2015 financial results - lion corporation · kyusoku jikan a rise in unit prices backed by growth...
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Financial Resultsfor the Fiscal Year
Ended December, 2015Lion Corporation
Itsuo HamaRepresentative Director and President, Executive Officer
February 10, 2016
Contents Financial Results for 2015 Progress of V-2 Plan and
Our 2016 PoliciesFinancial Forecast for 2016
Financial Results for 2015
4
Consolidated Statements of Income
(Millions of yen)
2015 2014Y-on-Y Change
Amount %
Net Sales 378,659 367,396 11,263 3.1
Operating Income
% of Sales
16,374
4.3
12,406
3.43,968 32.0
Ordinary Income
% of Sales
18,099
4.8
14,059
3.84,040 28.7
Net Income
% of Sales
10,680
2.8
7,368
2.03,311 44.9
EPS 39.35 27.47 11.88 43.2
Difference from forecast
Forecast as of the beginning of the year
Revised forecast as of Nov. 30, 2015
3,659(1.0%)
3,659(1.0%)
2,874(21.3%)
1,374(9.2%)
3,099(20.7%)
1,599(9.7%)
3,180(42.4%)
1,680(18.7%)
Record-High Operating Income (2nd Consecutive Year) and Ordinary Income (3rd Consecutive Year)
5
(Millions of yen)
Results by Business Segment
Net sales Segment income (operating income)
2015 2014Y-on-Y change
2015 2014Y-on-Y change
Amount % Amount %ConsumerProducts 273,486 274,427 (940) (0.3) 10,108 8,516 1,591 18.7IndustrialProducts 56,104 59,793 (3,688) (6.2) 1,612 1,759 (147) (8.4)
Overseas 102,077 86,202 15,875 18.4 2,983 1,147 1,835 159.9
Other 29,166 28,682 483 1.7 956 597 358 60.0
Subtotal 460,835 449,106 11,729 2.6 15,660 12,021 3,638 30.3
Adjustment (82,176) (81,709) (466) - 714 384 330 85.9
Consolidatedtotal 378,659 367,396 11,263 3.1 16,374 12,406 3,968 32.0
Increased profitability in Consumer Products, higher sales and income Overseas
6
(Billions of yen)
Y-on-Y Changes in Operating IncomeSteadi ly Enhancing Prof i tabi l i ty
(2.0)
(3.3)
2.8
16.30 5 10 15 20
Operating income for 2015
Other expenses
Competition expenses
Total cost reduction efforts(manufacturing and logistics
costs)
Crude oil and vegetable oilprices
Sales, product mix and othres
Operating income for 2014 12.4
3.4
3.0
7
Results of the Consumer Products BusinessOral Care Products: Increasing the Ratio ofHigh-Value-Added Items in the Product Mix
Sales growth in our high-end products spurred overall market growth
(Lion Survey)
Y-o-Y sales comparisons (2014-2015):Toothpastes with a unit price of ¥500 or more:Lion products: Up 23% Entire market: Up 9%
Toothbrushes with a unit price of ¥250 or more:Lion products: Up 17%Entire market: Up 12%
8
Pharmaceutical Products: Sales Grew Thanks toHigh-Value-Added Items and Inbound Marketing Demand
PAIR Acne Cream W
Kyusoku Jikan
A rise in unit prices backed by growth in sales of high-value-added products
BUFFERIN PREMIUM
Smile 40 Premium
Results of the Consumer Products Business
Up 31%
Up 10% Up 135%
Up 60%
(Comparisons of annual sales)
Steadily captured inbound marketing demand
9
Results of the Consumer Products BusinessDirect-to-Consumer Sales: Expanded Product Lineup,
with Products Labeled as Functional Contributing to Sales
‐30
‐20
‐10
0
10
20
1Q 2Q 3Q 4Q
Initiated functional
labeling at the end of June
2015
Functional labeling for Lactoferrin contributed to sales recovery
Y-o-Y comparisons of Quarterly Lactoferrin sales
The augmented product lineup helped attractnew customers
Introduced Ayumu Chikara, anutritional supplement that helps counter locomotive syndrome
10
Results of the Industrial Products Business
Launched a New Companyto Create No. 1 Global Niche Player
Electricaland Electronics
Energy, Environmental& Infrastructure
Automotive
Lifestyle related Industry
・Integrate existing technologies
・Nurture loyal users
・Accelerate overseas expansion
11
Results of the Overseas Business
(on a local currency basis)
Expanding Our Operations in the Personal Care Field
Y-o-Y sales comparisons (2014-2015) forpersonal care productsThailand: KODOMO Up 11%South Korea: KireiKirei Up 44%China: Systema Up 11%
2015 overall sales in the personal care field: Up 22% from 2014
Growing proportion of sales of personal care field* in net sales
From 29% in 2014 to 31% in 2015
*Total of sales from oral care and beauty care products
12
Results of the Overseas Business
Beauty CareY-o-Y sales comparison
Up 44%
E-CommerceY-o-Y sales comparison
Up 82%
Oral CareY-o-Y sales comparison
Up 16%
Profitable Growth in Key Overseas Markets
Thailand:Favorable sales of oral
care products
South Korea:Significant sales growth in
the beauty care field
China:Expanding sales
channels
Progress of V-2 Plan andOur 2016 Policies
14
Roadmap for “Vision2020 Part-2”
2015 2016 2017
QualitativeGrowth ofDomestic Businesses
QuantitativeExpansion ofOverseas Businesses
Development ofNew Business Value
Enhancement ofOrganizationalLearning Capabilities
Reform in marketing approach
Reorganizebusiness structure
Secure greater market presence in mainstay fields
Accelerate structural reforms
Boost direct-to-consumer sales products business and embark
on new businesses
Human resource development and diversity promotion
Strategies for further
growth
5.0%4.6%4.3%
In 2016, We Will Solidify Our Business Foundation for Achieving “Vision2020 Part-2” Targets
operating marginratio
15
1.Qualitative Growth of Domestic Businesses
E s t a b l i s h i n g G r e a t e r P r o f i t B a s e
2016Policies
2015Progress
・ Expanded high-value-added products lineup・ Improved business efficiency
Capture greater share of key markets by: ・ Solidifying our position in the oral care products
market・ Strengthening the brand recognition of our
super-concentrated liquid laundry detergents
16
E n s u r e C o n s t a n t P r o f i t a b l e G r o w t h
2.Quantitative Expansion of Overseas Businesses
2016Policies
2015Progress
・ Shifted toward the personal care field ・ Made Southern Lion Sdn. Bhd. a
consolidated subsidiary ・ Launched a new subsidiary in Taiwan
Enhance our market position by:・ Stepping up brand investment in Northeast Asia・ Expanding our operations in the personal care
fields in Southeast Asia
17
A c h i e v e R a p i d G r o w t h i n D i r e c t - t o -C o n s u m e r S a l e s P r o d u c t s B u s i n e s s
3.Development of New Business Value
2016Policies
2015Progress
・ Promoted Lactoferrin through functional labeling ・ Shifted to in-house Lactoferrin production ・ Established the Direct Marketing Division
Achieve business expansion by: ・ Establishing more diverse product lineups・ Enhancing business efficiency
18
B o o s t O u r O r g a n i z a t i o n a l C a p a b i l i t i e s t o E n t e r t h e N e x t G r o w t h S t a g e
4.Enhancement of Organizational Learning Capabilities
2016Policies
2015Progress
・ Shifted to a marketing approach emphasizing brand cultivation
・ Reorganized the chemical business
Strengthen our onsite capabilities for executing business strategies by:
・ Nurturing and utilizing globally capable employees while promoting diversity
19
2016 Investment Approach
Healthcare R&DNew Business
(Japan)Share No. 1 Brand
(Overseas)Global Brand
(Overseas) Investment to Boost Exports to Nearby
Countries
(Japan)Greater Production
Capacity forOral Care Products
Innovation
Marketing
Capital Expenditure
Strengthen the Group’s Operating Foundation
Accelerate Further Growth
20
2016 Business Plan
Sales declineSales growth
Profit growthProfit decline
Consumer Products(Household and OTC products)
Consumer Products(Direct-to-Consumer)
Industrial Products(Chemicals)
Industrial Products(Industrial Detergents)
Overseas(Southeast Asia)
Overseas(Northeast Asia)
Overseas(Northeast Asia)
Other
Financial Forecast for 2016
22
2016 Consolidated Financial Forecast
2016Forecast 2015 Y-o-Y
Change
Y-o-YChange
(%)
20161H
Forecast
20151H
Y-o-YChange
Y-o-YChange
(%)
Net Sales 390,000 378,659 11,340 3.0 185,000 180,283 4,716 2.6
Operating Income% of Sales
18,000
4.6
16,374
4.31,625 9.9 6,500
3.5
5,698
3.2
801 14.1
Ordinary Income% of Sales
19,000
4.9
18,099
4.8900 5.0
7,000
3.8
6,647
3.7
352 5.3
Net Income% of Sales
11,0002.8
10,6802.8
319 3.0 4,0002.2
3,8982.2 101 2.6
EPS (yen) 38.37 39.35 (0.9) (2.5) 13.95 14.53 (0.5) (4.0)
(Millions of yen)
By business segment
Aiming for Record-High Sales and Profits
23
2016Forecast 2015 Y-o-Y
Change
Y-o-YChange
(%)
20161H
Forecast
20151H
Y-o-YChange
Y-o-YChange
(%)
ConsumerProducts 253,000 247,978 5,021 2.0 118,000 116,546 1,453 1.2
IndustrialProducts 31,000 30,805 194 0.6 15,000 14,893 106 0.7
Overseas 102,000 93,903 8,096 8.6 50,000 45,524 4,475 9.8
Other 4,000 5,972 (1,973) (33.0) 2,000 3,319 (1,320) (39.7)
Total 390,000 378,659 11,340 3.0 185,000 180,283 4,716 2.6
Net sales to external customers (Millions of yen)
By business segment
2016 Consolidated Financial Forecast
24
Approach to Shareholder Returns
Ensure stable and sustainable returns on profits by realizing higher profitability
Annual dividend of ¥11 per share, up ¥1 year on year (interim dividend of ¥5 and year-end dividend of ¥6)
Our Stance on Shareholder Returns
Fiscal 2016 Dividend Forecast
25
Achieving Targets for V-2 Plan and Beyond
2012 2013 2014 2015 2016 2017 2018 2019 2020
2016Realize even greater
profitability and strengthen the
business foundation to achieve V-2 Plan
goals
2017Achieve V-2 Plan’s operating income margin target: 5%
V-1 PlanImprove basic profit structure
Structural reformsto improve profitability
and preparingfor the V-3 Plan
V-3 PlanFurther acceleratebusiness growth
Becoming Asia’s top company
creating value to enhance lifestyles
and promote spiritual
fulfillment
The forecasts and projected operating results contained in this
report are based on information available at the time of
preparation, and thus involve inherent risks and uncertainties.
Accordingly, readers are cautioned that actual results may differ
materially from those projected as a result of a variety of factors.
Note: Figures are rounded down to the digits that are displayed.
Consolidated Reference Materials
28
2015 2014 Y-o-YChange
Y-o-YChange(%)
Net sales 378,659 367,396 11,263 3.1Cost of sales 162,435 160,677 1,757 1.1
Gross profit 216,223 206,718 9,505 4.6Selling, general and administrativeexpenses 199,848 194,312 5,536 2.8
Operating Income 16,374 12,406 3,968 32.0Non-operating income 2,454 2,700 (246) (9.1)Non-operating expenses 729 1,047 (317) (30.3)
Ordinary income 18,099 14,059 4,040 28.7Extraordinary income 7,923 733 7,190 980.6Extraordinary loss 6,635 1,706 4,928 288.8
Net income before income taxes 19,387 13,085 6,301 48.2Income taxes 5,896 4,495 1,401 31.2Adjustment of income taxes 1,485 653 832 127.2Minority interests in earnings ofconsolidated subsidiaries 1,324 567 757 133.4
Net income 10,680 7,368 3,311 44.9
Statements of Income(Millions of yen)
29
Selling, General and Administrative Expenses
2015 2014 ChangeMillions of
Yen% ofsales
Millions ofYen
% ofsales
Millions ofyen
% ofsales
Selling, general andadministrative expenses 199,848 52.8 194,312 52.9 5,536 2.8
Sales commission 8,198 2.2 8,290 2.3 (91) (1.1)
Promotion expenses 87,380 23.1 86,430 23.5 949 1.1
Advertising expenses 26,222 6.9 24,517 6.7 1,705 7.0Transportation and warehousing expenses 17,011 4.5 16,723 4.6 287 1.7
Salaries and allowances 14,721 3.9 14,241 3.9 479 3.4Research and development expenses 9,808 2.6 9,439 2.6 368 3.9
Other 36,506 9.6 34,669 9.4 1,837 5.3
(Millions of yen)
30
2015 2014
Extraordinary income
Gain on disposal of noncurrent assets 629 Gain on disposal of
noncurrent assets 123
Gain on contribution of securities to retirement benefit trust 6,736 Gain on contribution of securities
to retirement benefit trust -
Gain on sales of investment securities 210 Gain on sales of investment
securities-
Gain on step acquisitions - Gain on step acquisitions 477Gain on negative goodwill - Gain on negative goodwill 97Other 346 Other 34
Total 7,923 Total 733
Extraordinary loss
Loss on disposal of noncurrent assets 1,889 Loss on disposal of
noncurrent assets 796
Impairment loss 4,479 Impairment loss 833Loss on valuation of investment securities 15 Loss on valuation of
investment securities 72
Other 243 Other -Total 6,635 Total 1,706
(Millions of yen)
Significant Extraordinary Income or Loss
31
Balance Sheets (Selected) I
2015 2014 Change
Current assets 166,830 146,175 20,654
Cash and deposits 18,584 18,008 575Notes and accounts receivable-trade 58,655 59,007 (352)
Short-term investments 45,919 24,448 21,470
Inventories 37,554 39,365 (1,810)
Noncurrent assets 115,603 137,176 (21,573)
Property, plant and equipment 75,060 79,275 (4,214)
Intangible assets 5,921 9,106 (3,185)
Investments and other assets 34,622 48,794 (14,172)
Total assets 282,434 283,352 (918)
(Millions of yen)
32
2015 2014 ChangeCurrent liabilities 121,247 115,537 5,710
Notes and accounts payable-trade 49,620 46,590 3,029Short-term loans payable 9,772 12,602 (2,830)Current portion of long-term loans payable 226 116 109Accounts payable-other and accrued expenses 47,521 45,123 2,398
Noncurrent liabilities 18,455 40,380 (21,925)Bonds with subscription rights to shares 2,426 14,430 (12,003)Long-term loans payable 2,082 2,448 (366)Net defined benefit liability 8,751 18,526 (9,775)
Total Net assets 142,730 127,434 15,296Retained earnings 69,414 66,095 3,318Treasury stock (6,800) (16,827) 10,027Accumulated other comprehensive income 3,375 5,434 (2,058)Total liabilities and net assets 282,434 283,352 (918)
(Millions of yen)
Balance Sheets (Selected) II
33
2015 2014 Change
Net cash provided by (used in) operating activities 35,539 11,738 23,800
Net cash provided by (used in) investment activities (6,974) (16,838) 9,864
Net cash provided by (used in) financing activities (5,062) (6,520) 1,458
Effect of exchange rate change on cash and cash equivalents (374) 829 (1,203)
Net increase (decrease) in cash and cash equivalents 23,128 (10,791) 33,919
Cash and cash equivalents at beginning of period 38,150 48,941 (10,791)
Cash and cash equivalents at end of period 61,278 38,150 23,128
(Millions of yen)
Cash Flow
34
(Millions of yen)
Results by Business Segment
Net sales and sales to external customers
Net Sales Segment income (operating income)
2015Y-on-Y change
2015Y-on-Y change
Amount % Amount %
ConsumerProducts
273,486 (940) (0.3)10,108 1,591 18.7
247,978 (1,335) (0.5)Industrial
Products56,104 (3,688) (6.2)
1,612 (147) (8.4)30,805 (649) (2.1)
Overseas102,077 15,875 18.4
2,983 1,835 159.993,903 12,128 14.8
Other29,166 483 1.7
956 358 60.05,972 1,118 23.1
Net sales total 460,835 11,729 2.6 15,660 3,638 30.3Sales to external
customers total378,659 11,263 3.1 16,374 3,968 32.0
Operating income: Subtotal represents segment income before offsetting inter-company transactions; consolidated total represents consolidated segment income
35
2015 2014 Y-on-YChange
Y-on-Y Change(%)
Southeast Asia 67,614 56,950 10,663 18.7
NortheastAsia 34,463 29,251 5,211 17.8
Total 102,077 86,202 15,875 18.4
Southeast Asia :Thailand, Malaysia, Singapore, Philippinesand Indonesia (PT. IPPOSHA INDONESIA)
Northeast Asia :South Korea, China, Taiwan and Hong Kong
(Millions of yen)
Overseas Sales Results by Region
36
3.2 4.3
7.2 7.8
3.95.9 5.7 5.4 4.9 5.4
8.3
13.6
6.0 6.1 5.8 5.4
5.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
Jul-Dec
Jan-Jun
10.812.0
10.311.2
14.1
11.111.8
8.8
11.0 11.0
6.4
6.9 5.8
4.9
plan
Capital Expenditures and Depreciation Expenses
Capital expenditures Depreciation expenses(Billions of yen)
Note: Both capital expenditures and depreciation expenses include amounts for intangible assets.plan
5.1
37
Market trend of the total of 39 home product markets in which Lion participates. (percentage change over the year-ago period.)
2010 2011 2012 2013 2014 2015
Sales value 102 101 101 102 102 103Unit sales 103 101 102 102 100 100Average unit price 99 99 99 100 102 102
OTC Drug Market Data
2010 2011 2012 2013 2014 2015
Sales value 96 98 98 99 100 102Unit sales 98 98 99 99 98 101Average unit price 98 100 99 100 102 101
Market trend of the total of 8 OTC drug markets in which Lion participates. (percentage change over the year-ago period.)
Home Products Market Data
Source: INTAGE Inc. SDI Survey
Source: INTAGE Inc. SRI Survey (Year-on-year data for 2010 and prior years is for the 44 home product markets in which Lion operates. Data for 2011-2012 is for 42 and 2013-2014 is for 40 such markets .)
Changes in Home Products and OTC Drug Markets
38
Business Environment for 2016
Crude oil (Dubai) Domestic naphtha Crude palm oil
2016 forecasts USD40/BBL JPY40,000/KL MYR2,200/ton
US Dollar Thai Baht Korean Won
2016 forecasts JPY120.0 JPY3.3 JPY0.095
Domestic market environment Overseas market environment
Currency
Raw material prices
Household products market: Slight rise in unit prices, flat sales volumes, slight rise in total sales
OTC drug market: Slight rise in unit prices, slight drop in sales volume, flat total sales
Forecasts for GDP growth rate in 2016(year on year)
ASEAN 5*: 4.9%China: 6.6%
*Thailand, Indonesia, Malaysia, Singapore and Vietnam
(Mitsubishi Research Institute, Inc. forecasts as ofDecember 2015 )
Assumptions for raw material prices and currency