Financial Results for the Fiscal Year Ended April 3, 218 June 218 ITO EN, LTD.
INDEX Soft Drink Market in Japan P.1 Results & Forecasts by Category (Non-Consolidated) P.2 Results of Operations FYE April 218 P.3 Forecasts FYE April 219 P.4 Brand: Oi Ocha (1) P.5 Brand: Oi Ocha (2) P.6 Brand: Healthy Mineral Barley Tea P.7 Brand: TULLY'S COFFEE & Vegetable Juice P.8 Tea Leaf Products & Matcha P.9 Building the Value Chain of Coffee Business P.1 Global Business Strategy P.11 Management Policy P.12 ESG in Our Value Chain P.13 Medium and Long-Term Management Plan P.14 Appendix Our Business Model Based on "Customer First" Principle About ITO EN Group (1) About ITO EN Group (2) Development Program of Tea-growing Area Summary of Consolidated Balance Sheet & Others (Consolidated) Management Index (Consolidated)
Soft Drink Market in Japan Soft Drink Market Trends Monthly Volume Trends ( billion) 4, 3, 2, Start of the Unsweetened RTD Tea Market 198 Pioneering of Canned Oolong Tea 1985 Pioneering of Canned Green Tea Carbonated has become popular Coffee has become popular 222. 26.1 97.7 157.5 447.4 376.4 145.6 922.3 218.4 276.3 159.2 955.1 Tea has become Popular 182.6 187. 244.2 244. 258.2 267. 317. 35. 147.2 14. 929.3 942. 193.8 189.8 188.3 246. 228.7 227.2 284. 275.5 277. 36. 33. 33. 152.2 167. 179. 951. 942. 945. Others/Functional Sports Drink Mineral Water Fruit Vegetable Coffee YOY (%) 1 5-5 3 3 4 1 8 7-5 -5 Bad Weather 2-1 -2-4 4 1 3 7 2 4 7 7 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Source: ITO EN, (Chart) May to Oct 217 Market ITO EN 3 5 1, 648.9 (796.4) 579.3 538.5 75. 72. (931.3) 484.3 (876.5) 475.5 (873.) 458. 725. 725. 73. (912.) (939.) (95.5) 477. 499. 55.5 447. 41. 415. 435. 44. 445. 217.1 85.2 198 1985 199 1995 2 25 214 215 216 217 218 (\ billion) 198 1985 199 1995 2 25 214 215 216 217 Forecast Total - - 2,78 3,1 3,54 3,613 3,66 3,678 3,77 3,77 3,8 YOY % Change - - - - - - - % 3% % 1% Carbonated (Tea total) Other Tea Green Tea Source: ITO EN, Calendar year Topics of Soft Drink Market (217) Market (Volume) stayed flat due to the weather changes in Summer 217 (Overall thirst-quenching drinks showed slower growth) 1. RTD Green Tea Market: +3% RTD Green Tea well performed thanks to major brand renewals 2. RTD Coffee Market: -1% 5ml PET and Bottled Can led the sales but substantial decrease in SOT(stay-on-tab can) Can 3. Vegetable Beverage: +16% Strong growth mainly with Tomato Juice 1
Results & Forecasts by Category (Non-Consolidated) (\ million) Breakdown of Drinks Net Tea Leaves Drinks Others Japanese Tea/Healthy Tea Chinese Tea Vegetable Fruit Coffee Black Tea Functional Mineral Water Carbonated Others FYE Apr. 3, 217 Composition YOY % Change FYE Apr. 3, 218 Composition YOY % Change FYE Apr. 3, 219 Est. Composition YOY % Change 371,831 1.% 1.8% 383,212 1.% 3.1% 394,3 1.% 2.9% 33,675 9.1% 3.7% 35,7 9.3% 6.% 38,361 9.7% 7.5% 334,843 9.% 1.6% 343,853 89.7% 2.7% 352,632 89.4% 2.6% 3,312.9% -1.2% 3,659 1.% 1.5% 3,36.9% -9.6% 183,644 49.4% 1.4% 186,579 48.7% 1.6% 192,18 48.7% 3.% 17,37 4.6% -2.6% 17,421 4.5% 2.3% 17,219 4.4% -1.2% 44,3 11.9% 3.2% 47,154 12.3% 6.4% 49,519 12.6% 5.% 1,739 2.9% -1.8% 11,866 3.1% 1.5% 11,542 2.9% -2.7% 42,399 11.4% 3.1% 42,758 11.2%.8% 43,848 11.1% 2.5% 4,9 1.3% -19.4% 5,83 1.3% 3.7% 5,273 1.3% 3.7% 7,64 1.9% 2.1% 6,821 1.8% -3.4% 6,997 1.8% 2.6% 1,958 2.9% 17.7% 1,462 2.7% -4.5% 1,488 2.7%.2% 9,988 2.7% 2.4% 11,936 3.1% 19.5% 11,928 3.% -.1% 3,89 1.% 1.% 3,768 1.% -1.1% 3,634.9% -3.5% 2
Results of Operations FYE April 218 Summary of Operations (Consolidated and Non-Consolidated) (\ million) Performances of Subsidiaries (\ million, $ thousand) Consolidated Non-Consolidated Net Gross Profit Composition Composition YOY % Change 475,866 1.% 494,793 1.% 4.% 226,17 47.5% 233,983 47.3% 3.5% Commission 79,34 16.6% 81,615 16.5% 3.3% Advertising 12,937 2.7% 12,491 2.5% -3.4% Freight 12,94 2.7% 14,188 2.9% 9.6% Depreciation and Amortization Selling, General and Administrative Expenses Operating Income Ordinary Income Extraordinary Losses and Income Net Income Net Gross Profit Operating Income Ordinary Income FYE Apr. 3, 217 FYE Apr. 3, 218 1,312 2.2% 1,873 2.2% 5.4% 24,395 43.% 211,939 42.8% 3.7% 21,774 4.6% 22,43 4.5% 1.2% 21,524 4.5% 21,441 4.3% -.4% -81 - -45 - - 13,693 2.9% 12,553 2.5% -8.3% (Note)Accounting for effects of the US tax reform: -829 million yen 371,831 1.% 383,212 1.% 3.1% 174,999 47.1% 179,77 46.9% 2.7% 15,646 4.2% 15,394 4.% -1.6% 17,46 4.7% 17,142 4.5% -1.8% Upper: Net Bottom: Operating Income Domestic Subsidiaries Tully's Coffee Japan Co., Ltd. Chichiyasu Company Overseas Subsidiaries US Business Other Overseas Subsidiaries Elimination of Internal Transactions Exchange rate (US$) (average during a year) Changes Changes in Product Mix, etc. FYE Apr. 3, 217 FYE Apr. 3, 218 YOY % Change 13,478 14,722 1.2% 5,378 5,62 4.5% 3,268 32,589 7.7% 3,13 3,25 3.8% 14,621 14,398-1.5% 3 35 1.6% 34,863 4,362 15.8% 2,225 2,619 17.7% 3,469 35,13 15.3% 1,687 2,18 19.7% $281,268 $317,65 12.9% $15,573 $18,253 17.2% 4,393 5,231 19.1% 538 6 11.6% -34,37-33,54 - -1,476-1,592-18.4 11.6 Breakdown of Gross Profit Change (Non-Consolidated) '16/4 '17/4 '18/4 (\ billion) +.6 18 +.5 +1.2 +5.3-1.2 17 +3. Fluctuations in Raw Material Costs, etc. Changes Changes in Product Mix, etc. Fluctuations in Raw Material Costs, etc. 3
Forecasts FYE April 219 Summary of Operations (Consolidated and Non-Consolidated) (\ million) Performances of Subsidiaries (\ million, $ thousand) Consolidated Non-Consolidated Composition Composition YOY % Change Net 494,793 1.% 57,8 1.% 2.6% Gross Profit 233,983 47.3% 239,6 47.2% 2.4% Commission 81,615 16.5% 81,767 16.1%.2% Advertising 12,491 2.5% 13,265 2.6% 6.2% Freight 14,188 2.9% 14,726 2.9% 3.8% Depreciation and Amortization Selling, General and Administrative Expenses FYE Apr. 3, 218 FYE Apr. 3, 219 Est. 1,873 2.2% 1,746 2.1% -1.2% 211,939 42.8% 216,6 42.7% 2.2% Operating Income 22,43 4.5% 23, 4.5% 4.3% Ordinary Income 21,441 4.3% 22,5 4.4% 4.9% Extraordinary Losses and Income -45 - -1,8 - - Net Income 12,553 2.5% 14, 2.8% 11.5% Net 383,212 1.% 394,3 1.% 2.9% Gross Profit 179,77 46.9% 183,116 46.4% 1.9% Operating Income 15,394 4.% 16,5 4.2% 7.2% Ordinary Income 17,142 4.5% 18,18 4.6% 6.1% Upper: Net Bottom: Operating Income Domestic Subsidiaries Tully's Coffee Japan Co., Ltd. Chichiyasu Company Overseas Subsidiaries US Business Other Overseas Subsidiaries Elimination of Internal Transactions Exchange rate (US$) (average during a year) Changes -1.2 Changes in Product Mix, etc. FYE Apr. 3, 218 FYE Apr. 3, 219 Est. YOY % Change 14,722 18,242 3.4% 5,62 5,429-3.4% 32,589 34,3 5.2% 3,25 3,27.6% 14,398 15,1 4.9% 35 37 21.% 4,362 39,565-2.% 2,619 3,96 18.2% 35,13 34,44-3.1% 2,18 2,15 -.2% $317,65 $315,23 -.8% $18,253 $18,66 2.2% 5,231 5,521 5.5% 6 1,81 79.9% -33,54-34,38 - -1,592-2,25-11.6 18. Breakdown of Gross Profit Change (Non-Consolidated) '17/4 '18/4 '19/4Est. (\ billion) 19 18 +5.3 +.6 +5.2 -.6 Fluctuations in Raw Material Costs, etc. Changes Changes in Product Mix, etc. -1.2 Fluctuations in Raw Material Costs, etc. 4
Brand: Oi Ocha (1) Green Tea Beverage Market Oi Ocha ( billion) No.1 Brand in RTD Tea Category *1 5 9% 447. 49.3 421. 415. 42. 4 382. 375. 375. 383. 45. 41. 415. 435. 44. 445. 7% 39.4 6% ITO EN Share 268.5 279.2 3 217.1 2 8% 31% 28% 31% 33% 29% 29% 39% 38% 37% 36% 37% 35% 35% 35% 33% 33% 34% 32% 34% 5% 4% 3% 2% 1 ITO EN ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 1% '11 '12 '13 '14 '15 '16 '17 Source: ITO EN, Calendar year RTD Roasted Green Tea Promoting Summer Consumption '18 Est. % *1 Source: ITO EN, Jan to Dec 217 Developing New Fan Base User Composition of "Oi Ocha Shin-Ryoku" (New Green Tea) *3 RTD Roasted Green Tea No.1 Share 7% *2 2% Male 49.6% Female 5.4% Age 2-3 Others 3% *2 Source: ITO EN, Jan to Dec 217 *3 Source: QPR, May 1, 218 to May 15, 218 5
Brand: Oi Ocha (2) FOSHU RTD Tea Brands Led by "Oi Ocha" Double in Healthy Catechin with Matcha* Long Selling Brand marks the 3th Anniversary Male 62% Female 38% Male 77 Female 23 Age 6 5 4 3 2 1 Age 6 5 4 3 2 1 5 15 Roasted Green Tea, Used 1% First Flush Tea Leaves grown in Japan Male 51 Female 49 Age 6 5 4 3 2 1 7,279 5,86 1 (Jasmine Tea etc.) 15 Male 55% Female 45% Low-Caffeine * Our ratio compared with RTD to Green Tea products 25 The Ice Brew Green Tea with Matcha (Tea Catechin) 2 Caffeine-Free Age 6 5 4 3 2 1 Rooibos Tea etc. 2 Source: QPR, Mar to Aug 217, All distribution channels in JP, PET525 6ml 6
Brand: Healthy Mineral Barley Tea Barley Tea Leaf Product Market ( billion) 16.7 15 15. 15.3 15.9 15.8 16.5 15.8 Total Amount of ITO EN's Barley Tea Leaf Product 1 5 '1 '11 '12 '13 '14 '15 Source: ITO EN, Market: Calendar year ITO EN: May to Apr Easy and Tasty with Cold Brew Tea Bag Products Supplying Minerals ITO EN Share (million cases) 47% 99. ITO EN Share2.( billion) 1 43% 2 15.5 RTD Barley Tea Market '16 '17 18. 16. 14. 12. 1. 8. 6. 4. 2.. 89.5 B s Blended Tea 4 8. 8 71. 63. 6 C s Blended Tea 4 3 51. 2 Volume of the Healthy Mineral Barley Tea 1 2 A s Barley Tea '11 '12 '13 '14 '15 Source: ITO EN, Market: Calendar year ITO EN: May to Apr '16 '17 '18 Est. No.1 Share in "Caffeine-Free RTD Tea" Category* Instant Barley Tea Supplement Minerals for Sports Activities Frozen Bottle * Source: ITO EN, Jan to Dec 217 7
Brand: TULLY'S COFFEE & Vegetable Juice RTD Coffee Market 1% Vegetable Juice Market (million cases) 1% 16 1 8.8 Others 8% 6% ITO EN Share 39% ( billion) 38% 35% 31% 12 28% 25% 15% 2% 24% '17 92. 8.6 8.1 8 Volume of "TULLY'S COFFEE" 126-2ml Can 87. 73. 71.6 61.7 Total Amount of ITO EN's Vegetable 1% Beverage 6 8 4 4% PET bottles 15% 2% 21-599ml Can 15% 15% 14% 16% 2% 24% '13 '14 '15 '16 4 % '11 '12 Source: ITO EN, Market: INTAGE Inc. SRI, 211 to 217 ITO EN: May 211 to Apr 217 Market share by sales amount for all coffee beverage containers and quantities (total for supermarkets, convenience stores and drug stores) TULLY'S COFFEE Brand Accumulated sales volume achieved Over 1 million Sugar-Free Latte 2 '11 '12 '13 '14 '15 '16 '17 Source: ITO EN, Market: Calendar year ITO EN: May to Apr 9 89 88 87 86 85 84 83 82 81 8 79 78 77 76 75 74 73 72 71 7 69 68 67 66 65 64 63 62 61 6 59 58 57 56 55 54 53 52 51 5 49 48 47 46 45 44 43 42 41 4 39 38 37 36 35 34 33 32 31 3 29 28 27 26 25 24 23 22 21 2 19 18 17 16 15 14 13 12 11 1 789156 432 1 '18 Est. One day Veggie Aojiru (a day' s worth of vegetables) (Green Juice) Promote Collaboration with Managerial Nutritionist Double-digit Growth cases 2 Packs (Sticks) 1,41 (Tax Excluded) 8
Tea Leaf Products & Matcha Green Tea Leaf Product Market ( billion) Stimulating the Japanese Green Tea Leaves Market 348.2 25% 288.6 3 241.6 2 6% 1 8% 236.8 1% 9% 234.3 2% 11% 15% 5% % '5 ( billion) '1 '15 '16 Easy-to-Use Green Tea Product Market 3 1 Increase in SKUs and "ITO EN Dai-Cha-Kai" (sales demonstration and tasting events of green tea) held by our certified TEA TASTER employees 1% ITO EN Share 2 Shelf with Hanger Hook 25. 25.9 44% 46% 18.3 13.2 38% '17 28.4 1% 99% 98% 97% 96% 95% 94% 93% 92% 91% 9% 89% 88% 87% 86% 85% 84% 83% 82% 81% 8% 79% 78% 77% 76% 75% 74% 73% 72% 71% 7% 69% 68% 67% 66% 65% 64% 63% 62% 61% 6% 59% 58% 57% 56% 55% 54% 53% 52% 51% 5% 49% 48% 47% 46% 45% 44% 43% 42% 41% 4% 39% 38% 37% 36% 35% 34% 33% 32% 31% 3% 29% 28% 27% 26% 25% 24% 23% 22% 21% 2% 19% 18% 17% 16% 15% 14% 13% 12% 11% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 48% 27% ITO EN Share '5 '1 '15 '16 Perfect Tea Pot "Skilled Professional on ITO EN TEA TASTER" was Approved by Ministry of Health, Labor '17 and Welfare Source: ITO EN, Market: Calendar year ITO EN: May to Apr Expand Distribution of "ITO EN Matcha" Developing Matcha Production Area Original Clean Processing Facilities Overseas Volume of Matcha Products Increased) Tripled (Contract Tea Farmers) in Three Years 7,279 5,86 High Quality and Vivid Green Color 9
Building the Value Chain of Coffee Business Tully's Coffee Japan Co., Ltd. Business Overview ( billion) Net 3 23.8 25 19.3 41 461 26. 27.7 3.2 513 555 588 32.6 1, 75 21. 15.3 15 1 Our Business Scope: From Coffee Farm to Distributions (Shops) 35 2 Distant Lands Trading Co. 638 671 711 5 # of shops 25 The Company's Own Farms and Mills are Rainforest Alliance Certified 5 '11/3 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. Value Creation throughout Our Integrated Coffee Business System Production / Procurement Overseas: DLTC Own farm and mills in Costa Rica Production / Logistics Overseas: DLTC Own roasting factory Domestic: ITO EN, Tully's Coffee Own roasting factory Planning / Development Overseas: DLTC Domestic: ITO EN, Tully's Coffee Development of beverage products Overseas: DLTC (Mainly USA) Domestic: ITO EN (Supermarket CVS Vending Machine) Domestic: Tully's Coffee Shops silverskin-composition paper napkins 1
Overseas Business Strategy Connect the people of the World with "Oi Ocha" and Mid-Term Goals "Oi Ocha" Accelerate the Overseas Business Strategy Annual Volume 1 Million Cases 217 215 Universal Label Design Product description in Local Languages Launched "Oi Ocha" Launched the World's First Canned Green Tea * Brand 1996 1989 Launched PET 5ml Bottle Launched Global Brand MATCHA GREEN TEA 1985 7,279 5,86 * Developed in 1984 11
Management Policy Sustainable Growth 2 force = (Sojourn time in store) (Frequency of visits) (Historical) Trend in Gross Number of Customers 1. Strengthening of the Domestic Business Strengthen the Existing Brands Development of the New Brands Increasing Company's Share in the Beverage Market Improvement of Profitability 2. Strengthening of the International Business Double-digit Growth, Mainly in North America Maximize the Group's Synergy 3. Strengthening ROE Management Improvement of Profitability and Capital Efficiency Growth in EPS Stable return to Stockholders 4. Promotion of Sustainability Management '76/4 '83/4 '9/4 ( million) CF from Operating Activities Free CF 1.5% 35, 3,85 '11/4 '18/4 15, 17,751 5.9% 27,98 6.8% 21,935 5, CF from Investing Activities ROE 9.% 25, 18,854 8,58 25,322 9.5% 29, -15, 8 4 2-9,242-8,15-8,243 '16/4 '17/4 '16/4 '17/4-11,359 '18/4 '18/4-12, '19/4 '19/4Est. 予測 3,731 8,63 8,135 11,62 12,535 Depreciation Amortization 4,568 5,23 5,418 6,179 6,915 11,85 1,872 7,51 7,42 6,751-12,143-11,236-1,361-8,616-7,115 Lease obligations (Repay m ent) 1 17, Capital Investm ents Leased Assets Depr. (%) 6 13,962-5, '15/4 '4/4 Consolidated Cash Flows '15/4 Enhancement of Governance Further effort of CSR/CSV Issues '97/4 12
ESG in Our Value Chain Management base for sustainable growth Procurement Product planning and Development Production/ Logistics ESG and value chain Development Program of Tea-growing Area S E Sustainable agriculture Creating employment Recycling System of Used Tea Leaves E Sustainable Use of Resources Agriculture with Environment conservation Mainly related SDGs Health Conscious Products S Products that contribute to health Sugar-Free Product about 7 * Eco Cars for Representatives E Prevention of Global Warming S Sustainable Mobility Tea Workshop S Hold Seminar about Tea and its cultures to consumers ITO EN Oi Ocha New Haiku Contest S Succession of traditional cultures, adopted in School Educations "Making Japan Beautiful through Tea" Project S Culture Preservation E Conservation of Water Circulation and Biodiversity Management base for value creation S G Corporate Governance / Risk Management / Compliance / Supply Chain Management / Respect for Human Rights / Human Resource Management / Financial Management * Percentage of total beverage sales 13
Medium and Long-Term Management Plan 1. Improving Profitability of Domestic Business 2. Launched Global Brand Products 215-217 Medium-Term Management Plan Long-Term Vision 218-222 Medium and Long- Term Management Plan "Global Tea Company" Towards a "Global Tea Company" 1. Global expansion of " " and "Oi Ocha" Brands 2. #.1 market shares both in Domestic and Global Green Tea Markets 3. Train world-class Tea Tasters Domestic: Excellent Beverage Company Challenge for New Businesses 1. Strengthen the Brand and Develop New Brands 2. Increase Customers and Improving Profitability 3. Challenge for New Businesses 22 3th Anniversary of the "Oi Ocha" (February 219) The Tokyo Olympic and Paralympic Games (to be held in Tokyo in 22) 5,86 7,279 FYE April 222 Plan (Consolidated) Net ROE Total Return Ratio 6. billion Over 1% Over 4% 14
Appendix
Our Business Model Based on "Customer First" Principle We will create various added value by optimizing the allocation of capital in our business activities. External Environment Acquisition of Opportunities Identification of Risks Input Management capital (Source of competitive advantage) Outcome (value to create) Financial capital Financial management integrated with business model Financial capital Improvement of profitability and capital efficiency Stable stockholder returns Manufacturing capital Fabless management in cooperation with manufacturing subcontractors Five block system of production and logistics bases nationwide Intellectual capital Five product development concepts Brand strength Traceability Quality control system for manufacturing subcontractors I n p u t R e s u l t Manufacturing capital Flexible production in line with demand Supply of products nationwide on the basis of community-based sales Intellectual capital Development of products tailored to diverse needs Optimum sales proposals in light of various product and market trends Use of optimum raw materials according to diverse products Human capital Route sales Professional team of Tea Taster Social and relationship capital Raw material procurement capability with scale advantage Collaboration and network with related parties Utilization of established CSR / CSV system Human capital Human resources development Creation of a pleasant working environment Social and relationship capital Safety and security of consumers Provision of health value to a wide range of customers Dissemination and succession of Japanese tradition and tea culture Natural capital Quality improvement of tea leaves and the stable procurement of raw materials based on the Tea-producing region development project Natural capital Promotion of environmental conservation-type agriculture Energy saving, resources saving and the prevention of global warming in business activities Used tea leaf recycling system From CSR to ESG Appendix 1
About ITO EN Group (1) Management principle Concept for Product Development "Always Putting the Customer First" Natural Delicious Products that make use of natural ingredients Delicious flavors that make people feel happy Welldesigned Designs that directly convey the delicious flavors of our products Production System Mainly Raw Beverage Use Tea Leaf Processing Factory Factory for Tea Bags Manufacturing (ITO EN KANSAI CHAGYO in Hyogo) Healthy Products that support a healthy life Safe Products that people can enjoy with complete peace of mind and safety Corporate History 1966 198 1984 1989 199 Established Develops the world's first Canned Oolong Tea Develops the world's first Canned Green Tea (launched in 1985) Changes the name of Canned Green Tea products to "Oi Ocha" 1998 21 26 27 211 215 Stock advanced to the First Section of the Tokyo Stock Exchange Established ITO EN (North America) INC. Tully's Coffee Japan Co., Ltd., into a consolidated subsidiary Releases the world s first PET bottled green tea drinks ("Oi Ocha" Green Tea, 1.5L) Class 1 Preferred Stock listed on the First Section of the Tokyo Stock Exchange Chichiyasu Company, into a consolidated subsidiary Distant Lands Trading Co. company became a consolidated subsidiary Beginning the Worldwide Expansion of the Global Brand 216 " Matcha Ko Bo" (manufacturing factory of real Matcha Powder in ITO EN Shizuoka Sagara Factory), Kobe Factory (Hyogo Prefecture) Leaves for green tea & coffee: Own Manufacturing System Realization of High Quality Beverages: Fabricationless (5 blocks) Production to reduce capital expenditures and transportation cost Tea Leaves Factory Central Research Institute Pulverization Factory for Matcha Powder Raw Material Own Coffee Roasting Factory Factory for Tea Bags Manufacturing (ITO EN SANGYO, LTD.) Appendix 2
About ITO EN Group (2) Brands Over 1 Million Cases Transition of Main Brands Product Mix Annual Volume RTD Tea No.1 Caffeine-Free RTD Tea 1% Vegetable Juice No.1 No.1 Bottle Can coffee No.1 (million cases) 15 1 1% 56% 6% 63% 64% 64% 5% 5 % '14/4 '15/4 '16/4 '17/4 '18/4 Source: ITO EN * Source: ITO EN, Jan 217 to Dec 217 Provision of Healthy Values From Tea Farm to Final Tea Products Domestic Subsidiaries Tully's Coffee Japan Co., Ltd. Sugar-Free Products Chichiyasu Company Antenna Shop "CHICHI YASU" Share among the all Beverage About 7% Inside the "LECT" Large Scale Commercial Facility of Izumi Co., Ltd. (Hiroshima Prefecture, Hiroshima City, West Ward) Appendix 3
Development Program of Tea-growing Area Total Volume of Domestic Green Tea Leaf Production Total Domestic Tea Leaf Production ITO EN Consumption ITO EN Consumption Share (%) (tons) 1, 1, 89,3 85, 84,8 83,5 8, 79,5 8,2 82, Development Program of Tea-growing Area Production volume (ton) Dimension of green tea farms (ha) (tons) 6% 6, ha 5,96 5,45 5% 2, 4,371 4% 4, 6, 27% 18% 4, 21% 24% 24% 25% 25% 25% 3,63 1,69 3% 1,41 1,226 2% 2, 2, Long-term target 1,34 2,ha 1% ' '5 '1 '13 '14 '15 '16 '17 % 1, '15 Source: ITO EN '16 * Including contract cultivation farms '17 '18 Est. Evolution of the "Development Program of Tea-growing Area" Harvesting with the same Tea Harvester Green Tea Spring Summer Barley Grass Winter Spring Utilize the same crude Tea Factory (Drying Process) A variety of Product Lineup Appendix 4
Summary of Consolidated Balance Sheet & Others (Consolidated) Consolidated Balance Sheet (as of April 3, 217 and 218) (\ million) 217 218 Change Current assets 174,657 173,798-859 Cash and deposits 64,22 61,664-2,538 Accounts receivable-trade and inventories 92,577 96,792 4,214 Property, plant and equipment 83,39 84,822 1,783 Land 21,587 21,745 157 Leased assets 27,889 24,1-3,878 Other 33,562 39,66 5,54 Intangible fixed assets 24,454 21,588-2,865 Goodwill 18,371 16,364-2,7 Investments and other assets 2,254 2,971 716 Total assets 32,45 31,18-1,225 Current liabilities 81,56 77,187-4,372 Accounts payable 33,61 29,879-3,182 Short-term loans payable 2,364 2,2-344 Lease obligations 8,995 7,2-1,992 Income taxes payable 4,49 3,948-541 Non-current liabilities 84,135 8,241-3,893 Corporate bonds 1, 1, - Long-term loans payable 47,433 45,922-1,511 Lease obligations 13,468 1,282-3,185 Total liabilities 165,696 157,429-8,266 Net assets 136,79 143,75 7,41 ( ) 8 6 4 2 Dividend & Total Return Ratio Dividend(Common Stock) Dividend(Preferred Stock) Total Return Ratio 72.3 54.4 54.3 42.6 61.2 43.5 48.5 48 48 49 5 5 5 5 5 38 38 39 4 4 4 4 4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. Recognition from Society At 1st "Japan SDGs Award" (FY217) ITO EN receives "Special SDGs Partnership Award" We were recognized as a company working on the promotion of SDGs emphasizing partnership through the Tea-Producing Region Development Project (Large-Scale New Tea Farm Business), Used Tea Leaves Recycling System, etc. (%) 8 6 4 2 Rating A+ Equity ratio Bond shelf registration \4 billion 4/217 45.3% (straight bonds) 4/218 47.1% Award ceremony held at the Prime Minister s Office (December 217) We are permitted to post links on the Ministry of Foreign Affairs of Japan website and use the logo mark in the above figure. Appendix 5
Management Indexes (Consolidated) Net & Cost of ratio Operating Income Net Income ( billion) Net 6 % Cost of 5 43.9 437.7 43.5 4 369.2 3 52.1 52.4 51.6 51.8 465.5 475.8 494.7 57.8 53. 52.5 52.7 52.8 (%) 65 55 ( billion) Operating Income 25 % Operating Income 21.1 2.2 2 18.9 17.2 15 11.3 21.7 22. 23. (%) 12 1 8 ( billion) Net Income 15 % Net Income 12. 11.2 1 9.2 7.2 8.6 13.6 12.5 14. (%) 25 2 15 2 45 1 5.1 5. 4.8 4.6 4.5 4.5 6 5 1 1 5 2.6 3.7 4 2.5 2.8 2.8 1.7 1.9 2.9 2.5 2.8 5 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. 35 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. 2 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. Overseas Business sales ratio Cash Flows EPS ( billion) US Business 4 Asia/Australia Business Overseas Business sales ratio 35 3 25 2 15 1 5 2. 2.3 2.9 3.5 7.8 7.3 8.2 7.8 (%) 1 8 6 4 2 ( billion) 3 2 1-1 -2 21.4 CF from Operating Activities CF from Financing Activities Free CF 3. 24. 24.3 13.3 14.7 6.2-16.4 19.7-18.1 17.7 8.5-4.8 21.9-18. 27. 18.8-8. 25.3 13.9 29. 17. -16.6-15.3 ( ) EPS(Common Stock) 15 1 5 82.18 88.64 95.77 72.18 EPS(Preferred Stock) 98.64 15.77 66.6 56.6 67.37 18.77 77.37 118.73 121.57 19.75 99.79 111.61 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. -3 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 '19/4 Est. Appendix 6
The purpose of the materials you have received is to provide the means for a more thorough understanding of ITO EN and should not necessarily be regarded as a recommendation to invest. Furthermore, the data in these materials is based on what we believe is the most accurate information. However, please understand that even without advance notice, both past data and future forecasts may be revised.