December 2015 ITO EN, LTD. First Half Financial Results for The
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First Half Financial Results for the Fiscal Year Ending April 30, 2016 December 2015 ITO EN, LTD. Index 1. Beverage Market in Japan 2. Results of Operations (First Half Totals) 3. Annual Forecasts FYE April 2016 4. Management 5. Category Results & Forecasts (Non-Consolidated) 6. To be a representative “Tea company” of Japan 7. Brand Strategy: Leaf 8. Brand Strategy: RTD Japanese Tea "Oi Ocha" 9. Brand Strategy: Healthy Mineral Barley Tea & TULLY'S COFFEE 10. Brand Strategy: Healthy Beverages 11. Approach for the Improving Profitability 12. Domestic Businesses: TULLY'S COFFEE & Chichiyasu 13. Overseas Businesses: Penetration of the ITO EN Brand 14. Medium and Long-Term Management Plan (Appendix) 1. About ITO EN 2. Project of the Developing Green Tea-Producing Regions 3. Summary of Consolidated Balance Sheet & Others 4. Key Management Indexes (Consolidated) 1. Beverage Market in Japan Moderate recovery for 2015 with the easing of the effects of the consumption tax increase Market Trend グラフ① Monthly Sales Trends (sales basis) chart① (volume basis) chart②グラフ② YOY(%) 4,000 (¥ billion) Tea was popular 10 ITO EN Coffee was Total 7.2 3,685.0 6.1 popular 3,680.0 3,678.0 5.6 3,607.8 3,637.5 3,660.0 Others/ 3,603.1 Functional 5 3,540.3 160.0 156.7 182.6 182.5 183.0 2.2 1.5 1.3 2.0 6.0 1.6 2.0 Carbonated 165.5 152.3 -0.6 5.0 5.0 was popular 222.0 Sports Drink 260.0 243.0 245.0 0 -1.2 260.0 252.2 244.2 292.3 1.0 1.1 3,100.2 260.1 244.0 Mineral Water -1.0 -1.0 -1.9 -1.0 232.0 258.2 269.0 278.0 -5 210.2 252.7 -3.0 -3.0 -8.0 3,000 97.7 Fruit Market 325.7 329.9 317.0 305.0 300.0 2,707.5 312.2 325.0 -10 447.4 Pioneering of 167.4 164.4 147.2 139.0 136.5 Vegetable -11.8 146.8 150.1 Canned -15 Green Tea 145.6 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Reaction to the last-minute Reaction to the rise in demand before the record-level storm rainfall Pioneering of 928.5 930.0 consumption tax raise 952.0 938.7 929.3 Coffee 2,000 Canned 952.4 948.0 Oolong Tea 922.3 Source: ITO EN, (Chart) Nov 2014 to Oct 2015 Average Monthly Temperatures & Precipitation chart③ Carbonated Precipitation quantity in July and September was bigger than 698.0 721.0 715.0 643.4 642.5 680.0 705.0 the previous year in the Tokyo and Osaka areas 648.9 1,000 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Average temp YOY (℃) 0.7 -1.6 -0.5 -0.2 -0.1 -0.5 0.8 -1.3 -0.6 -1.0 -0.6 -0.7 (885.0) (871.5) (885.0) (876.5) (890.0) (897.5) (872.5) (Tea total) Tokyo Precipitation (796.4) 510.0 497.5 488.5 480.0 475.5 478.0 477.5 Other Tea YOY (mm) 72.5 2.5 68.0 -95.5 -19.5 -26.0 -47.5 -115.5 129.0 -1.5 348.0 -327.5 579.3 Average temp YOY ( ℃) 1.3 -1.0 0.2 1.1 0.3 1.1 1.7 -1.0 -0.8 0.8 -0.8 -0.5 Osaka Precipitation 405.0 401.0 412.0 420.0 375.0 375.0 383.0 Green Tea YOY (mm) -6.0 30.0 41.0 -29.5 21.5 34.5 23.0 121.5 279.0 -155.5 68.5 -81.5 217.1 85.2 0 Source: Japan Meteorological Agency 1980 1985 1990 1995 2000 2010 2011 2012 2013 2014 2015 2016 Source: ITO EN Est. Forecast - 1 - 2. Results of Operations (First Half Totals) Increasing of awareness of profits within the group ■Summary of Operations (Consolidated and Non-Consolidated) (\ million) ■Performances of Subsidiaries (\ million) For the Year For the Year For the Year Ended For the Year Ending Upper: Net Sales Bottom: Operating Ended Ending Apr. 30, 2015 Apr. 30, 2016 Sales Sales YOY % Income Apr. 30, 2015 Apr. 30, 2016 YOY % Composition Composition Change Change 4,334 14,917 244.1% 100.0% 100.0% 8.1% ITO EN Net Sales 233,852 252,877 238 768 222.1% (North America) 41,676$thousand 122,371$thousand 193.6% 47.6% 45.9% 4.4% INC. Gross Profit 111,214 116,082 2,311$thousand 6,307$thousand 172.8% Tully's Coffee 12,810 13,681 6.8% Selling Commission 40,333 17.2% 42,221 16.7% 4.7% Japan Co., Ltd 1,834 1,675 -8.7% 6,891 7,212 4.7% Advertising 7,917 3.4% 6,923 2.7% -12.6% Chichiyasu Company 93 218 134.1% 41,853 42,644 1.9% Transportation 6,152 2.6% 6,537 2.6% 6.3% Domestic Subsidiaries 1,297 1,319 1.7% Depreciation and 2,796 3,773 35.0% 6,621 2.8% 6,913 2.7% 4.4% Other Subsidiaries Amortization 103 168 63.1% Selling, General and Elimination of Internal -29,172 -30,358 - 103,026 44.1% 106,068 41.9% 3.0% Administrative Expenses Transactions -544 -972 - Consolidated Operating Income 8,187 3.5% 10,014 4.0% 22.3% Exchange rate (US$) ¥103.9 ¥121.9 (May-October period average rate) Ordinary Income 8,019 3.4% 9,844 3.9% 22.8% Extraordinary Expenses -81 - -37 - - and Income ■Breakdown of Gross Profit Net Income 4,378 1.9% 5,706 2.3% 30.3% Change (Non-Consolidated) (¥ billion) For the Year Ended For the Year Ending Apr. 30, 2015 Apr. 30, 2016 Net Sales 194,338 100.0% 201,006 100.0% 3.4% Gross Profit 89,103 45.8% 91,226 45.4% 2.4% Sales Changes -3.4 3.0 Changes in 2.7% 3.4% 32.4% -0.6 -0.5 Operating Income 5,163 6,835 Product Mix, etc. Fluctuations in Raw 2.9% 4.7% 68.0% 0.6 -0.3 Non-Consolidated Ordinary Income 5,643 9,481 Material Costs, etc. - 2 - 3. Annual Forecasts FYE April 2016 Aiming to consistently reach the estimation by strengthening brands ■Summary of Operations (Consolidated and Non-Consolidated) (\ million) ■Forecasts of Subsidiaries (\ million) For the Year For the Year For the Year Ended For the Year Ending Upper: Net Sales Ending Bottom: Operating Ended Apr. 30, 2016 Apr. 30, 2015 Sales Apr. 30, 2016 Est. Sales YOY % Income Apr. 30, 2015 YOY % Composition Composition Change Est. Change 9,340 29,380 214.6% 100.0% 100.0% 8.0% ITO EN Net Sales 430,541 465,000 95 1,386 1348.9% (North America) 83,781$thousand 240,906$thousand 187.5% 48.2% 46.6% 4.6% INC. Gross Profit 207,409 216,900 1,108$thousand 11,372$thousand 926.1% Tully's Coffee 26,036 27,480 5.5% Selling Commission 74,468 17.3% 77,157 16.6% 3.6% Japan Co., Ltd 3,572 3,400 -4.8% 13,186 13,377 1.4% Advertising 13,759 3.2% 12,245 2.6% -11.0% Chichiyasu Company 87 200 128.9% 76,518 76,377 -0.2% Transportation 11,455 2.7% 12,105 2.6% 5.7% Domestic Subsidiaries 2,108 1,871 -11.2% Depreciation and 5,841 7,227 23.7% 13,611 3.2% 13,893 3.0% 2.1% Other Subsidiaries Amortization 212 254 20.1% Selling, General and Elimination of Internal -54,135 -54,143 - 196,016 45.5% 201,800 43.4% 3.0% Administrative Expenses Transactions -1,162 -2,114 - Consolidated Operating Income 11,393 2.6% 15,100 3.2% 32.5% Exchange rate (US$) ¥111.2 ¥120.0 (average during a year) Ordinary Income 11,229 2.6% 14,100 3.0% 25.6% Extraordinary Expenses -336 - -650 - - and Income ■Breakdown of Gross Profit Net Income 7,292 1.7% 8,770 1.9% 20.2% Change (Non-Consolidated) (¥ billion) For the Year Ended For the Year Ending Apr. 30, 2015 Apr. 30, 2016 Est. Net Sales 353,754 100.0% 365,300 100.0% 3.3% Gross Profit 164,289 46.4% 168,964 46.3% 2.8% Sales Changes -4.5 5.3 Changes in 1.8% 2.8% 55.9% -0.2 -0.9 Operating Income 6,478 10,100 Product Mix, etc. Fluctuations in Raw 2.0% 3.4% 81.8% -0.2 0.3 Non-Consolidated Ordinary Income 6,929 12,600 Material Costs, etc. - 3 - 4. Management To become a “Global tea company”, making synergetic effect among the group Management Strategies Consolidated Cash Flow chart① 1.Improve profitability on domestic business CF from operating activities (¥ million) ・Acquire new customers CF from investing activities Free CF ・Strengthen sales-visiting 24,042 24,300 25,000 21,462 Expand distribution and strengthen ties with 20,400 existing customers 17,751 ・Strengthen Branding 19,702 15,000 Expand and strengthen major brand (over 10 million cases sales in annual) 14,769 11,900 13,394 Enlarge share in the Green tea leaves 8,508 5,000 Launch a "food with functional labeling" ・Action for Agricultural Production Corporation ・Promote to improve profitability on vending machines -5,000 ・Promote improvement on logistics through cutting logistics cost -4,598 ・Improve productivity and cost competitiveness -8,067 -9,272 -9,242 -8,500 ・Generate synergetic effects among the group -15,000 '12/4 '13/4 '14/4 '15/4 '16/4 2.Expand overseas business & new growth Est.