JAPANESE

Medium-term Management Strategy

Innovation Toward 2021: the new medium-term management strategy to facilitate Maruha Nichiro Group’s long-term corporate vision over the next four years, beginning 2018.

Long-Term Corporate Vision

  • To be a global general food company that produces and sells marine products and other processed food under Maruha Nichiro brand.
  • To maximize profitability through extending leveraging value chain.
  • To become the world No.1 global seafood supplier.
  • To become the No.1 frozen and nursing care food supplier in Japan.
  • To become a leading manufacturer of marine-based functional products.

Overview of Innovation toward 2021

Enhance Enterprise Value and Generate Sustainable Growth

Three management strategies in the first four years to achieve long-term corporate vision

Further Increase in Profitability
  • Optimize value chain, leveraging broader accessibility to marine resources
  • Realize cost saving opportunities in processed food business
Invest in Growth
  • Extend global seafood value chain
  • Invest in processed food manufacturing facilities
  • Invest in business areas in line with mid to long-term growth
Strengthen Business Foundation
  • Build a strong balance sheet that supports business priorities
  • Enhance R&D and technical capability
  • Improve human resources, brand management, and IT infrastructure

Further Increase in Profitability

Marine product and processed foods will drive profit growth over next four years

Value chain optimization by leveraging broader accessibility to marine resources

Fisheries & Aquaculture
  • Expand egg-to-harvest Bluefin tuna farming
  • Launch new farming techniques to add new types of fish
Trading
  • Develop value-adding products and brands
  • Expand domestic processing capabilities
Overseas Business
  • Improve cross-border strategy planning and operations
  • Integrate value chains across domestic operations of marine product and processed food
    ⇒10%+ operating income CAGR* target

Fisheries & Aquaculture/Trading/Overseas OP target by segment

(JPY in billions)

Fisheries & Aquaculture/Trading/Overseas OP target by segment Fisheries & Aquaculture/Trading/Overseas OP target by segment

Increase Profit in Processing Segment

Processing
  • Improve profitability through optimizing production
  • Reduce production cost (purchasing cost and PD cost)
  • Manage for profit across processing and sales and marketing
  • Revive underperforming businesses
  • Reinforce product development capability ⇒ 10%+ operating income CAGR* target

Processing OP target

Processing OP target Processing OP target
*CAGR: Compound Annual Growth Rate

Invest in Growth

Increase investment to improve profitability

Investment in Marine Product Value Chain in and out of Japan

Trading/Overseas

  • Acquire further accessibility to marine resources
  • Maximize value of existing to marine resources
  • Expand global processing and sales operations
Active Investment in Frozen Foods

Processed Foods

  • Optimize production facilities
  • Expand core-product production capacity
  • Optimize with AI and IoT
Proactive Investment in Growing Business

Fisheries & Aquaculture

  • Expand egg-to-harvest Bluefin tuna farming
  • Farm additional fish species and enhance farming techniques
  • Deploy land-based farming and overseas farming

Processed Foods

  • Expand nursing care food
  • Expand fine chemical business

Strengthen Business Foundation

Prioritize investments that improve financial performance

OP CF ~134 B yen

Investment ~110 B yen

Strategic Opportunities ~48.5 B yen

  • Investment in key growth drivers― Overseas and frozen food
  • Proactive investment in mid to long-term growth area― Aquaculture, nursing care food, and fine chemicals
  • Continue to monitor ROIC

Infrastructure ~23.5 B yen

  • Reconstruction of cold storage
  • IT investment

Maintenance ~38.0 B yen

  • Replace outdated facility
  • Advance dechloroffluorocarbonizing initiatives
Interest-Bearing Debt
  • D/E ratio 1.5x  Equity ratio 30%+
Shareholder Return
  • Stable dividends

Financial Targets

  FY2021 Target FY2017 Result Change
Net Sales 1 Trillion Yen 918.8Billion Yen 81.2Billion Yen
Operation lncome 31 Billion Yen 24.5Billion Yen 6.5Billion Yen
ROA 5.7% 5.5% +0.2pt
D/E Ratio 1.5x 2.3x -0.8x
Equity Raito 30.0% 22.3% +7.7pt

Targets by Segment

Segment FY2021 Target FY2017 Result Change
Net Sales OP Net Sales OP OP
Fisheries & Aquaculture 44.1 3.0 38.3 2.3 +0.7
Trading 470.8 6.6 449.5 4.8 +1.8
Overseas Business 180.6 11.1 169.4 8.8 +2.3
Processing 275.6 8.2 232.6 5.3 +2.9
Logistics 17.6 1.8 16.0 1.9 -0.1
Others 14.3 0.4 13.0 0.8 -0.4
Common Cost - - - 0.7 -0.7
Total 1,000 31.0 918.8 24.5 +6.5