Itoham Yonekyu Group
Medium-term Management Plan 2020～

to the Next Stage～

November 18, 2016
Itoham Yonekyu Holdings Inc.
-1-

ITOHAM YONEKYU HOLDINGS INC. 2016

Table of Contents

1. Corporate Image Targeted
2. The Position of the Plan
3. Performance Targets
4. Basic Strategies
5. Detailed Plans
6. Investments and Returns to Shareholders-2-

ITOHAM YONEKYU HOLDINGS INC. 2016

1. Corporate Image TargetedGroup Principle

Contribute to the realization of sound and affluent society through business.
VisionA leading food company that continuously evolves with its employees byembracing the spirit of fairness and the challenge to progressions.
Action Guidelines

・Supply products and services of high value by pursuing safety, security and quality
・Build and expand trust by making good on promises
・Capacity development through broad-minded communication and mutual understanding
・Honest and transparent actions with top priority on compliance・Business actions with awareness to global environment-3-

ITOHAM YONEKYU HOLDINGS INC. 2016

2. The Position of the Plan
Executive Summary
Pre-Management Integration

 In January 2019, Itoham, Yonekyu and Mitsubishi enter into a comprehensive alliance arrangement. The
targeted synergy effect of ¥8.0 billion was not achieved.
 Itoham achieved the sales target set in its medium-term management plan through 2015 (CNV 2015).
Operational income, ordinary income, net income and ROE were below target. (Ordinary income and net
income showed increase for 5 consecutive years. Target net income and ROE were achieved in 2014)
 Yonekyu surpassed the 2018 ordinary income target set in its 5th Medium-term Management Plan (revised)in 2014
Medium-term Management Plan 2020

 Target of ¥1 trillion sales and OPM of above 3% by 2020.
 The Plan places emphasis on growing product categories and sales channels (adhering to growing markets)
while expanding current business. It also pursues the synergy effect, enhances competitiveness and reorganizes
functions.
Strengthen management foundation to support expanded business scale.

-4-

ITOHAM YONEKYU HOLDINGS INC. 2016

2. The Position of the Plan
Background and the Position of the Plan

Itoham Yonekyu Group Medium-termManagement Plan 2020
A leading food company with ¥1 trillion sales and OPM above 3%CNV 2015
2011～2015• Has endeavored to adopt to changes in the market,
strengthen its corporate and product brand images,increase its cost competitiveness.
• By affiliating ANZCO, sales into the global market,especially in Asia, have increase dramatically.

Challenges

5th Medium-term Management Plan
(revised) 2014～2018

April 2016
Management Integration“Aggressive Management Strategy”
Increase business size, and at the sametime, bring together the strength of bothcompanies to create a synergy effect

Need for high mobility in making proposals to theready-made and restaurant sectors, increased costcompetitiveness and stronger value chain in the meatdivision to ensure steady growth in the future

Has expanded and reorganized its business, improved
productivity and logistics efficiency and enforced strict
profit and loss management, resulting in record profits
in fiscal year 2015.

Challenges
The necessity to increase production capacity and sales
foothold without jeopardizing cost competitiveness

January 2009
Business Alliance

Mitsubishi Corporation-5-

ITOHAM YONEKYU HOLDINGS INC. 2016

3. Performance Targets
Target Values
billion yen

Actual 2015
Net Sales
Ordinary Income(Synergy Effect)
Ordinary Income Rate
% of Ordinary Income
Attributable to Oversesas
Operations

817.4
18.2

Plan 2018

Plan 2020

2.2%

900.0
26.0
5.0
2.9%

1,000.0
30.0
5.0
3.0%

11.9%

12.2%

13.5%

-6-

ITOHAM YONEKYU HOLDINGS INC. 2016

3. Performance Targets
Target Values(Ref) by Items and Operating Segmentsbillion yen

Actual 2015
Sales
Processed Food
Ham/Sausage
MeatOthers
Processed Food Division
Sales
Operating Income% of Sales
Meat Division
Sales
Operating Income% of Sales
Others/Consolidation Adj
Operating Income
Consolidated Op Income
Non-operating Gain/Loss
Ordinary Income

Plan 2018

Plan 2020

817.4
112.1
174.2
520.1
11.0900.0
150.0
190.0
550.0
10.0

1,000.0
200.0
200.0
600.0
-

276.3
7.7
2.8%

336.0
13.8
4.1%

400.0
16.0
4.0%

539.7
9.9
1.8%

558.0
12.7
2.3%

600.0
14.5
2.4%

-0.2

-15.0

-15.0

17.3
0.9
18.2

25.0
10.0
26.0

29.0
10.0
30.0

-7-

ITOHAM YONEKYU HOLDINGS INC. 2016

3. Performance Targets
Target Values(Ref) Balance Sheet / Cash Flowbillion yen

Actual 2015

Plan 2018

Plan 2020

Total Assets

360.9

401.0

427.0

Debt with Interest

57.4

52.0

52.0

Shareholder's Equity

191.8

232.0254.8

D/E Ratio

0.22

0.20

ROE

7.6%

8.0%

Operation CF

22.8

24.3

Investment CF-16.7

-10.4

6.1

13.9

FCF-8-ITOHAM YONEKYU HOLDINGS INC. 2016

4. Basic Strategies
Streamlining / Enhancement ofCompetitivenessBusiness Scale Expansion■■

Adhere to Growing Markets
Expand Current Business■■

Cost Competitiveness
Reorganization

BalanceStrengthen Management Foundation
Streamlining / Enhancement ofCompetitivenessBusiness Scale Expansion

1

1Strengthen processed foods

Meat

Proc. Foods

23

2

Expand overseas production and sales
Meat3

Increase share in ham/sausage

4Meat

5Proc. Foods

Logistical operations reforms
Meat

Increase domestic meat production

Proc. Foods

Procurement operations reforms
MeatProc. Foods

Proc. Foods

4Optimization of production

Proc. Foods

Reorganization of functions
MeatProc. Foods

Admin.

Reach actual demand
Meat-9-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Business Scale Expansion

1 Strengthen processed foods

Proc. Foods

Expand sales of processed foods to same level as ham/sausage(increase % of total sales from 13.7% to 20.0%)
 Target growing product categories and sales channels
 Increase competitive advantages of current products
 Strengthen sales structure of processed foods-10-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Business Scale Expansion

2 Expand overseas production and sales

MeatProc.
Foods
加工食品

Increase percentage of ordinary income from overseas operations from 11.9% to 13.5%.

 Propel ANZCO’s growth strategy and liaise on overseas business expansion
 Expand overseas meat production, primary processing chain Alliance with powerful local businesses based on production know-how of Itoham
Yonekyu Group-11-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Business Scale Expansion

3 Increase share in ham/sausage

Proc. Foods

Increase brand value to maximize supply Increase NB value by improving the quality and quantity of presentation to customers
 Strengthen ready-made and restaurant sectors support
 PB initiative that leads to increased profits-12-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Business Scale Expansion

4 Increase domestic meat production

Meat

Expand domestic production operations to solidify the supply system of branded meat andstrengthen the ability to react to market environment fluctuations
 Expand and increase utilization of meat production facilities
 Strengthen relations with contract/cooperative farms

5 Reach actual demand

MeatStrengthen direct sales capability.
 Increase sales personnel with thorough knowledge of meat Review locations of sales offices and reassign staff within the group to create an
atmosphere of friendly rivalry
 Strengthen ability to make proposals by enhancing primary processing functions-13-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Streamlining / Enhancement ofCompetitiveness1 Optimization of production

MeatProc. Foods

Establish a production system with cost competitiveness by optimization of all assets(including know-how) of Itoham Yonekyu Group to maximize production profits.
 Seamless production exchange of both brands
 Control facility/line/outsourcing of products according to changes in demand Sharing of production and development know-hows
 Reduction of product lines

2 Procurement operations reforms

MeatProc. Foods

Reduce cost and increase profitability by efficiently procuring items at a lower cost.
 Increase direct importation of meat Increase efficiency in importation
 Joint procurement of supplementary ingredients, supplementary materials and utility-14-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Streamlining / Enhancement ofCompetitiveness3 Logistical operations reforms

MeatProc. Foods

Maximize efficiency through volume
 Collective logistics of imported meat and processed foods
 Propel facility integration

4 Reorganization of functions

Meat

Proc. Foods

Admin.

Propel reorganization of overlapping functions
 Increase efficiency in sales support functions such as market research and advertisement
 Integration of corporate administrative divisions
 Reorganize administrative section of operating divisions-15-

ITOHAM YONEKYU HOLDINGS INC. 2016

5. Detailed Plans
Strengthen Management Foundation
1

Strengthen management and administration
 Integration of corporate administrative divisions
 Thorough profit and loss management
 Enrich quality control system
 Build next generation information system

2

Unambiguous distribution of corporate resource Constantly monitor and replace assets that its significance of retaining have completed orhave greatly declined
 Actively allocate personnel (group’s biggest asset) to areas of focus

3

Human resource utilization and development
 Induce human resource development program that meets various career visions
 Promote women and seniors in taking active roles-16-

ITOHAM YONEKYU HOLDINGS INC. 2016

6. Investments and Returns to Shareholders

Operating Cash Flow
5 year accumulation: ¥123.0 billion
Investment Cash Flow(maintain financial soundness)

Capital Investments

Returns to Shareholders

Business Investments¥83.0 billion over 5 year period

Return through dividends

Select items that meet investment gain

 Increase production capacity, Target payout ratio of 30%

 Overseas meat manufacture,

reduce labor requirement andincrease safety

 Flexible share buy back dependingon management environment(processed foods division)

processor with ties to demand basewithin its country Domestic processed food Buildup of meat production

manufacturer

facilities

 Strengthen domestic meat value Build next generation information

chainsystem-17-

ITOHAM YONEKYU HOLDINGS INC. 2016

The current plans, forecasts, strategies and other items contained in this presentation include our forecasts for businessresults. These forecasts are not historical facts; they are our judgment based on currently available information.
We do not guarantee these forecast business results, and they contain elements of risk and uncertainty.
The purpose of this presentation is not to solicit investment, but to give all investors a deeper understanding of Itoham Yonekyu
Holdings.
We have taken care over the content of this presentation, but we do not accept any responsibility for errors in the content,
tampering by third parties, or errors that may occur during downloading.

-18-

ITOHAM YONEKYU HOLDINGS INC. 2016