Ajinomoto Co., Inc. · TSE:2802

Ajinomoto — FY2019 Earnings Presentation

37 slides from Ajinomoto's earnings presentation, May 25, 2020

  1. Slide 1: Forecast for FY2020 and Initiatives for Structural Reform

    Ajinomoto Co., Inc. (2802) Forecast for FY2020 (Ending March 31, 2021) and Initiatives for Structural Reform Takaaki Nishii President & CEO May 25, 2020

  2. Slide 2: Contents

    Contents I. FY2019 Summary Results and FY2020 Forecast II. Impacts of COVID-19 and Progress on Structural Reform Reference Material Appendixes: Consolidated Results FY2019 (Ended March 31, 2020) FY2020 Forecast by Segment Note: Business profit (consolidated) in this material: Sales - Cost of sales -

  3. Slide 3: Contents

    Contents I. FY2019 Summary Results and FY2020 Forecast II. Impacts of COVID-19 and Progress on Structural Reform Reference Material Appendixes: Consolidated Results FY2019 (Ended March 31, 2020) FY2020 Forecast by Segment Note: Business profit (consolidated) in this material: Sales - Cost of sales -

  4. Slide 4: I-1. FY2019: Summary Results

    I-1. FY2019: Summary Results 1. Sales: Decreased • Increase in sales from pharmaceutical custom manufacturing and amino acids for pharmaceuticals and foods. • Large decrease in sales in the animal nutrition business. 2. Business profit: Increased (highest on record) • Large decrease in profit in ani

  5. Slide 5: I-2. FY2019: Factors Influencing Business Profit

    I-2. FY2019: Factors Influencing Business Profit Exchange rate Exchange rate （億円） (¥ bil.) $=110 $=108 110 +12% (+¥11.2 bil.) 105 100 0.8 95 2.4 90 7.9 85 Upside in Life Support, Japan Food 99.2 Products, and International Food 80 88.0 Products segments 75 70 FY19 revised Business growth Fermentatio

  6. Slide 6: I-3. FY2019: Recording of Impairment Loss

    I-3. FY2019: Recording of Impairment Loss Recorded impairment loss and impairment loss on investment accounted for using the equity method. (Unit: ¥billion) Operating profit Profit attributable to When Business (Qtr. profit before owners of the parent Comments recorded Profit income taxes) company (

  7. Slide 7: I-4. FY2019: Profit

    I-4. FY2019: Profit Despite highest business profit ever, annual profit decreased due to incurred impairment loss and costs for structural reform FY19 FY18 Difference (¥ Billion) -: losses Actual Actual (A)-(B) Comments (A) (B) Sales 1,100.0 1,114.3 -14.2 FY19 actual: Share of profit of associates a

  8. Slide 8: I-5. FY2020: The Impacts of COVID-19 on Our Business

    I-5. FY2020: The Impacts of COVID-19 on Our Business Impact on FY20 Business Results (summary) At the present stage, it cannot be predicted when the COVID-19 outbreak will come to an end, so the economic outlook is uncertain. In these circumstances, the Company has prepared the business results fore

  9. Slide 9: I-6. FY2020: Impacts of COVID-19 Reflected in the Forecast

    I-6. FY2020: Impacts of COVID-19 Reflected in the Forecast Impact of COVID-19 on FY20 Business Results Sales: approx. -¥76.0 billion (down approx. 7% vs. FY19 actual ) Business profit: approx. -¥23.0 billion (down approx. 23% vs. FY19 actual) Factors reflected in the forecast for FY2020 Meaning of s

  10. Slide 10: I-7. FY2020: Forecast of COVID-19 Impact on Each Country's Economy

    I-7. FY2020: Forecast of the Impact of COVID-19 on Each Country’s Economy Forecasts of actual GDP in our major countries of business Vaccine developed ▼Aiming for September 2021 Actual GDP Period of Period of co-existence with Period of recovery after (FY19 Q3=100) spread coronavirus coronavirus 120

  11. Slide 11: I-8. FY2020: Impact of COVID-19 on the Forecast

    I-8. FY2020: Impact of COVID-19 on the Forecast (¥ bil.) Impact of COVID-19 on sales (Group-wide) 売上高におけるCOVID-19影響額（全社） Impact on annual sales 0.0 approx. -¥76.0 billion -5.0 -10.0 -15.0 -20.0 Assume second wave -25.0 North America and Latin -30.0 America hit by wave from Q3. 1Q ２Q 計 ３Q ４Q return t

  12. Slide 12: I-9. FY2020: Forecast

    I-9. FY2020: Forecast 1. Sales: Decrease • Overseas seasonings and processed foods, and frozen foods will decrease due to impact of COVID-19. 2. Business profit: Decrease • Overseas seasonings and processed foods, and frozen foods will decrease due to impact of COVID-19. • Amino Acids business will

  13. Slide 13: I-10. FY2020: Profit

    I-10. FY2020: Profit Business profit will decrease due to impact of COVID-19. Although some structural reform costs are expected, annual profit is forecast to increase. FY20 FY19 Difference (¥ Billion) -: losses Forecast Actual (A)-(B) Comments (A) (B) Sales 1,048.0 1,100.0 -52.0 Business profit 78.

  14. Slide 14: I-11. FY2020: Priority KPIs (Group-wide)

    I-11. FY2020: Priority KPIs (Group-wide) 20–22 23–25 Phase 1 Phase 2 2030 Goal Structural Renewed reform growth FY19 FY20 FY22 FY25 (Actual) (Forecast) (Target) (Target) Efficiency ROIC (>Capital cost) 3.0% 3.0% 8% 10–11% 13% Growth Organic sales growth 4% 5% 5% (YoY) 0.3% -0.5% Percentage of sales

  15. Slide 15: I-11. FY2020: Priority KPIs (by new segment)

    I-11. FY2020: Priority KPIs (by new segment) New Segments FY19 Actual and FY20 Forecast Organic Unit price ROIC growth growth (％) (％) (％) Sauces & 1 Seasonings FY20 8.0% 0.9% － Quick Seasonings Seasonings Nourishment and Foods and Foods Food Solutions & FY19 8.7% 0.8% 6.7% Ingredients Frozen 1 Foods

  16. Slide 16: I-12. FY2020: Asset Reduction Measures

    I-12. FY2020: Asset Reduction Measures ROIC expected to temporarily fall below real capability due to impairment loss accompanying structural reform Approx. 6％ (excludes impairment) ROIC 5% 8% 3.0% 3.0% FY19 actual FY20 forecast FY21 FY22 Implemented FY20-22 Profit Profit improvement by ー ・Asset red

  17. Slide 17: I-13. FY2020: Financial Strategy

    I-13. FY2020: Financial Strategy Based on the policies of the FY2020–2025 MTP, we will strengthen our investments for growth and ability to create cash flow, to achieve stable shareholder returns. Cash Flow Investments for Growth Shareholder Returns Payout ratio: target 40% per FY Operating cash flo

  18. Slide 18: I-14. FY2020: ESG Measures

    I-14. FY2020: ESG Measures Environment ESG Issues Targets FY2020 Core Measures Progress • Develop TCFD scenario analyses for each Percent reduction of greenhouse SBT: have submitted business area Greenhouse gases (vs. FY18) targets for validation. • Get SBT validation, commit to RE100 gases FY25: 25

  19. Slide 19: I-15. FY2020: ESG Measures Corporate Governance

    I-15. FY2020: ESG Measures Corporate Governance Building a system that has independence and diversity, and bringing about a remuneration system that is highly transparent 1. New Audit & Supervisory Board member Candidate for Audit & Supervisory Board member: Mami Indo (Has been a member of the Secur

  20. Slide 20: Contents

    Contents I. FY2019 Summary Results and FY2020 Forecast II. Impacts of COVID-19 and Progress on Structural Reform Reference Material Appendixes: Consolidated Results FY2019 (Ended March 31, 2020) FY2020 Forecast by Segment Note: Business profit (consolidated) in this material: Sales - Cost of sales -

  21. Slide 21: The Fight with COVID-19 (CEO Message)

    The Fight with COVID-19 (CEO Message) The Ajinomoto Group is deeply grateful for being able to continue its business and it will do its utmost as one team to bring about the wellness of the people fighting COVID-19. While the effect on FY2020 results will be large, the Group will catch the swell of

  22. Slide 22: II-1. Use the Fight with COVID-19 as an Accelerator for Realizing ASV

    II-1. Use the Fight with COVID-19 as an Accelerator for Realizing ASV Push forward to realize the Ajinomoto Group Vision Contribute to greater wellness for people worldwide, unlocking the power of amino acids to resolve the food and health issues associated with dietary habits and aging. Help promot

  23. Slide 23: The Fight with COVID-19 (Initiatives bringing together employees)

    (Projection only) The Fight with COVID-19 (Initiatives bringing together the strengths of all employees) (Management team members relaying messages) Copyright © 2020 Ajinomoto Co., Inc. All rights reserved.

  24. Slide 24: II-2. The Fight with COVID-19 (Initiatives for factories)

    II-2. The Fight with COVID-19 (Initiatives for factories) At our factories around the world, employees and partners are continuing to work as hard as possible to protect the production of products essential for medical service and daily life. 1. Activities to protect employees and partners (Japan an

  25. Slide 25: II-3. The Fight with COVID-19 (Initiatives to continue business)

    II-3. The Fight with COVID-19 (Initiatives to continue business) 1. Measures to maintain the supply chain • Give top priority to continuing the production and supply of major products, such as home-use and amino acids for pharmaceuticals • Shift production personnel from foodservice-use, which is de

  26. Slide 26: II-4. The Fight with COVID-19

    II-4. The Fight with COVID-19 (Initiatives and thanks for healthcare practitioners and consumers) Examples of regional and social initiatives (for healthcare practitioners and those fighting COVID-19) 1. Open access of intellectual property Participation in the IP Open Access Declaration Against COV

  27. Slide 27: II-5. The Fight with COVID-19 (Revision of global communication)

    II-5. The Fight with COVID-19 (Revision of global communication) Copyright © 2020 Ajinomoto Co., Inc. All rights reserved. 22

  28. Slide 28: (Reference) The Fight with COVID-19

    (Reference) The Fight with COVID-19 (Additional measures to make the period of co-existence a business opportunity) Opportunities in demand for products with health value and perishables (propose menus), EC, and delivery channels 140% (Averages of all 140% Purchase prices compared 購入金額対前年比（％） three

  29. Slide 29: II-6. The Fight with COVID-19

    II-6. The Fight with COVID-19 (Additional measures to make the period of co-existence a business opportunity) Additional measures for a new healthy lifestyle Strengthen core strategies in the Medium-Term Management Plan 1. Additional measures for recovery of FY20 results…bring in the health orientat

  30. Slide 30: II-7. FY2020: Additional Measures by Segment

    II-7. FY2020: Additional Measures by Segment Not yet reflected in the forecast. Come up with additional measures for further improvement. • Strengthen marketing and sales promotions for lifestyles with new values Communication: - Strengthen support for at-home dining and promote nutrition and eating

  31. Slide 31: II-7. FY2020: Additional Measures by Segment

    II-7. FY2020: Additional Measures by Segment Not yet reflected in the forecast. Come up with additional measures for further improvement. • Strengthen solutions for processed foods manufacturers (Japanese demand) • Cooperate with startup businesses responding to changes in consumer Solutions & prefe

  32. Slide 32: II-8. FY2020: Promote Transformation through DX and CEO Task Forces

    II-8. FY2020: Promote Transformation through DX and the Tasks Directly Supervised by the CEO We will establish a new Operation Transformation Task Force and Business Model Transformation Task Force directly under the CEO with the DX Committee as their foundation, to promote transformation in corpora

  33. Slide 33: II-9. FY2020: Transformation to heighten ASV engagement

    II-9. FY2020: Transformation to heighten ASV engagement Run and evolve the management cycle using OE1 techniques (For jobs within the Group and within the Company, the next sectors in the value chain are customers. 1: Operational Excellence Initiative Current progress (ASV as own initiative) Dialogu

  34. Slide 34: Contents

    Contents I. FY2019 Summary Results and FY2020 Forecast II. Impacts of COVID-19 and Progress on Structural Reform Reference Material Appendixes: Consolidated Results FY2019 (Ended March 31, 2020) FY2020 Forecast by Segment Note: Business profit (consolidated) in this material: Sales - Cost of sales -

  35. Slide 35: FY2019: Percentage of Sales from Seasonings & Foods and Frozen Foods

    FY2019: Percentage of Sales from Seasonings & Foods and Frozen Foods Japan Overseas Home-use For For = home-use seasonings foodservice foodservice + processed foods 23% 7% Restaurant and Restaurant and industrial-use Restaurant and industrial-use industrial-use = for foodservice seasonings Season- 2

  36. Slide 36: FY2020 Assumed Exchange Rate and Exchange Rate Sensitivity

    FY2020 Assumed Exchange Rate and Exchange Rate Sensitivity Assumed exchange rate (vs. JPY) FY20 FY19 Actual FY20-25 Forecast 4Q 3Q 2Q 1Q MTP USD 105.00 108.84 108.76 107.36 109.90 107.00 EUR 116.55 120.05 120.32 119.41 123.50 123.00 THB 3.21 3.48 3.59 3.49 3.48 3.42 BRL 19.09 24.57 26.41 27.05 28.02

  37. Slide 37: ➢ Forward-looking statements, such as business performance forecasts, made in ➢ This material includes

    ➢ Forward-looking statements, such as business performance forecasts, made in these materials are based on management's estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations. ➢ This material includes s

Ajinomoto — FY2019 Earnings Presentation on 6ix