NISSIN FOODS GROUP. Medium-Term Business Plan 2016

Transcription

1 FOODS GROUP Medium-Term Business Plan 2016 April 30, 2013 Notes for This Document FY2014 in domestic company is the year from April 1, 2013 to March 31, FY2014 in overseas is the year from January 1, 2013 to December 31, Slide numbers appear at the top right of each slide. 1

2 Contents 2 Review of Previous Medium-Term Business Plan and Basic Policies of the Current Medium-Term Business Plan -2- Strengthening Earning Power of Domestic Business -8- Speeding Up Growth in Overseas Business -11- Pursuing Company-Wide Strategic Initiatives -19- GROUP PHILOSHY:EARTH FOOD CREATOR Group Philosophy 3 The Nissin Food Products Group explores various possibilities for food, and creates dream-inspiring delicious tastes. We contribute to society and the earth by gratifying people everywhere with pleasures and delights food can provide. The Spirit of Our Founder Our ideal vision for society People can only be content when there is enough food. Food is the most important thing supporting human life. People can discuss culture, art and ideas only when their need for food is satisfied. If its availability is disrupted, a nation will undoubtedly decline and struggles will break out. The world can achieve peace only when there is sufficient food.the operations of the Nissin Foods Group have grown from these roots in human life. How we appeal to customers Eat wisely for beauty and health. It is a common desire among humans to fill their stomachs and satisfy their sense of taste. But this is not the only role of food. Creating beautiful bodies and maintaining good health are important functions of food as well. A beautiful, healthy body results from a wise diet. The Nissin Foods Group pursues food functionality and proposes a wise diet to the world. What a corporation can do Creating foods to serve society. A creative spirit is the most important thing for a corporation. Creativity means the power to create innovative products through new ideas and technologies. Creating foods to serve society. The Nissin Foods Group is creating a new food culture for the world, and providing people with happiness and inspiration. What we expect from employees Food-related jobs are a sacred profession. Food production is a job that supports the very roots of life. People in the food industry require a pure spirit that inspires them to serve society and contribute to human health and world peace. Food-related jobs are a sacred profession. It is the mission of the Nissin Foods Group to provide the world s people with safe, delicious and healthy food for their bodies. 2

3 Nissin Foods Group Vision Under the current Medium-Term Business Plan, we will work towards our goal of Embodiment of EARTH FOOD CREATOR by focusing on overseas growth. 4 Corporate Value Embodiment of EARTH FOOD CREATOR Current status Pursue global status : 450 billion Overseas sales ratio: 20% ROE:7% Gain a strong global reputation Earn a high reputation, in Japan and abroad, as a globally operating company Overseas sales ratio:more than 30% ROE:More than 8% Contribute to society and the earth by gratifying people everywhere with pleasures and delights food can provide Overseas sales ratio: More than 50% ROE:More than 10% FY2014 FY2021 Period of the current Medium-Term Business Plan FY Medium-Term Business Plan FY Medium-Term Business Plan FY2026 Review of Previous Medium-Term Business Plan Result fell short of numerical targets under the plan, reflecting the impact of the Great East Japan Earthquake.However, we achieved technological innovation that will lead to domestic earnings and foundation for overseas growth. 5 Changes in Performance Results of Previous Medium-Term Business Plan (Unit: Bill.) Implementation period of the previous Medium- Term Business Plan Achieved technological innovation that will lead to future earnings and introduced products based on technological innovation. FY2009 FY2010 FY2011 FY2012 Net Margin Net Income Margin Net sales Operating margin Net margin Plan Actual Net sales 430 billion billion Operating income 35.5 billion 24 billion Operating margin 8.3% 6.3% ROE 8.0% 6.4% Domestic Overseas Introduced Ra-O bag-type noodles. Improved quality of Donbei and Menshokunin. Expanded rice business (Cup Noodle Gohan, frozen onigiri, etc.). Expanded share in mid-priced frozen pasta. Improved earning capacity in key regions Improved earnings of China business. Established production system in growth s. Established production system in s with high potential for growth (India, Thailand, Vietnam). Established Regional Headquarters of Asia (Singapore). Gained foothold in Middle East and Africa region Established JV with Yildiz (Turkey). 3

4 Recognition of Assumptions Underlying Current Medium-Term Business Plan We must lay the groundwork for adaptability to changes in the environment that are expected to take place, in Japan and abroad during the three-year period covered by the current Medium-Term Business Plan New Medium-Term Business Plan [Four Aspects of Environmental Change Used as Assumptions in Preparation of Medium-Term Business Plan] 6 Domestic Market Rising prices of imported materials under the yen s depreciation Change in consumer confidence due to consumption tax increase Impact of TPP on imported materials Emergence of PB Declining birth rate and aging society Competition Rise of companies based in emerging s Competition with local companies in overseas Intensification of global competition Increasing importance of alliances on a global scale Speeding-up of alliances International Market Consumption on a global scale Changes in the structure Economic growth in emerging s Population growth in emerging s Increasing importance of global SCM Food insecurity driven by unseasonable weather Human Resources Japan s declining working-age population/growth of working-age population in emerging s Importance of multicultural understanding and tolerance Ability to communicate with people of different races having different attributes Development of global human resources Aspiring to be a Group with a solid foundation that can adapt to environmental change General Strategies for Pursuing Global Status Allocate investment to to speed up growth. Aim to maximize earnings in domestic business. 7 Strengthen earning power of domestic business Establish new earnings model leveraging group strengths Introduce a new business model (high-speed branding system). Reduce costs through joint buying and distribution by group companies. Speed up growth in Establish business models suitable for s. Mature s: Expand earnings by improving relationship with major distributors and increasing business efficiency. Growth s: Generate earnings quickly by aggressively investing in key regions. New s: Establish a beachhead through early entry with limited investment. Pursue company-wide strategic initiatives Strengthen platform capabilities as a global company Strengthen ability to create innovation by opening new R&D center. Actively pursue M&A opportunities. Implement financial policies emphasizing capital efficiency (ROE). Establish global human resources programs. 4

5 Target of the current Medium-Term Business Plan We aim Net sales of 450 billion (Approx. 100 billion from Overseas), Operating Income of 31 billion, and achieve a 7% Operating Margin in fiscal (actual) (plan) Net Overseas Operating Income (+67.2) (+45.0) (+7.0) Ordinary Income (+5.0) Net Income Operating Margin ROE % 6.9% Ordinary Income Margin 8.1% 8.0% 6.4% 7.2% (+4.1) Overview of Initiatives in Domestic Business Strengthening earning power of domestic business In domestic business, we will promote cooperation coordinated by Nissin Foods Holdings, in addition to the strategies of individual companies. 9 Growth and expansion of share in pasta genre Business development and generation of earnings in rice category Radical reform of earnings structure of mainstay products Development of new brands SCM optimization Acceleration of introduction MYOJO FOODS FOOD PRODUCTS FROZEN FOODS Sharing of production capabilities Promotion of joint buying and distribution Pursue dominance, focusing on regions where we have competitive edge CHILLED FOODS Promotion of joint distribution Nissin Foods Holdings YORK Promotion of implementation of BPR and introduction of ERP Promotion of group branding On going implementation of strategy of selection and concentration in mainstay products Effective utilization of PB AJI-NO- MINGEI CISCO Turnaround of unprofitable restaurants Improvement in service to regain ability to attract customers Ongoing implementation of strategy of selection and concentration in mainstay products Review of poorperforming products BPR:Business Process Re-engineering (analysis and optimization of business content and business flow, and organizational structures) ERP:Enterprise Resource Planning (IT system and software for improving management efficiency by integrating the management of information across an entire company) SCM:Supply Chain Management (management for improving business results by building an integrated distribution system) 5

6 Cost Reductions Across the Group Strengthening earning power of domestic business We will introduce cost-cutting initiatives with the aim of achieving cost reductions of 3 4 billion a year over the coming 3 years. 10 Cost-cutting initiatives being launched Cost-reductions across the Group: billion FROZEN FOODS CHILLED FOODS YORK Improvement of production efficiency Joint buying and review of procurement costs Joint distribution and improvement of distribution efficiency MYOJO FOODS AJI-NO- MINGEI FOOD PRODUCTS Nissin Foods Holdings CISCO Reduction of expenses of holding company and operating companies: billion Reduction of general operating expenses Other Cost reductions Target of Medium-Term Business Plan (Domestic) Strengthening earning power of domestic business 11 We approximately aim domestic sales of 350 billion, Operating Income of 30 billion by New business model and Cost reductions. (Actual) (Plan) Increase Instant Noodles Domestic Chilled and Frozen Foods Other (Confectionery, Beverage and Food Service) Total Notes:Differences between the Group consolidated totals and the totals of the above by-segment figures are attributable to such factors as the revenue and income of the holding company and other subsidiaries. 6

7 Overview of Initiatives in Overseas Business Our basic policy incorporates three strands: (1) Expand earnings potential in mature s; (2) Establish business base in growth s; and (3) Establish beachhead in new s. 12 [Europe] Expand earnings by increasing efficiency [Middle East and North Africa] Examine entry to new s on an import basis [East Africa] Examine business expansion centered on Kenya [India and surrounding s] Widen scope of operations after building brand power in specific regions [Mature s] Expand earnings potential by increasing strength and efficiency [China and Hong Kong] Strengthen profit base in Southern China and Hong Kong and speed up expansion in Eastern and Northern China [Southeast Asia] Expand in mid-price range after building brand power in specific segments [New s] Assess demand through early entry in collaboration with local partners, involving investment of small amounts to minimize risk [North America] Generate earnings by capturing share in specific segments/ regions [Growth s] Expand size of operations after establishing brand in specific areas. [Central and South America] Argentinian and other South and Central American s: Import from North America and Brazil. The Americas: Initiatives and Forecasts In America, we will seek to expand share by focusing on specific customer groups and regions. In South America, we will assess demand through early entry involving a small amount of investment to minimize risk. 13 Establish the Nissin brand by focusing on specific customer groups. Expand share in Chop noodle category (U.S.A.). North America + Early entry to Argentinian and other central and South American s Existing base The Americas Net sales Operating income Actual Plan Increase Mature Central and South America New Growth Secure earnings by proposing new value. Enhance earnings potential by actively making value proposals to leading distributors. Leverage existing business to achieve geographical expansion. Enter the Argentinian and other Central and South American s by importing from plants in the U.S. and Brazil. Expand business in Brazil (JV) Examine leveraging leading position in instant noodle to capture new customer groups. + 7

8 China and Hong Kong: Initiatives and Forecasts We will strengthen earnings power for Cup Noodle, focusing on Hong Kong where we have a dominant position, and we plan to speed up business expansion in Eastern and Northern China and the Southwest region. 14 China and Hong Kong Net sales Expansion into central and Southwest China Actual 20.8 Plan Expansion into Northern China Expansion into Eastern China 32.2 Increase China and Hong Kong Growth Strengthen earnings power in Hong Kong and Southern China by enhancing brand power. Strengthen brand by pursuing expansion in the for high value added products such as Cup Noodle. Further expand share in Hong Kong through acquisition of the Fuku brand. + Deploy the model which was successful in Southern China across the whole of China, and make effective use of business bases. Establish bases in Eastern China, Northern China and Southwest China, and seek growth by consolidating sales structure. Operating income Asia: Initiatives and Forecasts Pursue expansion in share in mid-price range and widening in scope of operations after focusing on specific customer groups and regions and establishing brand in these areas. 15 お Entry to s surrounding India through exports Development of confectionary business South- East Asia Growth New Create new customer groups and establish Nissin brand (Vietnam and Thailand). Vietnam: Introduce non-fried noodles. Thailand: Introduce products with Japanese quality. Make effective use of business base. Step up expansion into surrounding s through exports from Vietnam and Thailand. Nissin Cisco will seek business expansion in Southeast Asia. Entry to s surrounding Thailand and Vietnam through exports Existing bases Asia Net sales Operating income Actual 4.0 (0.5) Plan Increase India and surrounding s Growth Establish winning model by focusing on specific customer groups and regions (India). Create new customer groups through new products. Focus on specific regions and expand regional share. Apply winning model to surrounding s, and make effective use of business base. Apply winning pattern in key regions. Enter s surrounding India through exports from India. 15 8

9 EMEA: Initiatives and Forecasts In Europe, we intend to secure earnings by increasing efficiency. In the Middle East and Africa, we plan to achieve early entry through ing in the existing and make the Nissin brand the de-facto standard for instant noodles. 16 Expansion of operating area Examination of entry to new s Europe Growth Improve earnings in the s in which we already operate. Improve terms and conditions of sale with major distributors. Strengthen specific customer groups focusing on soba. + Expand region of operations to 16 countries. Use local distributors to speed up expansion. Existing bases EMEA Net sales Operating income Actual Plan Examination of entry to new s Increase Middle East and Africa New Start of core base in region through collaboration with local partner. Turkey: Establishment of JV with Yildiz + Examine entry to northern region and eastern region. Plan to implement feasibility studies, research, etc. trends of Overseas We promote the expansion of in building up both sides, i.e. the Diversity of operations and Spread of business areas Bil. Current First step for future growth Strengthening earning power 50 Bil. Enhance profitability in North America growth in South America Expansion of and profit FY2012 FY2014 FY2015 9

10 Pursuit of Global Branding We plan to develop the global brand and aim to enhance investment efficiency to speed up global expansion. 18 Standardization of corporate brand Standardization of product brands Standardize the corporate logos and corporate identities of Nissin Cisco and Nissin York, using the lip mark as Nissin group original logo. Nissin Cisco Before Moving forward Cuptype instant noodle Develop CUP NOODLE as a global brand. Standardize the design and packaging and establish Cup Noodle as a global brand. Nissin York Before Moving forward Bagtype Instant noodle Standardize several brands as global brands. Establish several brands, including, as global brand. Target of Medium-Term Business Plan (Overseas) Positioned as the period of Strategic Investment, We aim to achieve rapid growth of profits in 3-5 years 19 (Actual) (Plan) Increase The Americas China and Hong Kong Asia 4.0 (0.5) EMEA Total

11 Strengthening of Ability to Create Innovative Products by Opening New R&D Center We aim to centralize and strengthen the R&D capabilities of the Group, to enhance our ability to be innovative. Pursuing company-wide strategic initiatives 20 Basic information about new R&D center Purpose of establishment of new R&D center Estimated completion date: November 2013 Location: Tobukimachi, Hachioji, Tokyo Site area: 86,768 m 2 (site owned by the Company) Total floor space: 16,600 m 2 Strengthen research capabilities Expand to around twice the size of current research Institute (Central Research Institute, Food Safety Research Institute). Centralize research capabilities Gradually centralize the research capabilities and product development business units of domestic group companies to increase the speed and efficiency of development. Strengthen R&D support functions for overseas products. Active Pursuit of M&A Opportunities Pursuing company-wide strategic initiatives 21 Actively exploring M&A options, especially in growth s, to establish position as global company. M&A Policy Establish system to promote M&A Existing targets New targets Strengthen cooperation and seek early realization of synergies and expansion in contribution to earnings. Jinmailang (China) Mareven (Russia) N-URC (Philippines) Nissinmas (Indonesia) Frente (Japan) YILDIZ (Turkey) Continue to actively explore targets, especially in growth s. Also examine large targets that could change the competition environment in mature s. Examine a wide range of targets in areas besides instant noodles such as confectionary, frozen and chilled businesses. Proceed with establishment of PMI (Post Merger Integration) system to speed up integration and realization of synergies after acquisition. Standardization of integration program Organization of specialist teams Strengthen system of M&A specialist promotion teams. 11

12 Financial Policies Emphasizing Capital Efficiency Pursuing company-wide strategic initiatives Pursue management with emphasis on ROE on going management of both business strategy and financial strategy. 22 Thoroughgoing business investment management Selective business investment (ROI-based management) Enhance earnings potential of domestic business and expand overseas profits Investment budget for 3-year period Capital expenditure 50 billion or less Business investment 65 billion or less Policy on Shareholder Returns Expansion of investment surplus Realization of efficient finance Management with emphasis on ROE Enhancement of business earnings Returns to shareholders Payout ratio Stock repurchases Effective use of assets, Improvement of capital efficiency 40% or more Consider based on evaluation of conditions and operating environment Stable stock price performance Implementation of financial policies Structures for Developing Managerial Human Resources Pursuing company-wide strategic initiatives Introduce structures for the recruitment and development of human resources to support global development, and focus on the development of managerial human resources. 23 Human resources to manage operating companies in Japan and overseas Global managerial human resources Human resources to lead platforms Chief officers (production, development, sales, management, etc.) Programs to development managerial human resources For domestic employees For overseas employees Pool of global managerial human resources Pool of specialist managerial human resources Nissin Honebuto Keieijuku Utilization of human resources recruited overseas at head office High potential employees are managed in pools of managerial human resources according to suitability and aspirations Honing of specialisms such as sales, ing, production, development Establishment of path for multinational employees Midcareer recruits Global Samurai Training Overseas trainees Global Challenge Path Introduction of duty-based annual salary system Introduction of public application system New graduates Seminars for the next management training 12

13 CSR/Social Contribution Activities: Hyakufukushi Project (Since 2008) Hyakufukushi Project - A hundred good deeds for a better tomorrow - The Nissin Foods Group will undertake 100 social contribution activities over a period of 50 years Under the Hyakufukushi Project named after our founder Momofuku Ando, we undertake social contribution activities based on five themes that reflect the spirit of our founder: Creation, Food, Earth, Health and Children. No. 1 The Kenya Oishii Project No. 2 The Idle to Idol In-House Project No. 3 The Canned Chicken Ramen Just-in-Case Project No. 4 The Living with Hot Water Project No. 5 The Support for Employees Great Volunteerism Project No. 6 The Run and Eat Children s Education Project No. 7 The Kids, Come into the Kitchen! Project No. 8 The Brighter Future for Tohoku Project - Skills to flash ideas for children - No. 9 The Canned Chicken Ramen & Cup Noodles Can Project No. 10 The All-Japan Ikumen Menu Contest A hundred good deeds for a better tomorrow Project 24 FOODS HOLDINGS The Company s plans, projections of results and strategies included in this document are forward-looking statements that reflect management s judgment based on information available at the time of their release. The Company cautions that intensification of price competition in the, changes in the economic trends in the business environment, significant fluctuations in valuation in capital s and various other risks and uncertainties may cause these forward-looking statements to differ from actual results. Contact for additional information or inquiries FOODS HOLDINGS CO., LTD. Financial Headquarters IR office Tel: / Fax: Shinjuku, Shinjuku-ku, Tokyo ir@nissinfoods-holdings.co.jp Nissin's web site at 13