First Half FY3/2015 Financial Results Presentation November 18, 2014 The Nisshin OilliO Group, Ltd. 1
Summary of Financial Results for First Half FY3/2015 Medium-Term Management Plan for FY3/2015-FY3/2017 Takao Imamura President and Representative Director 2
Summary of Financial Results for First Half FY3/2015 and Consolidated Financial Forecasts for FY3/2015 3
Consolidated Financial Results for First Half FY3/2015 (Million yen) 2Q FY3/2015 2Q FY3/2014 Change (%) Net Sales 158,216 162,421 2.6% Operating Income 3,085 2,015 +53.1% Ordinary Income 3,160 2,107 +50.0% Net Income 1,896 830 +128.4% 4
Earnings Results by Business Segment (1) Oils and Meals Business Processed Oils and Fats Business 110,000 90,000 111,239 1,660 102,170 1,943 (Million yen) 3,000 2,500 2,000 1,500 50,000 40,000 30,000 39,030 43,386 1,035 (Million yen) 2,000 1,500 1,000 70,000 1,000 500 20,000 500 50,000 2Q FY3/2014 2Q FY3/2015 0 10,000 130 2Q FY3/2014 2Q FY3/2015 0 Net sales (LHS) Operating income (RHS) [Oils and Meals Business] The soy bean market has trended downward since July, following highs at around the US$15/Bu level up to June. The rapeseed market also declined from July, after an uptick through May. In domestic oils and fats, although there was a reactionary decline in response to a last-minute rush in demand prior to the consumption tax hike, sales volume rose versus the previous year. However, selling prices were down from a year earlier due to sluggish market trends. COFCO Nisshin (Dalian) Co., Ltd. (former Dalian Nisshin Oil Mills, Ltd.) became an equity-method affiliate from FY3/2015. [Processed Oils and Fats Business] In domestic processed oils and fats, sales were strong, mainly for shortening and specialty fats. ISF posted a substantial rise in profit year-on-year reflecting a shift in sales composition to high value-added products for the European market. 5
Earnings Results by Business Segment (2) Fine Chemicals Business Healthy Foods Business 8,000 6,763 7,386 (Million yen) 400 4,000 3,702 3,551 (Million yen) 6,000 303 300 4,000 235 200 2,000-23 -27 0 2,000 100 0 2Q FY3/2014 2Q FY3/2015 0 0 2Q FY3/2014 2Q FY3/2015-100 Net sales (LHS) Operating income (RHS) [Fine Chemicals Business] In raw materials for cosmetics, net sales and profit rose year-on-year owing to brisk domestic sales. In the medium-chain triglycerides business, profit was down reflecting a rise in the cost of sales due to a weak yen and soaring raw material costs. IQL posted a rise in net sales and operating income versus the previous year owing brisk sales in Spain. [Healthy Foods Business] In dressings and mayonnaise-type dressings, sales volume and net sales dropped from a year earlier due to a reactionary decline in response to a last-minute rush in demand prior to the consumption tax hike and a decrease in demand owing to soaring vegetable prices, but operating income rose. In foods for specified health uses (FOSHU) and in foods for people receiving medical treatment, net sales and profit declined but net sales and profit rose for foods for the elderly and for those in nursing care. 6
FY3/2015 Consolidated Forecasts FY3/2015 Forecasts FY3/2014 Results (Million yen) Change (%) Net Sales 326,000 337,148 3.3% Operating Income 6,400 5,103 +25.4% Ordinary Income 6,000 5,058 +18.6% Net Income 2,800 2,276 +23.0% 7
Medium-Term Management Plan for FY3/2015-FY3/2017 Progress Report 8
Processed Oils and Fats Business (1) We will seek to achieve an ordinary income of 3 billion through expansion of the domestic processed oils and fats business, increase of the earnings of Intercontinental Specialty Fats Sdn. Bhd., and promotion of our Asian strategy Domestic Processed Oils and Fats Further cultivate the domestic specialty fats market Full-fledged entry into the retail chains and retail market Enter into and expand sales to major companies in bread manufacturing market Increase sales volume and net sales by actively making proposals to existing and new customers Daito Cacao Co., Ltd and T.&C. Manufacturing Company Pte New business development via entry into East Asia (Daito Cacao Co., Ltd.) Select partners and look into potential bases and other issues for business startup in Asia Strengthen sales in countries throughout Asia, focusing on the impact to markets after the enactment of TPP agreements (T&C) Increase business transactions by expanding manufacturing lines and fortifying alliances with overseas dairy product manufacturers 9
Processed Oils and Fats Business (2) ISF Sales expansion and stable supplies to business partners in Europe By building a proposal-based support system that integrates sales, production, and development functions, we are successfully securing contracts in line with plans Implement measures to stabilize supplies from RSPO raw material suppliers Expand sales of high value added products, including CBE Implement development and proposals to respond to customers needs Move forward with supplier development to ensure stable procurement of raw materials Strengthen product strategies through ties with NGRC (Nisshin Global Research Center); develop new customers; promote Asia strategy Cultivate new customers in Asia and carry out proposals to expand sales 10
Reduce Production / Distribution Costs (1) We will seek to build a structure that reduces costs by 3 billion in fiscal 2015 compared with fiscal 2012 through enforcement of the production and distribution optimization plan for flexible response to the environment Establish a system that achieves a reasonable balance between supply and demand: 300 million Central management of information and optimization of inventories and transport for companywide production / sale Organize functions and roles of subsidiaries: 300 million Dynamic cost reductions by reviewing outsourced operations with subsidiaries Maximize benefit from renewal of Yokohama Isogo Plant: 600 million Reduce costs by establishing new warehouse, transferring gift line, and fortifying filling facilities Measures to reduce transport costs, including joint delivery: 500 million Reduce product transport costs through measures such as the review of agreements for shipments from plants Renew production / logistics functions at West Japan bases: 200 million Reduce costs by strengthening storage and filling functions in the West Japan area, mainly Sakai Plant Strengthen comprehensive cost competitive strength in production: 1.1 billion Continue to reduce cost extending from production processes to materials procurement 11
Reduce Production / Distribution Costs (2) ( 単位 : 百万円 ) Implement reductions in line with plans to achieve our cost-cut goal of 3.0 billion (Million yen) 3,500 3,000 3,000 2,500 2,000 1,804 1,824 1,500 1,000 1,163 500 0 FY3/2014 Results FY3/2015 Plan FY3/2015 Forecast FY3/2016 Plan Measures: Reduce external warehouse costs by adequately adjusting supply-demand balance Reduce number of packaged products transferred between sites Reduce external warehouse and distribution costs by starting up a new distribution center Reduce cost of transferring crude oil between sites Expansion of production facilities that utilize the pressurized extraction technique in the extraction line, etc. 12
Strengthen Product and Technology Development New research policies to support growth strategies Research that leads new trends in the structural oils and fats, and nutritional functions Create new value (food and functional materials) by using fat nutrient and structural oils and fats technologies to extract the power of medium-chain triglyceride, and use it in the field of preventive medicine Domains in which we plan to prioritize new products/technologies Improvement of brain functions, new industrial materials, preventive medicine, etc. Structural reform for R&D management Regarding strategies, policies, themes and other issues related to R&D, select, focus, and fortify resource allocation, research promotion, human resources training, and other areas for R&D overall Construction of new R&D facilities Transfer the Central Research Laboratory to the R&D facilities to be newly built at the Yokohama Isogo Plant Integrate R&D and production technology functions Position at R&D hub, including fortification of alliances with headquarters and NGRC Strengthen presentation functions 13
Summary of Financial Results for First Half FY3/2015 Nobuyuki Watanabe General Manager, Financial Department 14
Summary of Consolidated Financial Results for First Half FY3/2015 2Q FY3/2015 2Q FY3/2014 Change (%) (Million yen) Net Sales 158,216 162,421 Operating Income 3,085 2,015-4,205-2.6% +1,069 +53.1% Ordinary Income 3,160 2,107 +1,053 +50.0% Net Income 1,896 830 +1,065 +128.4% Raw Material Prices & Foreign Exchange Rates 2Q FY3/2015 2Q FY3/2014 Change Change (%) Soybean Unit Price (USD/t) 622 628-6 -1% Rapeseed Unit Price (USD/t) 528 721-193 -27% Foreign Exchange Rate (JPY/USD) 102 93 +9 +11% * Figures f or raw materials and f oreign exchange rates are based on Nisshin OilliO estimates. 15
/Bu Soybean Market Price Trends (Chicago Board of Trade) 1,900 7/9 1,630.00 1,700 5/22 1,536.75 1,500 1,300 1,100 8/15 1,271.00 900 700 9/29 905.50 500 Source: Bloomberg 16
CAD/t Rapeseed Market Price Trends (Winnipeg Commodity Exchange) 800 5/14 656.20 700 600 5/13 511.20 500 8/6 472.40 400 9/22 388.00 300 Source: Bloomberg 17
Palm Oil Market Price Trends (Malaysia) MYR/t 4,400 4,000 3,600 4/17 2,745 3,200 8/27 2,502 2,800 2,400 2,000 7/30 2,220 1,600 8/29 1,922 1,200 Source: Bloomberg 18
Foreign Exchange Rate Trends JPY/USD 125 120 115 9/30 109.85 110 5/22 103.74 105 100 95 90 5/21 100.82 85 80 4/2 92.57 75 70 Source: Bloomberg 19
Meal Value Trends 75.00 % 70.00 65.00 60.00 55.00 50.00 Source: CBT market (soybean meal, soybean oil) 20
JPY/18 liter drum 5,000 Nikkei Market Price Trends: Oils 4,800 JPY/kg 290 4,500 4,000 4,100 249 3,800 3,850 4,150 3,750 270 250 3,500 3,400 229 224 3,300 3,400 217.5 218.0 233.0 230 3,000 2,500 179 219 219 2,800 187.5 215.5 216.0 210.5 200.5 210 190 2,000 1,500 1,000 155 151 140 153 148 170 150 130 Soybean oil 大豆白絞斗缶 (18 liter drum) 大豆白絞バルク Soybean oil (bulk) 菜種白絞バルク Rapeseed oil (bulk) Source: Nikkei,inc. 21
Market Price Trends: Meals JPY/t 70,000 77.9 70,000 67,000 69,500 % 75.0 60,000 50,000 68.8 62,000 69.2 60,000 70.0 48,000 58,000 61,000 69.7 49,000 73.9 51,000 71.7 70.0 65.0 40,000 30,000 46,500 32,000 43,000 61.5 45,000 40,000 37,000 57.1 31,000 58.2 45,000 31,500 32,800 38,000 40,500 60.0 55.0 25,300 20,000 50.0 Soybean Rapeseed Rapeseed 大豆粕菜種粕菜種粕レシオ meal meal meal Source: ratio The Daily Yushitokuhou Source: The Daily Yushitokuhou 22
Consolidated Results by Business Segments Net Sales (Billion yen) 2Q FY3/2015 2Q FY3/2014 Change (%) Operating Income (Loss) Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Consolidated total Oils and Meals Processed Oils and Fats Fine Chemicals Healthy Foods Other Elimination/Corporate 158.2 3.0 162.4 2.0-2.6% +53.1% 103.2 1.9 112.3 1.6-8.2% +17.1% 45.8 1.0 41.2 0.1 +11.2% +695.5% 7.6 0.2 6.8 0.3 +11.8% -22.5% 3.5-0.0 3.7-0.0-4.2% - 2.7 0.1 2.6 0.2 +2.2% -15.6% -4.7-0.2-4.4-0.2 2Q FY3/2015 2Q FY3/2014 Change Percentage of Overseas Sales 21.7% 21.8% -0.1% 23
Major Raw Material Prices Trends JPY/t 大豆 Soybean ( /t)(jpy/t) 菜種 Rapeseed ( /t) (JPY/t) 大豆 Soybean ($/t)(usd/t) Rapeseed 菜種 ($/t)(usd/t) USD/t 85,000 800 75,000 700 65,000 600 55,000 500 45,000 400 35,000 300 25,000 200 24
Unit Selling Price Trends Taking Apr. Sep. 2007 as baseline of 1.0 Unit price of major oils & fats products 油脂主要商品販売単価 ( /kg) (JPY/kg) 1.6 1.4 1.2 1.0 0.8 25
Factors Impacting Operating Income (Year on Year) First Half FY3/2014 Operating Income: 2.05 billion (Billion yen) Raw Material Costs Soybean +0.2 Rapeseed +7.55 Foreign Exchange -4.15 Subtotal +3.60 Unit Price of Meal +2.60 Sales of Oils and Fats -6.15 Total +0.05 Healthy Foods, Fine Chemicals Businesses (including subsidiaries) Total -0.05 Overseas Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) +1.30 Domestic Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) -0.35 Domestic Subsidiaries (Other) ±0.0 Total +0.95 Other SG&A +0.3 Manufacturing Costs, Other -0.2 Total +0.1 Up 1.05 billion First Half FY3/2015 Operating Income: 3.1 billion 26
Total assets Consolidated Balance Sheet: Changes from End of Previous Fiscal Year (Billion yen) Total liabilities and 236.8 +4.0 236.8 net assets (Billion yen) Current assets 130.0 +3.8 Total liabilities 113.7 0.2 Cash and deposits -0.5 Notes and accounts payable-trade -5.4 Notes and accounts receivabletrade +1.2 Interest-bearing debt +7.9 Inventories +4.1 Income taxes payable +0.1 Short-term loans receivable -1.9 Other -2.3 Other +0.9 Fixed assets 106.6 +0.1 Total net assets 123.1 3.7 Property, plant and equipment +0.0 Retained earnings +1.5 Intangible assets -0.6 Treasury stock -0 Investments and other assets +0.8 Minority interests Accumulated other comprehensive income +0.2 +2.0 Deferred assets Cost of issuing bonds 0 +0 +0 +4.0 27
Consolidated Interest-Bearing Debt (Billion yen) 700 70 600 60 500 400 300 54.9 51.5 51 8.8 13.4 21.5 6.6 4.5 5.3 66.1 19 4.1 63.2 20.7 4.4 50.3 16.6 3.3 58.2 14 3.4 200 100 36 33 28 43 38 30.4 40.8 0 FY3/2009 年 3 月期 FY3/2010 年 3 月期 FY3/2011 年 3 月期 FY3/2012 年 3 月期 FY3/2013 年 3 月期 FY3/2014 年 3 月期 2Q 2014 FY3/2015 年 9 月期 日清オイリオク ルーフ 国内子会社海外子会社有利子負債 The Nissin OilliO Group Domestic Subsidiaries Overseas Subsidiaries Interest-Bearing 28
Consolidated Financial Forecasts for FY3/2015 (Million yen) FY3/2015 2Q FY3/2014 2Q Year on Year Net Sales 326,000 158,216 337,148 162,421-11,148-3.3% Operating Income 6,400 3,085 5,103 2,015 +1,297 +25.4% Ordinary Income 6,000 3,160 5,058 2,107 +942 +18.6% Net Income 2,800 1,896 2,276 830 +524 +23.0% Raw Materials Prices & Foreign Exchange Rates FY3/2015 FY3/2014 Change Change (%) Soybean Unit Price (USD/t) 565 617-52 -8% Rapeseed Unit Price (USD/t) 520 668-148 -22% Foreign Exchange Rate (JPY/USD) 104 95 +9 +10% Note: *Figures f or raw materials prices and f oreign exchange rates are based on Nisshin OilliO estimates. 29
Forecasts for Factors Impacting Operating Income (FY3/2015 year on year) FY3/2014 Operating income: 5.1 billion (Billion yen) Raw Material Costs Soybean +3.8 Rapeseed +12.4 Foreign Exchange -7.25 Subtotal +8.95 Unit Price of Meal -0.9 Sales of Oils and Fats -8.1 Total -0.05 Healthy Foods, Fine Chemicals Businesses (including subsidiaries) Total ±0 Overseas Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) +1.2 Domestic Subsidiaries (Oils and Meals, Processed Oils and Fats Businesses) -1.0 Domestic Subsidiaries (Other) ±0 Total +0.2 Other SG&A +0.6 Manufacturing Costs, Other +0.55 Total +1.15 Up 1.3 billion FY3/2015 (forecast) Operating income : 6.4 billion 30