Financial Results Presentation for Fiscal 2012 Year Ended March 31, 2013 May 16, 2013 The Nisshin OilliO Group, Ltd. 1
Summary of Financial Results for Fiscal 2012 and Financial Forecasts for Fiscal 2013 GROWTH 10 Phase II Final Fiscal Year Efforts towards Business Structure Reform and the Formulation of a New Medium-Term Management Plan Takao Imamura President and Representative Director 2
Summary of Financial Results for Fiscal 2012 and Financial Forecasts for Fiscal 2013 3
Fiscal 2012 Consolidated Financial Results (Millions of yen) FY12 FY11 Change Net sales 309,981 312,628-0.8% Operating income 4,227 5,900-28.4% Ordinary income 4,471 5,395-17.1% Net income 1,508 3,833-60.7% Reference: Non-consolidated Financial Results (Millions of yen) FY12 FY11 Change Net sales 187,238 182,602 +2.5% Operating income 3,862 4,470-13.6% Ordinary income 4,702 5,252-10.5% Net income 2,528 2,455 +3.0% 4
Results by Segment (1) Oils and Meals Business Processed Oils and Fats Business 210,000 190,000 200,562 206,942 3,649 3,436 4,000 3,500 100,000 80,000 60,000 1,934 86,023 74,923 3,000 2,500 2,000 1,500 170,000 3,000 40,000 809 1,000 500 150,000 FY11 FY12 2,500 20,000 FY11 FY12 0 [Oils and Meals Business] Increased earnings / reduced profits. While oils sales fell below the previous year, meals sales unit prices exceeded the previous year and overall sales increased. However, raw materials prices exceeded the previous year and hovered at high prices. Also, despite improvements, difficult conditions continued at Dalian Nisshin and business overall posted lower profits. [Processed Oils and Fats Business] Reduced earnings / reduced profits. Although domestic sales posted increased earnings, profits declined at ISF and overall sales declined year on year. With regards to operating income, profits fell due to the tough situation at ISF plus the goodwill amortization expenses. Net sales (Left axis: Millions of yen) Operating income (Right axis: Millions of yen) 5
Results by Segment (2) Healthy Foods Business Fine Chemicals Business Soy Foods and Materials Business 7,500 7,095 7,081 12,000 10,740 12,487 800 5,000 4,740 5,285 100 5,000 2,500-221 -273 0 8,000 4,000 638 399 600 400 200 2,500 40 44 50 0 FY11 FY12-500 0 FY11 FY12 0 0 FY11 FY12 0 [Healthy Foods Business] Nisshin Dressing: Diet and Nisshin Mayodore were strong and sales of dressing and mayonnaise varieties also had increased. Overall sales of the business were flat year on year and operating losses increased to 273 million. [Fine Chemicals Business] Due to IQL results being reflected on an annual basis, earnings increased year on year, but there were goodwill amortization expenses and profits fell. [Soy Foods and Materials Business] As a result of business development in which production, sales and technical support were combined, year-on-year earnings and profits rose. Net sales (Left axis: Millions of yen) Operating income (Right axis: Millions of yen) 6
Fiscal 2013 Consolidated Forecasts (Millions of yen) FY13 FY12 Change Net sales 340,000 309,981 9.7% Operating income 6,700 4,227 58.5% Ordinary income 6,000 4,471 34.2% Net income 2,700 1,508 79.0% Reference: Non-consolidated Financial Forecasts (Millions of yen) FY13 FY12 Change Net sales 208,000 187,238 11.1% Operating income 4,700 3,862 21.7% Ordinary income 5,000 4,702 6.3% Net income 2,900 2,528 14.7% 7
GROWTH 10 Phase II Final Fiscal Year Efforts towards Business Structure Reform and the Formulation of a New Medium-Term Management Plan 8
GROWTH 10 Results Trends (Millions of yen) Operating income Ordinary income Net income Net sales 298,196 337,925 301,299 10,435 305,297 312,628 309,981 10,302 8,272 8,043 6,966 4,113 4,560 1,876 3,065 5,104 5,900 6,308 5,395 3,833 2,122 4,227 4,471 1,508 FY07 FY08 FY09 FY10 FY11 FY12 9
Efforts towards Business Structure Reform Final fiscal year of GROWTH 10: Promoting business structure reform through the two prongs of Growth Strategies and Structural Reform Strategies Growth Strategies Establishment of a firm growth model In accordance with the rapid structural changes of the oil manufacturing business, uncover growth factors and values from diverse standpoints, such as those of business, technology, overseas and human resources, and design a growth model based on a vision of the future Keyword: Innovation Based on a macro perspective, organically combine the functions of Group companies and organizations and create new functions Fuse technological development and marketing from the standpoint of customers and produce new values and services Promote the establishment of technologies which become the new axis of growth Structural Reform Strategies Promote structural reform to bolster competitiveness Create a profits structure with competitive strength, which is able to realize constant expected earnings in any kind of environment Reform the old-style operations / cost structure and create a flexible and agile organizational structure which is able to respond to change Priority Policies Bolster the earnings of the oils and meals business Restructure the processed oils and fats business and the oils and meals business in China Secure a simple and furthermore efficient business structure Aim for a business structure capable of securing earnings stably, in any kind of environment 10
Business Structure Reform: Major Issues of Fiscal 2013 Bolster earnings of oils and meals business Business structure reform of ISF Business structure reform of business in China Optimize overall production / distribution and transform into a thoroughgoing low cost structure Restructure the operations, costs, personnel / organization structure into structures appropriate to the business environment Bolster financial strength / balance sheet compression Business structure reform of healthy foods business Abolish / merge / reorganize Group companies Continuous growth of fine chemicals business 11
Priority Issues of Fiscal 2013 (1) Bolster earnings of the oils and meals business Core categories earnings improvements Continuation of appropriate sales prices Expand sales of profitable goods Expand sales, bring new products to the market in premium oils, olive oil, sesame oil and healthy oil Optimize overall production / distribution and transform into a thoroughgoing low cost structure Secure cost-competitiveness through the restructuring of the production/supply structure Establishment of a combined supply structure of imported oil, including palm oil, and oil extraction Create dual use expression-extraction of the extraction lines of the Yokohama Isogo and Mizushima plants Bolster Yokohama Isogo plant s handling of imported oils Restructure Yokohama Isogo Plant Realization of optimum supply structure and minimization of distribution/inventory costs Strengthen bottle filling line capacity of Yokahama Isogo Plant and Sakai Plant 12
Priority Issues of Fiscal 2013 (2) Business structure reform of ISF Stabilization of earnings structure by securing customers and expanding specialty fats sales in Asia Sales to Asian bases of manufacturers developing globally Expand sales of margarines and shortenings in Southeast Asia and Asia Bolster technological applications and the development of added value products through the operations of the Global R&D Center Business structure reform of business in China Fundamental review and restructure of Dalian Nisshin Oil Mills, Shanghai Nisshin Oil & Fats and The Nisshin OilliO (China) Investment Company Construction of new business models aimed at opened technology and partnership strategies 13
Formulation of New Medium-Term Management Plan 14
GROWTH 10 At the Beginning and Current Year Changes in the environment since the beginning of GROWTH 10 Trends in Chicago soybean market price and domestic soybean extraction oil volume Thousands of tons Trends in overseas companies operating income (Millions of yen) 4,000 3,000 2,000 1,000 2007 2008 2009 2010 2011 2012 Domestic Soybean Extraction Oil Volume (Annual) Operating income Chicago Soybean Market Price (Closing Price) Source: Chicago Market Price: Reuters Domestic Soybean Extraction Oil Volume: Food Industry Promotion Section, Ministry of Agriculture, Forestry and Fisheries of Japan (Simple aggregation, not including goodwill, of operating income of Dalian Nisshin, Shanghai Nisshin, The Nisshin OilliO [China] Investment, ISF, SNBT, T&C, and IQL) 0-1,000 FY07 FY08 FY09 FY10 FY11 FY12 15
GROWTH 10 and the New Medium-Term Management Plan 4/2007 4/2011 4/2013 4/2014 Phase I (FY07-FY10) Complete AHEAD and realize a corporate group with net sales of 300 billion Management indicators (Net sales, ordinary income, ROA, ROE, interest-bearing debt to operating cash flow ratio) GROWTH 10 10-year Basic Management Vision for Generating New Value by Harnessing The Natural Power of Plants Phase II (FY11-FY13) Realize a stable earnings structure and secure growth Set key management indicators in line with management policy GROWTH 10 Summary and Business Structure Reform GROWTH 10 will be concluded with Phase II and the new medium-term management plan will be commenced from FY 2014. The new medium-term management plan encapsulates GROWTH 10 and, incorporating future predictions, shows the vision the Group should aim for and new growth strategies and structural reform strategies. Oils and Meals Business Oils and Meals Business Growth Businesses Processed Oils and Fats Business Healthy Foods Business Fine Chemicals Business Overseas Businesses New business domains (Environment business, soybean protein business) Focused injection of management resources Processed Oils and Fats Business Growth Businesses Oils and Meals Business in China Healthy Foods Business Fine Chemicals Business Soy Foods and Materials Business New Medium-Term Management Plan Business platforms (CSR, internal controls, risk management, ICT strategy, brand strategy, affiliated companies policies, human resources polices, finance policies, earnings structure policies, investment policies, etc.) 16
Summary of Financial Results for Fiscal 2012 (Year Ended March 31, 2013) Takeshi Ootara Officer and General Manager Financial Department 17
312,628 309,981-2,646-0.8% Summary of Consolidated Financial Results for Fiscal 2012 (Year Ended March 31, 2013) (Millions of yen) 5,900 4,227-1,672-28.4% 5,395 4,471-924 -17.1% 3,833 1,508-2,325-60.7% FY11 FY12 Net sales FY11 FY12 Operating income FY11 FY12 Ordinary income FY11 FY12 Net income Raw Materials Prices & Foreign Exchange Rates FY12 FY11 Change Change (%) Soybean Unit Price (USD/t) 639 571 +68 +12% Rapeseed Unit Price (USD/t) 699 641 +58 +9% Foreign Exchange Rate (JPY/USD) 80 80-1 -1% Note: Figures for raw materials and foreign exchange rate are based on Nisshin OilliO estimates. 18
Soybean Market Prices (Chicago) /Bu Apr.2012-Mar.2013 Average price (closing price): 1,510 1,900 1,700 Percentage increase: 17% Apr. 2011-Mar. 2012 Average price (closing price): 1,291 9/4 1,794.75 1,500 8/31 1,456.00 1,300 1,100 6/1 1,317.50 900 12/14 1,094.25 700 500 Source: Bloomberg 19
Rapeseed Market Prices (Winnipeg) CAD/t 800 Apr. 2012-Mar. 2013 Average price (closing price): 618 700 Percentage increase: 12% Apr. 2011-Mar. 2012 Average price (closing price): 553 7/10 691.10 600 3/30 624.50 500 12/20 572.20 400 11/25 496.10 300 Source: Bloomberg 20
Palm Oil Market Prices (Malaysia) MYR/t 4,400 4,000 3,600 2/9 4,000 Jan. Dec. 2011 Average price (closing price): 3,289 Jan. Dec. 2012 Percentage decline: 12% Average price (closing price): 2,903 3,200 4/9 3,655 2,800 2,400 10/7 2,787 2,000 1,600 12/12 2,040 1,200 Source: Bloomberg 21
Foreign Exchange Rate JPY/USD 125 120 115 110 105 100 95 90 85 80 4/6 85.53 Apr. 2011-Mar. 2012 Average rate (closing rate): 79 Apr. 2012-Mar. 2013 Average rate (closing rate): 83 Percentage change: +5% 3/12 96.71 75 70 10/31 75.35 9/13 77.13 Source: Bloomberg 22
USD/LT 175 Freight Charges per Ton for Panamax Size Vessels, From U.S. to Japan 155 135 115 Apr. 2011-Mar. 2012 Average change: 52 Percentage decline: 12% Apr. 2012-Mar. 2013 Average change: 46 95 75 55 10/18 58.068 4/27 55.040 35 2/2 44.109 9/18 40.441 15 Source: Based on TDS Maritime Intelligence data 23
Changes in Value of Meal % 70.00 65.00 Apr. 2011-Mar. 2012 Average value: 55 Apr. 2012-Mar. 2013 Average value: 63 8 point increase 60.00 55.00 50.00 Source: Nisshin OilliO estimates from CBT market prices (Soybean Meal, Soybean Oil) 24
Market Prices: Oils JPY/eighteen litre drum 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 3,600 3,400 166 155 151 4,800 4,600 4,200 4,100 249 229 219 209 203 179 4,300 224 219 173 3,600 178 3,300 3,050 2,950 2,800 2,900 3,000 3,200 3,100 167.5 165.5 160 158 157 153 155 145 160.5 152 153 148 165.5 3,400 187.5 185.5 3,600 197.5 195.5 3,800 217.5 215.5 3,800 3,700 215.5 212.5 205.5 213.5 210.5 203.5 3,850 218 216 4,150 JPY/kg 290 270 250 230 210 190 170 150 1,000 140 130 Soybean oil (eighteen litre drum) Soybean oil (bulk) Rapeseed oil (bulk) Source: Nikkei, Inc. 25
Market Prices: Meals JPY/t % 70,000 60,000 50,000 40,000 30,000 77.9 70,000 67,000 65,000 75.2 62,000 60,000 69.4 68.8 50,500 47,500 46,500 43,000 38,000 37,000 32,000 69.2 68.9 68.0 52,000 55,000 66.1 50,000 61.5 45,000 40,000 37,000 36,000 58.2 59.7 34,000 32,000 57.1 31,000 70.0 45,000 31,500 69.0 68.4 68.3 67.3 66.6 66.2 47,500 48,000 46,500 43,500 43,500 38,000 32,500 32,800 31,300 30,000 28,800 61,000 58,000 70.5 70.0 69.8 65.6 54,000 64.0 48,000 43,000 45,000 40,500 38,000 31,500 29,000 75.0 70.0 65.0 60.0 55.0 25,300 20,000 50.0 Soybean meal Rapeseed meal Rapeseed meal ratio Source: The Daily Yushitokuhou 26
Consolidated Results by Business and Geographic Segments (Millions of yen) FY12 FY11 Change (%) Net sales Operating income (loss) Net sales Operating income (loss) Net sales Operating income Consolidated 309,981 4,227 312,628 5,900-0.8% -28.4% Oils and Meals 209,663 3,436 203,172 3,649 +3.2% -5.8% Processed Oils and Fats 78,835 809 90,089 1,934-12.5% -58.2% Healthy Foods 7,148-273 7,167-221 -0.3% - Fine Chemicals 12,634 399 10,811 638 +16.9% -37.5% Soy Foods and Materials 5,345 44 4,797 40 +11.4% +10.0% Other 5,333 366 5,563 423-4.1% -13.5% Elimination/Corporate -8,981-556 -8,973-564 +0% 1% Japan 239,436 4,868 234,111 6,179 +2.3% -21.2% Asia 75,789-648 84,107-372 -9.9% - Europe 2,721 11 644 49 +322.5% - Elimination/Corporate -7,965-4 -6,234 44 +28% 109% FY12 FY11 Change Percentage of overseas sales 23.5% 24.7% -1.2% 27
Breakdown of Sales of Oils & Fats, Meals and Grains (Fiscal 2012) Net sales Sales volume Grains: 1% ( 0) Grains: 2% ( 0) Edible oils for household use: 7% ( 0) Meals: 19% (+2) Edible oils for household use: 21% ( 0) Edible oils for commercial use: 10% (+1) Oils & fats for food processing: 11% ( 0) Edible oils for commercial use: 18% (+1) Meals: 47% (-1) Processed oils & fats: 26% (-1) Processed oils & fats: 30% ( -3) Oils & fats for food processing: 8% (+1) FY12 FY11 Net sales Sales volume Net sales Sales volume Domestic 74% 68% 70% 68% International 26% 32% 30% 32% Notes: 1. Based on data from The Nisshin OilliO Group, Ltd., Settsu Oil Mills Co., Ltd., Daito Cacao Co., Ltd., Dalian Nisshin Oil Mills, Ltd., Shanghai Nisshin Oil & Fats, Ltd., Intercontinental Specialty Fats Sdn. Bhd., T.&C. Manufacturing Company Pte. 2. Figures in parentheses indicate year-on-year percentage point changes. 28
Change in Major Raw Material Prices 85,000 /t 大豆 Soybean ( /t)(jpy/t) 菜種 Rapeseed ( /t) (JPY/t) 大豆 Soybean ($/t) (USD/t) 菜種 Rapeseed ($/t) (USD/t) $/t 800 75,000 700 65,000 600 55,000 500 45,000 400 35,000 300 25,000 200 29
Change in Unit Sales Prices Taking Apr. Sep. 2007 as baseline of 1.0 油脂主要商品販売単価 Unit price of major oils & fats products ( /kg) (JPY/kg) 1.6 1.4 1.2 1.0 0.8 30
Major Factors Affecting Operating Income (Year on Year) Fiscal 2011 Operating income: 5.90 billion (Billions of yen) Raw Material Costs Soybean -3.50 Rapeseed -4.05 Foreign Exchange +0.60 Subtotal -6.95 Unit Price of Meal +6.45 Sales of Oils and Fats -0.75 Total -1.25 Healthy Foods, Fine Chemicals, Soy Foods and Materials Businesses (including subsidiaries) Total -0.25 Overseas Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) -0.80 Domestic Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) +0.15 Domestic Subsidiaries (Other) -0.15 Total -0.80 Other SG&A* +0.15 Manufacturing Costs, Other +0.50 Total +0.65 *Selling, General and Administrative Expenses Down 1.65 billion Fiscal 2012 Operating income: 4.25 billion 31
Consolidated Balance Sheet: Changes from End of Previous Fiscal Year Total assets (Millions of yen) (Millions of yen) 248,580 +11,447 Total liabilities and net assets 248,580 +11,447 Current assets 141,960 +6,851 Total liabilities 131,502 +7,635 Cash and deposits -8,010 Notes and accounts payable-trade +7,164 Notes and accounts receivable-trade +3,028 Interest-bearing debt -2,938 Inventories +13,363 Accounts payable-other +1,285 Short-term loans receivable -2,499 Deferred tax liabilities +1,884 Other +969 Other +240 Fixed assets 106,574 +4,610 Total net assets 117,078 +3,811 Property, plant and equipment +3,106 Retained earnings -154 Intangible assets -598 Treasury stock -2 Investments and other assets +2,102 Minority interests +494 Deferred assets 45-13 Cost of issuing bonds -13 Accumulated other comprehensive income +3,473 32
Consolidated Interest-Bearing Debt (Millions of yen) 75,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 66,148 63,210 51,553 54,909 51,014 19,024 20,771 43,943 8,868 21,554 13,449 4,105 9,043 6,685 4,417 400 4,566 5,355 43,020 38,020 36,000 34,500 33,000 28,000 FY07 FY08 FY09 FY10 FY11 FY12 The Nisshin OilliO Group Domestic Subsidiaries Overseas Subsidiaries 33
Consolidated Cash Flows (Millions of yen) Net cash provided by operating activities Income before income taxes and minority interests Depreciation and amortization Net changes in accounts receivable-trade, inventories, and notes and accounts payable-trade Income taxes paid Other Net cash used in investing activities Purchase of property, plant and equipment Proceeds from the redemption of investment securities Other Net cash used in financing activities Proceeds from long-term loans payable Payment of long-term loans payable Redemption of bonds Cash dividends paid Other +1,369 +4,520 +5,893-7,299-685 -1,059-4,945-4,897 +750-798 -7,793 +2,162-2,856-5,000-1,662-436 Change in cash and cash equivalents -10,526 34
Consolidated Forecasts for Fiscal 2013 (Millions of yen) FY13 1H FY12 1H Year on Year Net sales 340,000 163,000 309,981 152,141 +30,019 +9.7% Operating income 6,700 2,300 4,227 2,533 +2,473 +58.5% Ordinary income 6,000 2,000 4,471 2,130 +1,529 +34.2% Net income 2,700 600 1,508 1,050 +1,192 +79.0% Raw Materials Prices & Foreign Exchange Rates FY13 FY12 Change Change (%) Soybean Unit Price (USD/t) 591 639-48 -8% Rapeseed Unit Price (USD/t) 693 699-6 -1% Foreign Exchange Rate (JPY/USD) 93 80 +13 +17% Note: Figures for raw materials and foreign exchange rates are based on Nisshin OilliO results. 35
Forecasts for Major Factors Affecting Operating Income (FY13 Year on Year) Fiscal 2012 Operating income: 4.25 billion (Billions of yen) Raw Material Costs Soybean +2.55 Rapeseed +0.35 Foreign Exchange -13.60 Subtotal -10.70 Unit Price of Meal +3.20 Sales of Oils and Fats +11.85 Healthy Foods, Fine Chemicals, Soy Foods and Materials Businesses (including subsidiaries) Total +0.50 Overseas Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) Domestic Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) +1.80-0.35 Total +4.35 Domestic Subsidiaries (Other) +0.05 Total +1.50 Other SG&A* -0.75 Manufacturing Costs, Other -3.15 Total -3.90 Up 2.45 billion Fiscal 2013 Operating income forecast: 6.7 billion 36
Capital Expenditures, Research and Development Costs, and Depreciation and Amortization Capital Expenditures FY12 Results (Millions of yen) FY13 Forecast 6,659 6,900 Research and Development Costs FY12 Results (Millions of yen) FY13 Forecast 1,900 2,000 Depreciation and Amortization FY12 Results (Millions of yen) FY13 Forecast 5,893 5,400 37