Kirin Group Financial Results for the 1Q May 10, 2018 Kirin Holdings Company, Limited

Transcription

1 Kirin Group Financial Results for the 1Q 2018 May 10, 2018 Kirin Holdings Company, Limited 1

2 1Q 2018 Results: Overview 1Q consolidated revenue were higher than previous year. Despite the decrease in normalized operating profit (OP), it was a strong start to the year that exceeded the plan as a result of favorable performance on the Japan Integrated Beverages Business. Japan Integrated Beverages Business Kirin Brewery: Great sales in key categories significantly increased profits. Kirin Beverage: Flat volumes combined with negative price/mix (*) led to lower revenue and profit. (*lower sales of small PET and canned products) Overseas Integrated Beverages Business Lion Beer, Spirits, and Wine (BSW): Stable revenue combined with pricing, focus brand growth & cost management led to increase in normalized OP. Lion Dairy & Drinks (LDD): Steady growth of the focus categories; however, revenue and profit impacted by declines in the ambient and chilled juice categories. Myanmar Brewery: Profit increased on higher revenue at a faster pace than last year (LY). Pharmaceuticals and Bio-chemicals While the results in 1Q were decreased profit on lower revenue, it is in line with the full year assumption. 2

3 1Q 2018 Results: Highlights bn yen 1Q18 1Q17 YonY change Revenue % Normalized operating profit (OP)* % Profit before tax % Includes gain on sales of Kirin Amgen, etc. Profit attributable to owners of the Company % *1 Normalized operating profit is an additional indicator for understanding of underlying sustainable performance of the Group. Normalized operating profit = Revenue (Cost of sales + SG&A expenses) Quantitative targets 1Q18 1Q17 YonY change Normalized EPS (yen) * *2 See p.12 for details Financial Indicator 1Q18 1Q17 YonY change EPS (yen) % 3

4 1Q 2018 Results by Segment Revenue +4.0% mainly from an uplift in the Japan & Overseas Integrated Beverage Business. Normalized OP -3.8%, but exceeded the 1Q plan mainly driven by Kirin Brewery. (bn yen) 1Q18 1Q17 YonY change Revenue % Japan Integrated Bev % Overseas Integrated Bev % Pharmaceuticals and Bio-chemicals % Others % Normalized OP % Japan Integrated Bev % Overseas Integrated Bev % Pharmaceuticals and Bio-chemicals % Others % Corporate expenses and elimination Profit attributable to owners of the Company % % Revenue Increase Kirin Brewery (+6.2bn), Myanmar Brewery (+0.6bn), Overseas others (+19.8bn, CCNNE*, etc.) Decrease Kyowa Hakko Kirin (-6.8bn), Lion D&D (-2.1bn) Imact of the FX rate on consolidation of the Overseas Integrated Beverages (-3.4bn) Normalized OP Increase Kirin Brewery (+4.5bn), Lion BSW (+0.6bn), Myanmar Brewery (+0.3bn) Decrease Kyowa Hakko Kirin (-3.2bn), Lion D&D (-0.7bn), Overseas others (-1.0bn) Impact of the FX rate on consolidation of the Overseas Integrated Beverages (-0.3bn) Profit *Coca-Cola Bottling Company of Northern New England, Inc Increase Gain on sales of Kirin-Amgen (+19.8bn) Gain on sales of equity-accounted investees (Kyowa Medex, etc.) 4

5 Changes in normalized OP by Company (vs 1Q 2017) Profit Loss Kirin Brewery normalized OP grew by +4.5bn yen. Kyowa Hakko Kirin -3.2bn yen mainly due to lower domestic sales, but the result was within expectations. Others -2.1bn yen consists of Mercian and other overseas businesses. 1Q17 Normalized OP bn yen Kirin Brewery +4.5 Kirin Beverage Lion (BSW) Lion (LDD) Myanmar Brewery Kyowa Hakko Kirin -3.2 Others Q18 Normalized OP

6 1Q Update - Japan Integrated Beverages Business Kirin Brewery Investments in key brands were successful. Pace of sales exceeded the plan. Since the full-scale renewal in July 2017, sales of Kirin Ichiban (cans) has exceeded the previous year for 8 consecutive months. The New Genre category recorded sales of +13% as a result of the strong start of the new products. Beer Kirin Ichiban Kirin Ichiban has maintained a high growth rate since the renewal in 2017, achieving +8% YonY as a total brand (March YTD). Kirin Ichiban exceeded the previous year for 8 consecutive months for canned products and 5 months for bottled products. New Genre Launch of Nodogoshi STRONG in Jan 2018 High consumer satisfaction from the strong alcohol. Annual sales plan has been revised upward one month after the launch. Launch of Hon Kirin in Mar 2018 New product that meets the needs of new genre users who want a beer-like taste (high quality). Achieved 30% of the annual sales target in the first month since the product was launched on March 13. 6

7 1Q Update - Japan Integrated Beverages Business Kirin Beverage Sales volumes in line with the plan. However, challenges remained in FIRE brand. Nama-cha underwent a successful package renewal aimed at increasing visual recognition, and cumulative sales through March were +3% compared to last year. FIRE recorded lower sales compared to last year due to weather-related factors and a package shift in the coffee category. The soft drinks category sales volume was overall on par with the results from the same period last year. Strengthen the foundation Core of the business Package renewal on March 6, 2018 The package was refined while keeping the popular taste unchanged. Sales volumes YonY March (Period) 115% March (YTD) 103% Downward trend in SOT cans continued due to weather-related factors, poor sales in the high component ratio channel of vending machines and a shift towards resealable packages. Challenge Expand into new categories Continue challenging the health and Japanese water categories. Strengthen the initiatives for Lactococcus lastis strain plasma. January 2018, Launch March 2018 Launch nationwide + New flavor NEW Nama-cha March (YTD) 90% imuse - Lemon & LAB* Hare-to-Mizu * Lactic Acid Bacteria 7

8 1Q Update - Overseas Integrated Beverages Lion BSW BSW = Beer, Spirits & Wine Normalized OP increased due to pricing, focus brand growth & cost management Contemporary Craft IRON JACK, the focus brand in the contemporary category, has sold 13 million litres in its first six months in market. +75% volume growth on FURPHY vs previous year. Distribution expanded from one state (Victoria) to Australia-wide. Lion D&D (LDD) D&D = Dairy & Drinks Revenue and profit impacted by declines in Juice. Steady growth of the flagship products in the milk based beverage categories. Lower revenue and profits driven by declines in the ambient and chilled juice categories. Milk Base Beverage dare +9% Volume growth vs previous year Specialty Cheese Tasmanian Heritage +21% Myanmar Brewery Continued XXXXX growth from 4Q. Completed the site expansion. Sales volumes are growing at a pace exceeding last year and the plan. Completed the expansion to the production facilities. Sales of the flagship product Myanmar Beer remain strong. Conducting local-oriented activities, such as launching a can designed for the Water Festival held in March to celebrate the new year. 8

9 1Q Update Pharmaceuticals and Bio-chemicals Business Kyowa Hakko Kirin Pharmaceuticals Steady progress in developing global strategic products despite decreased profit on lower revenue. Due to the increased use of generics and reduced buying ahead of the expected drug price revision, revenue and profit from pharmaceuticals sales in Japan decreased. KRN23 received conditional approval in February for pediatric use in the EU. Sales will start in Germany in or after April. Burosumab (KRN23) Indication XLH 1 Country/ Region Europe US Filed Filed Approved (pediatric) conditional 3 Received approval on February 23 Estimated time of regulatory decisions (pediatric & adults) (Received approval on 4/17 (2Q)) Japan - Plan to file an application Estimated time of regulatory decisions (adults) Mogamulizumab (KW-0761) CTLC 2 Europe Filed US Filed Estimated time of regulatory decisions - Estimated time of regulatory decisions(target review completion: June) - 1 XLH is a rare genetic disorder that causes hypophosphatemia, which impairs the growth and maintenance of bone. 2 CTCL is a class of non-hodgkin lymphoma, and it mainly manifests as a skin disorder. 3 Based on high unmet needs, even if all the data normally required when filing an application for approval of a medicinal pharmaceutical is not yet available, the authorities will conduct a review and grant sales approval. 9

10 2Q Onwards Kirin Brewery Kirin Beverage RTD Launch the new product Kirin The Strong in the growing RTD category. April 10 Launch Kirin The Strong Having renewed in April, Kirin Lemon has sold 1 million cases in its first month in market. Launch Mugi-no-Café CEBADA, the new barley tea product brewed as a coffee. April July Craft Lion Continue to invest in focus categories Renew the Hahn brand in the contemporary category. Drive Furphy & Iron Jack Drive milk based beverages Nationwide rollout of GRAND KIRIN from April 3 Completed the installation of Tap Marche units at a cumulative total of 2,500 businesses as of April 10. Further strengthen the activities from 2Q. Nikenjayamochi Kadoya Honten and Far Yeast Brewing brands will be newly added to Tap Marche. Kyowa Hakko Kirin Received approval for burosumab (KRN23) in the US on April 17, 2018 Estimated time of regulatory decisions in June 2018 for mogamulizumab (KW-0761) in the US 10

11 Appendices 11

12 Details of the Normalized EPS Normalized EPS bn yen 1Q18 1Q17 Profit attributable to Owners of the Company Profit attributable to Non-controlling interests Other operating income/expenses after taxes and other adjustments Normalized profit 4 = (1-2) Average number of shares during the period ('000) 5 912, ,513 Normalized EPS (yen) 4 /

13 1Q Results: Integrated Beverages bn yen 1Q18 1Q17 YonY change % Japan: Revenue % Kirin Brewery % Kirin Beverage % Mercian % Other and elimination % Japan: Normalized OP % Kirin Brewery % Kirin Beverage % Mercian % Others Overseas: Revenue % Lion % Myanmar Brewery % Other and elimination % Overseas: Normalized OP % Lion % Myanmar Brewery % Others % 13

14 1Q Results - Japan Integrated Beverages - Kirin Brewery Volume change by category bn yen 1Q YonY change 1Q18 Volume change by brand 1Q17 1Q YonY change Beer products total +5% Kirin Ichiban +8% Beer +7% Kirin Tanrei -6% Happo-shu -6% Kirin Nodogoshi +2% New genre +13% Kirin Hyoketsu +9% RTD +5% Kirin Honshibori Chuhai +15% YonY change Revenue % Revenue excl. liquor tax % Normalized OP % Beer market Beer market in 1Q is estimated at -1.3% YonY. Although the temporary demand prior to the price revision for returnable container products and warmer weather made positive contributions, the revision to the Liquor Tax Act in June of last year had a negative impact. Kirin Brewery Sales volume While the overall market contracted, total beer sales grew by 5% (including temporary demand). Kirin Ichiban volume increased in all package types. Sales of all new New-genre products exceeded the plan. Supplementary information about the results Significantly higher marginal profit due to increased volumes. Lower fixed sales promotion expenses due to the reduction to the mileage campaign. Advertising expenses increased due to launch of new products. 1Q17 Normalized OP 6.4 Description YonY change (bn yen) Increase in marginal profit of alcohol beverages, etc +2.4 Decrease in raw material costs +0.1 Decrease in selling expenses +2.1 Increase in other expenses -0.1 Total Q18 Normalized OP 10.9 Total beer products +2.1bn, (Sales volume: Beer +8,000kl, Happo-shu -6,000kl, New-genre +14,000kl) Others +0.7bn (Sales volume: RTD +3,000kl, non-alohol beverages (+3,000kl) Difference of change in composite of products, etc -0.4bn Decrease in sales promotion expenses +2.9bn, increase in advertising expenses -0.8bn, Total bn 14

15 1Q Results - Japan Integrated Beverages - Kirin Beverage Sales volume (10,000 cases) 1Q18 1Q17 YonY change Black tea 1,247 1, % Japanese tea % Coffee % Category Fruit and vegetable juice % Carbonated beverage % Functional beverage % Water % Other % Can % Container Large PET bottle 1,551 1, % type Small PET bottle 1,964 1, % Other % Total 4,804 4, % Soft drinks market Soft drink market in 1Q is estimated at +2% YonY. Kirin Beverage Sales volumes Soft drinks (total) grew by 0.5%. YOY growth in the green tea and health categories as a result of strong performances by Nama-cha and imuse. Sales volume of FIRE was lower both YonY and vs. the plan. Steady growth on retail channel while challenges remained on Convenience and vending machine channels. Supplementary information about the results Changes to the container mix: Composition ratio of cans decreased due to lower sales of FIRE. Raw material costs, etc.: Increased in-house production volumes Revenue (bn yen) % Normalized OP (bn yen) % 1Q17 Normalized OP 4.7 Description YonY change (bn yen) Decrease in marginal profit of soft drink beverages Decrease in raw material cost, etc. Decrease in selling expenses -1.5 Increase in sales volume 250,000 cases, +0.1bn Difference of change in products mix and in composition ratio of containers, etc. -1.6bn +0.2 Decrease in processing cost +0.2bn +0.5 Decrease in other expenses +0.1 Total Q18 Normalized OP 3.9 Decrease in sales promotion expenses +0.1bn, decrease in advertising expenses +0.4bn, Total: 6.7bn 6.2bn 15

16 1Q Results - Overseas Integrated Beverages - Lion Yen base (bn yen) A$ base (million A$) 1Q Q 2017 YonY change 1Q Q 2017 YonY change Revenue % 983 1, % BSW % % LDD % % Normalized OP % % BSW % % LDD % % Corporate Currency Rate: (Previous year: 86.10) Changes in normalized OP (A$ m) Change in sales volume BSW LDD -0.4% -7.0% 1Q Sales volume change Other Q Revenue Beer, Spirits and Wine (BSW) Revenue remained flat year on year. Volumes remained relatively stable despite impact of the container deposit scheme in NSW. Strong performance of Iron Jack and Furphy focus brands. (Impact of Fx rate on consolidation -0.9 bn) Dairy & Drinks (LDD) Steady growth of the flagship products in the milk based beverage category Overall lower revenue driven by declines in the ambient and chilled juice categories (Impact of Fx rate on consolidation -0.8 bn) Normalized OP Beer, Spirits and Wine Normalized OP increased due to pricing, focus brand growth & cost management. Achieved supply chain and overhead cost reduction. (Impact of Fx rate on consolidation -0.2 bn) Dairy & Drinks Reduction in normalized OP driven by declines in volumes in the ambient and chilled juice categories. (Impact of Fx rate on consolidation -0.0 bn) 16

17 1Q Results - Overseas Integrated Beverages - Myanmar Brewery 1Q18 Yen base (bn yen) 1Q17 YonY change 1Q18 Kyat base (bn MMK) 1Q17 YonY change Revenue % % Normalized OP % % Beer market Estimated to have grown in the high single digits. No change from the initial forecast. By channel, household segment is continuing to grow. Currency Rate: (Previous year: 83.15) Myanmar Brewery (%) YonY Beer +19.5% Sales Volume Excellent growth of +19.5% including shipment of in-kind payment which was deferred from sales promotion implemented in 4Q Strong growth of Myanmar Beer as planned. Andaman Gold had strong sales that exceeded the plan. Financial notes Higher revenue due to increased sales volume and the effect of the price increase implemented in June of last year. Higher gross profit due to increased sales volume and improved product mix. Both revenue and normalized OP exceeded the plan. 17

18 1Q Results Pharmaceuticals and Bio-chemicals bn yen 1Q18 1Q17 YonY change Revenue % Kyowa Hakko Kirin % Pharmaceuticals % Bio-chemicals % Others and elimination Normalized OP % Kyowa Hakko Kirin % Pharmaceuticals % Bio-chemicals % Others and elimination % Kyowa Hakko Kirin Revenue Lower pharmaceutical sales in Japan due to the increased use of generics and decreased buying ahead of the drug price revision in April. Impact of the deconsolidation of Kyowa Medex, reduced licensing revenue overseas and transfer of the plant growth regulator business within the bio-chemicals business. Normalized OP Lower normalized OP YonY due to decreased sales and higher SG&A expenses (Pharmaceuticals: preparation for the launch of new products overseas, Bio-chemicals: e-commerce business). Pipeline Progress in 1Q Burosumab (KRN23) received conditional approval in January for pediatric use in the EU. Sales will start in Germany in or after April. Regarding benralizumab (KHK4563), AstraZeneca, which has a license of benralizumab, received approval in Japan & Europe with indication for bronchial asthma in January. 18

19 This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial instruments. 19