first half fy3/2019 financial results presentation...summary of consolidated financial results 3...

First Half FY3/2019

Financial Results Presentation

November 14, 2018

The Nisshin OilliO Group, Ltd.

1

Summary of Consolidated Financial Results

for First Half FY3/2019

Kenji Matsuura,

General Manager, Financial Department

2

Net sales 172,262 166,761 ＋5,500 ＋3.3%

Operating income 6,209 4,706 ＋1,503 ＋31.9%

Ordinary income 7,003 4,485 ＋2,517 ＋56.1%

Net income attributable to the parent’s shareholders

4,838 3,471 ＋1,367 ＋39.4%

（Million yen）

Summary of Consolidated Financial Results

3

First Half FY3/2019

First Half FY3/2018

YoY

Change Change (%)

Consolidated Results by Business Segment

4

Oil, Meal, and Processed Food

119,578 3,837 109,245 1,771 ＋9.5% ＋116.7%

Processed Oil and Fat

41,455 1,646 46,709 2,429 -11.2% -32.2%

Fine Chemical 9,440 833 9,012 613 ＋4.7% ＋35.8%

Other/Corporate 1,787 -108 1,794 -107 -0.4% ―

Consolidated total 172,262 6,209 166,761 4,706 ＋3.3% ＋31.9%

First Half FY3/2019

Net sales Operating income

First Half FY3/2018


Change (%)


Percentage of overseas sales

19.5% 21.4% -2.0

（Million yen）

Factors Impacting Operating Income (Results)

5

Increase in sales volume

SG&A expenses and others

Change in subsidiaries’profit

＋0.６０

△０．５

Domestic processed oil and fat

Overseas processedoil and fat


-0.75

2Q FY3/2018 Operating

income 4.70 billion yen＋１.５0 billion yen

Fine Chemical

Other/Corporate

+2.05

2Q FY3/2019 Operating

income 6.20 billion yen


Sales at optimal prices in line with raw material costs

Expanded sales in high value-added categories and sales of products for ready-made meals and restaurants, among other factors

Change in unit price (sales, cost)

- 0.75

＋0.２０

- 0.00

＋0.０５

-0.70

＋2.10

Logistic costs, advertising expenses, etc.

- 0.00

Affected by fluctuations in market conditions

Solid sales of detergents and raw materials for cosmetics

Soymeal sales expanded through maintaining an appropriate selling price due to a rise in the Chicago market price even though demand for formulated feed increased only marginally. Rapeseed meal also strived to match the soymeal price rise and sell at an appropriate price even as its blending ratio for formulated feed was reduced and the impact of competitive prices for raw materials for formulated feed was felt.

Although the yen was relatively strong against the U.S. dollar compared to the previous fiscal year, prices for soy and rapeseed rose year on year, partly due to market prices for main ingredients remaining high until around May.

Key Points

Key Points

Status of Oil, Meal, and Processed Food (1)

6

Source：Bloomberg

Source：Yushitokuho Source：Bloomberg

800

900

1,000

1,100

1,200

1,300

Procurement Environment for Raw Materials

Sales Environment for Meal

Market prices for raw materials (￠/Bu)

Soybean (Chicago)

400

450

500

550

600Rapeseed (Winnipeg) (CAD/t)

95

100

105

110

115

120

125

130(JPY/＄)

Foreign Exchange Rate (JPY/US Dollar)

30

40

50

60

70

80

20,000

40,000

60,000

80,000

100,000

Soybean meal Rapeseed meal Rapeseed meal ratio

(JPY/t) Average Market Price Trends：Meal

55

60

65

70

75

80

(%) (%)

Meal Value Trends

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度

FY3/2017 FY3/2018 FY3/2019

FY3/2017 FY3/2018 FY3/2019

FY3/2017 FY3/2018 FY3/2019 FY3/2017 FY3/2018 FY3/2019

FY3/2017 FY3/2018 FY3/2019

・Strived to expand sales of high value-added products such as olive oil and flaxseed oil, and expanded sales of highly functional oils and fats such as Nisshin Healthy-Off and Nisshin Canola Oil Natyu-Made. ・Strived to sell at appropriate selling prices in line with raw material

costs as well as cultivated new partners in the ready-made meals and

restaurant sectors.

Key Points

Status of Oil, Meal, and Processed Food (2)

7

Edible oil for commercial use

and, processing use 36.4 34.6 ＋1.80 ＋5.1%

Household-use 27.3 26.0 ＋1.30 ＋4.9%

Wellness food 1.4 1.4 ＋0.00 ＋2.2%

Total 65.2 62.1 ＋3.10 ＋5.0%

First Half FY3/2019

Change First Half FY3/2018 Amount Ratio

Net sales

Sales of Oil and Fats and

Processed Food

Edible oil for commercial use and processing use ＋0.10 ＋1.00

Household-use ＋0.45 ＋0.20

Wellness food ＋0.05 ＋0.00

Total ＋0.60 ＋1.20


Change in unit

prices (sales)

Soybean -1.35 ＋0.55 ＋2.40 ＋1.60

Rapeseed -1.35 ＋0.60 ＋1.20 ＋0.45 Other products and manufacturing costs, etc.

-1.15

Total -2.70 ＋1.15 ＋3.60 ＋0.90

Ｃ＆Ｆ Foreign

exchange

Raw materials procurement Meal sales

Total

Increase in sales volume +0.60 billion Change in unit prices +2.10 billion Impact on segment

income

150

170

190

210

230

250

270

290

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Soybean oil (18 liter drum)

Soybean oil (bulk)

Rapeseed oil (bulk)

Nikkei Market Price Trends: Oils

(JPY/ 18 liter drum)

(JPY/kg)

(Billion yen)

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度FY3/2017 FY3/2018 FY3/2019

Status of Processed Oil and Fat

8

Source：Bloomberg

Net sales 41.4 46.7 -5.25 -11.2%

Operating income 1.6 2.4 -0.75 -32.2%

First Half FY3/2019

Change First Half FY3/2018 Amount Ratio (Billion yen)

*Foreign exchange impact (Net sales +1.70billion , Operating income +0.10billion ）

19%

4%

40%

37%

Specialty fats

Chocolate products

Confectionery ingredients

(premix products)

・Domestic net sales exceeded the previous year, but due to the impact of costs, operating income was down slightly year on year. ・ Overseas, net sales decreased in Europe, which had experienced brisk sales the previous year, and operating income was also down year on year due to the combined effects of the palm oil market and foreign exchange rate fluctuations.

Key Points

Japan

59% 41%

Overseas Japan

44%

40%

16%

Europe

Malaysia

Other regions

1,4001,6001,8002,0002,2002,4002,6002,8003,0003,2003,4003,600

(MYR/t)

Raw material market price: Palm oil

Japan Processed oil and fat products(＊) - 0.00

-0.00 Chocolate products ＋0.00

Confectionery ingredients (premix products) - 0.00

Overseas Processed palm products - 0.75 -0.75

Total -0.75

Impact on segment income

Billion yen（YoY）

（＊）margarine, shortening, specialty fats and others

Overseas * Value (net sales) basis Sales mix

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 　2016年度　　2017年度 2018年度

Margarine, shortening, and others

FY3/2017 FY3/2018 FY3/2019

Status of Fine Chemical

9

Net sales 9.4 9.0 +0.45 +4.7%

Operating income 0.8 0.6 ＋0.20 ＋35.8%

First Half FY3/2019

Change First Half FY3/2018 Amount Ratio (Billion yen)

*Foreign exchange impact (Net sales +0.15 billion, operating income + 0.0 billion ）

71%

11%

15%

3%

Americas and other

Japan

Asia

Europe

・Export sales of raw materials for cosmetics were firm

and domestic sales were brisk on the back of strong

demand.

・MCT sales decreased year on year, but cultivating

new business in chemicals contributed to sales.

・Results at The Nisshin OilliO (Shanghai) International

Trading Co., Ltd. were also robust.

Key Points

39%

33%

28%

Raw materials for

cosmetics

Detergents, etc.

Raw materials for cosmetics ＋0.05

Detergents, etc. ＋0.10

Food and chemicals, and others ＋0.05

Total ＋0.20

Impact on segment income Billion yen（YoY）

* Value (net sales) basis Sales mix

Food and chemicals, and others

42 43 44 48 49

26

37 37 42 48 53

25

21 21 24

26 28

15

FY3/2014 FY3/2015 FY3/2016 FY3/2017 FY3/2018 FY3/2019

Trend in Profit in High Value-Added Categories

Fine Chemical Processed Oil and Fat


100 110

122

High value-added products as a percentage of profit from household-use products

Status of Profit in High Value-Added Categories

101

130

High value-added products as a percentage of consolidated profit

39%

61%

Standard products and others

High value-added products

First Half FY3/2019

56%

17%

17%

10%

Standard products and others

66

(20%)

* Figures in parentheses represent year-on-year changes

(21%)

(9%)

(67%)

(50%)

(33%)

10

Forecast

138

Prior-year results and results and forecasts for the current fiscal year, with results for FY3/2014 indexed as 100

＊Profit represents profit on sales, a profit indicator for internal management purposes, calculated as gross profit less direct operating expenses and certain other items.

First Half

Net sales 357.0 338.0 +19.0 +5.6%

Operating income 10.8 9.1 +1.7 +18.6%

Ordinary income 11.4 9.3 +2.1 +22.9%

Net income attributable

to the parent’s

shareholders8.0 6.9 +1.1 +15.4%

FY3/2019YoY

Change Change (%)

FY3/2018(Billion yen)

FY3/2019 Consolidated Earnings Forecasts

11

Oil, Meal, and Processed Food 5.45 3.15 ＋2.30 ＋71.1%

Processed Oil and Fat 3.75 4.60 -0.85 -18.3%

Fine Chemical 1.65 1.40 ＋0.25 ＋18.8%

Other/Corporate -0.05 -0.05 0.00 ―

Consolidated total 10.80 9.10 ＋1.70 ＋18.6%

(Billion yen)

Full-year forecasts (operating profit by business segments)

12

FY3/2019 Plan

FY3/2018 Results

YoY

Change Change(%)

Factors Impacting Operating Income (Full-year forecasts)

13


Changes in unit price (sale, cost)

SG＆A expenses and others

Change in subsidiaries' profit

＋1.10

△０．５

Domestic processed oil and fat

Overseas processedoil and fat

Processed Oil and Fat -0.85

＋0.25

FY3/2018 Operating income

9.10 billion yen＋１.７0 billion yen

Fine Chemical

Other/Corporate

＋2.30

＋0.00

FY3/2019 Plan

Operating income 10.8 billion


Unit sales prices ＋0.85 Cost fluctuations ＋2.30

Market fluctuation impact, increase in business investment expenses, etc.

Sales growth in high value-added categories, etc.

＋3.15

- 1.85

- 0.10

Logistic costs, advertising expenses, etc.

-0.05

-0.80

Progress Report on Medium-Term Management Plan

Takahisa Kuno, Representative Director and President

Targets

15

Operating income 10.2 9.1 10.8 13.0 Billion yen

ROE 6.3 5.4 5.9 7.0 %

EPS (growth rate) 222 204 234 300 Yen per share

Operating cash

flow13.7 5.7 14.0 50.0 Billion yen

FY3/2017

Four-year total through FY3/2021

CAGR of 8%

FY3/2021FY3/2018 FY3/2019

Management Policy

16

Carry on business structure reforms while shifting focus to growth trajectory

57

52

29

49

53

28

130 138

72

58

35

165

*Prior-year results and forecasts for the fiscal year under review, with results for FY3/2014 indexed as 100 *Profit represents profit on sales, a profit indicator for internal management purposes, calculated as gross profit less direct operating expenses and certain other items.

Fine Chemical



Key Points

・Respond to expanding demand in Japan

and overseas

・Capture benefits of investment and strengthen

supply chain

・Expand sales and stimulate market for “oil for

topping” to be poured directly over dishes

Profit Forecast and Target of High Value-Added Categories

100

42

37

21

FY3/2019 Management Policy Pursue globalization and a business model that adds diverse value Work on measures for acquiring stable profits from the Domestic Oil and Fat

Business and further streamlining

FY3/2018 Result

FY3/2019 Forecast

FY3/2021 Target

FY3/2014 Result


17

・PT.Indoagri Daitocacao

・Intercontinental Specialty Fats Sdn. Bhd(ISF) ・T&C Manufacturing Co.,

Pte. Ltd(T&C)

・Intercontinental Specialty Fats (Shanghai)Co., Ltd

・Nisshin OilliO Group, Ltd. ・Daito Cacao Co., Ltd.

Malaysia

Italy

Indonesia

Singapore

Japan

China

・ATICI S.R.L.

Global supply chain in the Processed Oil and Fat Business

Company name: ATICI S.R.L. Location: Genoa, Italy Investment ratio: 70%

(Investment from

Intercontinental Specialty Fats (ISF))

• From a base at the Port of Genoa, ATICI will refine, manufacture and store products of ISF for sale to Europe

• Having a base in the consumption area will enable prompt response to customers and enhance services

• A base for sales activities to capture new business centered on southern Europe and for customer service

• Scheduled to start operations from FY3/2020

• Aim for contribution of ¥300 million after 5 years, including benefits for ISF

Procedures for investment in an Italian oil and fat refining and manufacturing company have been completed

Acquisition of a European Base

Capture the benefits of investment and strengthen the global supply chain in the Processed Oil and Fat Business

18

Company name: PT.Indoagri Daitocacao Location: Indonesia Investment ratio: 51% (Investment from Daito Cacao Co., Ltd.)

・ Joint venture with the Salim Group ・ Preparations are moving ahead for factory construction and sales toward starting sales from April 2019 ・ Expand business by leveraging the strong sales capabilities of the Salim Group in Southeast Asia, including the expanding market in Indonesia, aiming for a contribution of ¥300 million after 5 years

Work is moving forward on a chocolate factory in Indonesia

4.1 4.6

FY3/2017 Result

FY3/2018 Result

3.75

FY3/2019 Forecast

4.9

Processed Oil and Fat Business Segment Operating Income

(Billion yen)

• Moving ahead with strengthen the supply chain for Europe and China, originating from ISF and accelerating sales of products in high value-added categories

• Domestically, capital investment in Daito Cacao and Nisshin OilliO Group’s Yokohama Isogo Plant will start contributing to earnings

• A one-off decrease in earnings is expected in FY3/2019, but the forecast is to capture earnings as originally planned in FY3/2021

Current situation

Entry into a Growth Market Rendering image

Capital investment Completed

During FY3/2019 and FY3/2020, complete capital investment domestically and overseas, start contributing to earnings

(Main capital investment plan and schedule for completion) ISF Strengthen refining and manufacturing capabilities (Scheduled completion FY3/2020 1H) Daito Cacao Increase chocolate production (Scheduled completion FY3/2019 2H) Nisshin OilliO Group Production of processed oil and fat products (Yokohama Isogo Plant) (Completed FY3/2019 1H)

FY3/2021 Plan


19

Olive Oil Market Scale

* Source: SCI at INTAGE Inc.

Use oil for topping as a driver for continuing to expand the olive oil market

Continue communicating that oil for topping is a new method for cooking, create new markets and stimulate the household use market

42 49

FY3/2014 Result

FY3/2018 Result

57

FY3/2019 Forecast

FY3/2020 Plan

Oil, Meal, and Processed Food Segment Profit in High Value-Added Categories

• Using communication about oil for topping as a driver for the overall edible oils for household use market, expand product sales in the high value-added categories including olive oil and sesame oil

• In the standard oil category, raise the composition of strategic products such as Nisshin Healthy-Off and Nisshin Canola Oil Natyu-Made

• Continue to grow earnings by expanding the high value-added category and reforming the product composition in the standard oil category

72 Market Creation

Oil for Topping Market Scale

20.0

2013 2017

CAGR 2007-13 16% 2013-17 4%

* Estimated by the Nisshin OilliO Group based on research by SCI (household consumer panel research) at INTAGE Inc. and Shoku MAP Inc.

2020 Forecast

CAGR 11%

20.0

40.0 Billion

yen

2007 2010 2013 2017 2018 Forecast

2018

Forecast

* Indexed using full Group’s profit in high value- added categories in FY3/2014 as 100

Expanding sales of oil for topping and stimulate the market for household-use products.


40.0 Billion

yen

20

ヘルスサイエンス事業でのMCTの販売チャネルの拡大

Expand MCT oil sales for volume-sales retailers and drugstores through a review of the sales system

MCT oil sales launched in summer 2017 and it is now sold in more stores such as volume-sales retailers and drugstores following a review of the sales system, proactive TV advertising and other efforts

FY3/2019 1H net sales increased 55% compared to FY3/2018 2H

FY3/2019 2H net sales forecast to increase 40% compared to

FY3/2019 1H

Launch product sales utilizing crystallized powder fat technologies

Utilizing crystallized powder fat as a fine powder material, application development moved ahead to reduce water separation and prevent hardening and sales were launched for processed foods Going forward, move ahead on commercialization of crystallized powder fat using MCT for sales in hospital foods, meals for nursing care, etc.

Raise MCT recognition through a communication strategy

Raised awareness of MCT oil among women through commercials featuring Jun Hasegawa, an active modern woman combining beauty and health

FY3/2018 2H

FY3/2019 1H

+55%

FY3/2019 2H forecast

+40%

Expand MCT sales channels in the Health Sciences Business

Expand business by leveraging Nisshin OilliO Group’s proprietary technological capabilities


【Reference materials】

21

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Soybean raw material（USD/ｔ） Soybean raw material prices（¥/ｔ） soybean meal selling prices（¥/ｔ）

Indexed with April-September 2012 set as 1.0.

Trends in Raw Materials and Meal Prices : Soybean

22 * Figures for The Nisshin OilliO Group, Ltd.

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Rapeseed raw material prices （USD/ｔ） Rapeseed raw material prices（¥/ｔ） Rapeseed meal selling prices（¥/ｔ）


Trends in Raw Materials and Meal Prices : Rapeseed


0.8

0.9

1.0

1.1

1.2

1.3


Trends in Selling Prices for Main Oil and Fat Products


first half fy3/2019 financial results presentation...summary of consolidated financial results 3...

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