Results Briefing May 13, 2010 Raising the the Presence of Each Business under Stress Presence of Each Business under Stress Raising Producing Lasting Value Producing Lasting Value Medium- -Term M Term Management anagement P Plan for FY 201 lan for FY 2010 to FY 2012 0 to FY 2012 Medium (Stock code: 2871) (Stock code: 2871) Nichirei Corporation Nichirei Corporation Tel: (+81 Tel: (+81- -3) 3248 3) 3248- -2235 2235 E- -mail: mail: abemsh@nichirei.co.jp abemsh@nichirei.co.jp E URL: http://www.nichirei.co.jp/english/ir www.nichirei.co.jp/english/ir/index.html /index.html URL: http://
Table of Contents Business Strategy: Marine Products & Meat and Poultry Focus of the New Medium-Term Management Plan Restructuring Business Resources as the Basis for Business Target Values in the New Medium-Term Management Plan 1 Operation with High Earnings Stability 8 Capital Spending to Peak and Ratio of Operating Income to Stepping Up Marketing Closer to User Routes to Ensure Capital Employed to Resume Upturn 2 Stability and Improve Profitability 9 Sales Systems to Be Renewed and Proportions of "Quality- Business Strategy: Processed Foods Conscious Raw Materials and Processed Products" to Be Improved 10 Operating Income to Reach ¥6 billion with Expanded Chicken Products and Improved Efficiency in Other Categories 3 Nichirei's Processed Chicken Products to Enhance Presence Business Strategy: Logistics in the Expanding Market 4 Expansion of Earnings Sources to Offset Increased Earnings to Improve with Increased Dominance Following Depreciation Cost and Enable Profit Growth in the Final Year 11 Integration and Enhancement of In-House Supply Capabilities 5 Contracts at TC to Remain Growth Driver for Sales of Productivity to Be Reviewed at Each Level to Develop More Logistics Network 12 Robust Earnings Strength 6 Regional Storage to Expand Earnings Base with Series of First Year of Medium-Term Plan to Be a Year of Laying the Large Investment Completions 13 Foundations for an Earnings Recovery 7 Stronger European Presence with Stable Operation of New Base in Poland and Acquisition of French Company 14 Reference Materials Segment Data 15 Notes: Figures shown in the graphs and charts in this presentation, unless otherwise specified, have been rounded off to the unit indicated. Certain figures have also been rounded up or down.
Focus of the New Medium-Term Management Plan
Focus of the New Medium-Term Management Plan Target Values in the New Medium-Term Management Plan (100 million yen) 10/3 10/3 Amounts less than 100 million 10/3 Actual 11/3 E Goal for 13/3 yen are omitted (Comparison) (Comparison) Net Sales 4,381 4,497 103% 4,868 111% 168 165 98% 188 112% Operating Income 154 147 95% 171 111% Recurring Income 90 79 87% 93 103% Net Income ROE 8% 7% 7% EPS 29 yen 25 yen 30 yen 1. For net sales, we aim at 11% growth of ¥48.7 billion for the three years under the plan, backed by growth in Logistics and especially the Logistics Network, and recoveries in Processed Foods and the Meat and Poultry Business. 2. For operating income, we expect an overall increase of ¥2 billion, with increases of ¥3.4 billion in Processed Foods led by chicken products, ¥0.3 billion in Marine Products and ¥0.2 billion in Meat and Poultry. We anticipate growth in Logistics to remain at ¥0.3 billion, given a higher depreciation cost. Lower earnings of ¥0.1 billion for Real Estate are expected compared to those as of the fiscal year ended March 2010 given contract renewals in commercial office space anticipated for the second year. 100 million yen Operating Income by Segment Net Sales by Segment 100 million yen 6,000 225 4,868 Intercompany 4,722 4,745 4,497 73 elimination 188 66 4,381 69 61 200 5,000 74 62 64 69 3 71 168 70 Other 166 165 26 175 6 1,578 1,423 2 2 1,528 151 4,000 1,442 4 1,390 27 150 4 38 Real estate 2 37 3,000 925 125 40 900 860 82 823 776 Logistics 100 76 710 761 700 73 2,000 695 672 79 9 75 Meat and poultry 12 82 9 1,000 8 1,800 50 1,740 1,750 1,636 9 1,621 7 7 Marine products 9 60 25 45 0 3 40 0 -217 26 -244 -234 -247 -254 20 Consolidated net 0 -2 09/3 10/3 11/3E 12/3P 13/3P -3 -4 sales 09/3 10/3 11/3E 12/3P 13/3P -1,000 -25 Financial year Financial year 1
Focus of the New Medium-Term Management Plan Capital Spending to Peak and Ratio of Operating Income to Capital Employed to Resume Upturn ROIC and ROE Operating Margin 1. Capital spending focused on Processed Foods and Turnover Rate Logistics from the years under the previous 14.0% 2.9 3.0 medium-term plan will peak in the fiscal year 2.7 2.7 12.0% 2.5 2.5 2.6 2.5 2.5 ending March 2011, and subsequent investment 10.3% 2.5 10.1% 10.1% 10.0% 10.0% 9.9% 2.3 2.3 9.2% 9.1% levels are expected to be lower. 8.7% 8.5% 8.4% 8.0% 7.9% 7.0% 2.0 2. The employed capital turnover rate, which has 6.6% 6.4% 6.4% 6.5% 6.0% 5.9% 5.4% 5.3% continued to rise, will temporarily fall in the 4.0% 1.5 aftermath, but will rise again in the fiscal year 4.0% 3.9% 3.8% 3.8% 3.7% 3.5% 3.4% 3.2% 2.0% 2.9% 2.8% ending March 2013. The operating margin will 1.0 0.0% also start to rise in the fiscal year ending March 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P -2.0% -2.0% 2013 due to expanded business base. This will 0.5 Employed capital turnover rate Operating margin -4.0% trigger a sharp rise in the ratio of operating income Employed capital operating margin Return on shareholders' equity to capital employed starting in the fiscal year -6.0% 0.0 ending March 2013. 3. Free cash flow is expected to move into the black in the second year and onward, and we will review Change in Capital Spending 100 million yen the possibility of acquiring treasury stock (Lease assets are shown after made off-balance) 300 representing about 5% of outstanding shares. We 275 269 227 250 will maintain our dividend policy, with a dividend 14 rate at 2.5% of stockholders' equity of and a 200 173 10 166 dividend ratio of 25%. 107 119 158 150 147 101 138 50 90 4. To reduce future financial risk and maintain stable 9 115 70 66 100 77 14 37 52 50 8 employee benefits, we will consider restructuring 17 39 71 13 7 40 113 106 50 7 7 27 25 29 the retirement benefit plan from the defined 11 13 73 48 42 34 30 32 32 31 benefit-based system to the defined contribution- 0 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 Ｅ 12/3 Ｐ 13/3 Ｐ -34 based system. -50 (There was a total of ¥6 billion in actuarial -100 differences and past service liabilities as of the end -119 Financial Year -150 of March 2010.) Capital Spending (Logistics) Capital Spending (Processed Foods) Capital Spending (Other) Free Cash Flow 2
Business Strategy: Processed Foods
Business Strategy: Processed Foods Operating Income to Reach ¥6 billion with Expanded Chicken Products and Improved Efficiency in Other Categories Net Sales and Operating Income of Processed Foods 1. For net sales, we aim at total growth of 11% 100 million yen 100 million yen for the three years under the plan, or 14% 2000 1848 1800 1785 90 1773 1750 1740 1750 excluding the effect of the sale of the acerola 1700 1636 1621 366 322 344 315 306 beverage business. Both the household and 326 495 70 1500 309 304 487 57 128 53 104 122 119 commercial markets are expected to expand, 60 46 79 60 55 527 50 516 552 461 backed by growth opportunities in the market 466 504 496 48 556 1000 464 534 45 43 41 for chicken products. For other categories, 40 26 30 20 rice will be the main focus in the household 500 894 869 866 839 798 803 774 785 10 market, while the commecial market should 738 679 maintain the status quo with a focus on 0 -10 priority categories as competition among 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P Financial Year manufacturers remains fierce. Pre-coocked frozen foods for commercial use Pre-coocked frozen foods for househould use Health value Other Operating income 2. For operating income, we aim at a total increase of ¥3.4 billion for the three years Factors Affected Operating Income in Processed Foods in FY13/3 Compared with FY10/3 under the plan, driven by chicken products. (Period of the Medium-Term Management Plan) Also, improvements in the earnings of other categories are anticipated given FY10/03 Operating Income 26 enhancements in factory productivity, Improved fixed costs 7 especially that of internally manufactured Lower chicken procurement costs products, and modifications to raw materials 4 Increased revenues from procurement strategies. We will also take processed chiken products 16 Pre-coocked frozen foods Increased revenues from frozen steps to improve fixed costs. pre-cooded food excl. chicken products 7 Improved earnings from domestic internal factory production 10 Increased logistics cost -2 Increased commercial distribution -2 Rising raw material prices -6 FY13/03 Operating Income 60 0 10 20 30 40 50 60 70 80 100 million yen 3
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