カンロ（2216） – [Delayed] FY2021 Presentation material

FY2021 Presentation material (Jan. to Dec. 2021) February 17, 2022 (TSE Code: 2216) Contents Kanro Inc. Overview Page Corporate philosophy Corporate overview and History – Overview-1 – Overview-2 FY2021 Presentation material Slide 1 to 32 – 1 – 16 Corporate philosophyOverview-1 Corporate overview and HistoryAs of end December 2021President and CEOKazuyasu Misu [Corporate overview]Company nameKanro Inc.Date foundedMay 6, 1950Head officelocation3-20-2, Tokyo Opera City Building 37F, Nishishinjuku, Shinjuku-ku, TokyoTelephone+81-3-3370-8811Business activitiesManufacture and marketing of confections and foodFiscal year-endDecember 31Exchange listingTokyo Stock Exchange, Second Section (securities code:　2216)Capital stock¥2,864 millionEquity ratio55.7%Number of sharesissuedNumber ofemployees7,657,802608Recent performance(Annual)Net sales: ¥25.6 billion; Operating income: ¥1.2 billion; Ordinary income: ¥1.2 billion; Net income: ¥0.88 billionMajor shareholders(Top 5)Mitsubishi Corporation approx. 30%; Kanro Kyoei Kai approx. 7%; Enomoto Buhei Shoten K.K. approx. 6%; Sumitomo Mitsui Trust Bank, Limited approx.5%; Sumitomo Mitsui Banking Corporation approx. 4% [History]19121950195519591960196219631968197219731981198219881989199219952002201120122012201520162018201820182019202020212022Company founder Masaichi Miyamoto establishes a confectionery manufacturing business in Hikari City, Yamaguchi Prefecture.Business is restructured into a joint-stock organization with capital of ¥1 million under the name of Miyamoto Seika Co., Ltd.Kanro Ame is launched, using a secret ingredient – soy sauce. Becomes the first candy to be individually wrapped in cellophane.Matsumoto Plant is established in Matsumoto City in Nagano Prefecture.Company name is changed to Kanro Co., Ltd.Head office is relocated to Toshima-ku, Tokyo. Stock listed on the second section of the Tokyo Stock Exchange.Head office is relocated to Nakano-ku, Tokyo.New plant is constructed in Hikari City, Yamaguchi Prefecture (first phase).Consolidated subsidiary, Hikari Seika Co., Ltd. (former HIKARI Seika Co., Ltd), established in Hikari City, Yamaguchi Prefecture.Business alliance and sole sales agent agreement concluded with Mitsubishi Corporation.Launch of the first throat drops in the confectionery segment.New plant constructed in Matsumoto City, Nagano Prefecture, to which existing Matsumoto Plant is relocated.New Shimada Plant constructed in Hikari City, Yamaguchi Prefecture. (Leased to former HIKARI Seika Co., Ltd.)Head office is relocated to Shinjuku-ku, Tokyo.“Non-sugar” products launched.Puré Gummy launched.Kinno Milk launched.New plant constructed in Hikari City, Yamaguchi Prefecture, with facility name changed to “Hikari Plant” on the occasion of the relocation from theexisting plant.New Asahi Plant constructed in Asahi village, Nagano Prefecture. ISO 14001 (environmental management systems) certification is obtained for the Hikari Plant (2000),Matsumoto Plant (2001), head office and branch offices (obtained in 2003, surrendered in 2014), which together with the registration of the Asahi Plant means that allfacilities are certified.To commemorate the 100th anniversary of the founding of the Company, the first directly operated HITOTUBU KANRO store is opened in Tokyo Station.Head office R&D department is relocated to Koto-ku, Tokyo, and renamed the Toyosu Institute for R&D. Asahi Plant obtains FSSC 22000 (Food Safety System Certification).New gummy product line at Matsumoto Plant begins full-scale operation. Matsumoto Plant obtains FSSC 22000 (Food Safety System Certification).“NewKANRO 2021” Medium-term corporate strategy is announced.Head office is relocated to Tokyo Opera City building in Shinjuku-ku, Tokyo.Hikari Plant obtains FSSC 22000 (Food Safety System Certification).Consolidated subsidiary Hikari Seika Co., Ltd. is merged into parent company.The Kanro Farm, an indoor herb garden, is opened.Kanro Vision 2030 is announced.Medium-term Corporate Strategy 2024 is announced.Overview-2FY2021 Presentation material (Jan. to Dec. 2021)Kanro Inc.Copyright ©2022 Kanro Inc.Copyright ©2020 Kanro Inc. 1ContentsAbout Kanro Inc.1. Review of FY20212. Mainstay brand status3. Forecast for FY20224. Summary of Medium-term ：25-31Corporate Strategy 2024Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.2Slide #： 3- 7： 8-13：14-17：18-241About Kanro Inc. (1/5)◼◼◼Kanro is a confectionery manufacturer involved primarily in the manufacture and marketing of candy such as Kanro Ame, Kenko Nodoame, Kinno Milk and Puré Gummy.In line with its Medium-term Corporate Strategy “NewKANRO2021,” Kanro has pursued growth with the aim of becoming the No. 1 candy manufacturer by leveraging its “Digging deeper to further implement and strengthen brand-centric management,” which generates strong brands by focusing development on functionality and on using ingredients themselves to the full. The company is also working on “Digging deeper to further implement and strengthen sustainable management,” an initiative that uses business based on “sweetness” to support people’s healthy lifestyles and to contribute to the realization of a sustainable society, as well as “Propelling digital marketing with the aim of creating and providing special experimental value that makes use of customers’ opinions that were collected using digital contact points.”To achieve its vision for 2030, “Kanro Vision 2030,” Kanro announced its Medium-term Corporate Strategy 2024 built on the corporate purpose it has newly defined. Kanro will seek to contribute to a sustainable future for both people and the society through its three priority strategies of “Value creation,” “ESG management” and “Expansion of our business domains.”Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.3About Kanro Inc. (2/5) Candy market (Jan. to Dec. 2021)Others17.7%¥91.4 billionTablet candy (incl. Ramune)19.3 %Jan.-Dec. 2021Entire candy market ¥246 billionHard candy37.1%¥63.5 billionGummies25.8%Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.4◼ Market environment (Jan. to Dec. 2021)– Candy market as a whole was down 3.5% YoY due to repeated declaration of state of emergency and other factors that led to reduction in human mobility as well as mask-wearing practice becoming the norm.– Hard candy: Mask-wearing lifestyle resulted in reduced demand for throat drops, etc.– Gummies: Although demand for consumption in offices and on outings decreased, increase in at-home consumption resulted in rebound in demand, which increased by 11.7% YoY.Tablet candy: Decrease in situations where candy is eaten, etc.–Jan. to Dec. Market sales amount/YoY Unit: billion yenFY2021FY2020Hard candyGummiesTablet candy (incl. Ramune) OthersTotal91.463.5 47.5 43.6 246.0 YoY98.6 (7.4)% Our main 11.7%56.9 54.0 (12.0)%(4.0)%45.4 (3.5)%254.9 market* INTAGE Inc. SRI+ Candy market Jan.-Dec. total for 2020 and 2021, sales amount and YoY change by type* Amounts are rounded, and therefore totals may not add up to the same amount.2About Kanro Inc. (3/5) Composition of net sales 56.0%3.2%40.8%Copyright ©2022 Kanro Inc.5Increased composition of gummy (growth engine)salesUnit: million yenJan. to Dec. 2021Jan. to Dec. 2020Amount% of totalAmount% of total25,663100.0% 23,321100.0%14,38256.0% 14,69263.0%10,46740.8%7,53232.3%8143.2%1,0964.7%Net salesHard candy Gummies*1Healthy snacks *2*1 Figures for Jan. to Dec. 2021 include marshmallow products.*2 Healthy snacks: products containing healthy ingredients such as sour plum, laver, seaweed stems, and natto soybeans that have been processed for easy consumption.Hard candyGummies *1Healthy snacks *2About Kanro Inc. (4/5) Market share from Jan. to Dec. 2021Hard candy market share: No.1 20.7%*1(Previous year 19.4%)Gummies market share: No.2 17.5%*2(Previous year 16.8%)Candy market as a whole: No. 1 share (12.3%) *3 (Previous year No. 1 (11.3%))*1 INTAGE Inc. SRI+ Hard candy market Jan.-Dec. total for 2020 and 2021, share of sales amount by type*2 INTAGE Inc. SRI+ Gummies market Jan.-Dec. total for 2020 and 2021, share of sales amount by type*3 INTAGE Inc. SRI+ Candy market Jan.-Dec. total for 2020 and 2021, share of sales amountCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.63About Kanro Inc. (5/5) Our businessManufacture and marketing of confections and food“HITOTUBU KANRO” directly operated store, GRANSTA TOKYOShinjuku MYLORD store for a limited timeOnline shop can be accessed here:→https://kanro.jp/pages/hitotubuThe HITOTUBU gift shops are based on the concept of “HITOTUBU connects people to people,” embodying the joy of giving and receiving in the form of drop candy.Their purpose is to support the corporate brand and product brands through the test marketing of high value-added products, new products, and so on.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.71. Review of FY2021(Jan. to Dec. 2021)Copyright 2020 Kanro Inc.Copyright ©2022 Kanro Inc.Copyright ©2020 Kanro Inc. 84Market environment/status of business in FY2021◆Market environmentHard candy (down 7.4% YoY): Due to the decline in consumption in offices and on outings, sales of candy in stick-shaped or compact packaging* continued to decline, and demand for throat drops fell due to a mask-wearing lifestyle.Gummies (up 11.7% YoY): Recovered due to increase in at-home consumption.◆Status of company business (Topics)Feb.: Vision for 2030, “Kanro Vision 2030” was released Mar.: Selected for the New Diversity Management Selection 100 in FY2020(Minister of Economy, Trade and Industry Award)Sep.：Won the best of category “Grand Award” in 2 categories of the “International ARC Awards 2021,” the world’s largest annual report competitionNov.: Selected as one of the “Top Hundred Telework Pioneers” (Ministry of Internal Affairs and Communications)Dec.： Released the outline of the future design businessDec. Marosh won the “Excellent Hit Award” of the 40th GREAT HIT FOOD PRODUCT AWARDsponsored by The Japan Food Journal◼◼◼◼◼◼◼◼*Hard candy packaged in small bagsCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.9Summary of FY2021 performance (vs. revised forecast / YoY)Actualvs. revised forecastYoYYoY %ActualRevised forecast *2FY2021 vs. revised forecastUnit: million yenFY2021 FY2020Net sales25,6633631.4%2,34210.0%25,30023,321Operating incomeOrdinary incomeNet income1,2591,2968829996242350.6%1,16043527150.6%44.5%1,200880836860610Basic earnings per share (Unit: yen)125.120.3238.5444.5%124.8086.58*1 The values displayed in these materials are truncated at the million-yen level, so the breakdowns and totals may not always match completely.*2 Released on October 29, 2021.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.108.6%8.0%0.3%0.3%5Main factors behind changes in FY2021 performance (vs. revised forecast / YoY) ◼ Vs. revised forecast (increase in net sales, increase in incomes)––Net sales (increase): Gummies recorded increased net sales reflecting strong performance of mainstay brands, such as Puré Gummy, and new products. Hard candy also enjoyed higher net sales driven by gourmet candy such as Kinno Milk candy, although throat drops struggled.– Operating income/ordinary income (increase): Marginal profit increased due to higher net sales.Net income (slight increase): Net income increased slightly, which reflected impairment loss associated largely with facilityupgrades to enhance production capacity of gummies.◼ Year on year (increase in net sales, increase in incomes)–Net sales (increase): Significantly increased sales from gummies ＞ Lower sales of hard candy• Gummies: Mainstay brands Puré Gummy and Candemina and new product Marosh, among others, contributed to achieve substantial increase in net sales to outpace market recovery.• Hard candy: Sales from throat drops fell due to the mask-wearing lifestyle, and opportunities to consume candy in stick-shaped or compact packaging declined, among other factors. – Operating income/ordinary income (increase): Increase in income due to higher sales and decrease in cost of sales ratio ＞Increase in selling, general and administrative expenses–Net income (increase): Despite impairment loss associated largely with facility upgrades to enhance production capacity, substantial increase in net income was secured, partly as a result of posting gains on sales resulting from reductions in strategic shareholdings that exceeded levels in the previous year.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.11Factors behind change in FY2021 operating incomeFY2021 Vs. revised forecastVs. revisedforecastYoY YoY %3631.4% 2,342FY2021Revisedforecast*25,300Net salesCost of salesFreight/warehousing costsSales promotion expensesAdvertising expensesAgent feesPersonnel expensesGeneral expensesOperating incomeActual25,66313,2411,5048304713,4403,3591,5561,259* Released on October 29, 2021Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.12——-10.0%6.3%11.2%22.0%30.7%9.6%9.2%9.9%50.6%783151149110301282140423——-6998.6%1,160Unit: million yenFY2020Actual23,32112,4571,3536813603,1393,0761,415836——-Factors of changes in OP （ FY2020 Result Vs. FY2021 Result）Unit: million yenFY 2020 Result 836FY 2021 Result 1,259Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.132. Mainstay brand status(Jan. to Dec. 2021)Copyright 2020 Kanro Inc.Copyright ©2022 Kanro Inc.Copyright ©2020 Kanro Inc. 147Increase factorsDecrease factors(V) :Variable cost(F) :Fixed costMainstay brand status: Hard candy (net sales down 2.1% YoY)◼Kinno Milk candy (No.1 milk candy brand by sales*)–Brand as a whole enjoyed YoY increase in sales in the face of the COVID-19 crisis, with the introduction of a new caffe latte flavor for which TV and SNS advertising campaigns were rolled out.2022 marks the 10th anniversary of product launch*INTAGE Inc. SRI+ “Milk-flavor Candy Market” July 2020 – June 2021, cumulative sales amount brand ranking for “Kinno Milk brand” –––◼◼◼Salty-sweet JapanesedeliciousnessKanro Ame (a long-selling brand in its 67th year from launch)Released the book “Welcome Kanroame shokudo” published by SHOGAKUKAN Inc.Sales fell slightly from forecast and previous year’s levelNon-Sugar series–Sales increased YoY due to growth in sales of gourmet products, offsetting YoY decrease in sales of throat dropsA special throat drop made with health in mind, featuring a careful blend of 31 traditional Japanese medicinal ingredients as well as manuka honey.Kenko Nodoame level–Double-digit decline from both forecast and previous year’s A premium milk candy for grown-ups that uses carefully selected ingredients in pursuit of a sense of high-class luxury.A non-sugar throat drop with a juicy deliciousness that can be enjoyed in four fruit flavors; a refreshing sweetness with zero saccharide that uses no artificial sweeteners.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.15Mainstay brand status: Gummies* (net sales up 39.0% YoY)◼Puré Gummy*Including marshmallow products Revamped in March 2021 and doing wellDouble-digit growth over both previous year and forecastCollaboration with Pokémon continued2022 marks the 20th anniversary of product launch◼Candemina GummyDespite COVID-19, sales grew at double-digit rate over previous year and forecastTaste, shape, texture, entertainment value are well receivedAsobon! Gummy◼◼MaroshPut on the market as the third brand. Sales achieved double-digit growth over previous year but fell short of forecastA new product ( marshmallow product) that is expected to grow into a new mainstay brand. Doing well, achieving triple-digit growth over forecast – Won the “Excellent Hit Award” of the 40th GREAT HIT FOOD PRODUCT AWARD sponsored by The Japan Food JournalSelected as one of the Nikkei TRENDY Magazine 2021 Hit Selection Processed Foods Division–––––––––Fruit gummies with an enjoyable sweet-and-sour fruit taste, in which the acidity of the powder is followed by the spreading sweetness of the gummies.Addictively chewable gummies with a firm, springy texture and a unique shape.Gummies which are fun for both kids and adults. Contain Japanese-grown fruit juice, with no artificial colors.Marosh is a marshmallow product that gives a whole new sensation. It is coated on the surface with a fresh powder that melts in the mouth and spreads throughout for a fresh taste, but when chewed, has a sticky spring to it. Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.168Others: Healthy snacks/ HITOTUBU KANRO (Directly operated store/ E-commerce)◼Healthy snacks– Down by 25.7% YoY reflecting further shift toward private brands at convenience stores.◼HITOTUBU KANRO– Sales through online stores doing well in the face of COVID-19– Gummit-zel has gained popularity since it became a hot topic in ASMR videos and, as HITOTUBU KANRO business, has achieved a roughly twofold growth over the previous year.Healthy snacks: products containing healthy ingredients such as sour plum, laver, seaweed stems, and natto soybeans that have been processed for easy consumption.Sold at “HITOTUBU KANRO” directly operated store, Gummit-zel is a type of gummies with next-generation texture, crispy on the outside and moist on the inside.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.174. Forecast for FY2022Copyright 2020 Kanro Inc.Copyright ©2022 Kanro Inc.Copyright ©2020 Kanro Inc. 189FY2022 Management PolicyAiming for further growth in the first year of the Medium-term Corporate Strategy 2024, to achieve “Kanro Vision 2030”◼– Core businesses：Thoroughly implement brand-centric management and expand the share of the mainstay brands of candies and gummies that are Kanro’s core businesses– Digital commerce business: Achieve sales expansion by offering experience value through sale of HITOTUBU KANRO products and products exclusive for e-commerce– Global business： Expand sales in the global market centering on enhancement of collaboration with Chinese candy maker AmosFuture design business: Build the foundation for commercialization of products and services with “sustainable” and “well-being” as the keywordsInnovation through digital marketing and research/development as well as productivity enhancement (such as smart factories and RPA)– With respect to the five priority areas of SDGs that Kanro has selected, implement initiatives with greater attention to the link with business activities, and work towards resolution of social issues. Implement ESG financing.◼◼–––Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.19Forecast for FY2022FY2022YoYForecastYoYVs. forecastActual22,6001,0104.7%21,589Unit: million yenFY2021(New revenue recognition standard)1,140(114)(9.2)%1,160820116.29(131)(10.2)%(59)(6.7)%(8.37)(6.7)%1,2541,291879124.66The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29) and related guidance is applied from the fiscal year ending Dec. 31, 2022. Accordingly, certain items that were recorded as selling expenses, including agent fees, are deducted from net sales.* The values displayed in these materials are truncated at the million-yen level, so the breakdowns and totals may not always match completely.Net salesOperatingincomeOrdinaryincomeNet incomeBasic earnings pershare (Unit: yen)Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.2010Forecast for FY2022 (Year on year)◼Year on year– Net sales (increase) (comparison with the restated FY2021 figures after application of the new revenue recognition standard)• 8.3% YoY increase in the first-half forecast, 1.6% YoY increase in the second-half forecast, •and 4.7% YoY increase for the full-year forecastIncrease in net sales of both candies and gummies from market share expansion of existing brands and growth of digital commerce business– Operating/ordinary income/net income (decrease):• 9.2% YoY decrease in operating income despite increase in marginal profit reflecting increased sales (reasons (1) – (3))(1) Surge in raw material prices, rise of oil prices, etc. pushing up several expenses →increase in (2) Increase in general expenses due to repercussions of COVID-19 and expansion of business cost of sales areas(3) Increase in advertising expenses for the mainstay brands– Net sales in Jan. 2022: up 30% YoYCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.21FY2022 operating income forecast (vs. FY2021)FY2022ForecastVs. FY2021YoYYoY %Unit: million yenFY2021(New revenue recognition standard)Net sales Cost of salesFreight/warehousing costsSales promotion expensesAdvertising expensesPersonnel expensesGeneral expenses Operating income 22,60013,9021,5922535603,3781,7731,1401,01066687468918216(114)4.7%5.0%5.8%22.4%19.0%0.6%13.9%(9.2) %21,58913,2361,5042064713,3591,5561,254* The values displayed in these materials are truncated at the million-yen level, so the breakdowns and totals may not always match completely.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.2211Factors of changes in OP （ FY2021 Result Vs. FY2022 Forecast）Unit: million yenFY 2021 Result 1,254FY 2022 Forecast 1,140Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.23FY2022: dividend forecastAnnual dividend2nd quarter-endYear-endFY2021FY2022 (forecast)15202520Unit: YenDividend payout ratio32.0%34.4%Total4040◼◼The return of profits to shareholders is an important policy, and the current dividend of ¥40 will be maintained despite forecast of a decrease in income.Dividend payout ratio will be gradually raised during the period of the Medium-term Corporate Strategy 2024, up to 40%.Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.2412Increase factorsDecrease factors(V) :Variable cost(F) :Fixed cost4. Summary of Medium-term Corporate Strategy 2024If you want to know more details, please refer to the other document, ” Medium-term Corporate Strategy 2024″.https://www.kanro.co.jp/en/ir/news/Copyright 2020 Kanro Inc.Copyright ©2022 Kanro Inc.Copyright ©2020 Kanro Inc. 25Medium-term Corporate Strategy 2024◼ Our vision: As a Purpose-Driven CompanyOUR PURPOSESTATEMENTCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.2613Medium-term Corporate Strategy 2024 Key initiatives4 Key initiatives◆ Beef up investment to advance innovation◆ Aim for sustainability and strengthen pursuit of “ingredients” and Value creation◆ Listen to consumer feedback obtained directly through digital “functionality”contacts◆ Strengthen research and development from a global perspectiveESG management◆ Enhance internal structure to achieve SDGs◆ Promote diversity and inclusion◆ Strengthen corporate governanceExpansion of businessdomains◆ Build platform for expanding contacts with consumers while deploying the values created to new areas and new channels◆ Continuously implement cost reduction measures to prepare for investing in future growth in the 2nd stepHuman resources andorganizationactive role◆ Improve employee engagement◆ Develop environment that allows diverse workforce to play an Copyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.27Medium-term Corporate Strategy 2024Financial strategy (1) Basic policyFinancial strategy based on business management focusing on cost of capital (ROIC) to achieve growth Cash flows from operating activities generated by corebusinessCash flows from investing activities for sustained growth tnemeganamn i tnemtsevnIsecruoserCash flows fromfinancing activitiesthat maintain financial disciplineProcurementanddistributionCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.28Increase in value of core business• Profitability and efficiency improvementStrategic investment in growth businesses• Gummies as the growth• Expansion of businessenginedomainsOptimal capital structure using financial leverage・ Human capital：invest in human resources for value creation・ Intellectual capital：invest in R&D for innovation• Manufacturing capital：increase production capacity and develop new technologies・ Natural capital: implement initiatives conducive toreducing environmental load・ Social capital: promote purpose-driven management・ Procure funds by maintaining financial discipline・ Secure liquidity to support growth strategy and ESG management→ Conclude commitment line agreement based on ESG/SDGs assessment (ESG financing)Shareholder returnsgradually to 40%・ Maintain current dividend, raise dividend payout ratio ⇒Optimize corporate value with profitability×efficiency×growth potential14Medium-term Corporate Strategy 2024Financial strategy (2) 3-year cash flow planUse operating cash flow generated from core business for investment in future growth including new business domains (digital commerce business, global business and future design business) and for increasing shareholder returns.Cumulative cash flow 2022 – 2024Cash-out FlowCore businessApprox. ¥8 billionCapital investmentApprox. ¥7 billionInvest in highly efficient projects that contribute to ROIC improvement (with guideline rates set at levels higher than the cost of capital)・ Hold down maintenance and replacement investments・ Strengthen production system for gummies that are the growth engine・ Create new values・ Invest in productivity improvement (smart factory)Investment in digital and new businessesShareholder returns¥1 billion or more・ Promote digitalization (installation of a new ERP system, etc.)・ Make disciplined investment decisions for expansion of business domains (set guideline rate for each area and region)・Increase shareholder returns(maintain ¥40 annual dividend, increase dividend payout ratio gradually to 40%)ESG financing and other financialactivitiesCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.29Medium-term Corporate Strategy 2024Financial strategy (3) Financial indicators*1 Before applying new revenue recognition standard*2 New revenue recognition standardMedium-term Corporate Strategy 2024KanroVision 203020212022202320242030Net sales *1Net sales *2¥25.66 billion－¥21.58 billion¥22.6 billion－－¥55 billion ¥50 billionTotal of 4 businesses CAGR*5% or higherCore business CAGR3% or higherCore business* Compound annual growth rate(Digital/Commerce/Global/Future Design) 3 businesses CAGR30% or higher(Digital/Commerce/Global/Future Design) 3 businessesOperating income¥1.25 billion¥1.14billionOperating income margin5.8%5.0%9% or higherOrdinary income¥1.29 billion¥1.16billionROIC7.3%－－ 7.5% or higher10% or higher32.0%34.4%40%50%7.0%－－Dividend payout ratioCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.30¥30 billion¥20billion－－－－－－－－15株主還元10億円以上ESGファイナンス等 財務活動デジタル・新事業へ投資約70億円設備投資約80億円コア事業Cash-in FlowCash-out FlowMedium-term Corporate Strategy 2024Non-financial indicatorsBaseMedium-term Corporate StrategyKanro Vision 20302019202020242030308.6 t/¥100 million*1262.4 t/¥100 million(-15%) *2216.0 t/¥100 million(-30%) *1Key sustainability indicatorsMitigating environmental load through business• Reduction of CO2 emissions(scope 1 to 3)(per unit of net sales)Promotion of human rights and diversity• Rate of women in management(manager or above)• Employment rate of persons with disabilities • Reduction of food waste(per unit of net sales)4.63 t/¥100 million *14.12 t/¥100 million(-11%) *13.24 t/¥100 million(-30%) *120％In the 30％ range3.0％ with expansion of Kanro farmMaintain 3.0％12.6％2.6％47.0％• Employee engagement score55.0％70.0％Creating value through sweetness• Activities to disseminate correct information on the value of sugar480,000 people8 million people15 million people*1Restated due to application of the new revenue recognition standard*2 Restated due to application of the new revenue recognition standard; reduction target has been revisedCopyright ©2020 Kanro Inc. Copyright ©2022 Kanro Inc.31Copyright 2020 Kanro Inc.Copyright ©2022 Kanro Inc.Copyright ©2020 Kanro Inc. 3216MEMO Disclaimer Forward-looking statements related to Kanro’s current plans, outlook and strategy, etc. contained within these materials are based on judgments made by Kanro management using information available at hand at the time of writing. A variety of material factors that could result in actual performance differing significantly from earnings forecasts include, but are not limited to, economic conditions, particularly trends in personal consumption, as well as the industry environment in which the company conducts its business activities. The information contained within these materials is provided to facilitate understanding of Kanro, and does not necessarily constitute encouragement to invest. Moreover, information contained herein is not continuously updated, and the reader should be aware that the content may be revised or withdrawn without prior notice. Inquiries related to these materials should be directed to Kanro Inc. at tel. +81-3-3370-8811 ■ Company URL: https://www.kanro.co.jp/en/ ■ QR code for the above: