investor presentation: kirin holdings
TRANSCRIPT
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KIRIN at a glance
18%26%
6%
19%
31%
Domestic Alcohol BeveragesDomestic Alcohol Beverages
FY2011Sales (E)*1,782bnY
FY2011Sales (E)*1,782bnY
Domestic Non-alcohol BeveragesDomestic Non-alcohol BeveragesOverseas BeveragesOverseas Beverages
Pharmaceuticals and Biochemical
Pharmaceuticals and Biochemical
OtherOther
Unique business portfolio “Integrated beverage group”
Strong R&D capability and rich seeds for new product development fostered in Japan, the world’s most demanding and challenging beverage market
Kirin is building strong relationships with great partners in Asia and Oceania
*excluding liquor tax
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More international, more integrated…
1. Pursue an integrated beverages group strategy1. Pursue an integrated beverages group strategy
2. Internationalize business2. Internationalize business
3. Establish health food & functional food business pillar to follow alcohol beverages, soft drinks and pharmaceutical businesses
3. Establish health food & functional food business pillar to follow alcohol beverages, soft drinks and pharmaceutical businesses
Approx. 30%18%Sales excl.
liquor taxOverseas composition
OP margin
Sales (yen)
Approx. 30%
10% plus
2.5 trillion
3 trillion
2015
27%Operating income
9%Excl. liquor tax
1.27 trillionExcl. liquor tax
1.68 trillionIncl. Liquor tax
2006KV2015 targets
[ Key Scenarios for Kirin Group Vision 2015 (KV2015)*]
Unit: billion yen
Quantum growth trajectory
Current trajectory
0
500
1,000
1,500
2,000
2,500
3,000
1997 98 99 00 01 02 03 04 05 06 Est. 2015
0
50
100
150
200
250
Sales (left axis)Operating income (right axis)
Historic growthline
300
Quantum Leap
Becoming a leading food, health and wellbeing company in Asia and Oceania
*announced May 2006
Vision for an ambitious new growth trajectory
4MTBP = Three-year Medium-term Business Plan
Profitability
Business scale
Stage 1: 2007 MTBP(2007-2009)
Stage 1: 2007 MTBP(2007-2009)
Stage 1 Stage 2 Stage 3
Stage 2: 2010 MTBP(2010-2012)
Stage 2: 2010 MTBPStage 2: 2010 MTBP(2010(2010--2012)2012)
Three years of implementation focus on increasing profitability
Stage 3: 2013 MTBP(2013-2015)
Stage 3: 2013 MTBP(2013-2015)
Three years to Kick- start growth
2010 MTBP—from quantity to quality
KV2015KV2015KV2015
We are here
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Target
2012
1,835.2 1,782.0 (2.9)% 2,130.0
193.6 191.3 (1.1)% 231.0
10.5 10.7 +0.2 10.8
8.8 10.4 +1.6 10% plus
25.0 30.0 +5.0 29%
EBITDA 269.3 294.0 +9.1% 341.0
D/E ratio 0.81 0.94 +0.13 0.5
Total assets turnover ratio(%) 0.67 0.64 (0.03) 0.80 plus
2010 actual 2011 plan ** YoY change
Cash ROE (%)
Overseas sales ratio(%)
Net sales excluding liquor tax
Operating income
Operating margin(%)*
[Quantitative targets and results] ( billion yen )
*Before goodwill amortization**Revised on August 5,2011
Steadily increasing substantive profit and becoming more global
Poised to realize Cash ROE and Overseas sales ratio targets prior to 2012
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Domestic: Building greater strength and competitiveness
Brand Value Improvement Group synergy
All for becoming strong Integrated Beverage Group
For top line growth, profitability and efficiency improvement
Profit Structure Reform
Site optimization at KB
Drastic reform at KBC
Trading system reform at ME
Value proposition than pricing
Concentrated investment on leading core brands at KB,KBC,ME
KB: Kirin Brewery, KBC: Kirin Beverage, ME: Mercian
Synergy generation through CCT
Collaboration in sales between KB-ME, KB-KBC
Cross Group Collaboration “Kirin Plus-i”
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Value proposition to make strong brands stronger
Strengthening of leading core brands
Kirin Brewery: In the growing New Genre market, “Nodogoshi Nama” was at No.1*of total sales for the six straight years
“Gogo- no- Kocha / Afternoon tea” pioneered the black tea market and lead the market growth.
Alcohol beveragesAlcohol beverages
NonNon--alcohol beveragesalcohol beveragesKBC37%
Black tea market share for 2010
Taxed shipments of combined beer / Happo-shu / new genre (total 5 major companies)
*According to the category definition by Liquor tax act: ”Other miscellaneous liquors ②” in FY2005 and “Other liquors (Fermented) ②” from FY2006-2010
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New Value Creation
KIRIN FREE / Mercian FREE*
The world’s first 0.00% alcohol, beer and wine taste beverage
Developed untapped market potential beyond established categories
[Black tea x Espresso] [Tea x CSD]
Value proposition to make strong brands stronger
Joint developmentMercian x LION
Synergy creation across KIRIN group
[KB x KBC] [ME x KB]
Launched the joint-developed products between Japan-Australia and the series of health and functional products across group companies under the same brand with common ingredient
* Scheduled to be launched in November, 2011
Health and functional foods project “ Kirin Plus-i ”by group companies
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Domestic: Becoming more profitable and efficient
CCT* 2010 targets 2010 results 2011 targetsTarget for
2010 MTBP Production andlogistics 0.8 3.8 4.7 5.0
Procurement 4.6 8.2 4.0 10.1
IT/other 2.1 2.9 0.7 4.0
Total 7.5 14.9 9.4 19.1
(Unit: billion yen)
2010 targets 2010 actual 2011 targetsTarget for
2010 MTBP
Asset liquidation Approx.40.0 plus 57.6 Approx.100.0 150.0 plus
* Group-wide functionally organized “Cross Company Team”
Cost reduction and asset liquidation target for 2012 will be achieved ahead of schedule.
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Kirin’s Global Expansion
Kirin Europe (Germany)
Kirin Brewery of America(US)
Coca-Cola Bottling Company of Northern New England
(US)
Four Roses Distillery(US)
Fraser & Neave(Singapore)
San Miguel Brewery(Philippines)
LION(Australia)
Kirin (China) Investment(China)
Industria Agricola Tozan LTDA
(Brazil)
Interfood(Vietnam)
Kirin HoldingsVietnam Kirin Beverage
(Vietnam)Siam Kirin Beverage (Thailand) Taiwan Kirin
(Taiwan)
While Kirin continues to implement its international integrated beverages group strategy in the Asia and Oceania regions, Kirin is also pursuing opportunities to expand its business platform to new profitable and high growth markets, and decided to invest in Brazil
China Resources Kirin Beverages Company Ltd
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China Resources Kirin Beverages (Greater China)
International: Initiatives in China and Southeast Asia
- Kirin Holdings Singapore- Fraser and Neave- Kirin Beverage
San Miguel Brewery
JV established with China Resources Enterprise on August 19,2011, is aim to expand sales of Kirin brand products as quickly as possible utilizing the company’s sales network. Also, work on co-development of product.
Continue to maintain stable growth in the Philippines. Continue joint efforts aimed at strengthening the company’s overseas business base and creating new synergies.
Promote efforts aimed at sharing sales and production functions within the Group.
Efforts focused on expanding sales of Group products via shared sales channels. Also promote efforts for joint product development.
- Vietnam Kirin Beverage - Interfood
Singapore
Vietnam
China
Philippines
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Non-alcohol beverages
Focus on core ‘power brands’Site optimizationEstablish best value chain for future growthStrengthen business resilience
Alcohol beveragesDrive the premiumisation and innovation
Enhance multi beverage strategy in NZ
Alcohol beverages business: Sustain high profitability through focusing on the growing categories and strong brands
Non-alcohol beverages business: Improve the business infrastructure through strengthening core brands and promoting business integration & optimization
International: Initiatives in Australasia
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International: Schincariol in Brazil
Strong nationwide business platform & meaningful size both in the beer and soft drinks segments
2nd largest beer producer**
3rd largest share in CSD market***
Sales are expected to grow at 10% per year by leveraging our strengths
Kirin Holdings acquired all outstanding shares of Aleadri, a company that holds 50.45% of the outstanding shares of Schincariol.
[ Valuation & Funding ] - Based on the purchase price of BRL 3.95bn*, implied EV/EBITDA is 15.7x - Funded by cash on hand & loans and D/E multiple
after the acquisition expected to be within 1.0x
Note: * BRL1=¥50.35 (as of August 1, 2011) ** Based on Euromonitor and other sources *** Euromonitor. Off-trade basis
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Strong pipelines:Kyowa Hakko Kirin have ample pipelines based on advanced R&DSubstantial contribution to Kirin Group with high profitabilityAcquired ProStrakan to establish strong sales network in the U.S. & EU
Strong presence in the ESA market with NESP® and ESPO®Outstanding base- technology in Antibody: Utilizing POTELLIGENT® & COMPLEGENT® technologies* and KM Mouse**, Kyowa Hakko Kirin will strive for the creation of new therapeutic antibodies in cooperation with its worldwide partners.
Kyowa Hakko Kirin will be Global Specialty Pharmaceutical Companyleveraging their outstanding biotechnology.
Global Specialty Pharmaceuticals
*For producing enhanced antibody activity **Fully Human Antibody Producing Mouse
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Cash FlowCash Flow
Increased Operating CF
Increased Operating CF
Improved investment efficiency
Improved investment efficiency
Financial Strategy for 2010 MTBP
Shareholder returnsDividends:Consolidated payout ratios over 30% Aim to increase dividends inline with growth in real earnings, taking into consideration amortization of goodwill, etc. arising from investment for growth
Share buybacks:To be considered in the context of progress on qualitative expansion, on the basis of maintaining medium to long term credit rating
Investment for growthWe will intensively allocate resources as appropriate but have not established an investment framework as a guideline
Capital structurePursue debt repayment, targeting a D/E ratio of 0.5x at the end of 2012 (allowing a temporary upper limit of approximately 1.0x)
Further asset reduction
Further asset reduction
Significantly increase cashflow, through realizing group synergies, lean management, improved investment efficiency and asset reduction
2010-2012 capex ¥260 bn
2010-2012 operating CF¥620 bn
2010-2012 assets to beliquidated ¥150 bn
Debt repayment
Shareholderreturns