Itoham Yonekyu : Medium-term Management Plan 2023 Progress Explanatory Materials

Itoham Yonekyu Holdings Inc.

Medium-term Management Plan 2023

Progress Explanatory Materials

May 9, 2022

Group Philosophy and Vision

Group Philosophy

We will contribute to the realization of sound and affluent society through business.

Vision

A leading food company that continuously evolves with its employees by embracing the spirit of fairness and the challenge to progressions.

Founding spirit	Spirit that underlies the Group philosophy and vision

Serving society	A Moving Food
through business	Experience

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Medium-term Plan 2023

Action	Achieve further growth and leap by defying stereotypes and
guidelines	reaffirming our strengths

• Need to solidify the management base and earnings base after the integration and increase competitiveness.
• Need to strengthen growth potential by responding to new market needs and social and environmental values.

Ongoing challenges after integration

I. Strengthen management base

• Strengthen earnings base
• Initiatives for new businesses and markets

Ⅳ. Initiatives for sustainability

Vision to achieve during period of Medium-term Management Plan

Maximize performance and potential

Maximize Group value

Establish new core earnings sources

Fulfill corporate social responsibility through business

Developing priority policy	for each theme	2

Medium-term Plan 2023

FY21 results and quantitative targets

• Enhance competitiveness and added value in business to increase return on invested capital (ROIC).
• Implement shareholder return policies in consideration of financial soundness and capital efficiency to maximize shareholder value.

					FY2020			FY2021	FY2021	Difference			FY2022	FY2023
					Results			Plan	Results			Forecasts		Plan
	Operating income		240			230	246	16			210		280
		Processed Food		123			110	110	0			75		145
		Meat		134			135	143	13			150		155
		Other		-17			-15	-13	2			-15		-20
	Ordinary income		270			250	285	35			240		300
	ROIC ＊1		6.3%			6.0%	6.6%	0.6%			5.1%		6.8%
		Processed Food		8.5%			-	8.2%	-			4.7%		-
		Meat		9.3%			-	10.3%	-			8.5%		-
	Total Assets		3,940			4,000	4,131	131			4,200	＊2	4,250
	Shareholders' equity	2,399			2,500	2,522	22			2,550	＊2	2,700
	D/E Ratio		0.15			0.13	0.13	0			0.15	＊2	0.10
＊1 Insurance claim income in extraordinary income is excluded.
		＊2 Revised plan based on FY2021 results and FY2022 forecasts.
	Ordinary Income		(billion yen)			ROIC	(%)

billion yen

*Rounded down to the nearest 0.1 billion yen.

*ROIC =Earnings before interest after tax / (Interest-bearing debt + Equity capital)

Shareholder return policy

• Dividend

With target payout ratio of approx. 40%, we increase dividends steadily in 30% to 50% range.

	Annual	Payout ratio
	dividend
FYE 3/2021	¥21	30.6%
Results
FYE 3/2022	¥23	35.2%
Estimates
FYE 3/2023	¥24	46.7%
Forecasts

• Share buyback and cancellation

	# of shares	Amount
FYE 3/2021	2 million	¥1.4 billion
Results
FYE 3/2022	1 million	¥0.6 billion
Results
FYE 3/2023	10 million	¥5.0 billion
Estimates	(Maximum)	(Maximum)

5 million shares of treasury stock to be canceled

(Scheduled on June 30, 2022)

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Medium-term Plan 2023

Priority Policy and Status (1/2)

Theme

FY 2021 Results		Initiatives for FY2022 and beyond

Strengthen

• manageme nt base

Strengthen

• earnings base

• Reorganization

-Strategy and procurement functions of the meat division integrated and into HD*1

• Digital strategy

-System design for the meat sector completed as part of MKB*2 project (core system integration)

Processed	 Cost reduction
	-Boost yield and man-hour productivity
		-Promote higher operating rates of high-efficiency lines by
		changing location of plant which manufacture products
Food	 Enhancement of added value
	-Launch new commercial
Business		Strengthen communication by using digital marketing, etc.
	Scale expansion
		-Launch new products of business-use processed food for
		convenience stores
	 Cost reduction
Meat
	-Share information on suppliers and inventory positions
Division	 Scale expansion
	-Meat Process & Farm Div. established to strengthen production
		business
		-Ishikari Packing Center established
		-Strengthen sales of unheated meat products
	 Digital strategy
Other
	-Improve business efficiency by introducing RPA

(sales order, and accounting operations, etc.)

• Reorganization

-Strategy and headquarter functions of the processed food business integrated into HD

• Digital strategy

-System design for the processed food sector completed as part of MKB*2 project

-Digitalization of back office operations with the newly introduced expense management system

• Cost reduction

-Start the first phase of the reorganization of production bases (Reconstruction of the Yume Plant begins)

• Enhancement of added value

-Strengthen mutual sales by utilizing each company's logistics network

• Scale expansion

-New line development for processed food products (Toride

Plant)

• Cost reduction

-Logistics cost containment by using optimized refrigerators for sales

-Reorganize and integrate sales offices

• Scale expansion

-Newly establish farm for Yonekyu Oishiitori Corp.

-Construct Towada Meat Plant cattle processing facility begins

-Expand cattle and swine raising capacity on cooperating farms

(Tohoku area)

• Digital strategy

-Promote efficiency by introducing a meat standards management system

-Promote efficiency by expanding the scope of RPA utilization (logistics operations, and others)

*1 HD stands for Holdings, *2 MKB stands for MIRAIKIBAN Project

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