Presentation October 28, 2010 Strengthening the Earnings Base of Our Core Business Strengthening the Earnings Base of Our Core Business to Achieve the Medium Term Management Plan to Achieve the Medium Term Management Plan – Business Strategies for the Second Half of Business Strategies for the Second Half of – the Fiscal Year Ending March 31, 2011 – the Fiscal Year Ending March 31, 2011 – (Stock code: 2871) (Stock code: 2871) Nichirei Corporation Nichirei Corporation Tel: (+81 Tel: (+81- -3) 3248 3) 3248- -2235 2235 E- -mail: mail: tanakah tanakah@ @nichirei nichirei.co. .co.jp jp E URL: http://www.nichirei nichirei.co. .co.jp jp/ /english english/ /ir ir/index.html /index.html URL: http://www.
Table of Contents Overview Business Strategy: Marine Products & Meat and Poultry Business Climate in the Second Half Becoming Meat and Poultry to Regain Earnings Momentum More Difficult, But Income Growth to Be Achieved Through a Review of Sales Channels and the on a Full Year Basis 1 Development of Processed Products 6 Business Strategy: Processed Foods Business Strategy: Logistics Full Year Plan to Be Achieved with Revenue Regional Storage and European Business to Remain Growth in the Second Half Offsetting Under Stress, but Logistics Network to Continue Nonperformance Expenses for New Plant Facilities Improving 7 in Thailand 2 Logistics Network to Post Income Growth on New Facilities for Chicken in Thailand to Incur Expanded Contracts at TC and Improved Transport 8 Nonperformance Expenses Due to Delay in Efficiency Permission to Start Operation 3 New Facilities to Offer a One-Stop Service for Storage 9 With Enhanced Thai Facilities as Momentum, and Forwarding to Cold Storage Customers Processed Chicken Products to Make a Greater Push into the Global Market European Business to Remain Under Stress with Signs 10 4 of Earnings Turnaround Commercial Use to Strengthen Action for Reference Materials Struggling Deli Counter Business While Segment Data 11 Developing New Needs 5 Notes: 1. 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. 2. “E” indicates estimates. 3. “Previous E” indicates FY11/3 estimates announced on July 27, 2010 with first quarter results; “Initial E” indicates FY11/3 estimates announced on May 13, 2010 with results for the previous fiscal year (FY10/3). 4. “Q” indicates a fiscal quarter, e.g. Q2 is the second quarter.
Business Climate in the Second Half Becoming More Difficult, But Income Growth to Be Achieved on a Full Year Basis (100 million yen) 10/3 11/3 (Previous E) 11/3E 11/3 (Previous E) 10/3 Amounts less than 100 million yen are omitted (Comparison) (Comparison) Net Sales 4,381 4,394 4,352 -42 -1% Operating Income 168 168 170 2 1% Recurring Income 154 150 160 10 4% Net Income 90 83 91 8 0% EPS 29 yen 27 yen 29 yen ROE 8% 7% 7% 1. Forecast net sales in fiscal year ending March 31, 2011 has been revised downward ¥4.2 billion, but forecast operating income has been raised by ¥0.2 billion. (i) In net sales, Marine Products has been revised downward ¥2.5 billion, reflecting a prudent approach due to rising market price in the producing districts. Logistics has been revised downwards ¥1.6 billion. (ii) In operating income, Meat and Poultry has been revised downward ¥0.3 billion, reflecting the outbreak of foot-and-mouth disease, while Processed Foods and Marine Products has been revised upward ¥0.2 billion and ¥0.1 billion, respectively, thanks to a robust performance in the first half. 2. Overall recurring income has been revised upward ¥1.0 billion, mainly because of improved dividend income and interest expenses, net. Intercompany Net Sales by Segment Operating Income by Segment elimination and 100 million yen 100 million yen corporate 4,868 4,722 5,500 4,745 4,394 Other 225 73 4,352 69 66 4,381 61 5,000 74 62 188 64 69 63 200 71 3 70 67 4,500 170 Real estate 168 168 166 151 175 26 1,578 3 1,423 6 2 1,528 4,000 2 4 1,390 1,402 1,418 4 38 27 38 150 2 3,500 Logistics 37 125 3,000 40 925 82 900 860 770 776 770 Meat and poultry 2,500 100 76 73 73 710 761 700 79 9 2,000 672 695 670 75 12 Marine products 82 3 9 6 1,500 10 50 9 9 7 1,000 9 1,800 1,740 1,750 60 1,621 1,603 1,606 25 Processed foods 0 47 3 45 45 500 26 20 0 -4 -2 -4 -5 0 -217 -223 -244 -247 -254 -230 Consolidated net -25 sales -500 09/3 10/3 11/3E 12/3P 13/3P 11/3 09/3 10/3 11/3E 12/3P 13/3P 11/3 (Previous E) (Previous E) Fiscal year Fiscal year 1
Business Strategy: Processed Foods
Business Strategy: Processed Foods Full Year Plan to Be Achieved with Revenue Growth in the Second Half Offsetting Nonperformance Expenses for New Plant Facilities in Thailand 1. Revenues from household use are expected Net Sales and Operating Margin of Processed Foods 100 million yen to increase 1% on a full-year basis, 2,500 5.0% reflecting excellent progress in the introduction of new autumn products at the 2,000 4.0% store front against the fundamentally flat 1,800 1,740 1,750 1,621 1,603 pace in the first half remained the same as a 1,606 3.3% 315 306 322 1,500 3.0% year ago. 304 2.9% 57 309 53 2.8% 104 301 79 52 2.6% 46 2. For commercial-use products, revenues 1,000 2.0% declined 8% in the first half with the impact 894 866 869 774 770 782 1.6% of the termination of OEM procurement of 1.1% certain chicken products, which continued 500 1.0% from the previous fiscal year, and delays in 516 527 481 464 468 461 the recovery of other prepared products for 0 0.0% 09/3 10/3 11/3E 12/3P 13/3P 11/3 commercial use, but revenues are likely to (Previous E) Fiscal Year increase 11% in the second half, and 1% on Pre-cooked frozen foods for househould use Pre-cooked frozen foods for commercial use Health value Other a full year basis, with expanded sales of Operating margin chicken, mainly at year-end holiday sales, by securing products through OEM to offset the Year-on-year Change Income in Processed Foods Business delay in the start-up of the new plant in Thailand. Fiscal year ended March 31, 2010: 26 3. Operating income in the first half rose 2.1 Actual Results: First Half Improved fixed costs: 5 billion yen from a year ago, thanks to the Other: 6 O t h e r : 6 Frozen Foods Lower chicken procurement costs: 12 Pre-cooked improved profitability of chicken products Improved productivity in domestic factories: 1 Decreases in revenues from pre-cooked and reduced fixed expenses. We expect an frozen foods: -3 Lower profit margin: -1 increase of 0.1 billion yen in operating m I p r o v e d Pre-cooked Frozen Foods Improved fixed costs: 3 i f x e d income in the second half as well, or 2.1 c Increases in revenues from pre-cooked s o Forecasts: Second Half t s : frozen foods: 4 3 Improved productivity in domestic billion yen on a full year basis. This will be factories: 2 Delay in start-up of Thai plant: -5 achieved by expanding sales of chicken F i s c a l Lower profit margin: -3 y a e r e n d products, which will absorb expenses related n i Fiscal year ending March 31, 2011: 47 g a M c r (E) h 3 1 , to nonperforming assets in Thailand. 2 0 1 1 : 4 20 30 40 50 60 7 ( E ) 100 million yen 2
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