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INDEX Beverage Market in Japan P.1 Results of Operations FYE April 217 P.2 Forecasts FYE April 218 P.3 Management Policy P.4 ITO EN Brand Strategy Results & Forecasts by Category (Non-Consolidated) P.6 Brand Strategy P.7 Tea Leaf Products P.8 Oi Ocha (Green Tea) P.9 Healthy Mineral Barley Tea & Other RTD Tea P.11 Long-Term Vision & Medium and Long Term Management Plan Appendix Our Long-Term Vision P.18 Medium and Long-Term Management Plan P.19 ESG & SDGs Activities P.2 ESG in the Value Chains P.21 Project of the Developing Green Tea- Producing Regions Data Collection (Data Base) P.22 Management Index (Consolidated) P.23 One day Veggie & Other Vegetable Beverage P.12 TULLY'S COFFEE (RTD) P.13 Group Business Overview Tully's Coffee Japan P.14 Chichiyasu (Yogurt Company) P.15 Overseas Business P.16
Beverage Market in Japan RTD Market Trends Monthly Sales Volume Trends (ITO EN vs. Market) ( 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 16. 182.6 187. 26. 244.2 244. 244. 258.2 267. 329.9 317. 35. 164.4 147.2 14. 938.7 929.3 942. 193.8 195. 246. 246. 284. 28. 36. 36. 152.2 153.5 951. 952. Others/Functional Sports Drink Mineral Water Fruit Vegetable Coffee YOY (%) 1 5-5 1. ITO EN. -2. -1. 4. 3. 1. 1. 7. 6. 1.. 3.. 4. -1. May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2. Source: ITO EN, (Chart) May 216 to Apr 217 2. 4. Market. Kumamoto earthquakes (Apr. 216) 1. 3. -3. -5. 1, 85.2 648.9 (796.4) 579.3 217.1 538.5 698. 75. 72. (931.3) 484.3 725. 725. (932.5) (885.) (876.5) (873.) (912.) 48. 475.5 458. 477. 487.5 447. 45. 41. 415. 435. 445. 198 1985 199 1995 2 25 213 214 215 216 217 Forecast 198 1985 199 1995 2 25 213 214 215 216 Forecast Total (\ billion) - - 2,77.5 3,1.1 3,54.3 3,612.7 3,68. 3,66. 3,678. 3,77. 3,79. - - - - - - 1% -1% % 3% 1% Carbonated (Tea total) Other Tea Green Tea Source: ITO EN, Calendar year Topics of Beverage Market (216) RTD Green Tea Market: Performed well (RTD Green Tea, Blended Tea and Barley Tea) RTD Coffee Market: Steady (Bottle Cans Led Market) Vegetable Beverage: Recovered (Especially Tomato Beverages) 1
Results of Operations FYE April 217 Summary of Operations (Consolidated and Non-Consolidated) (\ million) Performances of Subsidiaries (\ million, $ thousand) Consolidated Non-Consolidated Net Sales Gross Profit Sales Composition Sales Composition 465,579 1.% 475,866 1.% 2.2% 218,818 47.% 226,17 47.5% 3.4% Sales Commission 77,574 16.7% 79,34 16.6% 1.9% Advertising 11,56 2.4% 12,937 2.7% 17.% Transportation 12,184 2.6% 12,94 2.7% 6.2% Depreciation and Amortization Selling, General and Administrative Expenses Operating Income Ordinary Income Extraordinary Losses and Income Net Income Net Sales Gross Profit Operating Income Ordinary Income 216 217 13,988 3.% 1,312 2.2% -26.3% 21,574 43.3% 24,395 43.% 1.4% 17,243 3.7% 21,774 4.6% 26.3% 15,74 3.2% 21,524 4.5% 42.8% -148 - -81 - - 8,615 1.9% 13,693 2.9% 58.9% 365,276 1.% 371,831 1.% 1.8% 17,229 46.6% 174,999 47.1% 2.8% 11,934 3.3% 15,646 4.2% 31.1% 12,821 3.5% 17,46 4.7% 36.2% Upper: Net Sales Bottom: Operating Income US Business Tully's Coffee Japan Co., Ltd. Chichiyasu Company Other Domestic Subsidiaries Other Overseas Subsidiaries Elimination of Internal Transactions 31,741 3,469-4.% 1,581 1,687 6.7% $264,929 $281,268 6.2% $13,26 $15,573 17.9% 27,751 3,268 9.1% 2,879 3,13 8.7% 13,89 14,621 5.3% 253 3 18.8% 77,915 58,588-24.8% 2,16 1,947-7.6% 4,438 4,393-1.% 275 538 95.6% -55,431-34,37 - -1,785-1,476 - Exchange rate (US$) 119.3 18.4 (average during a year) 216 217 Breakdown of Gross Profit (Non-Consolidated) (\ billion) 216 217 Sales s 5.3 3. s in Product Mix, etc..2.5 Fluctuations in Raw Material Costs, etc..4 1.2 2
Forecasts FYE April 218 Summary of Operations (Consolidated and Non-Consolidated) (\ million) Performances of Subsidiaries (\ million, $ thousand) Consolidated Non-Consolidated Net Sales Gross Profit Sales Composition Sales Composition 475,866 1.% 492,5 1.% 3.5% 226,17 47.5% 232,5 47.2% 2.8% Sales Commission 79,34 16.6% 8,119 16.3% 1.4% Advertising 12,937 2.7% 13,229 2.7% 2.3% Transportation 12,94 2.7% 13,166 2.7% 1.7% Depreciation and Amortization Selling, General and Administrative Expenses Operating Income Ordinary Income Extraordinary Losses and Income Net Income Net Sales Gross Profit Operating Income Ordinary Income 217 218 Est. 1,312 2.2% 1,852 2.2% 5.2% 24,395 43.% 29,9 42.6% 2.7% 21,774 4.6% 22,6 4.6% 3.8% 21,524 4.5% 22, 4.5% 2.2% -81 - -325 - - 13,693 2.9% 14, 2.8% 2.2% 371,831 1.% 381, 1.% 2.5% 174,999 47.1% 178,63 46.9% 2.1% 15,646 4.2% 16,5 4.3% 5.5% 17,46 4.7% 18,3 4.8% 4.8% Upper: Net Sales Bottom: Operating Income US Business Tully's Coffee Japan Co., Ltd. Chichiyasu Company Other Domestic Subsidiaries Other Overseas Subsidiaries Elimination of Internal Transactions 3,469 34,596 13.5% 1,687 2,3 18.8% $281,268 $314,562 11.8% $15,573 $18,215 17.% 3,268 32,3 6.7% 3,13 3,25 3.8% 14,621 15,6 6.7% 3 37 22.9% 58,588 55,881-4.6% 1,947 1,553-2.2% 4,393 4,516 2.8% 538 496-7.7% -34,37-31,393 - -1,476-1,573 - Exchange rate (US$) 18.4 11 (average during a year) 217 218 Est. Breakdown of Gross Profit (Non-Consolidated) (\ billion) 217 218 Est. Sales s 3. 4.3 s in Product Mix, etc..5.2 Fluctuations in Raw Material Costs, etc. 1.2 -.9 3
Management Policy (1) To be a "Global Tea Company" with Sustainable Growth 1. Strengthening of the Domestic Business 2. Strengthening of the International Business Priority theme Increasing Company's Share in the Beverage Market Improvement of Profitability Double-digit Growth, Mainly in the North American Business Enlargement of the Group's Synergy Activities Strengthening of major brands' sales Strengthening relationship with customer (more frequent face-to-face communication) Acquiring new customers Strengthening of the "Digital Marketing" and the "Direct Communication" Improvement of productivity Strengthening of control on sales promotion and sales commission Reducing total costs Strengthening of the Development of the "Oi Ocha" Brand Strengthening of Tea Leaf Products' Sales, mainly Global Brand Products Enlargement of "ITO EN" Brand Enhancing Exchange Training Programs 3. Strengthening ROE Management 4. Strengthening of CSR/CSV Management Improvement of Profitability and Capital Efficiency Increasing EPS Stable return to Stockholders Sustainable Community Sustainable Production and Consumption Legacy Creation Continuing activities/projects to improve profitability Total Return Ratio 4% Social Activities by taking advantage for our core business Stable Raw Materials Procurement and Quality Control Systems Appealing of Tea Culture 4
Management Policy (2) Consolidated Balance Sheet (as of April 3, 216 and 217) Consolidated Cash Flows 216 217 Current assets 159,517 174,657 15,14 Cash and deposits 53,259 64,22 1,942 Accounts receivable-trade and inventories (\ million) 88,69 92,577 3,967 Property, plant and equipment 81,18 83,39 2,2 Land 2,644 21,587 942 Leased assets 29,154 27,889-1,265 Other 31,219 33,562 2,342 Intangible fixed assets 27,154 24,454-2,7 Goodwill 2,179 18,371-1,87 Investments and other assets 2,12 2,254 242 Total assets 287,72 32,45 14,73 Current liabilities 1,756 81,56-19,196 Accounts payable 33,353 33,61-291 Short-term loans payable 1,81 2,364 563 Current portion of bonds 2, - -2, Lease obligations 1,442 8,995-1,447 Income taxes payable 3,945 4,49 544 Non-current liabilities 59,729 84,135 24,45 Corporate bonds - 1, 1, Long-term loans payable 29,653 47,433 17,779 Lease obligations 16,63 13,468-3,162 Total liabilities 16,486 165,696 5,29 Net assets 127,215 136,79 9,493 Topics ( Million) CF from Operating Activities CF from Investing Activities 35, Free CF 3,85 Main Investment ITO EN, LTD. 2nd Series Unsecured Pari Passu Bonds Acquisition of Own Shares (Stock Buyback) Jun. 216: "Matcha Ko Bo " Issued: Feb. 217 Class of shares: Class-A Preferred Stock (manufacturing plant of real Matcha Powder Total amount of issue: \1, million Total number of shares: 341,5 shares in ITO EN Shizuoka Sagara Plant) Unissued: \3, million Total value of shares: \7 million Sep. 216: Kobe Plant Use of funds: Redemption of bonds Period: Feb to Mar 217 (Hyogo Prefecture) Rating: A+ 25, 15, 5, -5, -15, Capital Investments Depreciation Amortization Leased Assets Depr. 24,3 19,72-4,598 17,751 8,58-9,242 21,935 27,98 18,854-8,15-8,243 28, 13,397 '14/4 '15/4 '16/4 '17/4-14,63 '18/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. Est. 4,663 3,359 8,241 8,135 13,477 4,24 4,568 5,23 5,418 6,376 1,936 11,85 1,872 7,51 7,65 Lease obligations (Repayment) -12,456-12,143-11,236-1,361-8,793 5
ITO EN Brand Strategy
Results & Forecasts by Category (Non-Consolidated) (\ million) Breakdown of Drinks Net Sales Tea Leaves Drinks Others Japanese Tea / Healthy Tea Chinese Tea Vegetable Fruit Coffee Black Tea Functional Mineral Water Carbonated Others 216 Sales Composition 217 Sales Composition 218 Est. Sales Composition 365,276 1.% 3.3% 371,831 1.% 1.8% 381, 1.% 2.5% 32,468 8.9% 4.7% 33,675 9.1% 3.7% 35,74 9.4% 6.1% 329,455 9.2% 3.1% 334,843 9.% 1.6% 341,947 89.7% 2.1% 3,351.9% 2.9% 3,312.9% -1.2% 3,311.9%.% 181,126 49.6% 4.6% 183,644 49.4% 1.4% 188,826 49.6% 2.8% 17,483 4.8% 6.4% 17,37 4.6% -2.6% 17,354 4.5% 1.9% 42,931 11.7% -2.5% 44,3 11.9% 3.2% 44,877 11.8% 1.3% 1,933 3.% -18.2% 1,739 2.9% -1.8% 11,27 2.9% 2.7% 41,143 11.3% 21.2% 42,399 11.4% 3.1% 43,643 11.4% 2.9% 6,82 1.7% -42.3% 4,9 1.3% -19.4% 4,486 1.2% -8.5% 6,918 1.9% 28.8% 7,64 1.9% 2.1% 7,21 1.9% 1.9% 9,312 2.5% 14.6% 1,958 2.9% 17.7% 1,535 2.8% -3.9% 9,751 2.7% -3.3% 9,988 2.7% 2.4% 1,488 2.7% 5.% 3,772 1.% -13.9% 3,89 1.% 1.% 3,56.9% -8.% 6
Brand Strategy 1. Strengthening of the Major Brands 2. Enhancing synergy - Tea Leaf Products and RTD Products Leaf Major Beverage Brand Tea Leaves Demand Expansion through Tea Enlightenment Activities Oi Ocha Increasing market share by providing many variety of flavors and sizes Mega Brands over Tea Bags Instant Accelerated Introduction through Variety Development Adaptation to the s in the Life Style Healthy Mineral Barley Tea One Day Veggie TULLY'S COFFEE Expanding business by appealing "Caffeine Free" and "Mineral Ingredients" Enhancing consumption by appealing Nutritional Values Further Brand Strengthening by Products' Lineup Expansion 3 million cases * Major brands over 1 million cases * * sales annually 7
Tea Leaf Products Market Overview (216) Estimated that the Market Size (monetary amount) is 2% lower than previous year Easy-to-Use Green Tea Products Market continued to perform well Sales Strategy Increase in the Products' Sales Counter Occupancy Ratio Expansion of the Tea Leaves and the Tea Beverages Interlocking Sales Counters Creation and Evocation of the Products' Demand Abundant Products' Lineup and Products' Forms Provision of Original Pots for Cold Water-Brewed Tea and Original Japanese Style Kettles "Kyusu" Strengthening of the Unique to ITO EN Sales Proposal Power, as Specialized Company in the Tea Field Enlightenment Activities by Employees, having the Tea Taster Qualification Certificates TOPICS "Skilled Professional on ITO EN TEA TASTER " "The Tea Taster System" that had been operated as an in-house qualification system was approved by "Skilled Professional on ITO EN TEA TASTER " by Ministry of Health, Labor and Welfare on March 24, 217. ( billion) 3 25 2 15 1 5 298. 28.8 9% 288.6 27.3 Leaf Source: ITO EN, Market: Calendar year ITO EN: May to Apr Interlocking Sales with Beverage Products Evoking Tea Leaves Products' Demand by the Summer season Iced-Water-Brewed Tea Proposal Green Tea Leaf Product Market 274.1 254.9 262.9 242.5 11% 11% 11% Easy-to-Use 25.6 245.8 241.6 236.8 227.9 221.9 17.2 18.3 19.2 2.4 22.7 23.9 25. 25.9 12% 13% 13% ITO EN Share of Packaged Tea Leaf Sales Activities with Special Features * Employees having the Tea Taster Qualification Certificates 216.6 21.9 '9 '1 '11 '12 '13 '14 '15 '16 The Tea Tasters* are participating events at the stores to demonstrate how to serve tea 14% 8
Oi Ocha (1) Market Overview (216) An Expansion Trend, Coming Along with the Market Revitalization Brand Strategy No.1 Brand Awareness Increasing market share by providing many variety of flavors and sizes TOPICS The Cumulative Sales Volume has exceeded 3 Billion Bottles *1 New "Oi Ocha " Quality "From Farm to Bottle" (Vertical Integration) Fresh, Safe and Delicious Taste Mild and Clear Umami Taste Design A New Type of a Bamboo Pipe-Shaped PET Bottle, with added English Inscription on its Label ( billion) 5 4 3 2 1 217.1 31% 268.5 279.2 39.4 28% 31% 33% 49.3 Green Tea Beverage Market 29% 29% 447. 435. 445. 421. 415. 42. 382. 375. 375. 383. 45. 415. 41. ITO EN Share 32% 34% 36% 37% 39% 38% 37% ITO EN No.1 Tea Category Beverage Brand *2 35% 35% 35% 33% 34% ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 Est. Source: ITO EN, Calendar year 8 6 5 4 3 2 A New Type of a PET Bottle, Possessing both Excellent Design- and Functional Properties (Protecting the Tea's Delicious Taste from the light's influence) *1 Valid As of May 217, 5ml PET Bottle Conversion Calculation Result *2 Source: ITO EN, Jan 216 to Dec 216 9
Oi Ocha (2) Brand Slogan Bringing "Oi Ocha" Launched the world's first Canned Green Tea *1 to the World Birth of "Oi Ocha" Brand Start of the "Shin Haiku (New Kind of Haiku Poems) Contest" 1989 1996 Innovated and Released PET 5ml Bottle 26 The Cumulative Sales Volume exceeded (Broke through) 1 Billion Bottles *2 211 The Cumulative Sales Volume exceeded (Broke through) 2 Billion Bottles *2 Strengthening Global Business 217 The Cumulative Sales Volume has Exceeded (Broke through) 3 Billion Bottles *2 Long-Term Goals Annual Sales Volume 1 Million Cases 1985 *1 Developed in 1984 *2 5ml PET Bottle Conversion Calculation Result 1
Healthy Mineral Barley Tea & Other RTD Tea Market Overview (216) The Barley Tea "Mugi-cha" has growing continuously The Blended Tea has shown recovery tendency in it growth ( billion) 2 Barley Tea and Blended Tea Markets Brand Strategy Expanding business by appealing "Caffeine Free" and "Mineral Ingredients" Strengthening of the Store Counter Development Ability, as a "Whole-Year-Sold Product" Providing many variety of container size Seeking more synergy of RTD and Tea Bags TOPICS Double-digit Increase in four (4) Consecutive Fiscal years Exceeding (Breaking through) 3 Million Cases * No.1 Share in the "Caffeine Free RTD Tea" category * 15 128. 128. 112.5 116. 118. 114. 1 126.5 12. Blended Tea 5 88. 8. 63. 71. 34.5 39.5 45.5 51. Barley Tea '1 '11 '12 '13 '14 '15 '16 '17 Source: ITO EN, Market: Calendar year ITO EN: May to Apr Est. Further Pursuing of Possibilities in the Tea Beverages Category * Source: ITO EN, Jan 216 to Dec 216 11
One day Veggie & Other Vegetable Beverage Market Overview (216) A Recovery Tendency is observed in the 1% Vegetable Juice Segment, with a Steady Performance Especially the Tomato Juice Drinks Segment is leading the market Brand Strategy Enhancing consumption by appealing Nutritional Values, doing Demonstration in stores and introducing recipes used our vegetable juice One day Veggie (a day' s worth of vegetables) No.1Brand Share in the 1% Vegetable Juice Segment * Jujitsu Yasai (vegetable and fruit mix juice) 25th Sales Release Anniversary in Sep 217 Original Package in 1992 ( billion) 2 15 1 146.8 15.1 87.6 88.4 Fruit Mix School Lunch Program (Red Cup Campaign of the United Nations WFP) Buying of "Jujitsu Yasai " Big Size PET Bottle Product Posting of Pictures with Red Cup Drinking Scenes on the SNS Media Part of sales is donated to WFP Vegetable Juice Market 167.4 164.4 147.2 86.6 84.3 74.2 Riso-no Tomato Containing 3 mg of Lycopene (Sugar and Salt Additive-Free) 139.9 68.3 152.2 153.5 3% 3% 29% 3% 29% 3% 26% 28% 5 8.8 8.1 81.5 73. 8.6 61.7 71.6 59.2 Vegetable 1% '1 '11 '12 '13 '14 '15 '16 '17 Est. Source: ITO EN, Market: Calendar year ITO EN: May to Apr (Tomato Juice) ITO EN Share 71.6 Aojiru (Green Juice) 6 Types of Healthy Raw Materials are used, including Japanese-Grown Green Barley Grass and Mugworth ("Oomugi-Wakaba") 72. * Source: ITO EN, Jan 216 to Dec 216 12
TULLY'S COFFEE (RTD) Market Overview (216) The Market Size is estimated to be 951. Billion Yen, growing by 1% compared to previous fiscal year The Bottle-Can Containers Market's Strong Performance Tendency is estimated to be continued in future as well Brand Strategy We are planning to strengthen Tully's brand by Products' Lineup Expansion Pursuing the "Tully's Quality" by the Tully's Barista Coffee Professionals Supervision of the Coffee Raw Material's Commitment Shop and RTD Interlocking Campaign TOPICS 1th Anniversary of the Sales Release of the Tully's Brand Beverages Even if only the Black Coffee Product Segment is taken into account, it has broken through 1 Million Cases * 1% 8% 6% 4% 2% % Others PET bottles 126~2ml Can 4% 41% 39% 21~599ml Can Coffee Beverage Market (share by type of container and size) Sales Volume of TULLY'S COFFEE 11% 12% 13% 14% 16% 38% 35% 31% 28% '1 '11 '12 '13 '14 '15 '16 Source Market: INTAGE Inc. SRI, 21 to 216 ITO EN: May 21 to Apr 216 Market share by sales amount for all coffee beverage containers and quantities (total for supermarkets, convenience stores and drug stores) Expansion of the Products' Lineup and Sales Channels Iced-Water-Brewing Extraction No Natural/Artificial Flavor added 2% 24% (million cases) 16 12 8 4 * Source: ITO EN, May 216 to Apr 217 13
Group Business Overview
Tully's Coffee Japan 216 217 218 Est. (\ million) Net Sales 27,751 6.6% 3,268 9.1% 32,3 6.7% Operating Income 2,879-19.4% 3,13 8.7% 3,25 3.8% (Shops) Number of Shops 638 +5 671 +33 7 +29 Business Overview Net Sales exceeded 3 Billion Yen Actively opening new shops in good Locations (As of April 217, 671 shops) Strong Performance of the Limited-Sales-Area Products Promotion of the Community Café Shops 2th Anniversary since Establishment (Foundation) Sequential Sales Release of of a Commemorative Product since March 217 ( billion) 35 3 25 2 15 1 5 13.9 13.9 15.3 357 Result/Forecast of Sales and Number of Shops Net Sales 375 41 461 19.3 21. 513 23.8 555 588 26. 27.7 638 3.2 # of shops 32.3 671 7 '9/3 '1/3 '11/3 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est (Shops) 1, 75 5 25 New Concept Shop "Casual & Cozy for Female Customers" Concept Shop oriented towards Female Customers Shop in TAKASHIMAYA GATETOWER MALL (Nagoya-city, Aichi) Promoting 2th Anniversary Items Rare Species of the "Peaberry Coffee Beans" Used "TULLY S BRAZIL FAZENDA BAU PEABERRY YELLOW BOURBON " Topics Commemorative Reprinting Menu Edition (Hot Bagel Sandwich) 14
Chichiyasu (Yogurt Company) 216 217 218 Est. (\ million) Net Sales 13,89 5.3% 14,621 5.3% 15,6 6.7% Operating Income 253 188.4% 3 18.8% 37 22.9% Chichiyasu Establishment : 1886 (Foundation) Head Office: Hiroshima Prefecture Business Overview 1th Anniversary of the Chichiyasu's Yogurt Products Sales Release Pursuing "Safety, Relief, Delicious Taste, Healthiness", as a pioneer of Yogurt product in Japan (for the First Time in the History). Opened First Flagship Shop Showroom of Chichiyasu's First Opening as an Anniversary Memorial Business Service Appealing of Chichiyasu Brands to all the local residents and community 1th Anniversary of the Chichiyasu's Yogurt Products Sales Release New products Topics Renewal of the "Classic Yogurt"- and the "Lowered Sugar Contents Yogurt" Products Additive-Free Honey Yogurt "Hiroshima Toyo Carp" * Team Additive-Free Honey Yogurt, that Every Mother will be Happy to Give it to Her Children, to be Eaten by Them A Collaborative Drink (Beverage) Product with the Opening of the Showroom "CHICHI YASU" First-in-Class Yogurt Product in Japan (1917) * Japanese Professional Baseball Team, with Home Stadium based in Hiroshima City Inside the "LECT" Large Scale Commercial Facility of Izumi Co., Ltd. (Hiroshima Prefecture, Hiroshima City, West Ward) 15
Overseas Business (1) *Excluding ITO EN. Before elimination of internal transactions (\ million, $ thousand) US Business 31,741 169.% 3,469-4.% 34,596 13.5% $264,929 15.% $281,268 6.2% $314,562 11.8% Asia/Australia Business 4,438 31.3% 4,393-1.% 4,516 2.8% Net Sales 36,18 138.3% 34,863-3.6% 39,112 12.2% US Business 1,581 82.4% 1,687 6.7% 2,3 18.8% $13,26 63.6% $15,573 17.9% $18,215 17.% Asia/Australia Business 275 17.5% 538 95.6% 496-7.7% Operating Income 1,856 52.9% 2,225 19.9% 2,5 12.4% Exchange rate (US$) (average during a year) 216 217 218 Est. 119.3 18.4 11 US Business Asia/Australia Business : Both Tea Leaf and Tea Beverage Business showed a strong performance, with Double-digit increase in both Revenue and Profit, that is estimated to continue in future as Well (Based on Local Currency Figures) : Distant Lands Trading Company (DLTC) is also showing a stable performance : Business in China is showing a strong performance, especially ITO EN BEVERAGE (SHANGHAI), LTD. : Businesses in Australia and in Southeast Asia are also developed in a favorable Manner : In April 217, ITO EN Singapore Pte. Ltd. and ITO EN (Thailand) Co., Ltd. had become profitable for the first time in their history after their establishment 16
Overseas Business (2) USA China Estimation of the ITO EN's International Business Development Pathway Hawaii (1987~) Fujian Province (1987~) New York (21~) Zhejiang Province (1994~) ( billion) US Business 4 3 2 Asia/Australia Business Overseas Business sales ratio Consolidated DLTC 8% 7% 8% 15% 1% Shanghai (212~) 1 3% 4% 5% Oceania Asia Australia (1994~) Southeast Asia (212~) Singapore, Thailand & Others Exchange rate (US$) '14/4 '15/4 '16/4 '17/4 '18/4 Est. 1.6 111.2 119.3 18.4 11 % International Brand Strategy Strengthening of "Oi Ocha" Brand Development and Expansion Unification of the Label Design Inscriptions in the Corresponding Local Languages on the Product's Label Local Brand USA China Development of Barley Tea "Mugi- "matcha Love" Cha" is Very Popular Strengthening of Sales of Tea Leaf Products Product Development that is Corresponding to the Specific Area's Characteristics USA China AUS Thailand USA AUS Asia China 17
Long-Term Vision & Medium and Long-Term Management Plan
Our Long-Term Vision "We deliver Smile and Tea to where you are. " Tea has power to make you smile and healthy. Management principle "Always Putting the Customer First" Medium and Long-Term Vision To be a "Global Tea Company" Comprehensive Beverage Company in Japan Challenges in New Business Sectors Strengthening Relationship with the Customers WAY We all do our best where ever we are, and we always smile. That is why we can make you smile. 18
Medium and Long-Term Management Plan Long-Term Vision "Global Tea Company" 218 222 Medium and Long-Term Management Plan 215 217 Medium-Term Management Plan To be 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. Training of "Tea Tasters" who can introduce Tea Culture in all over the world 1. Improving profitability of business in Japan 2. Sales release of Global Brand Products Comprehensive Domestic Beverage Manufacturer, Challenges in New Business Sectors 1. Brand strengthening, development of new brands 2. Expansion of total number of customers, Improving profitability of business in Japan 3. Challenges in new business sectors (Consolidated) FYE April 217 FYE April 22 FYE April 222 Plan Net Sales ROE 475.8 billion 1.5% Total Return Ratio 43.5% 3th Anniversary of the "Oi Ocha" (February 219) The Tokyo Olympic and Paralympic Games (to be held in Tokyo in 22) 6. billion Over 1% Over 4% 19
Appendix
ESG and SDGs Activities "Sustainable Development Goals (SDGs)" are Introduced to ITO EN's CSR/CSV Concepts ESG Classification G Major CSR Targets (KPI) S E * These logos belong to the United Nations Information Centre 2
ESG in the Value Chains Integrated system from tea plantation to tea grounds Shared Values Produced by an Authentic Value Chains ITO EN was ranked #18 "5 Companies That Are Changing The World" Activities such as "Tea Harvesting Fields Development Project" and "Used Tea Leaves Recycling System" were Highly Evaluated. Those Activities were Featured in the Article of the Business Magazine "FORTUNE", which ranked ITO EN on the 18th Place, the Highest Position among All Japanese Companies. (Issue dated 1st September 216) Procurement Production and Logistics Product planning and development Sales and Distribution 216 Time Inc. All rights reserved. FORTUNE September 1, 216 issue G Control of the Value Chains Development of the Tea Leaves Raw Materials Producing Regions Training of the Tea Farmers Whole Volume Deals (Transactions) Business Subcontractors Control Block production and logistics systems Patent Strategy /Trademark Strategy Control and monitor sales activities Compliance with the Regional Laws and Regulations S High Capability of Procuring Crude Tea The Tea-Producing Regions Development Project An Effective Utilization of Abandoned Farmlands Quality control system Increasing of the Brand Values Meet the consumer requests for security and safety Product Development Ability Provision of Healthy Values Route sales The community-based sales system Tea Tasters System * Spreading and Inheriting the Tea Culture E The Tea-Producing Regions Development Project Promotion of the Environment- Conservative Type of Agriculture Resource Saving /Energy Saving Production NS System * Used Tea Leaves Recycling System ECO (Ecological) Containers Beverage Paper Packages, Not Containing Aluminum Sheets Prevention of the Global Warming Introduction of an Ecologically -Friendly Driving and Environmentally -Friendly Vehicles Resource Saving and Emissions Reduction Collection of Empty Containers Recycling of All Waste Quantities by Recycling Agent * NS (Non-Sterilant) System * "The Tea Taster System" that had been operated as an in-house qualification system was approved by "Skilled Professional on ITOEN TEA TASTER " by MHLW on March 24, 217. 21
Project of the Developing Green Tea-Producing Regions Business Purpose Project of the Developing Green Tea-Producing Regions Total Volume of Domestic Green Tea Leaf Production Stable Procurement of a High Quality Green Tea Leaf made in Japan Training of the Tea Farmers Proactive Use of Abandoned Farmlands Since 197s Cultivation under contract with individual tea farms Since 21 The large-scale new tea farms business that uses abandoned farmlands, etc. (Tons) 6, 5, 4, 3, 2, 1, 3,285 957 Production volume (ton) Dimention of green tea farms (ha) 3,63 1,34 4,371 1,226 4,892 1,41 '14 '15 '16 17 Est. * Including contract cultivation farms Long-term target 2,ha 2, (ha) 2,5 2, 1,5 1, 5 (Tons) 1, 8, 6, 4, 2, 89,3 18% 1, 21% Total Domestic Tea Leaf Production ITO EN Consumption ITO EN Consumption (%) 6% 85, 84,8 83,5 79,5 8,2 5% 27% 24% 24% 25% 25% ' '5 '1 '13 '14 '15 '16 4% 3% 2% 1% % Green Tea Leaf for Matcha Contracted Farms of Green Tea Leaf for Matcha (Tencha) in Kyoto and Kagoshima Used Tea Leaves Recycling System A Recycling System that transforms "Used Tea Leaves" from manufacturing process of tea beverages into "Useful Resources" Used Tea Leaves (Annual Emission Amount: 49, Tons) * Partially Including Budged Plan Values 22
Data Collection (Data Base)
Management Indexes (Consolidated) Net Sales & % Cost of Sales Operating Income Net Income & ROE ( billion) Net Sales % Cost of Sales 465.5 475.8 492.5 5 437.7 43.5 43.9 4 351.6 369.2 3 52.1 52.4 53. 51.6 51.8 52.5 52.8 5.6 2 1 (%) 65 55 45 ( billion) Operating Income 25 % Operating Income 2.2 21.1 2 18.9 17.6 15 11.3 1 5. 5.1 5. 5 4.8 2.6 17.2 3.7 21.7 22.6 4.6 4.6 (%) 12 1 8 6 4 ( billion) 15 1 7.6 5 7.6 9.2 8.9 Net Income ROE 11.2 12. 1.3 1.4 7.2 5.9 8.6 6.8 13.6 14. 1.5 1. (%) 25 2 15 1 5 '11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. 35 '11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. 2 '11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. Cash Flows Capital investments & Depr. & Amort. Dividend & Payout Ratio ( billion) 3 2 1-1 -2 19.7 17.5-2.1 CF from Operating Activities CF from Investing Activities Free CF 21.4 13.3-8. -9.2 24. 24.3 14.7 19.7-4.5 17.7 8.5 3. 21.9-9.2-8.1-8.2 27. 28. 18.8 13.3-14.6 '11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. ( billion) Capital Investments 14 Depr. & Amort. Leased Assets Depr. 12 1 8 6 4 2 5.5 2. 7.2 5.6 3.4 3.6 9.8 6.6 4.8 3.9 4.2 1.9 11. 4.5 3.7 1.8 8.6 5.2 8.1 5.4 13.4 7. 7. '11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. 6.3 ( ) Dividend(Preferred Stock) 8 Dividend(Common Stock) Payout Ratio 6 4 2 65.6 54.4 44.5 48 48 48 38 38 38 42.4 49 39 72. 61. 38.3 5 5 5 5 37.4 4 4 4 4 '11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4 Est. (%) 1 8 6 4 2 23
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.