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MARUHA GROUP INC.
MARUHA GROUP MID-TERM MANAGEMENT PLAN
[ New Wave 21 ]
1
18,508 19,641 20,733 22,57324,131
1993 1995 1997 1999 2001
6,2125,9985,6965,8375,806
1993 1995 1997 1999 2001
Changes in the Business Environment around Maruha Group(Overseas Market)
18,498
25,53929,727
32,131 33,321
1993 1995 1997 1999 2001
Every market, including China, Europe, North America, and Asia, has potential for growth.
Annual average growth rate 0.8%
Annual average growth rate3.4%
Annual average growth rate7.6%
Annual average growth rate1.5%
North AmericaEU
Asia-Oceania
All other Asian and OceaniaChina
Source: FAO Food Balance Sheet – Fish, Seafood, 2004 Note: Food supply in the charts above shown in measurements of thousands of tons
9,563 9,85410,434 10,565 10,790
1993 1995 1997 1999 2001
2
Capital Investment for Growth (2005~2007)
Processed Food Business SegmentMarine Products Business Segment
*Reinforcement of fillet production facilities in North America
*Efforts to strengthen sales with M&A strategy in North America
*Reinforcement of EU sales through TESS and M&A
*Capital investment in Kingfisher Holdings Limited (Thailand)*Upgrading and expanding primary
processing facility
*Expansion of sales bases and reinforcement of production facilitiesInvestment of facilities in Zhoushan
Industrial Co., Ltd. (China)*Capital investment of facilities in Kingfisher
Holdings Limited (Thailand)Frozen foods and Canned pet foods
*Reinforcement of production facilities for a new item [Delicious Fish “Bone & All”] in China
*Capital participation/capital investment in the meat and livestock business
*New construction of a multi-functional processed food plant in western Japan
*Up-grading of nationwide sales bases*Construction of distribution center to cover
western Japan *Investment in information systems for effective management
Other Business
*New construction of logistics bases in Asia
Cold Storage & Logistics Business Segment
3
To reach the goal set for the next 3 years, an increase in capital of approximately US$200
million by preferred shares has been allocated to major clients and main financial partners
Establishment of stable financial ground
Capital Reinforcement Program
The full amount is expected to apply to capital investment
into the core business for the purpose of realizing a growth strategy
Efforts for growth strategyImprovement of financial strength
Improvement of enterprise value
Increase of capital stock Driving the policy of “choice and focus”
Intensive capital investment
into core business
4
Management Concept and Vision of the Group
Management ConceptManagement Concept
We contribute to society by delivering “secure and safe” foods that are intended to be “healthy”, “authentic” and “easy-to-prepare”, through sound business practices.
We contribute to society by delivering “secure and safe” foods that are intended to be “healthy”, “authentic” and “easy-to-prepare”, through sound business practices.
With “fish” as our core identity, we deliver to our customers high-quality foodstuffs, materials, and services with clear traceability and genuine value” that has been established through the Maruha Group’s more than a century history of innovation.
With “fish” as our core identity, we deliver to our customers high-quality foodstuffs, materials, and services with clear traceability and genuine value” that has been established through the Maruha Group’s more than a century history of innovation.
Management VisionManagement Vision
Marine products “Fish, Around the World”
Processed food “Food Wonderland, Maruha”
Marine products “Fish, Around the World”
Processed food “Food Wonderland, Maruha”
Catch PhraseCatch Phrase
5
Maruha Brand valid to the world
Overwhelming procurement capacity of marine products and sales force covering global markets
World-wide network with excellent information-gathering ability and technical experts in marine products
Procurement of fish resources with quality and price
Advantageous and consistent supply chain system from procurement, processing, up to sales of marine products
Strength of the Maruha Group
6
Status of Strategic Segment and Business Unit
Total (after inter-company elimination)
Other Business/CommonOther Business/Common
Storage & Logistics BusinessStorage & LogisticsBusiness Segment
Sub Total
Foods & Fine ChemicalSugar & Sweeteners
Consumer Foods businessInstitutional Foods business
Processed Foods Business Segment
Sub Total
Catering ServicesMarine Products Wholesaling
Marine Products Trading
N. America Operations
11,80016,000757,900770,000-2,000-2,80025,40023,6002,0002,40021,20020,9005,8008,100171,100178,500
5008005,8006,60050070024,70025,600
2,7003,20054,60055,3002,1003,40086,00091,0006,0008,300540,200547,000
20030025,20028,5001,2001,800380,200377,2003,7004,10081,90088,2001,5001,10035,80036,200-6001,00017,10016,900Fisheries & Aquaculture
Marine Products Business Segment
2003(Actual Result)2004 (Expected)2003(Actual Result)2004(Expected)
Operating ProfitSaleBusiness UnitStrategic
Segment
(Unit:Million Yen)
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Positioning of Future Business Units
Profitability
Growth
Fisheries & aquaculture
Storage & logistics
Institutional foods
Marine product trading
Size of each circle represents the sales volume of the field.
Areas aiming at growth
Areas aiming at the improvement of profits
Future direction of profitability
Catering Services
North American operations
Fish and Fish product wholesaling
Consumer Foods
8
Target of each Strategic Segments
Maruha Group Inc.
18,000
1,9009,100
11,500
Target of Ordinary Profit
2007
-4,500Total
Storage & Logistics BusinessSegment
Processed Foods Business Segment
Marine Products Business Segment
Strategic Segment
Other Business/ Common
21,000
2,50010,00011,400
Target of Operating Profit
2007
-2,900
(Unit:Million Yen)
9
Overseas Strategy
Surimi,Crab,Black CodMackerel, Octopus, Squid
Surimi, FilletReinforcement of procurement/sales
Procurement/sales
*Reinforcement of procurement functions
*Reinforcement of regional sales*Expansion of European sales
(expecting potential of enlarged EU-Eastern Europe)
Reinforcement of processing integration/sales
Processing/sales
High-Value Added Products
Mackerel, horse mackerel
High-value added productsSurim
i,Fille
t
Triangle OperationGlobal optimization of procurement, processing, and salesOverseas sales goal: One billion US dollars in 2007
High-Value Added Products
Europe North America
Asia
Reinforcement of procurement/production and sales
Procurement/processing/sales
*Reinforcement of procurement and production capacity
*Reinforcement of sales force (Flavored Crab Meat,Frozen Sushi, and Other Seafood products)
*Maximizing the merit of global processing integration
*Regional sales expansion to the area (especially the coastal region of China)
Shrimp,Squid
10
Business Strategy in North America
Measures to be taken
Reinforcement of procurement and production capacity*Procurement of fishing quota*Enhancement of production capacity within the Group
- Increase of surimi products at Trans Ocean Products
- M&A of local processing company- Multiplying the frozen sushi production line
*Material procurement capacity by exploiting suppliers outside of the Group
Reinforcement of the sales force*Sales of Alaskan products*Sales of consumer products (flavored crab meat and
frozen sushi)- Sales of high-value added seafood through M&A of
local sales company*Sales of imported processed products from Asian
affiliates of the groupExpansion of the livestock business
Sales goal: 45 billion yen (2007)
Dutch Harbor
Surimi - Seafood Processing
Bellingham
Imitation crabmeat Production/Sales
Kodiak
Surimi - Seafood Processing
SeattleHead Office
for All Plant
Salem
Imitation Crabmeat/Frozen sushi Production
Bering Sea
Surimi Processing
11
Business Strategy in Europe
Measures to be taken
Further expansion of existing products*Salmon, trout, salted codfish
Reinforcement of sales within the region*Production and sales of processed products for
consumers by M&A of local processing manufacturer*Sales of imported processed marine products from Asia
Promotion of sales to Eastern Europe
Reinforcement of procurement functions for Japan*Expansion of Blue-fin tuna farming in the Mediterranean
Sea*Keeping on being the bulk buyer of Mackerel, octopus,
squid, and tuna
Sales goal: 25 billion yen (2007)
TESS (Trans Europe Seafood Sales) (Netherlands)
Sales of Marine Products
Viver-Atun Cartagena
(Spain/ Tunisia)
Cultivation/Export
Las Palmas Representative Office(Spain)Sales of Marine Products
Taiyo UK(UK)Sales of Marine Products
12
Business Strategy in Asia and Oceania
Measures to be taken
Maximization of global processing integration merits*Main processing bases for the Triangle operation
Kingfisher Holdings Ltd. (Thailand)Zhoushan Industrial Co., Ltd. (China)
Regional sales expansion in Asia (specially in China)*Sales expansion of fish materials for further process*Sales expansion of processed foods for institutional use
(Primary processed products and natural bonito seasoning)
*Sales expansion of consumer foods(Fish sausage, Japanese hotchpotch, canned foods, pet foods)
*Entry to distribution/logistics operations(Development of cold storage business in Dalian and Shanghai)
Sales goal: 30 billion yen (2007)
Kingfisher Holdings Ltd.(Thailand)
Processing of frozen squid, shrimp, shrimp fry, and deep-fried mackerel
Zhoushan Industrial Co., Ltd. (China)
Processing of crabmeat, squid fillet, squid fry, peeled shrimp, and frozen seafood
Maruha (Shanghai) Trading Corporation (China)
Minced fish trading, and sales of consumer foods and pet canned foods
Cixi Yongching Frozen Foods Co., Ltd. (China)
Production of frozen farm products and frozen cooked foods
Tsingtao Duofukang Foods Co., Ltd. (China)
Vegetable extract, salmon flake
Maruha (N.Z.) Corporation Ltd.(New Zealand)
Fishing and sales of marine products
Raoping Younglian Foodstuffs Factory Co., Ltd. (China)
Production of frozen farm products
13
Formation of Production and Sales Structure in North America
Maruha Group Inc.
Maruha Capital Investment, Inc.
Supreme Alaska Seafoods Inc.
Alyeska SeafoodsInc.
Westward SeafoodsInc.
Trans-Ocean Products Inc.
*Head Office (Seattle)*Function:
Seafood Processing*Plant: Dutch Harbor AK.*Product line:
Pollock Surimi, fillet, Crab,Bottom fish, herring, etc.
*Head Office (Seattle)*Function:
Seafood Processing *Plants: Dutch Harbor,
Kodiak*Product Line:
Pollock Surimi, fillet, Crab,Bottom fish, Herring etc
*Head Office (Bellingham)
*Function:Production/Sales
*Plants:Bellingham, Salem
*Product line:*Flavored crabmeat,
frozen sushi, etc.
*Head Office (Seattle)*Function: Surimi
Processing*Operation locations:*Bering Sea, Pacific
Northwest offshore*Product line:
Surimi(pollock, Pacific hake, etc. )
Procurement of additional fishing quota
Reinforcement of Domestic sales in the US
Reinforcement of fillet production facilities
14
Reinforcement of Asian Production Facilities
Zhoushan Industrial Co., Ltd.
Foundation: December 6, 1994
Shareholding ratio: 49%
Sales: 8.206 billion yen (Dec. 2003)
Operating income: 456 million yen
Business content:One of most important overseas production sites. The main operation is primary processing of marine products for further process in Japan.
- Peeled shrimp, processed frozen fishery products, minced fish, frozen squid, and flavored crabmeat, etc.
Kingfisher Holdings
Foundation: February 8, 1972( Maruha participated: December 1990)
Shareholding ratio: 51%
Sales: 18.929 billion yen ( Sept. 2003)
Operating income: 789 million yen
Business content: One of most important overseas production sites. The main operation is marine product processing, but fries are also in production. KF’s main outlets are US,Europe, and Australia.
The maximum important processing base in ASIA
15
Upgrading of Domestic Production Sites
Reinforcement and improvements of domestic production sites
*Expansion of plants close to consumption region
*Construction of new multifunctional plants in western Japan
Transfer of mass production item to the overseas plants
Improvement of the distribution in Western Japan*New construction of a logistics center in Western Japan
*“Eastern Japan Logistics Center” in Utsunomiya is now in operation .
Taiyo Foods Co. Ltd.(Nagasaki)Laver
Koyo Suisan Co., Ltd. (Kushiro)Canned foods, frozen foods
Taiyo A & F (Ishinomaki)Seasoning, frozen foods
Daisy Food Industry Co. Ltd. (Furano)Canned foods
Aomori Canned Foods Co., Ltd. (Aomori)Canned foods, Etc
Tsuchiya Foods Co., Ltd.(Yamagata)
Cup jelly, retort pouch
Maruha Corporation(Shimonoseki)
Fish cake, Dried foods
Maruha Corporation(Utsunomiya)Eastern Japan Logistics Center
Maruha Corporation (Sendai)Fish cake, dried foods, frozen foods
Miyako Foods Inc. (Iwate)Frozen foods
Current domestic production sites Measures to be taken during this Medium-Term Plan
Maruha Corporation(Utsunomiya)
Fish cake, Frozen Foods, Fine chemicals, Seasoning
16
Business Objectivesin Next Med-Term Management Plan
(Note) Interest-bearing debt : Cumulative amount to be reduced during the next three years
Interest-bearing debt
D/E Ratio
ROA
Current Income
Ordinary Income
Operating Income
50,100
7.8
3.8%
-15,000
13,000
16,000
63,000
3.8
5.4%
10,000
18,000
21,000
2004(Expected)
2007(Target)
(Consolidated basis) (Unit: Million Yen)
17
Business Investment
115
165
69
9798
115
0
20
40
60
80
100
120
140
160
180
2002 2003 2004Expected
2005Target
2006Target
2007Target
(Year)
(Hundred Million Yen)
18
Interest-Bearing Debt
3,330
3,080 2,9302,730
2,5202,300
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2002 2003 2004 2005 2006 2007Expected Target Target Target
(Year)
(Hundred Million Yen)
19
R O A
3.12.7
3.8
5.44.9
4.2
0
1
2
3
4
5
6
2002 2003 2004 2005 2006 2007
(%)
Expected Target Target Target(Year)
20
D/E Ratio
10.7
8.47.8
6.3
5.0
3.8
012
3456
789
10
1112
2002 2003 2004 2005 2006 2007
(Power)
Expected Target Target Target(Year)