Results Briefing Materials
for FY2020/2Q
Kagome Co., Ltd.
July 30, 2020
1
Topics
1. Impact of COVID-19
- Establishment of COVID-19 Task Force to accelerate decision-making and the implementation of countermeasures
- Improvement in performance of products for institutional and industrial use, which hit bottom in April. However, impact still being felt.
2. Summary of Business Results for FY2020/2Q
- Gains in revenue and profit due to growth in demand for products for home use on the back of heightened health awareness and consumption at home despite sharp decline in sales of products for institutional and industrial use both in Japan and overseas due to the COVID-19 pandemic
- Decreases in operating income and net income attributable to shareholders of parent in the absence of a one-time gain on the integration of a physical distribution subsidiary recorded the previous fiscal year
3. Reform of Earnings Structure of Domestic Agriculture Business
- Establishment of a new company, Kagome Agri-Fresh Co., Ltd., and further reform of earnings structure
4. Reform of Earnings Structure of International Business
- Plan to reform earnings structure of primary processing operations and secondary processing operations respectively
5. FY2020 Full-year Consolidated Results Forecasts and Numerical Targets under Second Mid-term Management Plan
- Downward revision of consolidated sales revenue forecast for FY2020 due to changes in business environment
- Changes to numerical targets under the Second Mid-term Management Plan
2
1. Impact of COVID-19
3
Actions to Address COVID-19 Crisis
Established COVID-19 Taskforce (April 7)
Basic policy for measures against COVID-19
• Organization under the President's leadership | ||
To prevent Kagome Group employees and our | • Convenes regularly once a week | |
1 | ||
customers and suppliers from catching the virus | • Gathers information on the status of each | |
and falling serious ill. | division | |
2 | To constantly check the status of the entire supply | • Makes quick decisions on virus |
chain, giving top priority to supplying essential | countermeasures | |
products as a food manufacturer. |
Encouraged Group employees to work from home (ongoing since April)
• Various systems and infrastructure which were put in place to promote work style reform are being utilized
• The production division continues to manufacture products while using maximum caution to ensure the health and safety of its employees.
Provided around 53,000 cartons as of June 30
Provided vegetable beverages free of charge
- To show support and gratitude to local government workers and health workers at the frontline in the fight against COVID-19
4
Impact of COVID-19 on Business (Timeline)
Year-on-year changes in revenue in severely affected categories
120% 110% 100% 90% 80% 70% 60% 50%
Household use category (Japan)
Institutional and industrial use category (United States)
Institutional and industrial use category (Japan)
Jan. | Feb. | Mar. | Apr. | May | Jun. |
Household use category (Japan) (beverages and food from domestic processed foods)
- Sales were strong mainly due to stimulation of demand through "Let's Eat Vegetables" campaign
-
Sales held firm even after COVID-19 outbreak due to increased consumption at home
Institutional and industrial use category (Japan) - Sales were brisk prior to the COVID-19 outbreak but have been significantly below the year-ago level since March
- Sales bottomed out in April and recovered to approx. 70% of the level of the previous year by June.
Institutional and industrial use category (United States)
- Orders already showed slow growth before COVID-19, but revenue is much lower than the year-ago level due to COVID-19
- Orders bottomed out in April and recovered 90% in May and was at the level of approx. 70% in June.
5
2. Summary of Business Results
for FY2020/2Q
6
FY2020/2Q Consolidated Results
Unit: 100 million yen
Consolidated Results | 1Q | 2Q | |||||||||||
Results | Year on year | Results | YoY | Results | YoY | ||||||||
Margin | Rate of | ||||||||||||
change | |||||||||||||
Revenue | 888 | - | +3 | +0% | 409 | +10 | 480 | (7) | |||||
Core Operating | 64 | 7% | +9 | +17% | 20 | +4 | 44 | +5 | |||||
Income | |||||||||||||
Operating Income | 69 | 8% | (3) | (4)% | 24 | +8 | 45 | (11) | |||||
Net Income*1 | 46 | 5% | (9) | (16)% | 16 | +5 | 30 | (14) | |||||
*1 Net income attributable to owners of parent | |||||||||||||
ROE | 4.2% | (1.2) pt | |||||||||||
ROA | 3.0% | +0.2 pt | |||||||||||
EPS | 51.66 | (9.87) | |||||||||||
Main factors for increase in revenue
- Increased sales of beverages, condiments and other products in domestic processed food business
Main factors for increase in income (core operating income)
-
Decrease in sales promotion expenses and reduction of costs in domestic business
Main factors for decrease in income (income level below the operating income) - Temporary profit at the time of integration of logistics subsidiaries with F-LINE in the previous year
7
FY2020/2Q Results by Segment
Revenue | |||||
FY2019 | FY2020 | ||||
Year on | Rate of | ||||
year | change | ||||
Beverages | 353 | 365 | +12 | +3% | |
Food and others | 276 | 272 | (4) | (2)% | |
Domestic processed | 629 | 637 | +8 | +1% | |
food business | |||||
Domestic agriculture | 52 | 54 | +2 | +4% | |
business | |||||
International | 233 | 226 | (7) | (3)% | |
business | |||||
Other/adjustments | (28) | (28) | +0 | - | |
Total | 885 | 888 | +3 | +0% | |
Unit: 100 million yen
Core Operating Income | |||
FY2019 | FY2020 | ||
Year on | Rate of | ||
year | change | ||
26 | 36 | +10 | +38% |
21 | 20 | (1) | (5)% |
47 | 55 | +9 | +19% |
0 | 2 | +2 | - |
6 | 4 | (2) | (35)% |
2 | 2 | +0 | - |
54 | 64 | +9 | +17% |
Domestic processed food business
- Beverages: Gains in revenue and profit mainly due to growth in stay-at-home demand and stimulation of demand through the "Let's Eat Vegetables" campaign
- Food and others: Declines in revenue and profit due to decreased sales of products for institutional and industrial use caused by a slump in demand in the food service sector
Domestic agriculture business
- Gains in revenue and profit mainly due to strong sales in 2Q and reform of the earnings structure
International business
- Declines in revenue and profit, reflecting decreased revenue from the industrial category in the United States
8
Domestic Processed Food Business (Beverages)
Gains in revenue and profitmainly due to the "Let's Eat Vegetables" campaign and health-
related demand and consumption at home because of COVID-19
Unit: 100 million yen
Domestic Processed | Revenue | Core Operating Income | |||||
FY2019 | FY2020 | YoY | FY2019 | FY2020 | YoY | ||
Food Business | |||||||
(Beverages) | 353 | 365 | 103% | 26 | 36 | 138% | |
Year-on-year comparison of revenue by container size
200 ml | 720 ml | 1000 ml | Total | |
Tomato juice | 98% | 104% | 131% | 103% |
Yasai Seikatsu 100 | 104% | 110% | 116% | 106% |
Yasai Ichinichi | 108% | 116% | 109% | 109% |
Kore-Ippon | ||||
Yasai Seikatsu 100 includes smoothies. 250ml and 330ml container revenue is aggregated under 200ml container revenue.
Growth in consumption due to "Let's Eat Vegetables" campaign and impact of COVID-19
- Stimulated demand through commercials linked to campaign and emphasis on value
- Expanded Kagome's share of vegetable beverage market to 57% (up 1 pt YoY)
- Sales of large-container products were strong thanks to an increase in opportunities for consuming beverages at home
Yasai Seikatsu Soy+
Launch date: February 25
Tomato juice (Revenue of 5.7 billion yen, 103% year-on-year)
- Sales remained brisk, reflecting development of heavy users
Yasai Seikatsu 100 (Revenue of 20.5 billion yen, 106% year-on-year)
- Yasaui Seikatsu 100 Apple Salad performed strongly.
-
Sales of new product Yasai Seikatsu SOY+ were 130% of forecast level
Yasai Ichinichi Kore-Ippon (Revenue of 5.9 billion yen, 109% year-on-year) - Sales of both large and personal-size containers were brisk
Factors for increase in core operating income
• An increase in sales revenue, a decrease in promotion expenses and cost reduction, which offset a year-on-year
increase of 530 million yen in advertising expenses
9
Domestic Processed Food Business (Food and others)
Both revenue and profit decreased due to decline in products for institutional and industrial use, despite brisk sales of products for home-cooked food and direct marketing sales
Unit: 100 million yen
Domestic Processed | Revenue | Core Operating Income | |||||
FY2019 | FY2020 | YoY | FY2019 | FY2020 | YoY | ||
Food Business | |||||||
(Food and others) | 276 | 272 | 98% | 21 | 20 | 95% | |
Products for home cooked food (Revenue of 9.5 billion yen, 110% year- on-year)
- Demand for food products increased due to an increase in home-cooked meal opportunities
- Revenue from tomato ketchup was 4.7 billion yen (110% YoY)
- Sales of basic tomato and pasta sauces were also higher than the year-ago level
Direct marketing (Revenue of 5.6 billion yen, 109% year-on-year)
- Tsubuyori Yasai, vegetable potage and supplements all performed strongly
Products for institutional and industrial use (Revenue of 8.7 billion yen, 81% year-on-year)
- Sales were above the year-ago level through to February but fell dramatically from March
- Products such as frozen grilled vegetables plummeted because hotels and restaurants account for a large percentage of their total sales
Factors for increase in core operating income
- Although revenue from products for home-cooked food and direct marketing revenue increased, these
factors for increase were offset by a sharp decline in revenue from products for institutional and industrial | 10 |
use and an increase in advertising expenses in direct marketing business of 0.23 billion YoY | |
Domestic Agriculture Business
Both revenue and profit increased , reflecting brisk sales in 2Q and reform of earnings structure
Unit: 100 million yen
Revenue | Core Operating Income | ||||||
Domestic Agriculture | |||||||
FY2019 | FY2020 | YoY | FY2019 | FY2020 | YoY | ||
Business | |||||||
52 | 54 | 104% | 0 | 2 | - | ||
Trends in fresh tomato sales (1Q)
- Tomato procurement volume fell mainly due to lack of sunshine at Iwaki Onahama Green Farm, and sales volume were also below the year-ago level
(2Q)
- Revenue increased, reflecting higher utilization rates due to expansion in sales channels of plantations
- Income increased mainly due to reduction of fixed costs
Trend in market price of fresh tomatoes | |
• Market prices rose sharply from March through April due to | |
Yen/㎏ | growing demand for home-cooked food |
• Prices returned to normal year levels from May when the | |
availability of tomatoes increased |
11
Source: Created based on market statistics data obtained from the Tokyo Metropolitan Central Wholesale Market website
Domestic Business
Implementation of "Let's Eat Vegetables" campaign
Stimulation of demand for vegetables by putting a full-page ad in a national paper and on product packages
Newspaper ad | Promotion using TV ad and packages |
Announcement at press conference
Sales revenue in June:
125% of sales revenue in June 2019
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Domestic Business
Implementation of "Let's Eat Vegetables" campaign
Progress of measures taken
Measures | Details | Results |
Communicate information via | Information about vegetables | Six Vegetable Ambassadors shared |
vegetable ambassadors | spread by well-known people | information on how they themselves eat |
vegetables on social media | ||
Vegetable Maestro Skills Test | Tests taken by employees | 1,406 employees of approx. 2,500 in the |
capable of learning basic | company have been certified as "Class 3." | |
knowledge, who become | ||
vegetables evangelists | ||
Collaboration with | Collaboration with | Progress was delayed in the first half of the |
other companies and | companies and | fiscal year due to the impact of COVID-19, |
organizations | organizations from other | yet a kick-off meeting will be held on July |
(vegetable promotion project) | sectors to communicate the | 31. |
benefits of vegetables | ||
"Veggie Check" | Have consumers experience | Use at supermarkets and events across Japan |
experiences | "Veggie Check," a vegetable | was delayed due to COVID-19. |
intake estimation machine, in | ||
stores and events. | ||
Let's Eat Vegetables campaign will continue in and after FY2021.
Stimulate demand for vegetables and encourage consumption
of an additional 60 g of vegetables.
13
International Business
Decrease in both revenue and profit due to restrictions on the business in the U.S. restaurant industry
Unit: 100 million yen
Revenue | Core Operating Income |
International Business | FY2020 | YoY | YoY | FY2020 | YoY | YoY |
(excl. exchange | (excl. exchange | |||||
rate impact) | rate impact) | |||||
U.S.: Kagome Inc. | 92 | (18) | (17) | 0 | (3) | (3) |
Portugal: HIT | 54 | +8 | +10 | (0) | (1) | (1) |
Kagome Australia Pty Ltd. | 31 | (2) | +1 | 1 | (0) | (0) |
U.S.: UG | 23 | +2 | +2 | 4 | +2 | +2 |
Other, adjustments | 25 | +4 | +4 | (1) | +1 | +0 |
International Business total | 226 | (7) | +0 | 4 | (2) | (2) |
U.S.: Kagome Inc.
- Revenue and profit both decreased mainly due to the slump in food service demand caused by COVID-19
Portugal: HIT
- Although revenue increased on the back of growth in demand for home-cooked food due to COVID-19, profit decreased, reflecting an increase in the sales component ratios of products with low profit rates
Kagome Australia Pty Ltd.
- Almost at the same level of the previous year
U.S.: UG
- Revenue and profit both increased due to brisk sales of seeds and seedlings to Turkey and Italy
14
Factors Contributing to
Core Operating Income Changes
Changes in the domestic processed food business
Unit: 100 million yen
FY201954
(1)(8)
(2)+8
+3 | ||||||
(3) | +6 | |||||
+0 | ||||||
+2 | ||||||
(2) | ||||||
FY2020 | 64 | |||||
40 | 50 | 60 | 70 |
- Increase in advertising expenses: Mainly TV commercials linked to "Let's Eat Vegetables" campaign
- Cost reduction: Improvement of procurement strategy and shift to in-house production of PET bottles helped achieve cost reduction despite an increase in raw material cost due to market conditions
- Increased efficiency of sale promotion expenses: Fewer sales promotion opportunities due to COVID-19
15
Factors Contributing to
Operating Income and Profit Changes
FY2019 | FY2020 | |||
Core operating income | 54 | 64 | ||
Total other income (expenses) | 18 | 5 | ||
Gain on sales of non-current | 0 | 9 | ||
assets | ||||
Breakdown | ||||
Loss on disposal of non-current | (0) | (2) | ||
assets | ||||
Gain on sale of businesses | 17 | ‐ | ||
Other | 1 | (2) | ||
Operating income | 72 | 69 | ||
Profit before income tax | 72 | 69 | ||
Income tax expense | 17 | 23 | ||
Effective tax rate | 24% | 33% |
Unit: 100 million yen
(1)
(2)
(3)
(4)
Profit | 55 | 46 |
- Increase due to disposal of investment property for leasing
- Loss on disposal of non-current assets for line renewal of the Fujimi Plant
- Gain on sale of businesses to F-LINE, a new logistics company, in previous fiscal year
- Increase in the effective tax rate for the FY under review due to the absence of tax payment for the gain on sale of businesses in the previous fiscal year
16
Changes to Statement of Financial Position
Assets/liabilities and equity | |
¥216.3 B (up ¥15.1 B from the end of FY2019) | |
Equity attributable to owners of parent to total assets: | |
49.9% (down 4.0 points from the end of FY2019) | Unit: 100 million yen |
Unit: 100 million yen |
Current assets | 1,305 | |||||
1,126 | ||||||
858 | ||||||
Non-current | ||||||
assets | 885 | |||||
1,053 | ||||||
Liabilities | ||||||
898 | ||||||
1,110 | ||||||
Equity | ||||||
1,114 | ||||||
0 | 500 | 1,000 | 1,500 |
Current assets: up 178
Cash and cash equivalents +181: Increase in time deposit corresponding to borrowings, etc.
Operating and other receivables +17, Inventories (21), etc.
Non-current assets: down 27
Other non-current assets (28): Sale of Investment property, etc.
Liabilities: up 155
Borrowings + 154: Increase in preparation for tightness of financing conditions due to the spread of COVID-19, etc.
Equity: down 3
Net income attributable to owners of parent +46, dividends (31), purchase of treasury stocks (13), etc.
■ : Dec. 31, 2019 ■ : Jun. 30, 2020
17
Changes in Cash Flow
Unit: 100 million yen | |||
FY2019 | FY2020 | Change | |
Cash flows from operating activities (A) | 68 | 74 | 6 |
Cash flows from investing activities (B) | (60) | 1 | 61 |
Free cash flows (A+B) | 7 | 75 | 68 |
Cash flows from financing activities | (94) | 106 | 200 |
Factors contributing to changes in cash flows
- Profit before income taxes (3), depreciation and amortization +2, loss (gain) on sales and retirement of non-current assets (7), increase (decrease) in operating and other receivables +4, income taxes paid +14, etc.
- Purchase of property, plant and equipment, and intangible assets +32
- Proceeds from sales of property, plant and equipment +38
- Payments for acquisition of businesses (5), etc.
- Net increase (decrease) in short-term borrowings +210, net decrease (increase) in treasury shares (14), cash dividends paid +4, etc.
18
3. Reform of Earnings Structure of
Domestic Agriculture Business
19
Current Status and Challenges of
Domestic Agriculture Business
Performance has been poor since FY2017 and efforts to reform the earnings structure will continue
Past Performance Trends
Net sales/Revenue | Operating income/ | Unit: million yen | |
Core operating income |
(47) | (70) | (10) | |||||||||
(236) | (161) | (97) | (225) | ||||||||
(708)
(FY)
J-GAAP
- Business was launched in 1998, turned profitable in FY2012 and revenue topped 10 billion yen in FY2015
- From FY2017, competition intensified due to market entry by large-scale plantations and the market price of fresh tomatoes fell
- Performance has been poor since FY2017 and efforts to reform the earnings structure will continue
20
Establishment of New Company
in Domestic Agriculture Business
Establishment of Kagome Agrifresh Co., Ltd. (KAF)
- Plan to establish new company (as wholly-owned subsidiary) on October 1, 2020
- Plan to transfer domestic agriculture business to KAF in January 2021 through company split (simplified absorption-type split)
Aims of Establishment of New Company
(1) To speed up decision-making
- To create a more autonomous, agile organization by spinning off the business
- To speed up decision-making to be able to adapt to a dramatically changing environment
(2) To improve productivity
- To develop human resources specializing in the agriculture business and achieve more sophisticated plantation management and cultivation technology
- To recruit employees specifically for KAF and consider establishing working conditions more suited to the business in the future
- To manage profitability more carefully and strengthen cost competitiveness
(3) To promote alliances
- To actively acquire knowledge from external parties in order to transform ourselves into a "vegetable company"
- To actively promote alliances with other companies, including capital tie-ups
(4) To strengthen governance
- To strengthen the governance framework of the agriculture business through delegation of business management of each plantation to KAF
Strengthen the revenue base and expand the domestic agriculture business
21
4. Reform of Earnings Structure of
International Business
22
Current Status and Challenges of
International Business
Performance has been poor since FY2017 and efforts to reform the earnings structure will continue
Past Performance Trends
Net sales/Revenue | Operating income/ | Unit: million yen | |
Core operating income |
(735) | (656) | (683) | |||||||
(828) | |||||||||
(1,071) | |||||||||
(1,824) |
(FY)
J-GAAP
- The aim was a vertically integrated business model covering all stages from the development of seeds to the production, processing and sale of agricultural products based on the assumption of growth in global demand for tomato paste
- The business, which was unprofitable until 2015, was made profitable
- In recent years, performance has deteriorated, especially in the primary processing domain, due to a slowdown in demand for tomato paste
- The secondary processing domain of Kagome Inc., the core company in this segment, is also facing a
challenging business environment due to COVID-19 | 23 |
Direction of Earnings Structure Reform of
International Business
Focus on reforming the earnings structure of primary processing and strengthen secondary processing particularly in the U.S.
Portugal-based HIT, which is core company in primary processing domain
- Focus on structural reform at an appropriate size and reduce performance volatility rather than chasing expansion in scale
- Specific measures for the above are currently under consideration
U.S.-based Kagome Inc., which is core company in secondary processing domain
- Reduce fixed costs in response to dramatic deterioration in performance
- Introduce measures such as putting staff on temporal leave to minimize losses during the first half
- Concentrate on the U.S. rather than pursuing global development
Primary processing: Work on HIT reform and reduce performance volatility
Secondary processing: Verify the growth potential of Kagome Inc. in the U.S.
24
5. FY2020 Full-year Consolidated
Results Forecasts and Numerical Targets under
Second Mid-term Management Plan
25
FY2020: Revision of Full-Year Results Forecasts
Revenue | ||||
FY2019 | FY2020 | |||
Results | Initial | Revised | Change | |
forecast | forecast | |||
Domestic processed | 1,325 | 1,364 | 1,338 | (26) |
food business | ||||
Domestic agriculture | 96 | 108 | 105 | (3) |
business | ||||
International | 444 | 458 | 424 | (34) |
business | ||||
Others/ | (56) | (62) | (54) | +8 |
adjustment | ||||
Total | 1,808 | 1,867 | 1,814 | (53) |
Unit: 100 million yen | |||
Core Operating Income | |||
FY2019 | FY2020 | ||
Results | Initial | Revised | Change |
forecast | forecast | ||
112 | 102 | 110 | +8 |
(2) | 4 | 3 | (1) |
8 | 14 | 8 | (6) |
5 | 4 | 3 | (1) |
123 | 124 | 124 | ー |
* As of FY2020 the export beverage business has been transferred from the "Other" segment to the "international business" segment. Corresponding figures for FY2019 have been converted.
Consolidated
- Initial forecast for core operating profit is expected to be reached although downward revision was made for sales revenue
Domestic Processed Food Business
- Forecast for sales revenue was revised since a decrease in sales of institutional/industrial-use products will continue throughout the year
- Forecast for core operating profit was revised upward based on the increased efficiency of promotion expenses
Domestic agriculture business
- A decrease in revenue in the first quarter will be recovered in the second half of the fiscal year. Will turn a profit
International Business
- Sales revenue of Kagome Inc. is expected to remain at approx. 70% of the level in the previous year
• Revenue and core operating income forecasts have both been lowered | 26 |
Priority Strategies for Second Half of FY2020
Stimulate demand for vegetables through the "Let's Eat Vegetables" campaign
Stimulate demand for vegetables through the "Let's Eat Vegetables" campaign
- Continue the promotion focusing on the "Let's Eat Vegetables" campaign
- Promote demand for vegetables and help establish the daily habit of vegetable consumption
Launch Vegetable Consumption Promotion Project in cooperation with other companies and organizations
- Launch full-scale cooperation with other companies and organizations, which has been delayed due to COVID-19, and start a big movement
- Hold an online kick-off meeting on Friday, July 31
27
Priority Strategies for Second Half of FY2020
Launch date: October 28
Foods with functional claims
Yasai Seikatsu 100 Care+
PastaHotpot
Examples of proposals of recipes combining
fresh tomatoes and condiments
Domestic Processed Food Business (Beverages)
- Expand retailers selling large-sized containers, which are in increasing demand
- Make seasonal health proposals in response to heightened health awareness
-
Introduce foods with function claims for the first time under the Yasai Seikatsu brand
Generate demand using the functions "to protect skin moisture" and "keep the body warm" - Launch campaigns using popular characters again this year
Domestic Processed Food Business (Food and others)
- Meet growing demand for home-cooked meals by strengthening proposals for tomato ketchup as a general-purpose condiment
- Propose recipes which help consumers manage their health and increase their vegetable intake
- In the institutional and industrial use category, focus on making proposals for meal replacement and industrial use products
Domestic Agriculture Business
- Stimulate demand through proposal of recipes using fresh tomatoes
- Achieve profitability through expansion of procurement from summer and autumn production areas
International Business
- Continue efforts to reform the earnings structure
- Focus on sales of vegetable beverages in Asia
28
Numerical Targets under
Second Mid-term Management Plan
Revised Targets for Final Year of (FY2021) Second Mid-term Management Plan
Unit: 100 million yen | ||||||||
Final Year of First | ||||||||
Mid-term | Final Year of Second Mid-term Management Plan | |||||||
Management Plan | ||||||||
FY2018 | FY2021 | FY2021 | Change | |||||
Initial target | Revised target | |||||||
Results | Profit | Target | Profit | Target | Profit | |||
margin | margin | margin | ||||||
Domestic processed | Revenue | 1,340 | - | 1,480 | - | 1,374 | - | (106) |
food business | Core Operating Income | 119 | 8.9% | 124 | 8.4% | 108 | 7.9% | (16) |
Domestic agriculture | Revenue | 112 | - | 140 | - | 106 | - | (34) |
business | Core Operating Income | (1) | (0.9)% | 8 | 5.7% | 5 | 4.7% | (3) |
International | Revenue | 394 | - | 500 | - | 380 | - | (120) |
business | Core Operating Income | 6 | 1.5% | 30 | 6.0% | 12 | 3.2% | (18) |
Consolidated | Revenue | 1,846 | - | 2,120 | - | 1,860 | - | (260) |
Core Operating Income | 124 | 6.7% | 162 | 7.6% | 125 | 6.7% | (37) | |
Future Direction
Before | |
Domestic processed food | Strengthen functional, plant-based and |
business (Beverages) | target-specific beverages |
Domestic processed food | Strengthen meal replacement and food |
business (Food and others) | service markets |
Domestic agriculture | Achieve revenue growth through completion |
business | of reform of earnings structure |
International business | Achieve revenue growth through completion |
of reform of earnings structure | |
After
In addition to the strategies on the left, respond to heightened health awareness and home-cooked food opportunities (Stress health benefits of routinely drinking vegetable beverages and promote large-sized containers, etc.)
In addition to the strategies on the left, respond to the home- cooked food opportunities (recipes using condiments, etc.)
Achieve reform of earnings structure and revenue growth through new company
Structural reform focusing on Kagome Inc. and HIT
29
Finally…
2025 Goal
2025
Long-term Vision
"Become a strong company
that can achieve sustainable growth resolving social issues through foods."
Transform from a "tomato company"
to a "vegetable company"
Survive in the "food and health" domain
through the power of vegetables
Growing consumer interest in a healthy
diet and increasing immunity
30
Note
All information contained herein on the current plans, forecasts and strategies of Kagome that does not consist of historical facts is based on judgments made by Kagome's management from currently available information. We therefore request that you refrain from relying comprehensively and solely on these forecasts. Please note that actual results may differ materially from these forecasts due to various important factors that could have an impact on actual results, including but not limited to (1) weather, particularly low temperatures in summer, (2) product accidents such as contamination by foreign substances, (3) economic conditions, particularly consumer trends, surrounding the
business domains of Kagome, and (4) Kagome's capability of continuing to plan and
develop products and services that will be accepted by customers in the market exposed to fierce competition that is characterized by rapidly changing customer preferences. The purpose of these materials is to promote a greater understanding of Kagome, and not necessarily to solicit investment in Kagome. Market data, etc. stated herein are also prepared based on information that the Company deems to be reliable and accurate. However, please note that these data, including future as well as past data, could change without prior notice due to revisions, etc.
31
Reference
32
Fresh Tomato Market Prices
Trends in the fresh tomato market
- A downward trend in market prices has continued since 2017.
- Market structure tends towards excessive supply, due to factors such as the increase in the number of large-scale glasshouse plantations.
Yen/㎏
Source: Created based on market statistics data obtained from the Tokyo Metropolitan Central Wholesale Market website
33
Worldwide Production and Consumption of Primary Processed Tomato Products
Trends in worldwide production and consumption (3-year moving average) of primary processed tomato products(*)
- Primary processing: Tomato paste, whole tomatoes, and diced tomatoes
- Both production and consumption have slowed since around 2016
Production of primary processed tomato products Consumption of primary processed tomato products (3-year moving average)
Produced by Kagome based on Tomato News, worldwide consumption of tomato products | 34 |
Environmental Initiatives
Key Activities to Protect the Environment in FY2020
Established Kagome Plastic Policy to reduce environmental load
Jan. Goal 1: By 2030, stop using all straws made of oil-based materials attached to beverages in paper containers
Apr.
Goal 2: By 2030, switch at least 50% of beverage PET bottles to recycled, plant-based materials
Started to shift from plastic caps on paper containers of beverages to plant-based materials
(pictured below)
Started to shift from straws attached to paper containers to ones containing 5% of plant- based materials.
Jul. Started to consider biodiversity preservation at Kagome Yasai Seikatsu Farm Fujimi (Nagano Prefecture)
Sep. Will start to shift from 265 g PET bottles for tomato juice to 100% recycled materials.
Oct. Will start "month year" display for best-before dates, aiming to reduce food waste
Shift to plant-based materials
Compliance with TCFD (Task Force on Climate-related Financial
Disclosures) Recommendations
- We conducted a climate change scenario analysis in accordance with TCFD (Task Force on Climate-related Financial Disclosures).
- Please refer to p42-43 of the Integrated Report for further details. https://www.kagome.co.jp/library/company/ir/data/integratedreport/2020/ pdf/report_1.pdf
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KAGOME Co. Ltd. published this content on 12 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2020 08:02:13 UTC