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Toward Toward Completion Completion of of the the 02/04 Three-Year Management 02/04 Three-Year Management Plan Plan --Net NetSales Salesover over¥1 ¥1trillion trillionin inFY FY03, 03,ROE ROEover over10% 10%in inFY FY04 04-- Kunio Egashira, President Ajinomoto Co., Inc. May 20, 2004 Table of Contents I.Management I.Management Policies Policies II.Business II.Business Strategy Strategy for for the the Year Year to to March March 05 05 “Selection “Selection and and Concentration” Concentration” and and “Expansion” “Expansion” III.Corporate III.Corporate Strategy Strategy “Becoming “Becoming aa Truly Truly Global Global Company” Company” I.Management I.Management Policies Policies 1. 1. Group Group Management Management Philosophy Philosophy 2. 2. 02/04 02/04 Three-Year Three-Year Management Management Plan Plan 3. 3. Performance/Forecasts Performance/Forecasts 3 I-1. Management Philosophy of the Ajinomoto Group “Our “Our philosophy philosophy is is to to contribute contribute to to significant advances in food and health significant advances in food and health on on aa global basis and ultimately to create a global basis and ultimately to create a better better life life for for all.” all.” From From its its beginnings beginnings in in Japan, Japan, Ajinomoto aims to be a global Ajinomoto aims to be a global corporation corporation in in food food and and amino amino acid acid products. products. 4 I-2. 02/04 Three-Year Management Plan 1. Basic 1.Expand Expandbusiness businessin ingrowth growthsectors sectors Basic 2. Shift toward a high-earnings structure 2. Shift toward a high-earnings structure Strategies Strategies 3. 3.Strengthen Strengthencorporate corporategovernance governance 4. Nurture personnel 4. Nurture personnelcapable capableof ofworking working in the global arena in the global arena 5. 5.Operate Operatein inharmony harmonywith withsociety societyas asaagood good corporate citizen corporate citizen Numerical Numerical Final Final Year Year Targets Targets (initial (initialplan) plan) Targets Targets Net sales ¥1,100 Net sales ¥1,100 billion billion Operating income ¥75 billion Operating income ¥75 billion Net ¥45 Netincome income ¥45 billion billion ROE 10% ROE 10% or or more more 5 I-3. Performance/Forecasts Net sales Operating income (Net sales) 1,200 1,000 908.5 814.5 Net income 943.5 987.7 (Billions of yen) (Income) 1,039.5 1,080.0 100 80 829.4 800 60 600 400 13.2 49.0 37.8 33.0 28.7 17.6 200 18.8* 31.4 33.1 40 75.0 65.1 54.0 36.2 45.0 0 -11.5 0 -20 Mar 99 Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Results ROE for each year 20 3.4% Mar 05 Target 4.4% -3.0% (5.0*%) 8.5% 8.6% 8.9% *excluding charge for retirement benefits 10.0% or more 6 II. II. Business Business Strategy Strategy for for the the Year Year to to March March 05 05 “Selection “Selectionand and Concentration” Concentration”and and“Expansion” “Expansion” 1. 1. Domestic Domestic Food Food Products Products 2. Overseas Consumer 2. Overseas Consumer Foods Foods 3. 3. Global Global Bulk Bulk Ingredients Ingredients 4. 4. Pharmaceuticals Pharmaceuticals 7 II-1. Domestic Food Products 1) Seasonings and Food Products Company • Continued growth by strengthening core business base ¾ Focus management resources on strong brands ¾ Expand business with an international perspective, also in fields neighboring core businesses • Offer new value rooted in original technologies ¾ Use strengths in materials procurement, R&D, production technologies ¾ Seek evidence-based health functions • Thorough cost reductions • Further strengthen reliability/safety Raise brand value 8 II-1. Domestic Food Products 2) Ajinomoto Frozen Foods Co., Inc. • Concentrate and deepen in fields where we do best • Maximize effects of integration with Frec • Production system: Reorganize in Japan, strengthen overseas • Strengthen activities with strategic ingredients, promote simple recipes • Strengthen product quality from ingredients ¾Become number-one in prepared frozen foods ¾Secure world-class competitiveness 9 II-2. Overseas Consumer Foods 1) Flavor seasonings continue double-digit growth •• SE SE Asia: Asia: Ros Ros Dee Dee (Thailand) (Thailand) 120%, 120%, Masako Masako (Indonesia) (Indonesia) 120%, 120%, Ginisa Ginisa (The (The Philippines) Philippines) 160%, 160%, Aji-Ngon Aji-Ngon (Vietnam) (Vietnam) 340%. 340%. Tumix Tumix (Malaysia): (Malaysia): Launched Launched October October 2003 2003 •• S. S. America: America: Sazon Sazon (Brazil) (Brazil) 130%, 130%, Dona Dona Gusta Gusta (Peru) (Peru) 150% 150% Sales Salesvolume volumefor foryear yearended endedMarch March04 04compared comparedwith withprevious previousyear year 2) Strengthen operations in China •• Products Products launched launchedin inNovember November2003: 2003: Western-style Western-style soup, soup,Hon-Dashi Hon-Dashi Ganbeisu Ganbeisu (dried (dried scallop scallop flavor), flavor), MOR MOR CHU CHU GAOTANG GAOTANG •• Targeting Targetingconsumers consumers in in major major coastal coastal cities cities 10 II-3. Global Bulk Ingredients Strong Number-One Strategy Energizing Energizing global global supply supply bases bases Ajinomoto Co., (Thailand) Ltd. Ajinomoto Foods Europe S.A.S. Kamphaeng Phet Factory 1) Umami seasonings for processed food manufacturers • MSG: Obtained factory in Europe • Thai factory export base for nucleotides 2) Amino acids for pharmaceuticals and foods • Meet growing demand, maintain/expand global number-one share (60%) 3) amino acid-based sweetener, aspartame • Strategically use 2 factories in Japan and Europe (France) to aim for number-one share as global leader (currently 35-40%) 4) Feed-use amino acids • Maintain/expand global number-one share (currently Lysine 35%, Threonine 70%, Tryptophan 70-80%) as global leader with 6 factories worldwide 11 II-4. Pharmaceuticals 1) Product Strategy •• From Fromtop topbrands brandsto tostrong strongnumber-one number-oneproducts products LIVACT LIVACTGranules, Granules,ELENTAL, ELENTAL,SOLITA-T, SOLITA-T,NIFLEC, NIFLEC,ELEMENMIC ELEMENMIC •• Nurture Nurturemajor majorproducts productsfor forlifestyle-related lifestyle-relateddiseases diseases FASTIC FASTIC(nateglinide), (nateglinide),Actonel Actonel(risedronate), (risedronate),ATELEC ATELEC(cilnidipine) (cilnidipine) •• Launch Launchmore morenew newproducts productsthan thanin inthe theprevious previousyear year New Newproducts productslaunched launchedin inyear yearended endedMarch March04: 04: LIVACT LIVACTimproved improvedgranular granularformulation, formulation,PNTWIN PNTWINONEDAYBAG, ONEDAYBAG, HF-SOLITA HF-SOLITABW BWKit, Kit,PEMIROC, PEMIROC,Harmonic Harmonic 2) R&D •• Strengthen Strengthenbusiness businesswith withLCM* LCM*strategy strategyand andcreation creationof ofamino aminoacid-based acid-based pharmaceuticals (* Life Cycle Management) (* Life Cycle Management) pharmaceuticalsand andfoods foods •• Create Createnew newbusiness businessvalue valuewith withTNC** TNC**using usingParenteral Parenteral&&Enteral EnteralNutrition Nutritionand and Dialysis (** Total Nutrition Care) DialysisResearch ResearchLaboratories Laboratories (** Total Nutrition Care) 3) Production Logistics •• Enhance Enhanceproduction productionorganization organization(Saitama, (Saitama,Fukushima, Fukushima,Oigawa, Oigawa,Shimizu Shimizufactories) factories) •• Thoroughly Thoroughlyreduce reducecosts, costs,improve improvesupply supplychain chainmanagement management 12 III. III. Corporate Corporate Strategy Strategy “Becoming “BecomingaaTruly TrulyGlobal GlobalCompany” Company” 1. 1. Nurture Nurture Personnel Personnel Capable Capable of of Working in the Global Arena Working in the Global Arena 2. 2. Strengthen Strengthen Corporate Corporate Governance Governance 3. 3. CSR CSR Activities Activities 13 III-1. Nurture Personnel Capable of Working in the Global Arena (Promotion of the AJINOMOTO WAY) Use Use the the Ajinomoto Ajinomoto Group Group Training Training Center Center (scheduled (scheduled to to open open in in November) November) to: to: 1. 1. Nurture Nurture global global leaders leaders who who promote promote Group management Group management 2. 2. Hand Hand down down Group Group management management philosophy philosophy from from upper upper management management (Transmit “Ajinomoto DNA”) (Transmit “Ajinomoto DNA”) 3. 3. Enhance Enhance Ajinomoto Ajinomoto HR HR Values Values to to raise raise Ajinomoto Ajinomoto Group Group value value 14 III-2. Strengthen Corporate Governance Year ended March 03 CONTINUOUS PROGRESS •• Introduced Introduced internal internalcompany companysystem system ¾Delegate ¾Delegate authority authority and and responsibility responsibility ¾Make ¾Make businesses businesses independent, independent, strengthen strengthen competitiveness competitiveness Year ended March 04 •• Reduce Reduce number numberof ofdirectors directors (from (from30 30 to to12) 12) Include Include one one outside outside director director •• Introduce corporate executive officer system Introduce corporate executive officer system •• Establish EstablishNominating Nominating Advisory AdvisoryCommittee, Committee, Compensation Compensation Advisory AdvisoryCommittee Committee Accelerate decisionmaking Year ending March 05 (scheduled) •• •• •• Outside Outsideauditors auditors(CPA, (CPA, attorney) attorney) Reorganize Reorganize Corporate Corporate Division Division and andcompanies companies Non-Japanese Non-Japanese Corporate Corporate Executive Executive Officers Officers 15 III-3. CSR Activities Create a working group from CSR Committee staff to study CSR activities suitable for the Ajinomoto Group Proactive response to environmental issues • Ajinomoto Group Zero Emission Activities Voluntary worldwide unified standards for various environmental loads Sample targets: Resource recovery of waste and by-products: 99.0%or higher Wastewater BOD 10ppm, nitrogen 5ppm: lower than most advanced regulatory standards Spraying fertilizer produced from liquid by-products on a sugar cane field in Thailand Social responsibility activities • Promoting specific corporate activities suitable for Ajinomoto from a long-term perspective ¾ International cooperation programs related to food, health and healthcare (4 countries, 7 programs) ¾ Social contribution foundations in 5 countries (Thailand, Indonesia, Japan, Brazil, Peru) ¾ Implementation of Ajinomoto Group Citizenship Day campaign Establishment of Ajinomoto Foundation for Community Development in Peru 16 “Becoming a Truly Global Company” A unique company trusted by people worldwide Trusted Trustedproducts products Innovative Innovative technologies technologies Reliable Reliable and and safe safe brand brand Individual, Individual, creative creative personnel personnel 17