Fuji Oil : Presentation (657.97KB)

Structural Reforms of Blommer

March 22, 2024

Overview of Blommer Structural Reforms

Current Awareness

• Acquired Blommer in January 2019. Planned for FY2023 EBITDA of US$ 80m.
• COVID-19impact delayed the investment in old production facilities. In addition, the profitability of Blommer deteriorated significantly due to changes in the U.S. labor market, a sharp rise in interest rates, and a sharp increase in manufacturing costs caused by skyrocketing cocoa prices.
• Recorded extraordinary losses of 10.1 billion yen (additional amortization cost of goodwill and impairment loss on tangible assets) for Q3/FY2023.

Structural Reforms

• Implement three structural reform measures to achieve EBITDA of US$ 80m by FY2028.

STEP.1	Closure of Chicago Plant
STEP.2	Optimization of Cocoa Processing Business
STEP.3	Promotion of Differentiation Strategy

• No change in the brand strength and broad customer network Blommer has established in the U.S.
  Blommer reformation through structural reforms will improve profitability. We aim to be a company that contributes to our stakeholders.

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Contents

1. Current Awareness
2. Structural Reforms and Goals
3. Reference Materials

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1	Current Awareness

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1. Current Awareness

Background of Acquisition

Acquired Blommer based on business evaluation and assumption of improvement through capital investments

Awareness of Blommer prior to Acquisition

Evaluation		Issues
・Brand strength on US industrial chocolate market		・Plant productivity
・Customer network, sales network		・Old production facilities
・Innovative cocoa beans procurement initiatives		・Earnings volatility due to impact of cocoa market prices
・Pioneer in distinctive products like low-sugar chocolate

Acquisition

・Despite issues with old production facilities in some plant, we judged that plant productivities could be improved with the implementation of early renewal investments.

Acquired in January 2019 with assumed corporate value of 84.8 billion yen. *calculated as US$1 = ¥113

・Planned on EBITDA of US$ 80m in FY2023 based on the plant productivity improvements, the expansion of high value-added products such as low-sugar chocolate which Blommer developed and the adoption of compound chocolate using oils and fats technology, which was Fuji Oil's strength.

・Maintained existing management team to promote stable business succession.

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1. Current Awareness

Awareness of Issues Following Acquisition

Addressed internal factors following acquisition but profitability decreased due to major changes in external environment

Internal Factors

Old production facilities

Special factors of cocoa

beans procurement (long-term

contracts and inventories)

Dependence on

confectionery market

Changes in External Environment

Delayed investments for old production facilities due to COVID-19

Change in US labor market

Rising raw material prices

Rising interest rates

Decreased demand in the U.S. for chocolate confectioneries

Decline in Profitability

Stagnant plant productivity

Increased costs related to

cocoa beans

Decline in sales volume

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1. Current Awareness

Improvement Activities

Saw results from activities but recognized need for structural reforms

Profitability		Increased costs related to
Decline	Stagnant plant productivity	Decline in sales volume
cocoa beans
Factors

Implemented

Activities

Results

・Plant-specific management	・Price revisions reflecting raw	・Improvement of product
・Implementation of production	material costs	mix
improvement program

・Improved productivity at	・Achieved continual price	・Strengthened low-sugar
3 plants excluding Chicago	revisions	chocolate sales

		Increase in storage costs	Further improvement of
Issues to be	Significant increase in	and operating capital
product mix and
Addressed	costs at Chicago Plant	due to higher cocoa
marketing mix
		inventory level

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2	Structural Reforms and Goals

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2. Structural Reforms and Goals

Key Points of Structural Reforms

Blommer strengths have remained intact, but will implement structural reforms to restore profitability

STEP.1

Closure of Chicago Plant

Reduce manufacturing costs

significantly by closing Chicago Plant

STEP.2

Optimization of Cocoa

Processing Business

Reduce costs and improve operating

capital by downsizing cocoa

processing business

Strengthening of Blommer

Business Foundation

STEP.3

Promotion of

Differentiation Strategy

Improve productivity at each plant Increase production through large capital investments

Strengthen sales expansion of high

value-added products

Steadily promoting structural reforms and strengthening of business foundation

with the aim of profitability improvement

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2. Structural Reforms and Goals

Effects of Structural Reform

Aim to achieve EBITDA of US$ 80m in FY2028

Blommer 5-year EBITDA Image

US$ 80m

STEP.1, STEP.2 Turn a profit after goodwill amortization in FY2024-2025

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STEP.3

Improve profitability

over 5-year period

STEP.1

STEP.2

STEP.3

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