For the Year Ended April 30, 2018 [12.2MB]PDF

Financial Results for the Fiscal Year Ended April 30, 2018

June 2018 ITO EN, LTD.

Soft Drink Market in Japan P.1 Results & Forecasts by Category (Non-Consolidated) P.2 Results of Operations FYE April 2018 P.3 Forecasts FYE April 2019 P.4 Brand: Oi Ocha (1) P.5 Appendix Brand: Oi Ocha (2) P.6 Our Business Model Based on "Customer First" Principle Brand: Healthy Mineral Barley Tea P.7 About ITO EN Group (1) Brand: TULLY'S COFFEE & Vegetable Juice P.8 About ITO EN Group (2)

Tea Leaf Products & Matcha P.9 Development Program of Tea-growing Area Building the Value Chain of Coffee Business P.10 Summary of Consolidated Balance Sheet & Others (Consolidated) Global Business Strategy P.11 Management Index (Consolidated) Management Policy P.12 ESG in Our Value Chain P.13 Medium and Long-Term Management Plan P.14

Soft Drink Market Trends Monthly Sales Volume Trends

(¥ billion) Start of the Unsweetened RTD Tea Market Tea has become Popular YOY (%) 4,000 ITO EN Coffee has become 10 8 popular Others/Functional 193.8 189.8 188.3 7 7 7 182.6 187.0 Bad 218.4 227.2 7 1980 1985 222.0 246.0 228.7 Sports Drink Weather 244.0 Pioneering of Pioneering of 244.2 5 4 4 4 5 Canned Canned 276.3 277.0 3 3 Oolong Tea Green Tea 260.1 284.0 275.5 Mineral Water 258.2 267.0 2 3 3,000 Carbonated has 97.7 157.5 1 1 303.0 2 become popular 306.0 303.0 Fruit 3 305.0 376.4 317.0 0 447.4 179.0 0 0 152.2 167.0 Vegetable -2 147.2 140.0 159.2 -1 145.6 Market -4 -5 -5 -5 951.0 942.0 945.0 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 942.0 Coffee 2,000 929.3 922.3 955.1 Source: ITO EN, (Chart) May to Oct 2017

Topics of Soft Drink Market (2017) 725.0 725.0 730.0 Carbonated 538.5 705.0 720.0 648.9 Market (Volume) stayed flat due to the weather 1,000 changes in Summer 2017 (939.0) (950.5) (931.3) (876.5) (912.0) (Tea total) (Overall thirst-quenching drinks showed slower growth) 484.3 (873.0) 499.0 505.5 (796.4) 475.5 477.0 Other Tea 458.0 579.3 1. RTD Green Tea Market: +3% RTD Green Tea well performed thanks to major 447.0 401.0 415.0 435.0 440.0 445.0 Green Tea 217.1 brand renewals 0 85.2 1980 1985 1990 1995 2000 2005 2014 2015 2016 20172018 2018 2. RTD Coffee Market: -1% (\ billion) 1980 1985 1990 1995 2000 2005 2014 2015 2016 2017 Forecast Forecast 500ml PET and Bottled Can led the sales but Total - - 2,708 3,100 3,540 3,613 3,660 3,678 3,770 3,770 3,800 substantial decrease in SOT(stay-on-tab can) Can YOY % ------0%3%0%1% Change 3. Vegetable Beverage: +16% Copyright (C) All Rights Reserved. ITO EN, LTD. Source: ITO EN, Calendar year Strong growth mainly with Tomato Juice 1 Results & Forecasts by Category (Non-Consolidated)

(\ million)

FYE Apr. 30, FYE Apr. 30, FYE Apr. 30, 2017 Sales YOY % 2018 Sales YOY % 2019 Est. Sales YOY % Composition Change Composition Change Composition Change Net Sales 371,831 100.0% 1.8% 383,212 100.0% 3.1% 394,300 100.0% 2.9% Tea Leaves 33,675 9.1% 3.7% 35,700 9.3% 6.0% 38,361 9.7% 7.5% Drinks 334,843 90.0% 1.6% 343,853 89.7% 2.7% 352,632 89.4% 2.6% Others 3,312 0.9% -1.2% 3,659 1.0% 10.5% 3,306 0.9% -9.6%

Japanese Tea/Healthy Tea 183,644 49.4% 1.4% 186,579 48.7% 1.6% 192,180 48.7% 3.0%

Chinese Tea 17,037 4.6% -2.6% 17,421 4.5% 2.3% 17,219 4.4% -1.2%

Vegetable 44,300 11.9% 3.2% 47,154 12.3% 6.4% 49,519 12.6% 5.0%

Fruit 10,739 2.9% -1.8% 11,866 3.1% 10.5% 11,542 2.9% -2.7%

Coffee 42,399 11.4% 3.1% 42,758 11.2% 0.8% 43,848 11.1% 2.5%

Black Tea 4,900 1.3% -19.4% 5,083 1.3% 3.7% 5,273 1.3% 3.7%

Functional 7,064 1.9% 2.1% 6,821 1.8% -3.4% 6,997 1.8% 2.6%

Breakdown of Drinks of Breakdown Mineral Water 10,958 2.9% 17.7% 10,462 2.7% -4.5% 10,488 2.7% 0.2%

Carbonated 9,988 2.7% 2.4% 11,936 3.1% 19.5% 11,928 3.0% -0.1%

Others 3,809 1.0% 1.0% 3,768 1.0% -1.1% 3,634 0.9% -3.5%

■Summary of Operations (Consolidated and Non-Consolidated) (\ million) ■Performances of Subsidiaries (\ million, $ thousand)

FYE Apr. 30, FYE Apr. 30, Upper: Net Sales FYE Apr. 30, FYE Apr. 30, 2017 Sales 2018 Sales YOY % Bottom: Operating Income 2017 2018 YOY % Composition Composition Change Change 103,478 104,722 1.2% Net Sales 475,866 100.0% 494,793 100.0% 4.0% Domestic Subsidiaries 5,378 5,620 4.5% Gross Profit 226,170 47.5% 233,983 47.3% 3.5% Tully's Coffee 30,268 32,589 7.7% Japan Co., Ltd. 3,130 3,250 3.8% Sales Commission 79,034 16.6% 81,615 16.5% 3.3% Chichiyasu 14,621 14,398 -1.5% 300 305 1.6% Advertising 12,937 2.7% 12,491 2.5% -3.4% Company 34,863 40,362 15.8% Overseas Subsidiaries Freight 12,940 2.7% 14,188 2.9% 9.6% 2,225 2,619 17.7% 30,469 35,130 15.3% Depreciation and 10,312 2.2% 10,873 2.2% 5.4% 1,687 2,018 19.7% Amortization US Business Selling, General and $281,268 $317,650 12.9% 204,395 43.0% 211,939 42.8% 3.7% Administrative Expenses Consolidated $15,573 $18,253 17.2% Operating Income 21,774 4.6% 22,043 4.5% 1.2% Other Overseas 4,393 5,231 19.1% Subsidiaries 538 600 11.6% Ordinary Income 21,524 4.5% 21,441 4.3% -0.4% Elimination of -34,307 -33,504 - Internal Transactions Extraordinary Losses -1,476 -1,592 - -801 - -450 -- and Income Exchange rate (US$) ¥108.4 ¥110.6 (average during a year) Net Income 13,693 2.9% 12,553 2.5% -8.3% ■ (Non-Consolidated) (Note)Accounting for effects of the US tax Breakdown of Gross Profit Change reform: -829 million yen '16/4 '17/4 '18/4 (\ billion) 100.0% 100.0% 3.1% +0.6 Net Sales 371,831 383,212 180 +1.2 +5.3 -1.2 Gross Profit 174,999 47.1% 179,707 46.9% 2.7% +0.5 +3.0 Operating Income 15,646 4.2% 15,394 4.0% -1.6% 170 Sales Changes in Fluctuations in Sales Changes in Fluctuations in Product Mix, Raw Material Product Mix, Raw Material Non-Consolidated 4.7% 4.5% -1.8% Changes Changes Ordinary Income 17,460 17,142 etc. Costs, etc. etc. Costs, etc.

■Summary of Operations (Consolidated and Non-Consolidated) (\ million) ■Performances of Subsidiaries (\ million, $ thousand)

FYE Apr. 30, FYE Apr. 30, Upper: Net Sales FYE Apr. 30, FYE Apr. 30, 2018 Sales 2019 Est. Sales YOY % Bottom: Operating Income 2018 2019 Est. YOY % Composition Composition Change Change 104,722 108,242 3.4% Net Sales 494,793 100.0% 507,800 100.0% 2.6% Domestic Subsidiaries 5,620 5,429 -3.4% Gross Profit 233,983 47.3% 239,600 47.2% 2.4% Tully's Coffee 32,589 34,300 5.2% Japan Co., Ltd. 3,250 3,270 0.6% Sales Commission 81,615 16.5% 81,767 16.1% 0.2% Chichiyasu 14,398 15,100 4.9% 305 370 21.0% Advertising 12,491 2.5% 13,265 2.6% 6.2% Company 40,362 39,565 -2.0% Overseas Subsidiaries Freight 14,188 2.9% 14,726 2.9% 3.8% 2,619 3,096 18.2% 35,130 34,044 -3.1% Depreciation and 10,873 2.2% 10,746 2.1% -1.2% 2,018 2,015 -0.2% Amortization US Business Selling, General and $317,650 $315,230 -0.8% 211,939 42.8% 216,600 42.7% 2.2% Administrative Expenses Consolidated $18,253 $18,660 2.2% Operating Income 22,043 4.5% 23,000 4.5% 4.3% Other Overseas 5,231 5,521 5.5% Subsidiaries 600 1,081 79.9% Ordinary Income 21,441 4.3% 22,500 4.4% 4.9% Elimination of -33,504 -34,308 - Internal Transactions Extraordinary Los s es -1,592 -2,025 - -450 - -1,080 -- and Income Exchange rate (US$) ¥110.6 ¥108.0 (average during a year) Net Income 12,553 2.5% 14,000 2.8% 11.5% ■Breakdown of Gross Profit Change (Non-Consolidated) '17/4 '18/4 '19/4Est. (\ billion) Net Sales 383,212 100.0% 394,300 100.0% 2.9% 190 +5.2 -0.6 Gross Profit 179,707 46.9% 183,116 46.4% 1.9% 180 +0.6 -1.2 +5.3 -1.2 Operating Income 15,394 4.0% 16,500 4.2% 7.2% Sales Changes in Fluctuations in Sales Changes in Fluctuations in Product Mix, Raw Material Product Mix, Raw Material

Non-Consolidated 4.5% 4.6% 6.1% Changes Changes Ordinary Income 17,142 18,180 etc. Costs, etc. etc. Costs, etc.

Green Tea Beverage Market Oi Ocha

(¥ billion) No.1 Brand in RTD Tea Category *1 500 90% 447.0 435.0 440.0 445.0 421.0 415.0 415.0 80% 409.3 402.0 405.0 401.0 382.0 375.0 375.0 383.0 400 70%

309.4 60% 300 268.5 279.2 ITO EN Share 50% 217.1 37% 39% 38% 34% 36% 37% 35% 35% 35% 31% 33% 32% 33% 33% 34% 40% 200 31% 28% 29% 29% 30%

100 20%

ITO EN 10%

0 0% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Est. Source: ITO EN, Calendar year *1 Source: ITO EN, Jan to Dec 2017 RTD Roasted Green Tea Developing New Fan Base Promoting Summer Consumption User Composition of "Oi Ocha Shin-Ryoku" (New Green Tea) *3

RTD Roasted Green Tea 20% No.1 Share Age 20-30 Male Female Others 49.6% 50.4% 30% 70%*2 *2 Source: ITO EN, Jan to Dec 2017

FOSHU RTD Tea Brands Led by "Oi Ocha" (Tea Catechin)

Long Selling Brand marks the 30th Anniversary Double in Healthy Catechin with Matcha*

Male 62% Female 38% Male 77％ Female 23％

Age 60 Age 60 50 50 40 40 Low-Caffeine 30 30 (Jasmine Tea etc.) 20 20 10 10 * Our ratio compared with RTD to Green Tea products 51525 15

The Ice Brew Green Tea with Matcha Roasted Green Tea, Used 100% First Flush Tea Leaves grown in Japan Male 55% Female 45% Male 51％ Female 49％

Age 60 Age 60 Caffeine-Free （Rooibos Tea etc.） 50 50 40 40 30 30 20 7,279 5,086 20 10 10

Barley Tea Leaf Product Market RTD Barley Tea Market

(¥ billion) (million cases) (¥ billion) ITO EN Share 20 ITO EN Share20.0 47% 99.0 43% 100 16.7 16.5 18.0 89.5 15.9 15.8 15.8 B’s Blended Tea 40 15.5 15.0 15.3 16.0 80.0 15 80 14.0 71.0 Total Sales Amount of 63.0 ITO EN's Barley Tea 30 12.0 60 Leaf Product 51.0 10 10.0 C’s Blended Tea 8.0 20 40 Sales Volume of the 6.0 Healthy Mineral Barley Tea 5 4.0 20 10 2.0 A’s Barley Tea 0 0.0 0 0 '10 '11 '12 '13 '14 '15 '16 '17 '11 '12 '13 '14 '15 '16 '17 '18 Est. Source: ITO EN, Market: Calendar year ITO EN: May to Apr Source: ITO EN, Market: Calendar year ITO EN: May to Apr

No.1 Share in "Caffeine-Free RTD Tea" Category* Easy and Tasty with Cold Brew Instant Barley Tea Tea Bag Products Supplying Minerals Supplement Minerals Frozen Bottle for Sports Activities

RTD Coffee Market 100% Vegetable Juice Market

(million cases) (¥ billion) ITO EN Share 39% 100 8990 100% 16 92.0 86878889 87.0 83848586 818283 80.8 80.6 787980 Others 80.1 75767778 737475 80% 80 73.0 71.6 707172 67686970 Sales Volume of 12 64656667 626364 "TULLY'S COFFEE" 61.7 59606162 56575859 60 Total Sales Amount of 545556 60% 515253 126-200ml Can 25% ITO EN's Vegetable 48495051 28% 464748 35% 31% 8 100% Beverage 434445 38% 40414243 37383940 40% 40 353637 32333435 29303132 PET bottles 15% 20% 272829 15% 242526 4 21222324 15% 15% 192021 20% 20 161718 13141516 201-599ml Can 10111213 20% 24% 24% 8910 14% 16% 5678 2345 0% 0 0 012 '11 '12 '13 '14 '15 '16 '17 '11 '12 '13 '14 '15 '16 '17 '18 Est. Source: ITO EN, Market: INTAGE Inc. SRI, 2011 to 2017 ITO EN: May 2011 to Apr 2017 Source: ITO EN, Market: Calendar year ITO EN: May to Apr Market share by sales amount for all coffee beverage containers and quantities (total for supermarkets, convenience stores and drug stores)

TULLY'S COFFEE Brand One day Veggie Aojiru (a day' s worth of vegetables) (Green Juice)

Accumulated sales volume achieved Promote Collaboration Double-digit Growth Sugar-Free Latte Over 100 million with Managerial Nutritionist cases

Green Tea Leaf Product Market Stimulating the Japanese Green Tea Leaves Market

(¥ billion) 348.2 25% 288.6 Sales Shelf with Hanger Hook "ITO EN Dai-Cha-Kai" (sales demonstration and 300 241.6 236.8 234.3 20% Increase in tasting events of green tea) held by our certified 15% 200 9% 10% 11% SKUs and Sales TEA TASTER employees 8% 6% 10% 100 ITO EN Share 5% 0 0% '05 '10 '15 '16 '17 (¥ billion) Easy-to-Use Green Tea Product Market 28.4 30 100% 25.0 25.9 95%96%97%98%99% 89%90%91%92%93%94% 83%84%85%86%87%88% 77%78%79%80%81%82% 18.3 71%72%73%74%75%76% 20 65%66%67%68%69%70% 44% 46% 48% 59%60%61%62%63%64% 13.2 38% 53%54%55%56%57%58% 47%48%49%50%51%52% Perfect Tea Pot 41%42%43%44%45%46% 27% 35%36%37%38%39%40% 10 29%30%31%32%33%34% 23%24%25%26%27%28% ITO EN Share 17%18%19%20%21%22% "Skilled Professional on ITO EN TEA TASTER" 11%12%13%14%15%16% 5%6%7%8%9%10% 0 0%1%2%3%4% was Approved by Ministry of Health, Labor '05 '10 '15 '16 '17 and Welfare Source: ITO EN, Market: Calendar year ITO EN: May to Apr

Expand Distribution of "ITO EN Matcha" Original Clean Processing Facilities Overseas Sales Volume of Developing Matcha Matcha Products Production Area (Contract Tea Farmers) （Increased) Tripled in Three Years

7,279 5,086

Tully's Coffee Japan Co., Ltd. Distant Lands Trading Co. Business Overview

(¥ billion) Our Business Scope: (Shops) From Coffee Farm to Distributions 35 Net Sales 32.6 1,000 30.2 30 27.7 26.0 23.8 750 25 21.0 19.3 711 20 671 15.3 638 500 555 588 15 513 461 10 410 # of shops 250 5 The Company's Own Farms and 0 0 Mills are Rainforest Alliance Certified '11/3 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est.

Value Creation throughout Our Integrated Coffee Business System

Production / Production / Planning / Procurement Logistics Development Sales ■Overseas: DLTC ■ Overseas: DLTC (Mainly USA) ■Overseas: DLTC ■Overseas: DLTC Own roasting factory ■ Domestic: ITO EN ■Domestic: ITO EN, Tully's Coffee Own farm and mills in Costa Rica ■Domestic: ITO EN, Tully's Coffee (Supermarket· CVS · Vending Machine) Development of beverage products Own roasting factory ■ Domestic: Tully's Coffee Shops

silverskin-composition paper napkins

Connect the people of the World with "Oi Ocha" and Mid-Term Goals "Oi Ocha" Annual Sales Volume Accelerate the Overseas Business Strategy 100 Million Cases

2017

2015 ･Universal Label Design ･Product description in Local Languages Launched "Oi Ocha" Launched Brand 1996 Launched the Global Brand World's First Canned MATCHA GREEN TEA Green Tea * 1989 Launched PET 500ml Bottle

1985

7,279 5,086

2 Sales force = (Sojourn time in store)×(Frequency of visits) Sustainable Growth (Historical) Trend in Gross Number of Customers

1. Strengthening of the Domestic Business

・Strengthen the Existing Brands ・Development of the New Brands ・Increasing Company's Share in the Beverage Market ・Improvement of Profitability 2. Strengthening of the International Business '76/4 '83/4 '90/4 '97/4 '04/4 '11/4 '18/4 Consolidated Cash Flows ・Double-digit Growth, Mainly in North America ・Maximize the Group's Synergy CF from Operating Activities CF from Investing Activities ¥ ( million) Free CF ROE (%) 35,000 10.5% 9.5% 3. Strengthening ROE Management 30,085 9.0% 10 25,000 27,098 29,000 17,751 6.8% 25,322 8 ・Improvement of Profitability and 15,000 5.9% 6 Capital Efficiency 21,935 18,854 13,962 17,000 5,000 ・Growth in EPS 8,508 4 ・Stable return to Stockholders -5,000 2 -8,150 -9,242 -8,243 4. Promotion of Sustainability Management -15,000 -11,359 -12,000 0 '15/4 '16/4 '17/4 '18/4 '15/4 '16/4 '17/4 '18/4 '19/4Est.'19/4 予測・Enhancement of Governance Capital Investments 3,731 8,603 8,135 11,062 12,535 ・Further effort of CSR/CSV Issues Depreciation Amortization 4,568 5,203 5,418 6,179 6,915 Leased Assets Depr. 11,085 10,872 7,051 7,042 6,751

Product Procure- Production/ planning and ment Logistics Sales Development

ESG and value chain Eco Cars for Sales Tea Workshop "Making Japan Beautiful Development Program Health Conscious Products through Tea" Project Recycling System of Representatives Hold Seminar about of Tea-growing Area Used Tea Leaves Tea and its’ cultures Products that S Culture Prevention of to consumers S Sustainable agriculture contribute to health Global Warming Preservation Sustainable Use of S E S Creating employment ITO EN Oi Ocha E Resources Conservation of Sustainable New Haiku Contest Agriculture with Water Circulation S Mobility Succession of E Environment Sugar-Free Product and Biodiversity E S traditional cultures, conservation adopted in School about 70％* Educations Mainly related SDGs

Management base for value creation Corporate Governance / Risk Management / Compliance / Supply Chain Management / Respect for Human Rights / Human Resource S G Management / Financial Management Copyright (C) All Rights Reserved. ITO EN, LTD. * Percentage of total beverage sales 13 Medium and Long-Term Management Plan

2015 - 2017 Medium-Term Towards a "Global Tea Company" Management Plan 1. Global expansion of " " and "Oi Ocha" Brands 2. #.1 market shares both in Domestic and 1. Improving Profitability of 2018 - 2022 Global Green Tea Markets Domestic Business Medium and Long- 3. Train world-class Tea Tasters 2. Launched Global Brand Term Management Products Plan Domestic: Excellent Beverage Company Challenge for New Businesses 1. Strengthen the Brand and Develop New Long-Term Brands Vision 2. Increase Customers and Improving Profitability "Global Tea Company" 3. Challenge for New Businesses

2020 FYE April 2022 Plan (Consolidated) 30th Anniversary of the "Oi Ocha" 7,279 Net Sales ROE Total Return Ratio (February 2019) 5,086 The Tokyo Olympic and Paralympic Games (to be held in Tokyo in 2020) ¥600.0 billion Over 10% Over 40%

Copyright (C) All Rights Reserved. ITO EN, LTD. 14 Appendix Our Business Model Based on "Customer First" Principle We will create various added value by optimizing the allocation of capital in our business activities. External Environment Acquisition of Identification of Opportunities Risks

Input Management capital Outcome (Source of competitive advantage) (value to create)

Financial capital Financial capital ・・Financial management integrated with business model Improvement of profitability and capital efficiency ・Stable stockholder returns

Manufacturing capital ・Fabless management in cooperation I R Manufacturing capital ・ with manufacturing subcontractors n e Flexible production in line with demand ・Supply of products nationwide ・Five block system of production and logistics p s ・ on the basis of community-based sales Sales bases nationwide u u t l Intellectual capital t Intellectual capital ・Five product development concepts ・Development of products tailored to diverse needs ・Brand strength ・Optimum sales proposals in light of various product ・Traceability and market trends ・Quality control system for manufacturing subcontractors ・Use of optimum raw materials according to diverse products

Human capital Human capital ・Human resources development ・ Route sales ・Creation of a pleasant working environment ・ Professional team of Tea Taster Utilization of established Social and relationship capital CSR / CSV ・ Social and relationship capital Safety and security of consumers system ・Provision of health value to a wide range of customers ・Raw material procurement capability with scale advantage ・・Collaboration and network with related parties Dissemination and succession of Japanese tradition and tea culture

Natural capital Natural capital ・Quality improvement of tea leaves ・Promotion of environmental conservation-type agriculture and the stable procurement of raw materials ・Energy saving, resources saving and the prevention of based on the Tea-producing region development project global warming in business activities ・Used tea leaf recycling system

Concept for Management principle Corporate History Product Development "Always Putting Natural 1966 Established the Customer First" 1980 Develops the world's first Canned Oolong Tea Products that make 1984 Develops the world's first Canned Green Tea (launched in 1985) use of natural ingredients 1989 Changes the name of Canned Green Tea products to "Oi Ocha" Delicious Healthy 1990 Releases the world’s first PET bottled green tea drinks ("Oi Ocha" Green Tea, 1.5L) Delicious flavors Products that 1998 Stock advanced to the First Section of the Tokyo Stock Exchange that make people support a healthy 2001 Established ITO EN (North America) INC. feel happy life 2006 Tully's Coffee Japan Co., Ltd., into a consolidated subsidiary 2007 Class 1 Preferred Stock listed on the First Section of the Tokyo Stock Exchange Well- Safe 2011 Chichiyasu Company, into a consolidated subsidiary designed Products that people 2015 Distant Lands Trading Co. company became a consolidated subsidiary Designs that directly can enjoy with Beginning the Worldwide Expansion of the Global Brand convey the delicious complete peace of 2016 " Matcha Ko Bo" (manufacturing factory of real Matcha Powder in ITO EN flavors of our mind and safety products Shizuoka Sagara Factory), Kobe Factory (Hyogo Prefecture) Production System ■Leaves for green tea & coffee: Own Manufacturing System Pulverization Factory for Realization of High Quality Tea Leaves Factory ■Beverages: Fabricationless (5 blocks) Matcha Powder Raw Material Mainly Raw Beverage Production to reduce capital expenditures and transportation cost Use Tea Leaf Processing Factory

Factory for Tea Bags Factory for Tea Bags Manufacturing Own Coffee Central Research Institute Manufacturing (ITO EN KANSAI CHAGYO in Hyogo) Roasting Factory (ITO EN SANGYO, LTD.)

Brands Over 10 Million Cases Transition of Main Brands Product Mix （ Annual Sales Volume ）

Caffeine-Free 100% Vegetable (million cases) RTD Tea Bottle Can coffee RTD Tea Juice No.1 No.1 150 100% No.1 No.1

63% 64% 64% 60% 100 56%

50%

0 0% '14/4 '15/4 '16/4 '17/4 '18/4 Source: ITO EN * Source: ITO EN, Jan 2017 to Dec 2017

Provision of From Tea Farm to Domestic Subsidiaries Healthy Values Final Tea Products

Tully's Coffee Japan Co., Ltd. Chichiyasu Company Antenna Shop Sugar-Free Products "CHICHI YASU" Share among the all Beverage Sales About 70%

Inside the "LECT" Large Scale Commercial Facility of Izumi Co., Ltd. (Hiroshima Prefecture, Hiroshima City, West Ward) Copyright (C) All Rights Reserved. ITO EN, LTD. Appendix 3 Development Program of Tea-growing Area

Total Volume of Domestic Green Tea Leaf Production Development Program of Tea-growing Area

Total Domestic Tea Leaf Production Production volume (ton) (tons) ITO EN Consumption Dimension of green tea farms (ha) 100,000 ITO EN Consumption Share (%) (tons) （） 100,000 60% 5,906 ha 89,300 6,000 85,000 84,800 83,500 5,405 80,200 82,000 79,500 50% 80,000 2,000 4,371 40% 3,630 60,000 4,000 1,609 27% 25% 25% 24% 24% 25% 30% 1,401 21% 18% 1,226 1,000 40,000 Long-term target 20%2,000 1,034 20,000 10% 2,000ha

0 0% 0 0 '00 '05 '10 '13 '14 '15 '16 '17 '15 '16 '17 '18 Source: ITO EN * Including contract cultivation farms Est. Evolution of the "Development Program of Tea-growing Area"

A variety of Harvesting with Utilize the same crude the same Tea Harvester Tea Factory Product Lineup (Drying Process) Spring Green | Tea Summer

Winter Barley Grass | Spring

Consolidated Balance Sheet (as of April 30, 2017 and 2018) Dividend & Total Return Ratio (\ million) Dividend(Common Stock) Dividend(Preferred Stock) 2017 2018 Change (¥) Total Return Ratio (%) Current assets 174,657 173,798 -859 80 72.3 80 61.2 Cash and deposits 64,202 61,664 -2,538 54.4 54.3 60 48.5 60 Accounts receivable-trade and inventories 92,577 96,792 4,214 42.6 43.5 Property, plant and equipment 83,039 84,822 1,783 40 40 Land 21,587 21,745 157 48 48 49 50 50 50 50 50 20 38 38 39 40 40 40 40 40 20 Leased assets 27,889 24,010 -3,878 0 0 Other 33,562 39,066 5,504 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Intangible fixed assets 24,454 21,588 -2,865 Est. Goodwill 18,371 16,364 -2,007 Recognition from Society Investments and other assets 20,254 20,971 716 Total assets 302,405 301,180 -1,225 Current liabilities 81,560 77,187 -4,372 At 1st "Japan SDGs Award" (FY2017) ITO EN receives Accounts payable 33,061 29,879 -3,182 "Special SDGs Partnership Award" Short-term loans payable 2,364 2,020 -344 We were recognized as a company working on the promotion of SDGs emphasizing partnership through the Tea-Producing Region Development Project (Large-Scale Lease obligations 8,995 7,002 -1,992 New Tea Farm Business), Used Tea Leaves Recycling System, etc. Income taxes payable 4,490 3,948 -541 Non-current liabilities 84,135 80,241 -3,893 Corporate bonds 10,000 10,000 - Long-term loans payable 47,433 45,922 -1,511 Lease obligations 13,468 10,282 -3,185 Total liabilities 165,696 157,429 -8,266 Net assets 136,709 143,750 7,041

■Rating A+ ■Equity ratio ■Bond shelf registration \40 billion ■4/2017 45.3% Award ceremony held at the Prime Minister’s Office (December 2017) ■(straight bonds) ■4/2018 47.1% We are permitted to post links on the Ministry of Foreign Affairs of Japan website Copyright (C) All Rights Reserved. ITO EN, LTD. and use the logo mark in the above figure. Appendix 5 Management Indexes (Consolidated)

Net Sales & Cost of Sales ratio Operating Income Net Income

(¥ billion) Net Sales (%) (¥ billion) Operating Income (%) (¥ billion) Net Income (%) 600 65 25 % Operating Income 12 % Cost of Sales 23.0 15 % Net Income 14.0 25 22.0 13.6 507.8 21.1 21.7 494.7 20.2 12.5 500 465.5 475.8 12.0 437.7 430.5 20 18.9 10 11.2 20 403.9 17.2 400 369.2 55 10 9.2 8.6 15 8 15 52.4 53.0 52.5 52.7 52.8 7.2 300 52.1 51.6 51.8 11.3

10 5.1 6 10 5.0 4.8 200 45 4.6 4.5 4.5 5 3.7 5 4 5 100 2.5 2.8 2.8 2.9 2.5 2.8 2.6 1.7 1.9

0 35 0 2 0 0 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. Est. Est.

Overseas Business sales ratio Cash Flows EPS

(¥ billion) US Business (%) CF from Operating Activities (¥ ) (¥ billion) EPS(Common Stock) 40 Asia/Australia Business 10 CF from Financing Activities Overseas Business sales ratio 150 EPS(Preferred Stock) Free CF 30.0 8.2 29.0 35 30 27.0 25.3 7.8 7.8 24.0 24.3 118.73 121.57 7.3 8 21.4 109.75 30 20 17.7 105.77 21.9 98.64 19.7 111.61 25 18.8 17.0 100 108.77 6 10 14.7 82.18 13.3 13.9 95.77 77.37 20 6.2 8.5 88.64 66.60 3.5 0 99.79 4 72.18 15 2.9 2.3 -10 -4.8 50 10 2.0 -8.0 2 67.37 -20 -15.3 56.60 5 -16.4 -18.1 -18.0 -16.6 -30 0 0 0 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. Est. Est.

Copyright (C) All Rights Reserved. ITO EN, LTD. Appendix 6 The purpose of the materials you have received is to provide the means for a more thorough understanding of ITO EN and should not necessarily be regarded as a recommendation to invest. Furthermore, the data in these materials is based on what we believe is the most accurate information. However, please understand that even without advance notice, both past data and future forecasts may be revised.