Financial Results for the Fiscal Year Ending April 30, 2020
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Financial Results for the Fiscal Year Ending April 30, 2020 June 2020 ITO EN, LTD. Copyright (C) All Rights Reserved. ITO EN, LTD. INDEX Soft Drink Market in Japan …P.3 About achievements …P.6 Spread of COVID-19 Marketing strategy …P.11 Management strategy …P.20 Appendix …P.24 Copyright (C) All Rights Reserved. ITO EN, LTD. 2 Soft Drink Market in Japan/ About achievements Copyright (C) All Rights Reserved. ITO EN, LTD. 3 Soft Drink Market in Japan Soft Drink Market Trends Monthly Sales Volume Trends (¥ billion) FYE April 2020 Create a Unsweetened RTD Tea Market YoY(%) Tea has become Popular Market 4,000 15 Coffee has become 4 3 3 2 1 3 4 popular Others/Functional 5 189.8 202.0 200.0 -3 187.0 -4 2 -3 166.0 -5 2 3,500 1980 1985 218.4 167.0 154.0 Vegetable -1 -3 Pioneering of Pioneering of 221.9 140.0 170.0 -2 -4 -3 -5 -4 Canned Canned 159.2 228.7 235.0 -7 -19 Oolong Tea Green Tea 145.6 226.5 156.0 -15 244.0 Sports Drink -23 ITO EN Carbonated has 276.3 295.0 215.0 3,000 become popular 260.1 303.0 280.0 -25 -21 -23 305.0 Fruit 254.0 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 376.4 275.5 289.0 284.0 Source: ITO EN, (Chart) May 2019 to Apr 2020 447.4 267.0 934.0 278.0 Mineral Water FYE April 2019 YoY(%) 2,500 157.5 9 ITO EN 97.7 10 8 8 Carbonated 6 6 725.0 740.0 733.0 4 538.5 720.0 5 2 3 710.0 1 1 2,000 648.9 5 5 -2 0 0 2 3 2 718.2 1 1 0 -1 0 -5 -2 Coffee Market 1,500 -6 955.1 942.0 933.0 915.0 -10 720.3 942.0 832.0 922.3 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Source: ITO EN, (Chart) May 2018 to Apr 2019 1,000 843.5 (931.3) (939.0) (945.0) (966.5) (906.0) Topics of Soft Drink Market (873.0) (Tea total) 699.3 484.3 499.0 500.0 521.5 Other Tea 659.0 458.0 481.0 (796.4) 2019 500 597.2 579.3 Apr Rolled out progressive price increases for products in large- 519.2 sized PET. 330.0 447.0 415.0 440.0 445.0 445.0 425.0 Green Tea 172.0 217.1 Jul Sales volumes decreased due to heavy/sustained rain and 0 85.2 low temperatures. 1980 1985 1990 1995 2000 2005 2015 2017 2018 2019 2020 Sep Sales volumes decreased as a reaction to the disruption and 1980 1985 1990 1995 2000 2005 2015 2017 2018 2019 Est confusion in the logistics network last year. Total - - 2,708 3,100 3,540 3,613 3,678 3,770 3,805 3,759 3,521 (¥ billion) 2020 YoY % Feb Spread of COVID-19 - - - - - - - 3% 1% -1% -6% Change Apr Declaration of a State of Emergency Copyright (C) All Rights Reserved. ITO EN, LTD. 4 Soft Drink Market in Japan and ITO EN Soft Drink Market Beverage business of ITO EN 2019 (Jan-Dec) YoY △1.2% Shares in soft drink market FYE April 2020(May 2019 to Apr 2020) YoY △4.1% (¥ billion) YOY 4,000 3,805.0 3,759.0 A 25.6 % Proportional sales YoY Others △ 3.5 % Others △ 9.7 % 3,000 Of which Sports Drink △ 3.6 % 6% B 22.0 % Vegetable △ 3.5 % Vegetable △ 7.2 % 13% 2,000 Mineral Water △ % 3% Mineral Water △ 14.9 % 1.7 C 13.9 % 3% Carbonated △ 0.9 % 64% Carbonated △ 6.2 % 1,000 ITO EN 12.4 % 11% Coffee △ 1.9 % D 12.3 % Coffee △ 12.5 % Tea total + % 0 2.3 Others 13.8 % Tea total △ % 2018 2019 1.4 Ratio of sugar-free beverages:49.9 % ※2019 Quantity based : 2020 (Jan-Dec) YoY △6.3%(Est) Ratio of sugar-free beverages 74 % (¥ billion) (\ million) YOY 4,000 3,759.0 FYE Apr. 30, FYE Apr. 30, 3,521.0 Others % △ 9.6 2020 Sales Composition YoY % Change 2021 Est. Sales Composition YoY % Change Of which Sports Drink △ 5.1 % 3,000 Drinks 339,395 100.0% -4.1% 337,653 100.0% -0.5% Vegetable + 1.3 % Tea total 218,142 64.3% -1.4% 218,949 64.8% 0.4% 2,000 Mineral Water △ 2.1 % Japanese Tea/Healthy Tea 193,246 56.9% -2.8% 194,645 57.6% 0.7% Carbonated △ 3.1 % 1,000 Chinese Tea 17,219 5.1% 2.6% 17,234 5.1% 0.1% Coffee △ 9.1 % Tea total △ % Black Tea 7,677 2.3% 34.1% 7,070 2.1% -7.9% 0 6.3 2019 2020 Vegetable 43,960 13.0% -3.5% 44,022 13.0% 0.1% Coffee 36,538 10.8% -12.5% 36,399 10.8% -0.4% Mineral Water 9,396 2.8% -14.9% 8,979 2.7% -4.4% Carbonated 11,175 3.3% -6.2% 10,586 3.1% -5.3% Others 20,184 5.9% -9.7% 18,718 5.5% -7.3% Source: ITO EN Copyright (C) All Rights Reserved. ITO EN, LTD. 5 Results of Operations FYE April 2020 ■Summary of Operations (Consolidated and Non-Consolidated) (\ million) ■Performances of Subsidiaries (\ million, $ thousand) Upper: Net Sales FYE Apr. 30, FYE Apr. 30, FYE Apr. 30, FYE Apr. 30, Sales Sales Bottom: Operating 2019 2020 YoY % Change YoY % Change Composition Composition Income 2019 2020 107,765 102,885 -4.5% Net Sales 504,153 100.0% 483,360 100.0% -4.1% Domestic Subsidiaries 5,801 3,196 -44.9% Gross Profit 240,375 47.7% 232,755 48.2% -3.2% Tully's Coffee 34,568 32,811 -5.1% Japan Co., Ltd. 3,504 1,725 -50.8% Sales Commission 84,760 16.8% 80,537 16.7% -5.0% 14,409 14,251 -1.1% Chichiyasu Company Advertising 11,544 2.3% 11,206 2.3% -2.9% 269 410 52.4% 38,168 36,282 -4.9% Freight 15,210 3.0% 14,651 3.0% -3.7% Overseas Subsidiaries 2,738 1,617 -40.9% Depreciation and 2.2% 2.3% -3.0% -4.4% Amortization 11,296 10,957 32,385 30,971 Selling, General and 1,658 654 -60.6% Consolidated 217,555 43.2% 212,814 44.0% -2.2% US Business Administrative Expenses $ 291,054 $ 285,736 -1.8% Operating Income 22,819 4.5% 19,940 4.1% -12.6% $ 14,901 $ 6,034 -59.5% Other Overseas 5,783 5,311 -8.2% Ordinary Income 23,211 4.6% 19,432 4.0% -16.3% Subsidiaries 1,080 963 -10.8% Extraordinary Losses - - - Elimination of -36,276 -33,595 - and Income -724 -5,064 Internal Transactions -1,572 -1,500 - Net Income 14,462 2.9% 7,793 1.6% -46.1% Exchange rate (US$) 111.27 108.39 (average during a year) ■Breakdown of Gross Profit Change (Non-Consolidated) Net Sales 394,495 100.0% 377,787 100.0% -4.2% (¥ billion) Gross Profit 46.9% 47.9% -2.2% 184,965 180,977 -7.8 +1.7 184.9 +2.1 Operating Income 15,851 4.0% 16,626 4.4% 4.9% 180.9 Non-Consolidated FYE Apr. 30, Sales Changes in Fluctuations in FYE Apr. 30, Ordinary Income 18,600 4.7% 18,142 4.8% -2.5% 2019 Changes Product Mix, Raw Material 2020 etc. Costs, etc. Copyright (C) All Rights Reserved. ITO EN, LTD. 6 Effects of COVID-19 ITO EN (non-consolidated) Main impact on sales ※ 4Q( Feb to Apr, 2020 ) Changes in sales composition by channel ○Demand for stockpiling emerged at supermarkets and mass retailers. Purchases were stable. - 8.5 % ○Visits to convenience stores decreased primarily in urban areas. ○Purchases from indoor vending machines at transportation facilities, tourist facilities and offices, among other places, declined. Changes in product mix ○Product categories, such as RTD tea, vegetable beverages changed ○Demand for products in large PET bottles rose chiefly due to an increase in teleworking and temporary school closures Sales results YoY change Feb Mar Apr 4Q Regulation overview Early March ITO EN (non-consolidated) + 5% - 4% - 22% - 9% Temporary school closures, teleworking Stay-at-home requests April 7 Supermarkets + 11% + 5% - 13% - 1% Declaration of a state of emergency (seven prefectures) Business April 16 Convinience Store + 5% - 8% - 23% - 9% Declaration of a state of emergency (Nationwide) type May 14 Cancellation of the declaration of a state of Vending Machine - 7% - 15% - 36% - 19% emergency (39 prefectures) May 21 Cancellation of the declaration of a state of Green Tea + 13% - 2% - 27% - 8% emergency (three prefectures in the Kansai area) By product May 25 Vegetable + 7% + 2% + 1% + 3% Cancellation of the declaration of a state of emergency (Nationwide) ※Amount-based Copyright (C) All Rights Reserved. ITO EN, LTD. 7 Effects of COVID-19 Subsidiaries Main impact on sales ※ 4Q( Feb to Apr, 2020 ) Tully's Coffee Japan ○Giving the highest consideration for the safety of customers and colleagues (employees) - 34 % ○Closed shops or shortened business hours at shops in areas where a state of emergency was declared. US Business (ITO EN (North America) INC.) ○Consumers’ purchase frequency declined due to restrictions on going out. - 9 % ○There was particular demand in online shopping.