FY3/2015 Financial Results Presentation May 22, 2015 The Nisshin OilliO Group, Ltd. 1
Summary of Financial Results for FY3/2015 Progress Report on Medium-Term Management Plan Takao Imamura President and Representative Director 2
Summary of Consolidated Financial Results for FY3/2015 and Consolidated Financial Forecasts for FY3/2016 3
Consolidated Financial Results for FY3/2015 (Million yen) FY3/2015 FY3/2014 Change Net sales 329,267 337,148-2.3% Operating income 5,574 5,103 +9.2% Ordinary income 5,823 5,058 +15.1% Net income 3,447 2,276 +51.5% 4
Consolidated Forecasts for FY3/2016 (Million yen) FY3/2016 Forecasts FY3/2015 Results Change Net sales 340,000 329,267 +3.3% Operating income 7,000 5,574 +25.6% Ordinary income 7,000 5,823 +20.2% Net income attributable to the parent s shareholders 4,000 3,447 +16.0% 5
Progress Report on Medium-Term Management Plan 6
Basic Policy in Medium-Term Management Plan Our Desired Vision and Direction Armed with strong brand power and original technology, we aim to become a corporate group conducting the oil and fat and related businesses on a global scale. Basic policy Centered on the improvement of earnings in our core oil and fat business, we will build a solid earnings base for the future. 7
Domestic Oil and Fat Business (1) Aiming to build a solid earnings base, we are implementing far-reaching initiatives to improve earnings - Promote sales with reasonable prices, expand sales of value-added products - Reform earnings structure in standard oil category Shift to earnings structure model that focuses on value-added products Strengthen product development and lineup to satisfy consumer/user needs Expand sales of Nisshin Healthy Vege-Oil and Nisshin Yasashi-canola oil Strengthen lineup, in part by introducing new olive oil products Create new markets for coconut and linseed oils Expand product lineup for olive oil gift packs and further collaborations Strengthen sales of Nisshin super long canola oil Expand product lineup of Nisshin flavor-rich oil series Implement full-fledged strategies for each sales channel to commercial users and newly establish organizational functions that specialize in developing new customers Promote a marketing model that implements the joint development of demand via affiliations with the User Support Center 8
Domestic Oil and Fat Business (2) Reduce Production / Distribution Costs ( 単位 : 百万円 ) Realize cost reductions in line with plans to achieve 3.0 billion cost-slimming goal (Million yen) 3,000 2,000 1,000 0 3,000 1,804 1,916 1,163 FY3/2014 Results FY3/2015 Plan FY3/2015 Results FY3/2016 Plan [FY3/2015 results] Establish a system that achieves a reasonable balance between supply and demand: 62 million yen Maximize benefits from renewal of Yokohama Isogo Plant: 226 million yen Renew production/logistics functions at West Japan bases: 63 million yen Measures to reduce transport costs, including joint delivery: 365 million yen Strengthen comprehensive cost competitive strength in production: 1,199 million yen [Ref.] Package inventory trends (Quarter average) *Indexed at Apr-Jun 2013 = 1 1.1 1.0 0.9 FY3/2015 FY3/2014 0.8 Apr-Jun average Jul-Sep average Oct-Dec average Jan-Mar average 9
Processed Oil and Fat Business Steadily post profits to achieve profit levels equivalent to those in the domestic oil and fat business ISF Increase sales volume, focusing on customers in Europe, and shift product mix to valueadded products Further expand business in Asia, a region that boasts growth potential Strengthen technological expertise through collaborations with Nisshin Global Research Center Expand suppliers and stabilize procurement of RSPO raw materials Daito Cacao Co., Ltd. and T.&C. Manufacturing Co., Pte. Ltd. Select partners for commercialization of products in Southeast Asia and accelerate global expansion (Daito Cacao) Strengthen proposals to beverage/food manufacturers, and implement low-cost operations (T.&C.) Domestic Processed Oil and Fat Secure increase in sales volume via a full-fledged expansion in sales of specialty fats Launch activities for full-fledged entry into the retail market Expand sales to major companies in bread manufacturing market 10
Fine Chemical Business and Healthy Food Business Increase volume of sales for existing product to major customers and establish an infrastructure in China to facilitate sales expansion (Fine Chemical) Expand lineup of medium-chain triglyceride (MCT)-related products, and improve profit margins on dressings (Healthy Food) Fine Chemical In the cosmetics industry, increase sales of existing products to major customers, and secure new users Respond to increase in demand for general-purpose products in overseas local markets Increase sales, including securing new users for MCT oils Establish independent operating company in China IQL to implement measures to expand sales in the global market Healthy Food In the category of foods for people receiving medical treatment, expand MCT oils and other MCT-related products to increase sales volume Expand product lineup of nursing care foods and sales of the energycharged Ene-Pudding series Improve earnings in the dressings Launch new products product concept is to use MCT coconut oil and reduce sodium content by 50% 11
Medium-Chain Triglycerides (MCT) Business Develop MCT into a viable business - a growth strategy Establish a global brand: MCT = Nisshin OilliO Implement activities to boost recognition of the benefits of MCTs in various situations by gathering case studies and other evidence that indicates that MCTs prevent the accumulation of body fat, enhance mobility performance, treat malnutrition in seniors, and improve brain functions Develop global brand by collaborating with overseas companies and interlinking activities with the presentation of case studies on the benefits of MCT at scientific conferences New product launch Product name: MCT Memorion Type: Soft jelly in 15g sticks (30 to a package) Sales channel: Mail order 12
Additional Business Structure Reforms & Building New Structure Additional Business Structure Reforms Aiming toward the realization of our vision in the Medium-Term Management Plan and sustainable group growth in and after FY3/2018, we plan to implement the following four additional major cost-reduction initiatives: sales operation reforms, distribution structure reforms, operational, organizational, and personnel structure reforms, and cost structure reforms Establish Technology Development Center We aim to execute reforms to the structure of our R&D management. To this end, we plan to establish a new Technology Development Center by transferring our R&D functions to the Yokohama Isogo Plant, to further drive globalization, introduce a market-in approach, accelerate proposal-backed product development, to get us closer to the market, and to integrate R&D and production functions. Name: Technology Development Center (tentative) Location: Yokohama Isogo Plant Role: R&D, development of technologies, presentations, etc. Construction is slated for completion in the spring of 2017 13
Medium-Term Management Plan Ordinary Income Goals Aiming for FY3/2017 Consolidated Ordinary Income: 11.0 billion-plus (Million yen) 12,000 11,000 10,000 Healthy Food Business, etc. 1,000 Fine Chemical 1,000 8,000 6,000 4,000 2,000 5,823 890 547 1,972 2,414 7,000 500 700 2,500 3,300 Processed Oil and Fat Business 3,000 Domestic Oil and Fat Business 6,000 0 FY3/2015 Results FY3/2016 Plan FY3/2017 Plan 14
Summary of Financial Results for FY3/2015 (Year Ended March 31, 2015) Nobuyuki Watanabe General Manager, Financial Dept. 15
Summary of Consolidated Financial Results for FY3/2015 (Year Ended March 31, 2015) Net sales Operating income 5,574 5,103 5,823 5,058 Ordinary income Net income FY3/2015 329,267 3,447 FY3/2014 337,148 2,276 Change (Million yen) -7,881-2.3% +471 +9.2% +764 +15.1% +1,171 +51.5% Raw Materials Prices & Foreign Exchange Rates FY3/2015 FY3/2014 Soybean Unit Price (USD/t) 571 617-46 -7% Rapeseed Unit Price (USD/t) 522 668-146 -22% Foreign Exchange Rate (JPY/USD) 103 95 +8 +8% Note: Figures f or raw materials and f oreign exchange rate are based on Nisshin OilliO results. Change Change (%) 16
/Bu Soybean Market Price Trends (Chicago Board of Trade) 1,900 7/9 1,613.25 1,700 4/30 1,530.75 1,500 1,300 1,100 11/5 1,259.25 900 700 9/26 910.25 500 Source: Bloomberg 17
CAD/t Rapeseed Market Price Trends (Winnipeg Commodity Exchange) 800 5/14 656.20 700 600 5/13 511.20 500 400 2/13 394.00 9/22 394.60 300 Source: Bloomberg 18
MYR/t 4,400 Palm Oil Market Price Trends (Malaysia) 4,000 3,600 3,200 3/11 2,912 4/16 2,736 2,800 2,400 2,000 5/6 2,229 1,600 8/29 1,937 1,200 Source: Bloomberg 19
Foreign Exchange Rate Trends JPY/USD 125 12/5 121.46 120 115 110 12/31 105.31 105 100 95 90 7/17 101.18 85 80 4/3 93.04 75 70 Source: Bloomberg 20
75 % Meal Value Trends 70 65 60 55 50 Source: CBT market (soybean meal, soybean oil) 21
JPY/18 liter drum 5,000 Nikkei Market Price Trends: Oils 4,800 JPY/kg 290 4,500 4,000 4,100 249.0 3,800 3,850 4,150 3,750 3,850 270 250 3,500 3,400 229.0 3,300 217.5 218.0 233.0 230 3,000 2,500 179.0 2,800 187.5 215.5 216.0 210.5 192.5 202.5 210 190 2,000 1,500 1,000 155.0 151.0 140.0 153.0 148.0 170 150 130 Soybean oil 大豆白絞斗缶 (18 liter drum) 大豆白絞バルク Soybean oil (bulk) Rapeseed 菜種白絞バルク oil (bulk) Source: Nikkei inc. 22
Market Price Trends: Meals JPY/t 70,000 77.9 70,000 67,000 69,500 64,000 % 75.0 60,000 50,000 40,000 68.8 46,500 43,000 60,000 37,000 61,000 58,000 70.0 69.7 48,000 45,000 40,500 38,000 32,800 49,000 73.9 51,000 61,000 64.5 63.6 41,000 38,800 70.0 65.0 60.0 30,000 32,000 57.1 31,000 55.0 25,300 20,000 50.0 大豆粕 Soybean 菜種粕 Rapeseed 菜種粕レシオ Rapeseed meal meal meal ratio Source: The Daily Yushitokuhou 23
Consolidated Results by Business Segments Net sales FY3/2015 FY3/2014 Change (%) Operating income Net sales Operating income Net sales (Billion yen) Operating income Consolidated total Oil and Meal Processed Oil and Fat Fine Chemical Healthy Food Other Elimination/Corporate 329.2 5.5 337.1 5.1-2.3% +9.2% 214.8 2.9 231.8 2.6-7.4% +11.9% 96.0 2.2 87.0 2.0 +10.4% +9.6% 15.1 0.5 14.1 0.5 +6.7% -5.6% 7.1-0.0 7.3-0.0-2.8% - 5.6 0.4 5.6 0.4-1.2% -14.7% -9.4-0.5-8.9-0.5 FY3/2015 FY3/2014 Change Percentage of overseas sales 22.2% 21.9% +0.2% 24
Change in Major Raw Material Prices JPY/t 大豆 Soybean ( /t)(jpy/t) 菜種 Rapeseed ( /t)(jpy/t) 85,000 75,000 65,000 55,000 45,000 35,000 25,000 *Figures provided by Nisshin OilliO Group 25
Unit Selling Price Trends of Major Oil & Fat Products Taking Apr Sep 2007 as baseline of 1.0 1.6 1.4 1.2 1.0 0.8 *Figures provided by Nisshin OilliO Group 26
Factors Impacting Operating Income (Year on year) FY3/2014 Operating income: 5.1 billion (Billion yen) Raw Material Costs Soybean +3.55 Fine Chemical, Healthy Food Businesses (including subsidiaries) Rapeseed +12.10 Foreign Exchange -7.15 Subtotal +8.50 Unit Price of Meal -0.35 Sales of Oil and Fat -9.70 Total -1.55 Total ±0.00 Overseas Subsidiaries (Oil and Meal, Processed Oil and Fat Businesses) +1.50 Domestic Subsidiaries (Oil and Meal, Processed Oil and Fat Businesses) -0.65 Domestic Subsidiaries (Other) -0.05 Total +0.80 Other SG&A +1.15 Manufacturing Costs, Other +0.05 Total +1.20 Up 0.45 billion FY3/2015 Operating income: 5.55 billion 27
Total assets Consolidated Balance Sheet: Changes from End of Previous Fiscal Year (Billion yen) 241.6 +8.8 Total liabilities and net assets 241.6 +8.8 Current assets 130.8 +4.6 Total liabilities 113.3-0.1 Cash and deposits +2.7 Notes and accounts payable trade +1.7 Notes and accounts receivable trade +0.0 Interest-bearing debt -3.9 Inventories +3.2 Income taxes payable +0.5 Short-term loans receivable -1.8 Other +1.4 Other +0.5 Fixed assets 110.6 +4.1 Total net assets 128.2 +8.9 Property, plant and equipment -0.5 Retained earnings +2.2 Intangible assets -1.0 Treasury stock -0.0 Investments and other assets +5.7 Minority interests +0.8 Deferred assets 0.0 +0.0 Cost of issuing bonds +0.0 Accumulated other comprehensive income +5.9 28
Consolidated Interest-Bearing Debt (Billion yen) 700 70.0 66.1 63.2 600 60.0 500 50.0 400 40.0 300 30.0 54.9 51.5 51.0 8.8 13.4 21.5 6.6 4.5 5.3 19.0 4.1 20.7 4.4 50.3 46.4 16.6 12.9 3.3 3.0 200 20.0 100 10.0 36.0 33.0 28.0 43.0 38.0 30.4 30.4 0 2009 FY3/2009 年 3 月期 2010 FY3/2010 年 3 月期 2011 FY3/2011 年 3 月期 2012 FY3/2012 年 3 月期 2013 FY3/2013 年 3 月期 2014 FY3/2014 年 3 月期 2015 FY3/2015 年 3 月期 日清オイリオク ルーフ 国内子会社海外子会社 The Nisshin OilliO Group Domestic Subsidiaries Overseas Subsidiaries 29
Consolidated Forecasts for FY3/2016 (Million yen) Net sales FY3/2016 Forecast FY3/2015 Results 340,000 329,267 Operating income 7,000 5,574 Change +10,733 +3.3% +1,426 +25.6% Ordinary income 7,000 5,823 +1,177 +20.2% Net income attributable to the parent's shareholders 4,000 3,447 +553 +16.0% Raw Materials Prices & Foreign Exchange Rates FY3/2016 FY3/2015 Note: Figures for raw materials and foreign exchange rate are based on Nisshin OilliO estimates. Change Change (%) Soybean Unit Price (USD/t) 469 571-102 -18% Rapeseed Unit Price (USD/t) 484 522-38 -7% Foreign Exchange Rate (JPY/USD) 120 103 +17 +17% 30
Forecasts for Factors Impacting Operating Income (FY3/2016 Year-on-year) FY3/2015 Results Operating income: 5.55 billion (Billion yen) Raw Material Costs Soybean +9.30 Fine Chemical, Healthy Food Businesses (including subsidiaries) Rapeseed +3.35 Foreign Exchange -14.00 Subtotal -1.35 Unit Price of Meal -4.35 Sales of Oil and Fat +6.45 Total +0.75 Total +0.25 Overseas Subsidiaries (Oil and Meal, Processed Oil and Fat Businesses) +0.65 Domestic Subsidiaries (Oil and Meal, Processed Oil and Fat Businesses) -0.25 Domestic Subsidiaries (Other) +0.05 Total +0.45 Other SG&A -0.50 Manufacturing Costs, Other +0.50 Total ±0.00 Up 1.45 billion FY3/2016 Operating income forecast: 7.0 billion 31
Capital Expenditures, Research and Development Costs, and Depreciation and Amortization Capital Expenditures FY3/2015 Results (Million yen) FY3/2016 Forecast 6,511 9,500 Research and Development Costs (Million yen) FY3/2015 Results FY3/2016 Forecast 1,857 1,900 Depreciation and Amortization (Million yen) FY3/2015 Results FY3/2016 Forecast 5,813 6,000 32