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Enhancement of Capital Efficiency and

Optimization of Efficient Use of Funds

1,017,784

989,308

2.9%its989,308
989,308entails expanding
The Nippon Ham Group believes that shareholder-driven
management
ability to produce cash
953,616
flows and increasing ROE, which should boost corporate value.
We seek to boost ROE by pursuing growth strategies to enhance sales and profitability while deploying capital
strategies to generate capital returns. In addition, we look to bolster capital efficiency by enhancing asset
efficiency (asset turnover ratio).
We seek Enhancement of capital efficiency and optimization of efficient use of funds by balancing our business
strategies and our financial and capital strategies.
1,029,694

Initiatives to Boost ROE


20103

20113

Final year of
New Medium-Term Management
Plan Part III (Result)

ROE

ROE

17,769

20143

20.1%

ROE
over

8.0%

33,175

33,175

24,855

0.0

0.0

0.0
Expand earnings and margins

Enhance asset efficiency

0.0

0.0

Goal

26,513

7.0%

4.1%
21,417
Capital strategy
and measures to
boost ROE

20133

Final year of
New Medium-Term Management
Plan Part IV (Target)

20123

0.0%

Shareholders equity management

First raise operating income


Increase total asset
Flexibly acquire treasury
ratio to 4%
turnover through selectivity
stock to improve total
and focus
return ratios
Improve earnings capability
by strengthening and
Keep inventories at
Optimize capital and debt
expanding core businesses
appropriate levels
structures

Boost market share

3
2010
2011
2012
2013
20143
3
3
3
Proactively expand

business domains and


build overseas operations
Reduce tax expenditures

Increasing shareholder value through shareholder returns


and ROE management
Goals of New Medium-Term Management Plan Part IV
Dividend
payout
ratio of
30%

ROE
7

Improved
total
returns ratio

Minimum cash
dividend of
16 per share
Ratio of
Net income
attributable to
Nippon Meat
Packers, Inc.

2.0%

Total asset
turnover

1.8 times

Financial
leverage

1.95 times

Yoshihide Hata
Director and Managing Executive Officer
General Manager of Corporate Management Division, in charge of
Accounting & Finance Department and IT Strategy Department

24

Total Asset Turnover

Inventor

(Times)
41.5
40.2

40.5

3
38.4

1,017,784

1,029,694

2.9%

989,308

953,616

989,308

989,308

989,308

Initiatives to Boost ROE

20103

20113

20123

Enhancement
of Capital
Efficiency and

Optimization
of Efficient Use of Funds

20133

We

20143

20153

will also leverage


IT in reviews that visualize
management

information, thereby boosting the efficiency of Group manage-

More than anything, we must boost earnings and margins to

ment and capital efficiencies.

raise ROE as a benchmark for capital profitability. As part of

and Capital Strategy Policies


26,513 Financial
areas, our prime focus is on maximizing operating income
The basic policies of our financial and capital strategies are to
our efforts to Allocate management resources in prioritized

33,175

33,175

33,175 interest-bearing debt and cash flows and maintain


while lifting the operating
income ratio by reinforcing corner-20.1% balance
21,417

4.0%

stone businesses to expand profitability and broadening our

safety while increasing ROE and maximizing cash flow to

business scope and cultivating overseas operations. At the

0.0
increase
capital efficiency.

17,769

24,855

0.0

0.0

same time, we recognize the need to improve non-operating0.0%

We will push ahead with financial and capital strategies


that

0.0
0.0 promote interincome
and lower corporate tax rates. We will

optimize capital and debt structure (debt/equity ratio) to lower

national tax strategies in line with Groupwide tax strategies

the weighted-average cost of capital. Under our current finan-

and aggressively develop overseas operations. In addition, we

cial position, we believe that a ratio at around 0.5 is an

seek to enhance shareholder value per share and ROE by flex-

appropriate balance between debt and equity.

ibly acquiring treasury stock by


taking into account cash flows

and
our financial position.
In the fiscal year
ended
March 31,
3
3
2010
20113
2012

we acquired 16
increasing the
2013,
billion of treasury stock,

There are numerous


funding vehicles in the financial and

capital markets. We2014


choose
the funding techniques
3
20133
20153that beneficially

match our management


strategy vector.
We will endeavor

number of shares to 29,466,532 at the end of the fiscal year

to boost evaluations from rating institutions and secure more

and further enhancing our capital productivity.

advantageous funding terms to lower procurement costs.

We will increase our total asset turnover to enhance capital

Under the New Medium-Term Management Plan Part IV, our

efficiency.
particular, value
we will
shorten
the inventory
and the
IncreasingIn
shareholder
through
shareholder
returns

three-year cash flow plans are to generate 134 billion in cash

and ROE
management
trade
receivable
turnover periods while improving our working

from operating activities, use 113 billion in investing activities,

capital
cycle.
In the fiscal
ended March
Goals ofcash
Newconversion
Medium-Term
Management
Planyear
Part IV

and produce 21 billion in free cash flow. Our investment cash

31, 2013, the inventory turnover period was around 40 days.

flow plan is to allocate 100 billion in capital expenditures over

Dividend
Improved
Minimum cash
Bypayout
overhauling supply
chain of
management and
totalimplementing
dividend
ratio of
returns ratiosuch mea16revamp
per share
other
reforms,
we
will
logistics,
employing
30%

three years to drive revenue growth, which we would augment


with a 30 billion strategic investment budget for business

sures as consolidating
inventories upstream and properly
Ratio of

domain expansion. We would allocate 51 billioncombining

Total
asset periods.
Financial
managing
inventories
to shorten
turnover
attributable
to
ROE

our 21 billion in free cash flow and our 30 billion strategic

Net income

In7
keeping

turnover
Nippon Meat
Inc.
1.8
timesof
withPackers,
a management
policy

2.0%

leverage

1.95 times
Allocating

investment budgetto foster ongoing growth, ensure investor

management resources in prioritized areas, we will deploy a

returns in keeping with our dividends policy, and repay

new performance management system from the fiscal year

interest-bearing debt.

ending March 31, 2014, to enhance our approach.


Our first effort will be to introduce new standards for investment criteria and deploy business review standards and carefully verify investment efficiency and business continuity. By

Total Asset Turnover

Inventory Turnover Period

(Times)

(Days)
41.5
40.2

40.5

carefully selecting investments based on benchmarks for

39.7

40.1

38.4

returns on such investments, we will properly allocate funds


and enhance profitability.
We will reinforce monthly results management, applying the
costs of capital with respect to working capital and capital

1.7

1.7

1.6

1.7

1.7

1.7

2010

2011

2012

2013

expenditures and will extensively manage monthly inventories,


thereby enhancing asset and capital efficiencies.

2008

2009

25