised forecast FY2022 Revised Forecast v
Slide 13: I-6. Priority KPIs (Group-wide Forecast)
I-6. Priority KPIs (Group-wide Forecast) Steady progress toward achieving the structural targets of the MTP. To ensure the achievement of FY2022 and FY2025 targets, we are moving to steadily execute the MTP priority themes. 20-22 20–22 23–25 フェーズ1 2030 Goal Phase 1 Phase 2 Structural reform Regrowth
Slide 14: I-6. Priority KPIs (Forecast by Segment)
I-6. Priority KPIs (Forecast by Segment) Segments FY2021 Actual and FY2022 Forecast Unit price growth Organic growth ROIC (International consumer products) (％) (％) (％) FY21* MTP Targets Sauce & FY21 H1-FY22 FY22 FY21 H1-FY22 FY22 FY22* Seasonings actual actual forecast actual actual forecast actual
Slide 15: I-7. Progress of Structural Reform
I-7. Progress of Structural Reform ROIC expected to temporarily fall below real capability due to Proceed with even greater structural reform to impairment accompanying structural reform make sure we reach our ROIC target Approx. 8.5% Approx. 9% Approx. 8% (excluding impairment loss) (excluding stru
Slide 16: I-7. Progress of Structural Reform
I-7. Progress of Structural Reform Structural reform in non-core businesses Financial impact Animal Nutrition Amount of asset 1 Completed sale of company in Europe in April. reduction in FY2021: Business Shift to customer solution-providing business. (commodities) approx. ¥15.5 billion 2 Part of MSG
Slide 17: I-8-(1). Seasonings and Foods, Japan
I-8-(1). Seasonings and Foods, Japan (Initiatives for Organic Growth) Excluding the impact of *AGF structural reform, the first half of FY2022 saw increased revenue for the combination of home-use products and restaurant and industrial-use products Home-use products Restaurant and industrial-use pro
Slide 18: I-8-(2). Seasonings and Foods, Overseas
I-8-(2). Seasonings and Foods, Overseas (Initiatives for Organic Growth) In Sauce & Seasonings overseas, both sales and volume remained strong. We achieved increased volume while working to raise prices in various countries, according to or ahead of plans. Sales of Sauce & Seasonings overseas: 112%
Slide 19: I-8-(2). Umami seasonings and flavor seasonings
I-8-(2). Seasonings and Foods, Overseas (Initiatives for Organic Growth) Umami seasonings and flavor seasonings that are less susceptible to business conditions Thailand GDP and AJI-NO-MOTO®, RosDee® (flavor seasonings) sales in Thailand (THB) AJI-NO-MOTO® RosDee® GDP growth rate (%) COVID-19 10 pan
Slide 20: I-9. Frozen Foods: North America Path to ROIC Improvement
I-9. Frozen Foods (North America, Currently and Going Forward) 1. North America Business: Path to ROIC Improvement Initiatives to be solidly carried out 1 (1) Unit price growth by Price increases During structural reform, impacted by COVID-19 (2) Improve production by promoting OE and inflation, BP
Slide 21: I-9. Frozen Foods: Focus on Asian Category
I-9. Frozen Foods (North America, Currently and Going Forward) 1. North America Business: Path to ROIC Improvement 2 Growth of the packaged frozen foods market slows down temporarily Focus on core categories (especially the Asian category) Expansion of the Asian category is expected to continue, ret
Slide 22: Asian Category Expansion Strategy and Gyoza Growth
I-9. Frozen Foods (Expansion of Asian category overseas, including N.A.) 2. North America Business: Asian Category Expansion Strategy Group with high interest in Asian foods Trial group for Asian foods (middle class and higher) (middle class and lower) Offer high-value-added Proposal of meals in con
Slide 23: I-9. Significance of Frozen Foods Business
I-9. Frozen Foods (Significance of Frozen Foods Business) 4. Significance of Frozen Foods Business 1 Future growth driver Frozen Foods is a developed country-oriented business that responds to needs such as shorter cooking times and individual meals, etc. Touchpoints with consumers in Europe and the
Slide 24: I-10. Electronic Materials Business
I-10. Electronic Materials Business (Drive Growth through BMX) BMX: Business Model Transformation Expansion of server applications is driving recent ABF growth ABF: Ajinomoto Build-up Film First half of 2022 Functional Materials Sales: ¥37.2 billion (130% of prev. year ) 2022 Server market (forecast
Slide 25: I-10. Electronic Materials Business (ABF Demand)
I-10. Electronic Materials Business (Drive Growth through BMX) 2. Expansion of Increase in Increase in data centers 5G market communication (Increase in demand for ABF) traffic Increase in traffic due to 5G Mobile devices Macrocell Increase in data centers Demand for ABF will be firm Ajinomoto Build
Slide 26: I-11. Assets and Liabilities
I-11. Assets and Liabilities Total assets increased due to increases in inventory due to currency translation effects and increases in raw materials prices. Net D: Interest-bearing debt - Cash on hand and in banks x 75% (¥ bil.) Total assets Net D/E ratio （%） 20,000 2,000 60 15,000 1,500 40 10,000 1
Slide 27: I-12. Cash Generation
I-12. Cash Generation The revised forecast for operating cash flow is approximately ¥112.0 billion. In FY2022, working capital, such as accounts receivable (price increases and currency translation) and inventories (raw material prices and currency translation) in particular, was affected by substan
Slide 28: I-13. Strategic Investments
I-13. Strategic Investments We will shift investments from tangible to intangible assets such as research and development, marketing, DX, business model development, and human resources. In capex, we will agilely make growth investments in core businesses such as electronic materials. Percentage of
Slide 29: I-14. Important Management Indicators
I-14. Important Management Indicators Important management indicators for FY2022 are expected to exceed initial forecasts due to steady growth in business profit. ROE (%) ROA (BP basis, %) 14.0 10.0 11.6 11.5 8.8 10.3 9.0 8.4 8.1 10.0 8.0 7.2 7.0 6.0 3.3 6.0 2.0 5.0 FY19 FY20 FY21 FY22 FY19 FY20 FY2
Slide 30: I-15. Investment for Growth and Shareholder Returns
I-15. Investment for Growth and Shareholder Returns (Approach for FY2020–2022) Throughout the MTP, shift investments from tangible to intangible assets, from non-core to core businesses. Operating cash flow in FY2020-2022 is expected to exceed the ¥400.0 billion target in the MTP. Cash Flow (Approac
Slide 31: I-15. Investment for Growth and Shareholder Returns (FY2022 Forecast)
I-15. Investment for Growth and Shareholder Returns (FY2022 Forecast) Decided to increase the dividend again (FY2021 ¥52 -> ¥62) and repurchase shares in FY2022. Work to further strengthen shareholder returns. ■ Shareholder Returns (Approach for FY2020–2022) Forecast total shareholder return for the
Slide 32: II. The Corporate Value Enhancement Cycle and Engagement
I. Summary Results for the First Half Ended September 30, 2022 and FY2022 Forecast II. The Corporate Value Enhancement Cycle and Engagement III. Medium-Term ASV Initiative for the 2030 Roadmap
Slide 33: II-1. Growth Strategy Aimed at Enhancement of Corporate Value
II-1. Growth Strategy Aimed at Enhancement of Corporate Value We will enhance growth potential and profitability through the driving of growth in the four areas of BMX, the integration of food and AminoScience, and the strengthening of efficient management through further selection and concentration
Slide 34: II-2. ASV Management under the New Executive Team
II-2. ASV Management: Management under the New Executive Team (What should be evolved) Purpose Speed Up × Passion × × Scale Up OE Speed Up Transformation of corporate culture and appropriate top-down and bottom-up communication Accelerate "Stop and Reduce" to earnestly tackle what we want to do Stan
Slide 35: II-3. Four Growth Areas of BMX
II-3. Four Growth Areas of BMX We have identified four BMX areas where Ajinomoto Group can leverage its strengths going forward into 2030. Based on the value we want to provide and co-create, we have identified Healthcare, Food & Wellness, ICT, and Green as growth areas. Four growth 4つの成長領域 Value (o
Slide 36: II-4. BMX: New Successes in Food and Wellness (Marketing)
II-4. BMX: The Shape of New Successes in Food and Wellness (Marketing) In the consumer foods products business, we have worked toward growth by creating new areas in response to changes in the economic environments and lifestyles in different countries. ■ Change in Knorr® soup business sales, Japan
Slide 37: Cook Do stir-fry sauce (Japan)
II-4. BMX: The Shape of New Successes in Food and Wellness (A Recent Case in Marketing 1) Cook Do® stir-fry sauce (Japan) For those who don’t purchase oyster sauce, we looked deeply into the reasons, identified the barriers that caused consumers’ dissatisfaction and came up with concepts and develop
Slide 38: Plant-based protein hamburger mix (Brazil)
II-4. BMX: The Shape of New Successes in Food and Wellness (A Recent Case in Marketing 2) Plant-based protein hamburger mix (Brazil) In the area of plant-based food alternatives, which consist mainly of frozen foods, we have gathered detailed insights from flexitarians and vegetarians in Brazil and,
Slide 39: II-5. Expansion of Healthcare Global Business
II-5. BMX: Dramatic Expansion of Healthcare Global Business Partnership in the Biopharmaceutical Culture Media Business The amino acids for pharmaceuticals and foods business consists mainly of amino acids for pharmaceuticals and foods, biopharmaceutical cell culture media, and cell culture media fo
Slide 40: II-5. Cell Culture Media Market Growth
II-5. BMX: Dramatic Expansion of Healthcare Global Business Partnership in the Biopharmaceutical Culture Media Business A stable supply of high-quality amino acids is supporting the growth of the market for biopharmaceuticals High-quality amino acids are essential to the manufacture of biopharmaceut
Slide 41: II-5. Culture Media Business History and Strengths
II-5. BMX: Dramatic Expansion of Healthcare Global Business Partnership in the Biopharmaceutical Culture Media Business History of our culture media business 1987 Nov. 2012 Mar. 2018 Jun. 2019 First serum-free culture medium Ajinomoto Genexine Co., Ltd. Launched new brand, Customer service in Japan,
Slide 42: II-5. AJI-JSR Collaboration
II-5. BMX: Dramatic Expansion of Healthcare Global Business Partnership in the Biopharmaceutical Culture Media Business AJI-JSR collaboration 1 Production by our Group of high-performance culture media developed by JSR Corporation (Strengthening of product lineup and achievement of stable supply) 2
Slide 43: II-6. Value Creation Story Based on Human Assets
II-6. Value Creation Story Based on Human Assets Create innovation and enhance corporate value through co-growth of diverse talent and organizations that create value. Realizing ASV Purpose: Unlocking the power of amino acids to resolve the food and health issues. Co-growth of individuals and organi
Slide 44: II-6. ASV Realization Process
II-6. Value Creation Story Based on Human Assets From this fiscal year we have introduced a new approach for the ASV realization process and we have visualized opportunities and issues from the scores of related questions in the engagement survey. ASV Realization Process ASV management cycle Process
Slide 45: II-6. Engagement Survey, Preliminary Results
II-6. Engagement Survey, Preliminary Results We got high, favorable scores of 75% for the ASV Realization Process, which we introduced this fiscal year. We will analyze the details of the scores and further evolve the processes to realize medium- term ASV Initiative. Favorable response score (includ
Slide 46: II-6. Forbes JAPAN Inclusive Company Ranking
II-6. （ref.）Forbes JAPAN “Inclusive Company Ranking100” We ranked No. 1 in Stakeholder Capitalism Ranking in Forbes JAPAN's "Inclusive Company Ranking 100" (covering 1,839 companies on the TSE Prime Market). “Employees" and "Earth" received high marks among the five evaluation categories. １ AJINOMOT
Slide 47: 3 Medium-Term ASV Initiative for the 2030 Roadmap
1 Summary Results for the First Half Ended September 30, 2022 and FY2022 Forecast 2 The Corporate Value Enhancement Cycle and Engagement 3 Medium-Term ASV Initiative for the 2030 Roadmap
Slide 48: III. Medium-Term ASV Initiative—Through Dialogue
III. Medium-Term ASV Initiative—Through Dialogue I have had numerous conversations with many shareholders since becoming president. Are you so focused on planning that execution becomes secondary? (Is it Plan-Plan-Plan-Plan instead of Plan-Do-Check-Act?) Are you overly focused on short- term figures
Slide 49: III. Evolving from Medium-Term Management Plan to Medium-Term ASV Initiative
III. Evolving from a Medium-Term Management Plan to Medium-Term ASV Initiative We will break away from the traditional medium-term management plan disease that exhausted us with making plans in an age where the future can’t be read, and evolve to medium-term ASV Initiative where we decide on a path
Slide 50: III. Medium-Term ASV Initiative, ASV Indicators
III. Medium-Term ASV Initiative, ASV Indicators While pursuing the performance forecasts to which we have committed, we will continue striving toward new value and the transformation of our business model and continue promoting medium-term ASV Initiative to take on the challenge of ASV indicators. W
Slide 51: Message from the CEO
Message from the CEO We have worked on "Purpose x Passion x Operational Excellence (OE)" and "Speed Up x Scale Up," and have gotten achievements even in these first half results for FY2022. To further evolve into a solution-providing group of companies for food and health issues, we will introduce m
Slide 52: Forward-looking statements
Forward-looking statements, such as business performance forecasts, made in 本資料に記載されている業績見通し等の将来に関する記載は、 these materials are本資料の発表日現在における将来の見通し、計画のもととなる前提、 based on management's estimates, assumptions and projections at the予測を含んで記載しており、当社としてその実現を約束する趣旨の time of publication. A number of factors could
Slide 53: Examples of DX Initiatives: Supply Chain Management
Examples of DX Initiatives: Supply Chain Management Ajinomoto Group Initiative Promote Group-wide SCM reform to construct a SCM that delivers products at the lowest cost and with the highest efficiency — Even in an environment of COVID-19 and the Ukraine issue, we are providing products while enhanc
Slide 54: Examples of DX Initiatives: Smart Factory
Examples of DX Initiatives: Smart Factory Promote automation Use varied data in advanced ways to promote factory automation. Aim for stable production and labor-saving improvements. AI-based image inspection: Removal of foreign matter Use of production data in factories: packaging processes from dri
Slide 55: Summary as of the Second Quarter (July-September)
Summary as of the Second Quarter (July-September) Profit attributable to owners Sales: Increased Business profit: Increased of the parent company ¥338.2 billion ¥33.7 billion ¥19.2 billion 123.5% of FY2021 results 111.2% of FY2021 results 60.1% of FY2021 results Excluding currency translation: 111.4
Slide 56: First-Half Results (Consolidated Statements of Income)
First-Half Results (Consolidated Statements of Income) H1-FY22 H1-FY21 vs. Prev. vs. Prev. year Difference (excluding currency (¥ Billion); -: losses Actual Actual year （A）-（B） translation) (A) (B) (A)/(B) (A)/(B) Sales 659.8 550.2 109.6 119% 109% Gross profit 233.8 211.7 22.0 110% - (Gross profit m
Slide 57: First-Half Results (Sales and Business Profit by Segment)
First-Half Results (Sales and Business Profit by Segment) H1-FY22 H1-FY21 Difference vs Prev. year (¥ Billion); -: losses Actual Actual （A）-（B） (A)/(B) (A) (B) Sales 659.8 550.2 109.6 119% Seasonings and Foods 372.7 316.0 56.7 118% Frozen Foods 128.5 106.3 22.2 120% Healthcare and Others 151.6 121.9
Slide 58: First-Half Results by Region
First-Half Results (Sales and Business Profit by Region; Change from Prev. Year) Japan Asia Americas EMEA Other Total (¥ Billion); -: losses H1- H1- H1- H1- H1- H1- Differ- Differ- Differ- Differ- Differ- Differ- FY22 FY22 FY22 FY22 FY22 FY22 ence ence ence ence ence ence Actual Actual Actual Actual
Slide 59: Addressing Inflation
Addressing Inflation In Seasonings and Foods and Frozen Foods, successive measures are being taken to counteract the ongoing impact of increased costs, such as for raw materials. 第3四半期以降 (Price actions in major countries of business: only executed and announced actions) FY2022 Q2 From Q3 Flavor seas
Slide 60: Forecast (Consolidated Statements of Income)
Forecast (Consolidated Statements of Income) FY22 vs. Prev. year FY21 Revised Difference vs. Prev. year (excluding currency (¥ Billion); -: losses Actual forecast (A)-(B) (A)/(B) translation) (B) (A)/(B) (A) Sales 1,367.0 1,149.3 217.6 118% 109% Business profit 133.0 120.9 12.0 110% 100% Other opera
Slide 61: Forecast (Sales and Business Profit by Segment)
Forecast (Sales and Business Profit by Segment) FY22 FY21 (¥ Billion); -: losses Difference vs. Prev. year Revised forecast Actual (A)-(B) (A)/(B) (A) (B) Sales 1,367.0 1,149.3 217.6 118% Seasonings and Foods 784.7 664.2 120.5 118% Frozen Foods 261.1 221.7 39.4 117% Healthcare and Others 303.5 251.2
Slide 62: Forecast (Sales by Region)
Forecast (Sales by Region; Change from Prev. Year) Japan Asia Americas EMEA Total (¥ Billion); -: losses FY22 FY22 FY22 FY22 FY22 Differ- Differ- Differ- Differ- Differ- Revised Revised Revised Revised Revised ence ence ence ence ence forecast forecast forecast forecast forecast Sales 522.5 36.7 364
Slide 63: FY2022 Assumed Exchange Rate and Exchange Rate Sensitivity
FY2022 Assumed Exchange Rate and Exchange Rate Sensitivity Assumed exchange rate (vs. JPY) FY22 FY22 FY22 Revised forecast 4Q 3Q 2Q 1Q Initial forecast USD 135.00 138.27 129.73 120.00 EUR 135.00 139.26 138.26 133.00 THB 3.75 3.80 3.77 3.63 BRL 25.96 26.39 26.41 26.09 Exchange Rate Sensitivity Foreig
Slide 64: Reference Links
Reference Links Ajinomoto Group IR https://www.ajinomoto.co.jp/company/en/ir/ Ajinomoto Group ASV Report (Integrated Report) 2022 https://www.ajinomoto.co.jp/company/en/ir/library/annual.html Ajinomoto Group Medium-Term Management Plan https://www.ajinomoto.co.jp/company/en/ir/event/medium_term.html