Kameda Seika Co., Ltd. (2220)

Transcription

Shared Research Report
2015/7/31
Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is
to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an
accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and
findings. We will always present opinions from company management as such. Our views are ours where
stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback.
Write to us at [email protected] or find us on Bloomberg.
2015/7/31
Contents
Executive summary ................................................................................................... 3
Key financial data...................................................................................................... 4
Recent updates ......................................................................................................... 5
Highlights .............................................................................................................. 5
Trends and outlook .................................................................................................... 6
Quarterly trends and results ................................................................................... 6
Full-year outlook .................................................................................................... 9
Strategy and long-term outlook ............................................................................. 11
Business ................................................................................................................. 13
Summary ............................................................................................................ 13
Segment summary ............................................................................................... 14
Profitability analysis ............................................................................................. 24
Market and value chain ........................................................................................ 30
Strengths and weaknesses.................................................................................... 33
Historical performance and financial statements ........................................................ 34
Income statement ................................................................................................ 39
Balance sheet ...................................................................................................... 40
Cash flow statement ............................................................................................ 42
Other information .................................................................................................... 43
History ................................................................................................................ 43
Top management ................................................................................................. 45
Corporate governance .......................................................................................... 45
Major shareholders .............................................................................................. 46
Employees ........................................................................................................... 46
Dividends ............................................................................................................ 46
By the way .......................................................................................................... 47
Company profile ...................................................................................................... 48
About Shared Research Inc................................................................................... 49
http://www.sharedresearch.jp/
Copyright (C) Shared Research Inc. All Rights Reserved
2/49
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Executive summary
Japan’s biggest rice cracker company—about 30% market share
Kameda Seika’s main business is making and selling snacks. In the rice cracker industry, it is the largest
player, with a circa 30% market share. The company embraced mass production ahead of rivals, and in
1975—18 years after its founding—it became the largest rice cracker company in Japan, by sales. Over
the next 40 years, it held its place at the top. Most manufacturing is done in-house.
The Kameda Seika group consists of the parent, 11 subsidiaries, and two affiliates. Segments: Snack
Production and Sales, Transport and Warehousing, and Other (auto sales/repair). More than 90% of sales
and profits come from Snack Production and Sales. The domestic rice cracker market is mature and rising
raw material costs are a headwind. Targets for FY03/21, the last year forecast under the company's
long-term vision include consolidated sales of JPY150.0bn (+1.6x FY03/15), operating profit margin of
10.0% or higher (+5.7pp vs. FY03/15). In order to achieve these goals the company stated its readiness
to pursue acquisitions for growth and improved efficiencies.
Trends and outlook
Q1 FY03/16 results (consolidated): sales JPY22.5bn (+0.2% YoY); operating profit JPY501mn (+31.4%
YoY); recurring profit JPY775mn (+27.0% YoY); net income JPY466mn (+34.8% YoY). Operating profit
rose, as even though costs increased due to higher prices of certain raw materials amid yen weakness and
a rise in advertising spending, profits improved at consolidated subsidiaries and prices for the company’s
key ingredients were relatively stable. Recurring profit and net income rose on higher profits at the
company’s equity-method affiliates; TH Foods Inc. in the US and Thien Ha Kameda, JSC in Vietnam.
FY03/16 full-year estimates: sales JPY98.0bn (+3.3% YoY); operating profit JPY5.0bn (+24.0% YoY);
recurring profit JPY6.1bn (+18.3% YoY); net income JPY4.0bn (+18.7% YoY). Kameda Seika expects the
market environment to remain difficult, with a cheaper yen impacting raw material costs and with
recovery in private consumption levels remaining subdued. In this challenging environment, Kameda
Seika plans to grow earnings and profits by implementing customer-focused product strategies centered
on its four main rice cracker brands, expanding sales in North American and Asian markets, and
reinforcing its "health functions-related business" initiatives.
Strengths and weaknesses
Kameda’s strengths lie in its core products—long-time favorites among consumers—advantages as an
industry pioneer, and scale economies plus in-house logistics. Weaknesses include the time required for
success in overseas development, limited track record in acquisitions and new businesses, and a lack of
bargaining power when dealing with major retailers.
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Key financial data
Income Statement
(JPYmn)
Total Sales
YoY
Gross Profit
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
71,313
72,450
74,736
77,541
79,354
79,859
78,789
81,324
92,833
94,849
98,000
3.3%
1.3%
1.6%
3.2%
3.8%
2.3%
0.6%
-1.3%
3.2%
14.2%
2.2%
28,431
29,357
29,887
30,987
32,447
32,693
32,734
33,777
39,087
40,937
FY03/16
YoY
3.1%
3.3%
1.8%
3.7%
4.7%
0.8%
0.1%
3.2%
15.7%
4.7%
GPM
39.9%
40.5%
40.0%
40.0%
40.9%
40.9%
41.5%
41.5%
42.1%
43.2%
Operating Profit
2,993
3,240
3,339
3,128
3,481
3,330
3,365
3,497
3,306
4,032
5,000
YoY
14.2%
8.3%
3.0%
-6.3%
11.3%
-4.3%
1.0%
3.9%
-5.5%
22.0%
24.0%
4.2%
4.5%
4.5%
4.0%
4.4%
4.2%
4.3%
4.3%
3.6%
4.3%
5.1%
Recurring Profit
OPM
3,133
3,331
3,506
3,314
4,021
3,938
4,059
4,294
4,530
5,157
6,100
YoY
17.5%
6.3%
5.3%
-5.5%
21.3%
-2.1%
3.1%
5.8%
5.5%
13.9%
18.3%
RPM
4.4%
4.6%
4.7%
4.3%
5.1%
4.9%
5.2%
5.3%
4.9%
5.4%
6.2%
1,484
1,932
1,869
1,926
2,101
2,112
2,278
2,842
3,121
3,369
4,000
5.1%
30.2%
-3.3%
3.1%
9.1%
0.5%
7.9%
24.8%
9.8%
7.9%
18.7%
2.1%
2.7%
2.5%
2.5%
2.6%
2.6%
2.9%
3.5%
3.4%
3.6%
4.1%
Net Income
YoY
Net Margin
Per Share Data (JPY, adjusted)
Number of Shares ('000)
EPS
23,714
63.1
Dividend Per Share
13.0
Book Value Per Share
1,071
22,319
86.6
22.0
1,146
22,319
22,319
22,319
22,319
22,319
22,319
22,319
22,319
-
83.7
86.5
95.9
97.8
107.6
134.8
148.0
159.8
189.7
20.0
1,177.4
20.0
1,222.4
22.0
1,297.0
22.0
1,353.6
24.0
1,439.3
24.0
1,591.4
26.0
1,794.0
31.0
2,053.9
35.0
-
Balance Sheet (JPYmn)
Cash and Equivalents
Total Current Assets
Tangible Fixed Assets, net
Other Fixed Assets
Intangible Assets
Total Assets
3,925
16,151
15,040
15,991
17,861
16,728
18,425
17,619
15,543
15,991
-
16,421
19,156
18,182
19,370
21,629
21,044
23,015
23,009
21,751
22,203
-
22,595
22,262
22,438
22,799
23,785
25,652
24,822
25,741
28,546
28,714
-
7,105
7,268
7,111
6,841
6,836
6,709
6,643
7,817
8,077
8,521
-
827
758
471
537
541
682
633
8,097
8,465
8,608
-
46,948
49,443
48,201
49,547
52,791
54,087
55,113
64,664
66,840
68,046
-
Accounts Payable
4,570
4,905
4,889
5,476
5,325
5,139
5,636
6,226
4,186
3,858
-
Short-Term Debt
2,569
2,536
2,491
2,372
2,816
2,735
2,800
3,757
4,354
2,319
-
Total Current Liabilities
13,062
14,781
13,809
14,632
15,692
14,613
15,677
18,060
19,059
17,008
Long-Term Debt
2,037
1,401
810
411
1,470
3,135
2,235
3,846
2,356
2,600
-
Total Fixed Liabilities
9,821
8,968
8,030
7,736
8,696
10,277
8,850
12,276
9,338
7,151
-
Total Liabilities
22,883
23,749
21,840
22,369
24,388
24,889
24,527
30,336
28,396
24,159
-
Net Assets
23,957
25,694
26,362
27,178
28,403
29,198
30,586
34,329
38,443
43,887
-
4,605
3,937
3,301
2,783
4,286
5,870
5,035
7,603
6,710
4,919
-
Interest-Bearing Debt
Cash Flow Statement (JPYmn)
Operating Cash Flow
3,882
4,518
5,069
4,445
5,573
4,297
5,803
5,229
5,937
7,638
-
Investment Cash Flow
-2,892
-1,790
-3,790
-2,918
-4,434
-5,984
-3,184
-8,044
-5,423
-4,723
-
-436
-983
-1,191
-1,312
455
555
-1,836
1,482
-1,628
-2,595
-
Financing Cash Flow
Financial Ratios
ROA
6.8%
6.9%
7.2%
6.8%
7.9%
7.4%
7.4%
7.2%
6.9%
7.6%
ROE
6.3%
7.8%
7.2%
7.2%
7.6%
7.4%
7.7%
8.9%
8.7%
8.3%
50.8%
51.7%
54.5%
54.4%
53.3%
53.6%
55.1%
51.9%
56.6%
63.6%
Equity Ratio
Figures may differ from company materials due to differences in rounding methods.
Source: Company data
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Recent updates
Highlights
On July 31, 2015, Kameda Seika Co., Ltd. announced earnings results for Q1 FY03/16; see the results
section for details.
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2015/7/31
Trends and outlook
Quarterly trends and results
Quarterly Performance
(JPYmn)
Sales
YoY
Gross Profit
YoY
GPM
SG&A Expenses
YoY
SG&A / Sales
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
NPM
Cumulative
Sales
YoY
3.3%
Gross Profit
YoY
GPM
YoY
SG&A / Sales
Operating Profit
YoY
OPM
Net Income
YoY
NPM
3.6%
Q1
22,453
0.2%
9,621
1.9%
42.8%
9,120
0.7%
40.6%
501
31.4%
2.2%
775
27.0%
3.5%
466
34.8%
2.1%
Q1
22,453
2.2%
0.2%
9,440 18,573 30,342 40,937
9,621
6.7%
1.9%
8.4%
3.4%
Q4
23,821
-1.2%
10,595
-2.1%
44.5%
9,304
3.3%
39.1%
1,292
-29.1%
5.4%
1,645
-21.3%
6.9%
1,310
-8.5%
5.5%
FY
94,849
7.3%
4.7%
FY03/16
Q2
Q3
Q4
FY03/16
% of 1H 1H Est.
48.8% 46,000
2.7%
50.1%
48.5%
51.7%
Q2
Q3
Q4
% of FY
22.9%
1,000
26.8%
2.2%
1,600
28.3%
3.5%
900
24.0%
2.0%
FY Est.
98,000
3.3%
9,059 17,784 27,601 36,905
9,120
4.4%
0.7%
4.2%
3.1%
3.1%
40.4% 39.7% 38.9% 38.9% 40.6%
381
789
2,741
4,032
501
10.0%
123.8% 978.0% 84.8% 22.0% 31.4%
Recurring Profit
RPM
FY03/15
Q2
Q3
22,377 26,252
4.0% 2.9%
9,133 11,769
10.1% 5.8%
40.8% 44.8%
8,725 9,817
4.0% 1.0%
39.0% 37.4%
408 1,952
- 38.5%
1.8% 7.4%
636 2,265
288.0% 24.6%
2.8% 8.6%
380 1,333
189.2% 27.6%
1.7% 5.1%
1H
Q3
44,776 71,029
42.1% 41.5% 42.7% 43.2% 42.8%
SG&A Expenses
YoY
Q1
22,400
3.3%
9,440
6.7%
42.1%
9,059
4.4%
40.4%
381
123.8%
1.7%
611
33.3%
2.7%
346
-32.7%
1.5%
Q1
22,400
1.7%
1.8%
3.9%
4.3%
2.2%
611
1,247
3,512
5,157
775
5.1%
12.7%
33.3% 100.4% 43.9% 13.9% 27.0%
2.7%
2.8%
4.9%
5.4%
3.5%
346
726
2,059
3,369
466
-32.7% 12.5% 21.9%
1.5%
1.6%
2.9%
7.9% 34.8%
3.6%
2.1%
5,000
24.0%
6,100
18.3%
6.2%
11.6%
4,000
18.7%
4.1%
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Quarterly sales and operating profit
(JPYmn）
(JPYmn）
30,000
2,500
25,000
2,000
20,000
1,500
15,000
1,000
10,000
500
5,000
0
0
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
FY03/13
FY03/12
2Q
3Q
4Q
FY03/14
Sales
1Q
2Q
3Q
FY03/15
4Q
1Q
2Q
-500
FY03/16
Operating profit (right axis)
Rice cracker demand tends to rise during colder months, particularly around New Year. As such, sales and
profits are typically higher in 2H.
Q1 FY03/16 consolidated results
Sales:
Operating profit:
Recurring profit:
Net income:
JPY22.5bn
JPY501mn
JPY775mn
JPY466mn
(+0.2% YoY)
(+31.4%)
(+27.0%)
(+34.8%)
Operating profit rose despite cost increases due to higher prices of certain raw materials amid yen
weakness and a rise in advertising spending. Profits improved at consolidated subsidiaries and prices of
the company’s key ingredients were relatively stable. Recurring profit and net income rose on higher
profits at the company’s equity-method affiliates; TH Foods Inc. in the US and Thien Ha Kameda, JSC in
Vietnam.
In Q1, progress towards full-year guidance was as follows: sales, 22.9% (23.6% in Q1 FY03/15);
operating profit, 10.0% (9.1%); recurring profit, 12.7% (12.0%), and net income, 11.6% (10.8%).
Q1 FY03/16 results
FY03/15
(JPYmn)
Q1 Act.
22,400
Sales
FY03/16
Q1 Act.
22,453
+0.2%
Operating profit
381
501
Recurring profit
611
Net income
346
YoY
FY03/16
FY Est.
% of Est.
98,000
22.9%
+31.4%
5,000
10.0%
775
+27.0%
6,100
12.7%
466
+34.8％
4,000
11.6%
Performance in the domestic market for rice crackers was on par with the previous year. In the areas of
maintaining and raising brand awareness, it shifted focus from price competition to concentrating
resources in its four key brands, Kameda No Kaki No Tane, Happy Turn, Kameda No Magari Senbei and
Teshioya. The company embarked on an aggressive sales promotion campaign through TV commercials
and campaigns targeting consumers.
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There were strong sales of limited editions of ranges such as Kameda No Kaki No Tane Spicy Curry and
Kameda No Kaki No Tane Sauce-Mayo Aji in the Kameda No Kaki No Tane brand. Further, sales of brands
such as Tsumami Tane, Usuyaki, and Age Ichiban also increased YoY. Further, Kakitane Kitchen stores
launched a new French fry flavored product called Kakitane Potato which was popular with its customers.
Eda No Kodawari, which had been positioned as a brand under development through FY03/15, is now a
core brand, and grew sales.
Overseas, Mary’s Gone Crackers, Inc. posted solid sales as the US organic and gluten-free markets grew.
Further, an expanded Kameda USA Inc. product lineup helped sales rise YoY. The company made efforts
to expand Kaki No Tane in the Chinese market as well.
In the "health functions-related business," sales of organic lactic acid bacteria derived from rice were
strong, and the company tapped into demand for low-protein rice for patients with kidney ailments with
the launch of small-serve packages.
For details on previous quarterly and annual results, see the Historical performance and
financial statements section.
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2015/7/31
Full-year outlook
Forecasts
(JPYmn)
Sales
YoY
CoGS
Gross profit
YoY
GPM
SG&A Expenses
SG&A / Sales
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net margin
FY03/14
1H Act. 2H Act. FY Act.
43,203
49,629 92,833
16.6%
12.1% 14.2%
26,064
27,682 53,745
17,140
21,948 39,087
18.1%
14.0% 15.7%
39.7%
44.2% 42.1%
789
901 1,690
1.8%
1.8%
1.8%
73
3,233 3,306
-64.3%
-1.8% -5.5%
0.2%
6.5%
3.6%
622
3,907 4,530
8.1%
5.1%
5.5%
1.4%
7.9%
4.9%
645
2,476 3,121
85.7%
-0.7%
9.8%
1.5%
5.0%
3.4%
FY03/15
FY03/16
1H Act. 2H Act. FY Act. 1H Est. 2H Est. FY Est.
44,776 50,073 94,849 46,000 52,000 98,000
3.6%
0.9%
2.2%
2.7%
3.8%
3.3%
26,204
27,709 53,912
18,573 22,364 40,937
8.4%
1.9%
4.7%
41.5%
44.7% 43.2%
789
901
1,690
1.8%
1.8%
1.8%
789
3,243 4,032 1,000
4,000 5,000
978.0%
0.3% 22.0% 26.8%
23.3% 24.0%
1.8%
6.5%
4.3%
2.2%
7.7%
5.1%
1,247
3,910 5,157 1,600
4,500 6,100
100.4%
0.1% 13.9% 28.3%
15.1% 18.3%
2.8%
7.8%
5.4%
3.5%
8.7%
6.2%
726
2,643 3,369
900
3,100 4,000
12.5%
6.7%
7.9% 24.0%
17.3% 18.7%
1.6%
5.3%
3.6%
2.0%
6.0%
4.1%
Earnings forecasts for FY03/16 are as follows:
Sales:
JPY98.0bn (+3.3% YoY)
Operating profit:
JPY5.0bn
(+24.0%)
Recurring profit:
JPY6.1bn
(+18.3%)
Net income:
JPY4.0bn
(+18.7%)
Factors contributing to year-on-year changes in consolidated operating profit during the year are detailed
below.
Full-year FY03/16 forecasts
Contributions to changes in earnings
Positive impacts
Negative impacts
Increased sales
1,360
Hither raw materials costs
Lower utility fees
150
Promotion and ad costs
Improved CoGS
Others
Total
600
24
Logistics
2,134
400
680
86
1,166
Source: Shared Research, based on company data
Increased sales are calculated as the change in sales x GPM of the previous period.
Costs are calculated as sales x difference in sales composistion of each expense.
SG&A expenses are calculated as the difference between current earnings and the previous quarter's earnings.
Forex rate: JPY120/USD
Kameda Seika expects the market environment to remain difficult, with a cheaper yen impacting raw
material costs and with recovery in private consumption levels remaining subdued. In this challenging
environment, Kameda Seika plans to grow earnings and profits by implementing customer-focused
product strategies centered on its four main rice cracker brands, expanding sales in North American and
Asian markets, and reinforcing its "health functions-related business" initiatives.
Company forecasts for each business:
For the Rice Cracker and Snack business (domestic), the company is forecasting sales of JPY81.7bn
(+1.4% FY03/15) and operating profit of JPY4.9bn (+15.4%). In addition to implementing
customer-oriented product policies in its four main brands, the company intends to further restrain SG&A
expenses and lowering its manufacturing cost ratio.
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2015/7/31
For its New Domestic business, the company is forecasting sales of JPY4.1bn (+6.9% on FY03/15) and
operating profit of JPY62mn (+23.4x), which it hopes to achieve by reinforcing its "health
functions-related business" initiatives and by capitalizing on group synergies.
For overseas subsidiaries, the company is forecasting sales of JPY7.0bn (+28.7% on FY03/15) and
operating profit of JPY404mn (vs an operating loss of JPY647mn in FY03/15). The company plans to
achieve this through accelerated growth in North America, developing markets in Asia, and structural
improvements to strengthen its profit base.
Initial forecast vs. results
(JPYmn)
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
73,000
74,000
76,000
80,000
82,000
82,000
80,000
89,000
95,000
Sales (Inl. forecast）
71,313
Sales (Act.）
Inl. forecast vs. results
Operating profit (Inl. forecast)
Operating profit (Act.）
2,993
Recurring profit (Inl. forecast）
Recurring profit (Act.）
3,133
Net income (Inl. forecast)
Net income (Act.)
72,450
74,736
77,541
79,354
79,859
78,789
81,324
92,833
94,849
-0.8%
1.0%
2.0%
-0.8%
-2.6%
-3.9%
1.7%
4.3%
-0.2%
0
3,400
3,100
3,500
3,800
3,600
3,700
4,000
4,200
3,240
3,339
3,128
3,481
3,330
3,365
3,497
3,306
4,032
-1.8%
0.9%
-0.5%
-12.4%
-6.5%
-5.5%
-17.4%
-4.0%
3,300
3,400
3,200
3,700
4,300
4,100
4,300
5,000
5,100
3,331
3,506
3,314
4,021
3,938
4,059
4,294
4,530
5,157
0.9%
3.1%
3.6%
8.7%
-8.4%
-1.0%
-0.1%
-9.4%
1.1%
1,800
2,000
1,800
2,100
2,400
2,300
2,700
3,000
3,200
1,932
1,869
1,926
2,101
2,112
2,278
2,842
3,121
3,369
7.3%
-6.6%
7.0%
0.0%
-12.0%
-1.0%
5.3%
4.0%
5.3%
-
1,484
FY03/14 FY03/15
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2015/7/31
Strategy and long-term outlook
Target for FY03/21: becoming a global food company
Kameda Seika's long-term vision through FY03/21 is becoming a global food company focusing on rice
crackers. The company's main strategies for achieving this are maintaining its core domestic rice cracker
market while expanding into new areas and products and spreading the philosophy of "Wa" through its
products to provide customers with health and happiness. Targets for the final year, FY03/21 are sales of
JPY150bn (1.6x greater than FY03/15), operating profit margin of 10% (5.7pp higher than FY03/15), and
a ROE of at least 10% (1.7pp higher).
Kameda's long-term vision
Term
Theme
Details
To be a "global food company" primarily focusing on rice cracker market
FY03/15 Reform (1) to become a "global food company"
Build operating base in global rice cracker market
Achieve brand evolution
Consolidated sales of JPY94.8bn, OPM of 4.3% (act.), ROE of 8.3% ( act.)
FY03/18 Reform (2) to become a "global food company"
Expand business in the global rice cracker market
Consolidated sales of JPY108bn, OPM of 7.0%, ROE of 10.0%
FY03/21 Become a global food company
Become a leading company in the global rice cracker market
(30% of sales from overseas)
Be a trusted brand that represents Japanese culture
Consolidated sales of JPY150bn, OPM of 10%, ROE of over 10%
Medium-term management plan toward FY03/18 focused on branding
Kameda Seika announces a medium-term management plan every three years, setting milestones for
achieving its long-term vision. For the plan ending in FY03/18, the company's main targets are
strengthening the profit base and branding. Specific targets for FY03/18: sales of JPY108.0bn (+14%
higher than FY03/15), operating profit margin of 7% (2.7pp higher than FY03/15), and a ROE of 10%
(1.7pp higher). The company's main focus appears to be strengthening its branding in order to secure the
profitability increase that it was unable to fully achieve in its previous medium-term plan.
The company's strategies for each business segment under the medium-term plan are as follows:
Rice Cracker and Snack Business (domestic)
 Consolidation of brands, and improving the value add of its main brands
 Improving product development capabilities and stronger marketing
 Create a corporate environment that builds value by providing customers with a sense of fun,
relaxation, and health
Overseas Business
 Developing premium products at Mary's Gone Crackers, and pursuing new acquisitions to further
expand the company's health-related business in North America
 Pursuing rapid growth in Asian markets though tie-ups with strong local companies
New Domestic Business
 Leveraging a strong base in its core technologies related to rice to develop new innovations
 Developing new markets by providing new value through innovation
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According to the company, when formulating the medium-term business plan it was originally considering
building a new plant as part of branding efforts. However, there has been a greater focus on food safety
given the product contamination issues in 2015. For now, Kameda Seika has changed its stance to focus
on safety efforts at its own plants, rather than constructing new plants. The company is currently
inspecting existing plants and reviewing its capital investment plans. The basic strategy of the
medium-term plan is as set out above, but the company plans to announce a more detailed plan reflecting
these changes in late August 2015.
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Business
Summary
Largest domestic rice cracker company, aiming for growth overseas
Kameda Seika’s main business is the production and sale of snack products. In the rice cracker industry, it
is the largest player with a market share of approximately 30%. Mass production initiatives were
implemented ahead of its rivals, and in 1975—18 years after its founding—it became the largest rice
cracker company (by sales) in Japan. Over the next 40 years, it has held its place at the top.
Most of its production is done in-house. The group consists of the parent, 11 subsidiaries, and two
affiliates. Segments: Snack Production and Sales, Transport and Warehousing, and Other (auto
sale/repair).
More than 90% of sales and profits come from Snack production and sales. Yet the domestic rice cracker
market has matured, and rising raw material costs are a problem. Still, the company’s plan to FY03/21
calls for sales of JPY150.0bn, operating profit margin of 10% or higher, and an overseas sales
composition of 30%. To capitalize on potential synergies, it may make acquisitions. It plans to strengthen
its revenue and profit bases in the domestic rice crackers business, create new domestic markets, and
accelerate overseas expansion.
In the rice cracker industry, difficult business conditions (like higher raw material costs) have pushed
many smaller firms into bankruptcy. The few remaining big players are becoming dominant. Among the
company’s rivals, Sanko Seika Co., Ltd. (unlisted) has gained significant market share through a low price
strategy. For a time, Kameda Seika’s market share declined as a result of Sanko Seika’s initiatives. Yet
through eliminating unprofitable product lines and instead focusing on creating variety within its
successful product lines, market share is recovering. Promotional effectiveness is the difference between
increase in sales and increase in promotion expenses (details below). It was negative in the three years
from FY03/11, but turned positive in FY03/14.
Consolidated sales and operating profit
(JPYmn)
(JPYmn)
100,000
4,000
3,800
80,000
3,600
3,400
60,000
3,200
3,000
40,000
2,800
2,600
20,000
2,400
2,200
0
FY03/04
FY03/05
FY03/06
FY03/07
FY03/08
Sales
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
2,000
OP
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2015/7/31
Segment summary
Earnings by segment
FY03/10
(JPYmn)
Full-Year Full-Year Full-Year Full-Year Full-Year Full-Year
Sales
FY03/11
FY03/12
FY03/13 FY03/14 FY03/15 FY03/16
Est.
79,354
79,859
78,789
81,324
92,833
94,849
98,000
75,982
76,133
75,133
77,156
88,101
90,556
92,819
2,513
2,827
2,898
3,253
3,724
3,545
4,135
859
899
758
915
1,008
897
1,045
3,481
3,330
3,365
3,497
3,306
4,032
5,000
3,190
3,316
3,172
3,222
2,988
3,900
4,598
197
4
182
245
285
275
367
94
10
11
30
33
24
33
Recurring profit
4,021
3,938
4,059
4,294
4,530
5,157
6,100
Net income
2,101
2,112
2,278
2,842
3,121
3,369
4,000
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Snack Production and Distribution
Freight Transport and Warehousing
Other
Operating profit
Other
Composition
0
Sales
95.8%
95.3%
95.4%
94.9%
94.9%
95.5%
94.7%
3.2%
3.5%
3.7%
4.0%
4.0%
3.7%
4.2%
Other
1.1%
1.1%
1.0%
1.1%
1.1%
0.9%
1.1%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Operating profit
91.6%
99.6%
94.3%
92.1%
90.4%
96.7%
92.0%
5.7%
0.1%
5.4%
7.0%
8.6%
6.8%
7.3%
Other
2.7%
0.3%
0.3%
0.9%
1.0%
0.6%
0.7%
Snack Production and Sales: 94.8% of sales, 90.2% of OP in FY03/15
FY03/10
(JPYmn)
Sales
75,982
YoY
Operating profit
YoY
FY03/11
FY03/12
76,133
75,133
FY03/13 FY03/14 FY03/15 FY03/16
77,156
88,101
89,870
Est.
92,819
2.7%
0.2%
-1.3%
2.7%
14.2%
2.0%
3.3%
3,190
3,316
3,172
3,222
2,988
3,636
4,598
26.5%
13.8%
3.9%
-4.3%
1.6%
-7.3%
21.7%
OPM
4.2%
4.4%
4.2%
4.2%
3.4%
4.0%
5.0%
Percent of consolidated
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Sales
95.8%
95.3%
95.4%
94.9%
94.9%
94.8%
94.7%
Operating profit
91.6%
99.6%
94.3%
92.1%
90.4%
90.2%
92.0%
Snack Production and Sales is the core of the company’s business, and accounts for 94.9% of
consolidated sales and 90.4% of operating profit. Businesses in the segment include: Rice Cracker and
Snack, New Domestic Business, and Overseas. Rice Cracker and Snack has been part of the company
since its founding, but as the domestic market matures, growth is tapering. So the company is looking to
expand into related areas in the domestic market along with overseas expansion, and focusing on New
Domestic and Overseas.
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Rice Cracker and Snack: optimizing classic methods to attain growth
Domestic rice crackers and snacks
FY03/10
(JPYmn)
Sales
72,477
YoY
Operating profit
YoY
OPM
FY03/11
FY03/12
73,435
72,648
FY03/13 FY03/14 FY03/15 FY03/16
73,688
79,095
80,550
Est.
81,673
2.5%
1.3%
-1.1%
1.4%
7.3%
1.8%
1.4%
3,301
3,361
3,107
3,193
3,394
4,281
4,940
13.6%
1.8%
-7.6%
2.8%
6.3%
26.1%
15.4%
4.6%
4.6%
4.3%
4.3%
4.3%
5.3%
6.0%
Sales
Operating profit
95.4%
96.5%
96.7%
95.5%
89.8%
89.6%
88.0%
103.5%
101.4%
98.0%
99.1%
113.6%
117.7%
107.4%
Rice Cracker and Snack accounts for about 90% of sales and close to all of the company’s profits. Key
operations in Rice Cracker and Snack are the production and sale of rice crackers to domestic
supermarkets and convenience stores. By sales channel, supermarkets account for over 70%, and
convenience stores for over 10%. The company does not generally sell directly to consumers. In this
segment, sales are primarily collected through wholesalers, but in terms of delivery, over 50% of products
are delivered to retailers via wholesale distributors, and a little over 40% are delivered directly to retailers.
Key products that are popular with consumers are managed by the parent, and other products are
produced and sold by subsidiaries Ajicul Co., Ltd., Nisshin Seika Co., Ltd., Qingdao Kameda Foods Co., Ltd.,
and Thai Kameda Co., Ltd. (formerly Kameda-STC Co., Ltd.). The parent receives and sells products and
semi-finished products from these subsidiaries.
Aside from sales to the parent, Ajicul produces and sells gift products to retailers and theme parks, in
addition to novelty snacks. Toyosu Co., Ltd. primarily produces and sells luxury rice crackers to
department stores. Nisshin Seika also produces and sells rice crackers to supermarkets and convenience
stores under its own brand, in addition to selling to the parent.
Mainstay products form the product lineup’s core
In the 1960s, Salad Usu-yaki was a hit product, followed by Happy Turn in the 1970s, and Pota Pota Yaki
and Kameda No Magari Senbei in the 1980s. These products continued to be popular for a long period of
time. Kaki No Tane with peanuts began sales in 1966. Fresh Pack Kaki No Tane went on sale in 1977,
preserving freshness and preventing oxidation from the peanut oil by dividing up the package into smaller
sizes. This caused sales of Kaki No Tane to rise significantly, and it remains a favorite among consumers.
The main eight brands are currently Kameda No Kaki No Tane, Happy Turn, Kameda no Magari Senbei,
Tsumami Tane, Pota Pota Yaki, Teshiyoya, and Eda No Kodawari, which together make up more than half
of the company's sales. Of these, the two most popular products are Kameda No Kaki No Tane and Happy
Turn, and these two products alone contribute more than 30% of sales.
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Rice cracker manufacturer brand recognition (unaided recall)
(%)
Brand recognition of key products (photo recognition)
(%)
75
100
60
80
45
60
30
40
15
20
0
0
Source: Company survey (June 2014)
Sales history of key products
Date of sales launch
Product
1950
Production of baked snacks and rice snacks such as Kaki No Tane
1961
Salad Hope
1966
Kaki No Tane with Peanuts*
1967
Salad Usu-yaki*
1976
Happy Turn*
1977
Ume no Kamaki and Fresh Pack Kaki no Tane
1986
Magari Senbei* and Pota Pota Yaki*
1989
Nori Pi Pack*
1993
Tsumami Tane*
1996
Ebippuri series
1999
Ebi-nori Arare
2005
Teshioya* and Popcorn
2006
Chigiremochi
2008
Eda No Kodawari
*Top eight products
Strengths in main eight brands, continued product development, and production and sales
The company’s strengths lie in the ability of its top eight products to chalk up stable sales and profits and
its ability to continuously develop, product, and sell new products. Of its main eight brands, Kameda No
Kaki No Tane and Happy Turn, with their high name recognition among Japanese consumers, form the
core. The top eight products together enjoy stable shelf placement at retailers to produce consistent sales
and profits. The company also differentiates itself from competitors through convenient new
technologies—mass production and fresh packaging.
It has implemented new measures ahead of its competitors, from mass production, new technologies,
online systems, acquiring funds via its IPO in 1984, to overseas expansion. In an industry where
companies are struggling to find gains domestically, these initiatives have allowed the company to attain
growth. By looking to expand nationwide at an early stage, the company moved to establish sales and
logistics networks and reduced lead times and product shortages, yielding high satisfaction from both
retailers and consumers.
Balanced product strategy for various consumers
The company has a balanced product strategy that targets a wide range of consumers. This is key to its
success. For instance, the top three rice cracker companies buy rice from an array of sources. The
company buys rice from Japan, the US, and Thailand. Sanko Seika sources its rice from China, Japan, and
the US, while Iwatsuka Confectionery Co., Ltd. (JASDAQ: 2221) purchases all of its rice from contracted
domestic farms. For quality, it may seem that 100% domestic rice would be the winner, but high raw
material costs lead to these costs being passed on to the consumer. Conversely, cutting costs too much
would hit product quality, harming demand. Based on these costs and benefits, the company uses
16/49
2015/7/31
overseas rice, but in an effort to balance costs and quality, it goes for California rice.
In the 1990s, the company aimed to increase sales in Japan by introducing many new products. However,
this led to inefficiencies in its production lines, ultimately resulting in the company recording a net loss in
FY03/00. To combat this issue, Kameda Seika implemented a new strategy from FY03/13, with a focus on
producing variations on its most successful products. Specifically, the company has 23 varieties of
Kameda No Kaki No Tane, 18 varieties of Happy Turn, four varieties of Kameda no Magari Senbei, and
seven varieties of Teshioya (April 7, 2015). This strategy has met with success, and sales of its mainstay
brands have posted results that beat industry averages.
Rice cracker market and Kameda Seika sales (YoY)
Rice cracker market
YoY sales comparison of the company's eight core brands
115
Yameda Seika
115.0
109.7
110
109.5
107.9
110.0
105.8
105
105.0
102.6
100.3
100.0
100
95.0
95
90.0
Apr aay Jun
Jul
Aug Sep hct
bov Dec Jan
2014
Ceb aar
2015
90
Source: Company data (Itagen SRI/SM)
CY03/11
CY03/12
CY03/13
CY03/14
CY03/15
YoY change by sales channel (FY03/14)
Snack market
Rice cracker market
FY03/14 FY03/15
Supermarkets
Convenience stores
Drug stores
CY03/10
FY03/14
101.3%
FY03/15
102.3%
Kameda Seika
FY03/14
105.6%
FY03/15
101.5%
101.0%
102.1%
101.4%
103.8%
106.5%
109.9%
100.4%
104.7%
108.6%
110.3%
111.4%
113.0%
115.0%
111.7%
Main four brands
Kaki no tane
Happi turn
Magari senbei
Tenshioya
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2015/7/31
New domestic business: applying rice cracker expertise to new areas
New domestic businesses
FY03/10
(JPYmn)
Sales
YoY
Operating profit
YoY
OPM
FY03/11
FY03/12
FY03/13 FY03/14 FY03/15 FY03/16
Est.
2,963
2,211
1,951
2,689
4,634
3,881
4,147
-9.3%
-25.4%
-11.8%
37.8%
72.3%
-16.2%
6.9%
-18
82
104
71
224
2
62
-
-
26.8%
-31.7%
215.5%
-99.1%
-
-
3.7%
5.3%
2.6%
4.8%
0.1%
1.5%
Sales
Operating profit
3.9%
2.9%
2.6%
3.5%
5.3%
4.3%
4.5%
-0.6%
2.5%
3.3%
2.2%
7.5%
0.1%
1.3%
As of March 2014, 5.3% of sales of Rice Cracker and Snack were attributable to new domestic businesses.
Leveraging the expertise it has gained in the production of rice crackers, this business aims to seek out
opportunities in other areas, primarily in healthy living via research and development in new functional
foods. Key products: Yume Gohan, a product geared toward patients with kidney ailments, and Fukkura
Okayu, a rice porridge product that is easily digestible. The company continues to research and develop
new products, such as organic lactic acid bacteria K-1, which serves to balance the digestive system, and
organic lactic acid bacteria K-2, which has been approved for use to relieve allergic symptoms.
Additionally, in an effort to deliver quality rice to consumers across Japan, Kameda Seika also sells raw
rice made domestically.
Acquired Onishi Foods in 2013 for further business expansion
In January 2013, to expand business reach, the company bought Onishi Foods, which has the top market
share in extended shelf life rice products. Kameda Seika completed the acquisition for JPY4.0bn in cash.
Onishi Foods holds a high market share in emergency foods, producing and selling alpha rice, which has
a shelf life of five years. Alpha rice can be prepared in emergency situations by adding hot or cold water,
and due to this advanced technology, it has been approved by the Japan Aerospace Exploration Agency
for use in the International Space Station as “Japanese Space Food.” Onishi Foods is also a producer and
seller of non-allergen containing products.
Main brands
Koshihikari
Yume Gohan
Onishi write rice
Onishi brown rice
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Overseas business: forward investment resulting in losses, foundations for growth
Overseas businesses
FY03/10
(JPYmn)
Sales
YoY
Operating profit
YoY
OPM
FY03/11
FY03/12
FY03/13 FY03/14 FY03/15 FY03/16
Est.
541
487
534
779
4,372
5,235
6,998
1051.1%
-10.0%
9.7%
45.9%
461.2%
19.7%
33.7%
-93
-127
-39
-42
-630
-581
-404
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sales
Operating profit
0.7%
0.6%
0.7%
1.0%
5.0%
5.8%
7.5%
-2.9%
-3.8%
-1.2%
-1.3%
-21.1%
-14.9%
-8.8%
As of March 2014, 5.0% of sales of the Rice Cracker and Snack Business were attributable to new
domestic businesses. This business will play a key role in the company’s path toward becoming a global
food company. Sales growth continues to expand in the double digits year-on-year, and its share of sales
in Rice Cracker and Snack continues to rise. However, it is still in the early phase of development, and as
of FY03/15, its contribution to profits is negative.
A global company
Source: FY03/14 company earnings briefing documents
According to the company, the global rice cracker market size is around JPY622.0bn (FY2014), and of this,
the Japan market is JPY330bn and the market outside of Japan is just under JPY292.0bn. Key areas
include Asia (excluding Japan), with a market size of JPY172.0bn (of this, China is JPY160.0bn), North
America, with a market size of JPY60.0bn, and other markets, with a market size of JPY60.0bn. Although
the market size is not large, there are few large-scale competitors, and the company sees this as an
opportunity for expansion.
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Overseas strategy centered on North America and Asia
In the company’s overseas business, it is promoting expansion into the US and Asia, with seven overseas
operational bases, including one affiliate. In the US, subsidiaries Kameda USA, Inc. and Mary’s Gone
Crackers, Inc. produce and sell rice crackers. Affiliate TH Foods, Inc. produces and sells rice crackers and
snacks. Yearly sales at TH Foods are around JPY20.0bn, and it holds approximately 60% of the US rice
cracker market, according to the company's research.
In China, Qingdao Kameda Foods Co., Ltd. produces and sells rice crackers, while Thai Kameda Co., Ltd.
serves the same role in Thailand. Rice crackers in Vietnam are produced and sold by affiliate Thien Ha
Kameda, JSC.
Kameda Seika’s first entrance in overseas markets was in 1989, in the US state of Illinois. Through an
investment in Sesmark Foods, Inc. (now TH Foods), the company began production and sales of rice
crackers. Due to healthy eating trends and the popularity of Japanese foods overseas, TH Foods has seen
strong growth via marketing of its rice crackers as low calorie, low fat, low allergen foods. In 2008, the
company established subsidiary Kameda USA, Inc. in California, beginning sales of Kameda Crisps, the
local name for Kameda No Kaki No Tane. In December 2012, the company acquired an additional 70.2%
ownership stake and consolidated Mary’s Gone Crackers, Inc.—a leading company in the field of
producing organic and gluten free rice crackers—for JPY2.8bn in cash.
Gluten: a protein produced by grains like wheat, barley, and rye. Provides texture to foods such as bread and
noodles. However, consumption of gluten can cause an overreaction in the small intestine, causing nausea,
pain, or other intestinal problems. Severe allergic reactions can lead to celiac disease, an autoimmune
disorder that leads to patients being unable to absorb nutrients through their intestines. The number of
people allergic to gluten, including those who have only a slight reaction and are thus unaware of their
allergy, keeps rising. Hence gluten-free foods are becoming more popular, particularly in Europe and the US.
In the Asia region, Kameda Seika established Qingdao Kameda Foods Co., Ltd. in 2003, utilizing it as a
production base in the Chinese province of Shandong. Qingdao Kameda Foods is currently working to
expand sales in the Chinese market. In 2009, the company consolidated SMTC Co., Ltd. (currently Thai
Kameda Co., Ltd.) in Thailand, and positioned it as the center of operations for cross-border trading to
provide products worldwide. In 2013, affiliate Thien Ha Kameda, JSC was established as a joint venture
with a local large-scale rice cracker company, and it has begun production and sales of rice crackers.
As a basic principle, the company procures and produces where the rice is farmed, and also conducts
sales activities. As a result, Thai Kameda has a high proportion of export activity to the US and Europe,
since Thailand also serves as a country where the company sources its rice. Kameda Seika plans for
further expansion in its exports from Thailand. At Kameda USA as well, if sales volume rises, the company
maintains that the creation of a local production base is a possibility. If duties on rice cracker products are
eliminated under the Trans-Pacific Partnership (TPP), products for sale in Japan could be sourced at low
cost from Kameda Seika’s equity-method affiliate in Thailand, yielding greater cost competitiveness for
the company’s products in the Japanese market. However, gaining market share in Thailand is currently a
higher priority, and alongside quality control issues, the realization of such plans may not be possible in
the immediate future.
Many small companies compose the rice cracker market, and most companies are focused solely on the
domestic market. Among the company’s rivals, Iwatsuka Confectionery provides technology to the Wan
Wan Group, a large-scale food manufacturer in Shanghai. Iwatsuka Confectionery aims to cooperate
closely with the Wan Wan Group to expand into the Southeast Asian market.
20/49
2015/7/31
Affiliate TH Foods a contributor to recurring profit
Although TH Foods does not contribute directly to the overseas business due to its position as an
equity-method affiliate, it is an important company within the context of Kameda Seika’s plans for
expansion in the US. Currently, the company holds a 46.8% stake in TH Foods, with Mitsubishi
Corporation group companies holding the remainder. Kameda Seika has a trading relationship with
Mitsubishi for the purchase of raw materials for rice crackers, and business relations between the two
companies are favorable. Recurring profit exceeds operating profit due to profits from TH Foods, an
equity-method affiliate that has profits booked under non-operating profit at the parent.
Gross profit margin at TH Foods is lower than that of the parent, but its operating profit margin is
significantly higher. This is likely due to SG&A expenses such as sales fees being excluded from sales at
TH Foods.
Income Statement
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Operating Profit
2,993
3,240
3,339
3,128
3,481
3,330
3,365
3,497
3,306
4,032
14.2%
8.3%
3.0%
-6.3%
11.3%
-4.3%
1.0%
3.9%
350
206
283
305
647
812
906
998
YoY
Non-operating Income
Non-operating Expenses
Recurring Profit
YoY
FY03/14 FY03/15
-5.5%
1,346
22.0%
1,241
210
115
115
119
107
204
212
201
122
116
3,133
3,331
3,506
3,314
4,021
3,938
4,059
4,294
4,530
5,157
17.5%
6.3%
5.3%
-5.5%
21.3%
-2.1%
3.1%
5.8%
5.5%
13.9%
TH FOODS earnings
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Total Assets
2,535.3
3,030.4
3,918.6
5,483.5
7,135.2
Sales
8,614.9
8,687.1
9,733.9
12,192.5
17,140.6
-
0.8%
12.1%
25.3%
40.6%
(JPYmn)
YoY
Net Income
379.5
229.3
252.4
267.6
932.1
1,202.2
1,442.9
1,641.3
2,094.7
250.1%
250.1%
250.1%
250.1%
29.0%
20.0%
13.8%
27.6%
-
-
-
10.8%
13.8%
14.8%
13.5%
12.2%
46.8%
46.8%
46.8%
46.8%
46.8%
46.8%
46.8%
46.8%
46.8%
177.6
107.3
118.1
125.3
436.2
562.6
675.3
768.1
980.3
YoY
Net Margin
Kameda stake
Non-operating Profit Contribution
FY03/14
Recent results at key overseas subsidiaries and affiliates
Overseas subsidiaries’ sales
FY03/14
FY03/15
(USD '000)
Full-Year
Full-Year
KAMEDA USA, INC. (California)
Mary’s Gone Crackers, Inc.
TH FOODS, INC. (California)*
FY03/15 measures
YoY
value
1,067
1,552
484
34,350
40,992
6,642
171,012
179,186
8,174
ratio
45.3% Expanding kaki no tane "Kameda Crisps" lineup
19.3% Continue foreward investments to establish profit base
4.8% Reorganize and increase production
*Equity-method affiliate
21/49
2015/7/31
Transport and Warehousing: 4.2% of sales, 8.9% of OP in FY03/15
FY03/10
(JPYmn)
Sales
FY03/11
FY03/12
FY03/13 FY03/14 FY03/15 FY03/16
Est.
2,513
2,827
2,898
3,253
3,724
3,545
4,135
-0.2%
12.5%
2.5%
12.2%
14.5%
-4.8%
16.6%
197
4
182
245
285
275
367
-16.2%
-98.0%
4450.0%
34.6%
16.3%
-3.5%
33.5%
7.8%
0.1%
6.3%
7.5%
7.7%
7.8%
8.9%
Sales
3.2%
3.5%
3.7%
4.0%
4.0%
3.7%
4.2%
Operating profit
5.7%
0.1%
5.4%
7.0%
8.6%
6.8%
7.3%
YoY
Operating profit
YoY
OPM
Primary operations in this segment include the storage and transport of raw materials sourced and rice
crackers produced by the company. The segment was established in 1974 as Kameka Yusou Co., Ltd.
(now Niigata Yusou Co., Ltd.) in an effort to rationalize the transport of rice crackers.
Currently, the two core companies are subsidiaries Niigata Yusou and Kameda Transport Co., Ltd. Niigata
Yusou not only transports the company’s products and raw materials, but undertakes comprehensive
logistics activities, such as storage and warehouse leasing. Transport is primarily focused on local
deliveries. Kameda Transport is mainly engaged in transport along trunk lines, thus dividing the workload
between it and Niigata Yusou. The two companies also offer storage and joint transport for food
manufacturers that are outside of the Kameda Seika group. However, the majority of sales generated by
the two companies are to the parent.
Reducing delivery lead times and logistics costs
One of the factors leading to Kameda Seika’s success has been its head start in creating a nationwide
sales network, and its own logistics network has served a key role. By creating its own logistics network,
it became possible to cut lead times and product shortages, engendering satisfaction from both retailers
and consumers. In recent years, rising fuel costs have caused logistics costs to rise, but the company has
worked to consolidate logistics hubs and promote direct shipments from factories, contributing to
improved profitability for the Kameda Seika group.
Other: 1.1% of sales, 0.8% of OP in FY03/15
FY03/10
(JPYmn)
Sales
FY03/11
FY03/12
FY03/13 FY03/14 FY03/15 FY03/16
Other
Est.
859
899
758
915
1,008
1,019
1,045
-16.3%
4.7%
-15.7%
20.6%
10.2%
1.1%
2.5%
94
10
11
30
33
34
33
2.2%
-89.5%
8.1%
177.5%
10.0%
4.4%
-3.5%
11.0%
1.1%
1.4%
3.3%
3.3%
3.4%
3.2%
Sales
1.1%
1.1%
1.0%
1.1%
1.1%
1.1%
1.1%
Operating profit
2.7%
0.3%
0.3%
0.9%
1.0%
0.8%
0.7%
YoY
Operating profit
YoY
OPM
The main company in the Other segment is N.A.S. Co., Ltd., wholly owned subsidiary of Niigata Yusou Co.,
Ltd., which sells equipment such as forklifts to the group and makes repairs. It also sells and repairs
22/49
2015/7/31
automobiles for clients outside of the Kameda Seika group.
Research and development
The core of Kameda Seika’s business lies in rice, its primary ingredient, and it applies its extensive
experience to research and development in a wide variety of fields, such as rice cracker products and
healthcare products. In FY03/15, research and development expenses across the Kameda Seika group
totaled JPY976mn (JPY939mn in FY03/14).
Research on rice cracker products focuses on providing safe, reliable, and quality products by developing
technology that enables uniform dough weights and water content. Discoveries are then incorporated into
machinery installed for rice cracker production to improve quality of the end product. The company has
also been developing low sodium, whole grain, and other health-oriented products.
In the field of probiotics derived from rice, the company has focused research and development to meet
expected demand from the functional food labeling system. The company has also added Yume Gohan, a
product geared toward patients with kidney ailments, and is continuing research into rice as a functional
ingredient to develop new healthcare products in collaboration with external institutions, as Japan's
population ages and becomes more health-conscious.
23/49
2015/7/31
Profitability analysis
Absorbing rising raw materials prices through cost-cutting
Analysis of rise and fall in operating profit (YoY)
FY03/10
FY03/11
FY03/12
Act.
Act.
Act.
(JPYmn)
Reasons for growth
1,470
1,260
Act.
659
1,313
Increased sales and production
690 Cost cuts
960 Improved CoGS
480 Lower labor costs
521
Lower materials costs
550 Increased sales
300 Reduced sales promotion costs
105 Increased sales
454
Improved productivity
230
Lower depreciation
Other
Reasons for decline
-1,110
74 Other*
-1,420
-624
279
59
-1,180
Strategic investment
-860 Increased promotion costs
-630 Lower sales
-438 Increased promotion costs
-640
Increased advertising
-390 Increased depreciation
-520 Increased logistics costs
-107 Higher material costs
-465
Increased depreciation
-350
-79 Higher utilities fees
-75
Overseas investments
-10
Quality improvement costs
（such as repair costs）
Other
Increased personnel costs
-190
-60 Other
Total
-270
353
-151
FY03/14
FY03/15
Act.
Act.
(JPYmn)
Reasons for growth
4,098
Increased sales
35
2,620 Increased sales
Est.
2,134
850 Increased sales
1,360
Improved CoGS
965 Lower price for raw materials
350 Lower utility fees
150
Change in standards
513 Change in standards
258 Improved CoGS
600
392
Other
Reasons for decline
-4,289
-1,123
-2,522 Promotion and ad costs
Higher raw materials costs
-796 Logistics costs
Increased logistics costs
-317
New subsidiary
-242
Other
24
-1,166
-636 Hiher row materials costs
-400
-168 Promotion and ad costs
-680
Logistics costs
-412 Other
-191
132
FY03/16
1,850
Improved CoGS
Total
FY03/13*
-86
-319
727
968
*Only results for domestic crackers and snacks were released for FY03/13, so JPY182mn for other segments have been added.
Raw material expenses—big impact on earnings
Changes in operating profit for previous years are heavily impacted by fluctuations in the cost of raw
materials. The primary ingredient in rice crackers is rice. Other raw materials include peanuts, soy sauce,
sugar, and cooking oil. According to the company, the price of rice is relatively stable, and fluctuations in
market prices or exchange rates can be managed to an extent by modifying the mix of rice that is sourced
overseas and domestically. However, peanuts are primarily imported into Japan from contracted farms
overseas. Production output is stable from a quality and volume standpoint, but due to changes in the
global market and labor costs in production locations, the cost of peanuts is rising. Costs are also
increasing for cooking oil, soy sauce, and sugar due to higher grain prices.
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2015/7/31
Price of main raw materials（comparison as of the end of FY03/15）
175.0
155.0
135.0
115.0
100.0
89.3
85.0
95.0
96.2
98.8
98.3
FY03/13
FY03/14
FY03/15
91.2
75.0
55.0
35.0
FY03/09
FY03/10
FY03/11
FY03/12
Rice (US, non-glutinous)
Rice (domestic)
Peanuts
Source: Shared wesearch, based on company data,
Note: FY03/09 is used as a base of 100.
% of sales
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
60.1%
59.5%
60.0%
60.0%
59.1%
59.1%
58.5%
58.5%
57.9%
56.8%
39.9%
40.5%
40.0%
40.0%
40.9%
40.9%
41.5%
41.5%
42.1%
43.2%
35.7%
36.0%
35.5%
35.9%
36.5%
36.8%
37.3%
37.2%
38.6%
38.9%
4.2%
4.5%
4.5%
4.0%
4.4%
4.2%
4.3%
4.3%
3.6%
4.3%
Non-operating profit
0.5%
0.3%
0.4%
0.4%
0.8%
1.0%
1.2%
1.2%
1.5%
1.3%
Non-operating costs
0.3%
0.2%
0.2%
0.2%
0.1%
0.3%
0.3%
0.2%
0.1%
0.1%
4.4%
4.6%
4.7%
4.3%
5.1%
4.9%
5.2%
5.3%
4.9%
5.4%
Composition
Sales
CoGS
GPM
SG&A Expenses
Operating profit
Recurring profit
CoGS-to-sales ratio lower on reduced personnel expenses absorbing higher raw materials
costs
The company’s CoGS-to-sales ratio is showing steady decline due to continued measures to reduce costs.
Although specific raw material figures on a consolidated basis are not disclosed, some information can be
derived from the details on the parent’s raw materials costs, which account for about 80% of consolidated
sales. Although the composition of raw materials costs versus sales is rising, personnel expenses have
being reduced at an even higher rate, absorbing these effects.
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Total production costs
38,345
39,792
40,160
40,279
39,309
39,662
41,709
41,071
Materials
22,119
24,795
24,945
24,760
24,233
24,978
26,538
25,939
Personnel
8,640
8,524
8,526
8,340
7,893
7,496
7,235
6,967
Expenses
7,586
6,473
6,689
7,179
7,183
7,189
7,937
8,165
Total production costs
59.2%
59.4%
58.3%
57.9%
57.7%
57.6%
56.6%
55.7%
Materials
34.1%
37.0%
36.2%
35.6%
35.6%
36.3%
36.0%
35.2%
Personnel
13.3%
12.7%
12.4%
12.0%
11.6%
10.9%
9.8%
9.5%
Expenses
11.7%
9.7%
9.7%
10.3%
10.6%
10.4%
10.8%
11.1%
Production costs (parent)
(JPYmn)
FY03/14 FY03/15
Cost-to-sales ratio (parent)
Investments in rationalization at factories aim to enhance cost competitiveness
Specific measures to reduce CoGS include global sourcing (use of imported raw materials and packaging),
improving production efficiency by dividing the workload among different factories (improving efficiency
25/49
2015/7/31
for production of key products), and utilization of part-time workers. Declines in personnel expenses are
set to continue through around 2020 due to a natural decline in employee numbers. Kameda Seika also
plans to promote investment in rationalization measures at factories to enhance cost competitiveness.
Rice accounts for approximately half of the company’s raw material costs. It uses approximately 40,000
tons of rice per year, equivalent to approximately 5% of the total rice demand of Japan, which was
786,600 tons for the period between July 2013 and June 2014. As mentioned, the company utilizes both
imported and domestic rice, and adjusts its mix based on exchange rates and fluctuations in rice cracker
prices. In FY03/14, imported rice accounted for over half of the company’s rice usage. However, the
company seeks quality in its imported rice, choosing to source primarily from California.
TPP could potentially reduce costs
Currently, there is a 778% import duty on imported rice, and a 34% import duty on partially completed
rice cracker products. Depending on how the TPP is negotiated, this import duty on rice may be removed
or partially reduced. Around half of the rice used by Kameda Seika is imported, but as this is the minimum
access rice to which import duty does not apply, there will not necessarily be a direct benefit from the
removal or reduction of import duties under the TPP. However, the company is expanding its overseas
production locations, particularly in Asia, and if rice import duties were removed, it would become
possible to supply products in Japan from these more price-competitive sources. The TPP negotiations are
still in progress, but the company does stand to profit from the removal of import duties on rice.
Measures to reduce group costs
Create new line at
Kameda Plant for
30% increase in
production capacity
Reduce personnel at
main plants and shift
personnel to low-lot
plants
Shirone Plant (Niigata)
Kameda No Kaki No
Tane, etc.
Suibara Plant (Niigata)
Happy Turn, etc.
Ajicul (Niigata)
Small lots, private
brands
Transfer production
of low-lot products
Nisshin Seika
(Utsunomiya)
Nisshin and Kameda
brands
Toyosu (Osaka)
Department store
products, Kakitane
Kitchen
Consign production of popular subsidiary products
to Kameda Seika plants
oto ac
a t
(Niigata)
Small lots, snacks
Minimize cross-factory transport,
promote direct shipment
Improve productivity
Kameda Plant (Niigata)
Kameda No Kaki No
Tane, etc.
Happy Turn
Source: company data, SR Inc. research
26/49
2015/7/31
SG&A expenses (cons.)
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
26,549
27,859
28,966
29,363
29,370
30,280
35,791
36,905
14,036
14,277
14,738
15,299
15,236
15,844
18,638
19,226
206
234
254
322
280
322
404
469
3,547
3,550
3,685
3,499
3,582
3,797
4,312
4,353
334
308
308
280
295
309
360
415
53
60
69
66
62
68
75
91
221
245
278
267
262
241
113
83
Storage and shipping
2,845
3,982
3,965
4,012
4,119
4,112
4,476
4,644
Other
5,307
5,203
5,669
5,618
5,536
5,588
7,414
7,625
35.5%
35.9%
36.5%
36.8%
37.3%
37.2%
38.6%
38.9%
18.8%
18.4%
18.6%
19.2%
19.3%
19.5%
20.1%
20.3%
Provision for sales promotion expenses
0.3%
0.3%
0.3%
0.4%
0.4%
0.4%
0.4%
0.5%
Salaries
4.7%
4.6%
4.6%
4.4%
4.5%
4.7%
4.6%
4.6%
Provision for bonuses
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
Provision for director's bonuses
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
Retirement benefit expenses
0.3%
0.3%
0.4%
0.3%
0.3%
0.3%
0.1%
0.1%
Storage and shipping
3.8%
5.1%
5.0%
5.0%
5.2%
5.1%
4.8%
4.9%
Other
7.1%
6.7%
7.1%
7.0%
7.0%
6.9%
8.0%
8.0%
(JPYmn)
Total SG&A
Sales promotion expenses
Provision for sales promotion expenses
Salaries
Provision for bonuses
Provision for director's bonuses
Retirement benefit expenses
FY03/14 FY03/15
% of sales
Total SG&A
Sales promotion expenses
Reducing product types resulted in positive promotional effectiveness from FY03/14 onward
Increasing the number of products in its lineup during the 1990s, lower production efficiency due to entry
into the snack business, and higher raw materials costs caused the parent to book a net loss in FY03/00,
the first since its founding. As a result, in 2000, the company’s presidency was passed on from founder
Eiji Koizumi to Takeshi Kanazu. Under Kanazu, Kameda Seika aggressively terminated unprofitable
products and reduced costs, realizing improved earnings. From 2006, Michiyasu Tanaka was appointed
president, rising from his former position as general manager of corporate headquarters. Tanaka set the
company’s current growth strategy.
In SG&A expenses, rising items include sales promotion expenses—due to targeting business
growth—and storage and transport expenses, a result of rising fuel prices. However, the company is
working to make the most efficient use of these items. In storage and transport expenses, logistics costs
have been reduced by consolidating logistics hubs and promoting direct shipment from plants. Sales
promotion expenses have been stemmed by terminating unprofitable products and shifting to a variation
strategy for its mainstay products. As a result, promotional effectiveness (the difference between the
increase in sales and the increase in promotion expenses), which had been negative for the three years
since FY03/11, entered positive territory in FY03/14.
Effectiveness of sales promotion
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
(JPYmn)
Act.
Act.
Act.
Act.
Act.
Act.
Increased sales and production
690
300
Increased sales promotion costs
-390
300
Internet sales promotion
FY03/16
Est.
-438
454
2620
850
1360
-630
105
-640
-2522
-636
-680
-330
-333
-186
98
214
680
Facilities are aging, but no significant impact on repair costs
Kameda Seika’s main production facilities in Japan are the Kameda Plant Kogyo Danchi (Niigata City,
Niigata), Kameda Plant Motomachi (Niigata City, Niigata), Suibara Plant (Agano City, Niigata), and Shirone
Plant (Niigata City, Niigata). Domestic sales bases include nine branches (Sendai, Niigata, Tokyo, Nagoya,
Osaka, Fukuoka, etc.) and 21 other locations.
Headquarters and main production/logistics bases are concentrated in the Kaetsu region of Niigata
Prefecture. Overseas, business activities including production and sales are conducted in North America
and Asia. Since domestic production facilities are in close proximity, efficient management is possible.
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2015/7/31
However, the main domestic plants were opened in 1957 (Kameda Plant Motomachi), 1971 (Suibara
Plant), 1976 (Shirone Plant), and 1987 (Kameda Plant Kogyo Danchi). As its main plants are aging, the
company’s rate of facility aging is rising. Renovation investments since FY03/14 are helping.
Although its facilities are aging, the amount of repair expenses and its ratio vs. sales is stable. Kameda
Seika plans to continue with investments in rationalization with the aim of providing safety and peace of
mind to consumers and employees, implementing measures against aging facilities, and introducing new
value-added products.
Asset deterioration rate
(JPYmn)
Tangible fixed assets
Land
FY03/14 FY03/15
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
22,438
22,799
23,785
25,652
24,822
25,741
28,546
28,714
6,643
6,643
6,643
6,643
6,643
6,510
6,406
5,939
Accumulated depreciation
50,690
52,977
54,695
55,661
57,676
60,470
61,660
62,907
Construction
17,266
17,834
18,175
18,844
19,235
19,966
20,491
21,156
Machinery, equipment, and vehicles
32,231
33,672
34,946
35,129
36,722
38,496
39,025
39,355
-
3
14
33
71
144
180
254
1,193
1,469
1,559
1,655
1,649
1,863
1,963
2,141
76.2%
76.6%
76.1%
74.5%
76.0%
75.9%
73.6%
73.4%
Construction
25,363
26,143
26,534
27,810
27,650
28,550
30,260
30,802
39,538
41,060
43,042
44,705
45,690
42,513
49,550
50,359
Leased assets
Other
Book-value of each asset
-
36
73
158
255
487
724
947
1,577
1,848
1,899
1,946
1,954
2,303
2,507
2,671
Construction
68.1%
68.2%
68.5%
67.8%
69.6%
69.9%
67.7%
68.7%
81.5%
82.0%
81.2%
78.6%
80.4%
90.6%
78.8%
78.1%
-
8.0%
19.9%
20.8%
27.7%
29.6%
24.9%
26.8%
75.6%
79.5%
82.1%
85.0%
84.4%
80.9%
78.3%
80.2%
Leased assets
Other
Leased assets
Other
FY03/14 FY03/15
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Repair costs
759.8
749.4
820.0
746.1
748.9
745.4
779.3
722.0
Repair costs-to-sales
1.2%
1.1%
1.2%
1.1%
1.1%
1.1%
1.1%
1.0%
Repair costs
Inventory levels strategically increased but remain healthy
The company’s efficiency indices are at a stable level, but the sole exception is its inventory turnover rate,
which has been increasing since bottoming in FY03/08. The reasoning is that Kameda Seika has
strategically increased its inventory levels in line with reducing delivery lead times to heighten
competitiveness and consolidating logistics hubs. However, turnover remains below 20 days, which is low.
Productivity indexes
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Total Asset Turnover Ratio
1.5
1.6
1.6
1.5
1.4
1.4
1.4
1.4
Fixed Asset Turnover Ratio
2.5
2.6
2.6
2.5
2.4
2.2
2.1
2.1
Inventory Turnover (days)
Receivables Turnover (days)
FY03/14 FY03/15
Cons.
10.1
10.7
11.9
13.0
15.2
17.9
18.4
19.4
48.23
44.67
45.54
46.03
48.55
51.49
46.02
43.80
28/49
2015/7/31
Key group companies (as of end FY03/15)
Main group companies
Company name
Location (ownership stake)
Konan-ku, Niigata City
(100%)
Main business
Packaging of rice cracker gifts and convenience store products. Packaging
of rice cracker products produced by the parent and sourced from other
companies for sale via channels such as 100 yen stores (equivalent to
dollar stores), theme parks, souvenir shops, and mail order catalogs.
Toyosu Co., Ltd.
(Production and sales of snacks)
http://www.toyosu.co.jp/
Ikeda City, Osaka
(89.4%)
Opening of stores primarily in department stores and urban shopping
centers, and production and sales of luxury rice cracker products. In
addition to mainstay department store brands, has recently introduced new
brands such as Senka and Kakitane Kitchen.
Nisshin Seika Co., Ltd.
http://www.nissin-seika.co.jp/
Utsunomiya City, Tochigi
(99.0%)
OEM production of convenience store and supermarket products. Production
and sales of Nisshin Seika brand rice cracker products intended for
supermarkets and convenience stores in the Kanto region.
Onishi Foods Co., Ltd.
(Production and sales of foods)
http://www.onisifoods.co.jp/
Minato-ku, Tokyo
(100%)
Production and sales of foods mainly extended shelf life products and space
food. Number one domestic market share in rice products with extended
shelf-life.
Qingdao Kameda Foods Co., Ltd.
http://www.kameda.cn/
Shandong Province, China
(100%)
Production of shrimp rice crackers and soy snacks to the parent, and sales
to the Chinese market.
Kameda USA, Inc.
http://www.kamedausa.com/
California, US
(100%)
Sources Kaki No Tane from the parent, adds locally sourced peanuts, and
sells to local supermarkets. Sources popular Japanese rice cracker products
from Japan and sells to supermarkets specializing in Asian foods.
Thai Kameda Co., Ltd.
http://www.thaikameda.com/main.php
Samut Prakan Province, Thailand Production of rice crackers made from glutinous rice. Production and sales
(100%)
of rice crackers for export to Thailand, Europe, the Americas, and Asia.
Mary’s Gone Crackers, Inc.
http://www.marysgonecrackers.com/
California, US
(84.5%)
Leading company in organic and gluten-free rice crackers. Main products
are crackers made from organic ingredients.
TH Foods, Inc.*
http://www.thfoods.com/
Illinois, US
(46.8%)
Production of thinly baked rice crackers and snacks for the North American
market, its own brand sales, and OEM sales to food and snack companies.
The company and Mitsubishi Corporation each hold a 46.8% stake, and
Mitsubishi International Corporation holds 6.3%.
Thien Ha Kameda, JSC*
http://thienha-kamedafood.com/
Hung Yen Province, Vietnam
(30%)
Joint venture with local large-scale rice cracker company Thien Ha
Corporation. Production and sales of rice crackers for the local market.
Niigata Yusou Co., Ltd.
(Transport and warehousing)
http://niigatayusou.com/
(100%)
Provides logistics for all Kameda Seika products, in addition to logistics for
sourcing of raw materials. Also provides logistics for snack and food
manufacturers outside of the Kameda Seika group.
Kameda Transport Co., Ltd.
(Transport)
(100%)
As a subsidiary of Niigata Yusou, primarily provides long-distance transport.
N.A.S. Co., Ltd.
(Sales and repair of automobiles)
Agano City, Niigata Prefecture
(55.7%)
As a subsidiary of Niigata Yusou, provides sales and repairs for vehicles
used within the Kameda Seika group. Also sell and repairs automobiles to
consumers.
Ajicul Co., Ltd.
http://www.ajicul.com/
Source: Company materials
* indicates an equity-method affiliate.
29/49
2015/7/31
Market and value chain
As the snack market matures, the rice cracker market remains steady
According to the “Comments on Estimated Snack Production and Pricing 2015” announced by the All
Nippon Kashi Association (ANKA) in March 2014, the total amount of snacks produced during CY2014 was
up by 2.2% YoY, with a value of JPY2.4tn.
Comments by ANKA indicate that the effect of the April 2014 consumption tax increase on snack demand
had negative effects in certain categories, but was light overall. Poor weather including typhoons and
heavy rains persisted from summer 2014 onward, but low summer temperatures led to a recovery in
demand for snacks during 2014. The recovery varied depending upon the category, but overall,
production volume, value, and retail prices were higher year-on-year.
However, conditions in the snack industry remain severe, owing to deflationary trends on the retail level,
combined with rising raw materials costs for items such as wheat and dairy products alongside higher
prices for other base materials.
In the rice cracker category—the mainstay category for Kameda Seika—the effects of a rice shortage and
high raw materials prices were a significant factor at the beginning of 2014, but rice production stabilized
for the 2014 crop, allowing for stable and low cost procurement. Production volume for the rice cracker
industry as a whole was up by 0.1% year-on-year, but arare type rice crackers—using glutinous
rice—were up 1.9% year-on-year, while senbei type rice crackers—using non-glutinous (ordinary)
rice—were down 1.3%. Both production value and retail value were higher due to increased production
costs, a result of rising raw and base materials prices that were seen during in early 2014.
Confectionary production value (2014)
(JPY100mn)
Share of confectionary production value (2014)
Source: Company data compiled from All Nippon Kashi Association data
Consolidation continues in rice cracker industry
In the rice cracker industry, consolidation has continued as small-scale manufacturers are forced into
bankruptcy due to the rising cost of raw materials. The market share of the top 14 companies has
increased from 79.0% in 2004 to 92.0% in 2014. Sanko Seika has gained significant market share
through a low price strategy. For a time, Kameda Seika’s market share declined as a result of Sanko
Seika’s initiatives. However, through eliminating unprofitable product lines and instead focusing on
30/49
2015/7/31
creating variety within its successful product lines, the company’s share is recovering.
Sales of domestic rice crackers by manufacturer
Domestic snack manufacturers' sales
2004
2005
Amount
Rank Company
1
2006
Share Amount
2007
Share Amount
2008
Share Amount
Share Amount
Share
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
630
28.6
623
27.3
621
26.6
629
27.0
647
26.6
15.3
Kameda Seika
2
Sanko Seika
212
9.6
242
10.6
278
11.9
314
13.5
372
3
Iwatsuka Confectionary
177
8.0
175
7.7
184
7.9
189
8.1
190
7.8
4
Mochikichi
135
6.1
138
6.0
146
6.3
155
6.7
165
6.8
5
Kuriyama Beika
88
4.0
91
4.0
94
4.0
97
4.2
108
4.4
6
BonChi
73
3.3
79
3.5
82
3.5
83
3.6
87
3.6
7
Ogurasansou
53
2.4
58
2.5
62
2.7
70
3.0
75
3.1
8
Amanoya
50
2.3
51
2.2
52
2.2
55
2.4
58
2.4
9
Echigoseika
57
2.6
57
2.5
51
2.2
52
2.2
67
2.8
10
Bourbon
80
3.6
75
3.3
75
3.2
75
3.2
76
3.1
11
Maruhiko Seika
47
2.1
47
2.1
47
2.0
47
2.0
47
1.9
12
Harimaya Honten
39
1.8
38
1.7
41
1.8
41
1.8
42
1.7
13
Masuya
67
3.0
63
2.8
64
2.7
68
2.9
66
2.7
14
Abeko Seika
30
1.4
30
1.3
39
1.7
39
1.7
39
1.6
Other
461
21.0
515
22.6
498
21.3
415
17.8
397
16.3
Total
2,199
100.0
2,282
100.0
2,334
100.0
2,329
100.0
2,436
100.0
Domestic snack manufacturers' sales (cont.)
2009
2010
Amount
Rank Company
2011
Share Amount
2012
Share Amount
2013
Share Amount
2014
Share Amount
Share Amount
Share
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
(JPYbn)
%
1
Kameda Seika
670
27.4
689
28.3
695
29.3
681
28.2
689
28.8
737
30.4
2
Sanko Seika
438
17.9
447
18.3
477
20.1
491
20.3
441
18.4
462
19.0
3
Iwatsuka Confectionary
184
7.5
190
7.8
199
8.4
201
8.3
193
8.1
198
8.2
4
Mochikichi
169
6.9
178
7.3
182
7.7
188
7.8
190
7.9
194
8.0
5
Kuriyama Beika
122
5.0
127
5.2
127
5.3
142
5.9
162
6.8
175
7.2
3.8
6
BonChi
88
3.6
84
3.4
84
3.5
87
3.6
88
3.7
93
7
Ogurasansou
78
3.2
84
3.4
86
3.6
90
3.7
90
3.8
92
3.8
8
Amanoya
58
2.4
58
2.4
58
2.4
63
2.6
65
2.7
69
2.8
9
Echigoseika
60
2.5
45
1.8
45
1.9
48
2.0
49
2.0
51
2.1
10
Bourbon
65
2.7
60
2.5
60
2.5
60
2.5
59
2.5
51
2.1
11
Maruhiko Seika
47
1.9
47
1.9
47
2.0
47
1.9
48
2.0
50
2.1
12
Harimaya Honten
43
1.8
42
1.7
46
1.9
43
1.8
45
1.9
45
1.9
13
Masuya
67
2.7
60
2.5
45
1.9
45
1.9
45
1.9
44
1.8
14
Abeko Seika
37
1.5
37
1.5
38
1.6
38
1.6
40
1.7
42
1.7
Other
321
13.1
288
11.8
187
7.9
190
7.9
190
7.9
123
5.1
Total
2,447
100.0
2,436
100.0
2,376
100.0
2,414
100.0
2,394
100.0
2,426
100.0
Source: Company data, SR Inc. research
Key competitors (rice cracker manufacturers)
 Sanko Seika Co., Ltd. (unlisted)
Founded in August 1962. Significant gains in market share over the past ten years due to a low price
strategy. Mainstay products include Yuki No Yado, Parinko, Tsubu Yori Komochi, Cheese Almond,
Niigata Jikomi, and Okaki Mochi.
 Iwatsuka Confectionery Co., Ltd. (JASDAQ: 2221)
Founded in April 1954. Solid growth through an emphasis on craftsmanship. Mainstay products include
Iwatsuka No Kuromame Senbei, Aji Shirabe, Iwatsuka No Onihibi, Otona No Niigata Hitotsumami, and
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Fuwatto.
 Kuriyamabeika Co., Ltd. (unlisted)
Founded in February 1949, and changed its brand to Befco in 2010. Differentiated by operation of
Niigata Senbei Okoku, where customers can experience hand baking of rice crackers. Mainstay
products include Bakauke, Hoshi Tabeyo, Mini Kakimochi, Seto Shio, and Nagisa Arare.
 Bourbon Corporation (TSE2: 2208)
Founded in November 1924. Comprehensive snack manufacturer, selling biscuits, soy snacks, candies,
desserts, chocolates, and chewing gum. Less than 10% of sales generated by rice crackers. Rice
cracker products include Aji Gonomi, Cheese Okaki, Aji Salon, Petit Usu-yaki, and Hagoromo Arare,
with a wide variety of flavors available in the Petit series.
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2015/7/31
Strengths and weaknesses
Strengths
 Stable revenues from best-selling brands: Kameda has a number of bestselling products that
have been popular for years, such as Kameda No Kaki No Tane and Happy Turn. Stable cash flows
generated by these products make possible investments in new areas. The core brands also allow
Kameda to launch new products and tastes under the same brand name umbrella.
 Pioneering initiatives, survivor advantages: Kameda has been leading the industry with such
initiatives as manufacturing mechanization, mass production, introduction of fresh-pack technology to
preserve product freshness, and overseas expansion. Rising material costs exacerbate challenges
facing the maturing domestic rice cracker industry and industry consolidation continues as smaller
players are forced out. As the industry leader, the company has the capacity to absorb rising costs
through investments in rationalization and natural reductions in personnel expenses.
 Scale economies, in-house logistics: as Japan’s largest rice cracker producer and thanks to the
fact that 60% of its sales are concentrated in its top eight products, Kameda enjoys economies of scale.
The scale also made possible owning the company’s proprietary logistics network, leading to short lead
times and lower opportunity losses.
Weaknesses
 Time required for success in overseas development: the domestic rice cracker market is slowing,
so Kameda must expand overseas if it is to achieve sustainable growth. In FY03/14, however, overseas
operations accounted for just 5% of total sales and made an operating loss. This is partly due to
upfront investment, but it is also because Kameda is committed to overseas expansion, and generating
success takes time. For this reason, Kameda is focusing on overseas expansion through acquisitions
and other means.
 Limited track record in acquisitions and new businesses: the company’s two most popular
products, Kameda No Kaki No Tane and Happy Turn, account for about 30% of the company’s sales
combined; this means the company has not cultivated other best-selling products. The company aims
to expand overseas and into other business areas, but it lacks experience in efficiently implementing
such a strategy, including acquisitions.
 Lack of bargaining power when dealing with major retailers: Kameda’s main
clients—supermarket and convenience store chains—may apply pressure to national brand
manufacturers by offering alternative private brand products. Kameda is the leading player in the rice
cracker market, but it is significantly smaller than these major retailers. The company has a group of
products with strong brand value, which puts it in a strong position compared to industry competitors.
Still, it has a limited product portfolio, so we expect that it will come under ongoing pressure when
negotiating prices and supply terms.
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2015/7/31
Historical performance and financial statements
Historical performance
Full-year FY03/15 consolidated results
Sales:
Operating profit:
Recurring profit:
Net income:
JPY94.8bn
JPY4.0bn
JPY5.2bn
JPY3.4bn
(+2.2% YoY)
(+22.0%)
(+13.9%)
(+7.9%)
Results vs. full-year earnings forecasts:
Sales:
99.8%
Operating profit:
96.0%
Recurring profit: 101.1%
Net income:
105.3%
Operating profit fell short of forecast, but overall the company was on target.
Full-year FY03/15 results
FY03/14
(JPYmn)
Act.
92,833
Sales
3,306
Operating profit
4,530
Recurring profit
3,121
Net income
FY03/15
Act.
YoY
94,849
4,032
5,157
+2.2%
+22%
+13.9%
3,369
+7.9％
FY03/15
Est.
% of Est.
95,000
4,200
5,100
99.8%
96.0%
101.1%
3,200
105.3%
maintaining and raising brand awareness, it shifted focus from price competition to increasing sales via TV
ads and other ad campaigns. Limited edition versions of various brands (Kameda No Kaki No Tane, such
as Kameda No Kaki No Tane Karasa Gobai and Kameda No Kaki No Tane Sauce-Mayo Aji) performed well,
causing sales to rise year-on-year. Sales of brands such as Kameda No Magari Senbei and Tsumami Tane
also increased.
The company expanded its line of Happy Turn snacks to include seasonal limited editions and a new
sugar-butter flavor. It also opened two new “Happy Turn’s” stores to enhance branding. Brands under
development like Eda No Kodawari, Age Ichiban, and Haihaihan performed strongly on better distribution
to stores.
The company began selling nutritional supplements featuring rice-derived organic lactic acid bacteria and
Ion Balance Okayu—rice porridge endorsed by Niigata Prefecture Board of Pediatricians. Concerning low
protein rice for patients suffering from kidney ailments, Kameda Seika established an academic unit for
pathology and nutritional sciences in cooperation with other companies in Niigata. Established in April
2014, it conducts clinical and fundamental research on food and nutritional remedies at the Graduate
School of Dentistry, Niigata University.
Overseas, more interest in healthy living in the US prompted higher gluten-free product sales. In China,
the company expanded market share via Kaki No Tane sales. (See the Business section for details about
gluten-free.)
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2015/7/31
Expenses ticked up due to increased depreciation expenses resulting from higher production and
investments for rationalization, and higher logistics costs stemming from a shortage of truck drivers in line
with stricter regulations on working hours. However, improved utilization rates at factories due to higher
sales and measures to reduce CoGS, alongside relatively stable materials costs for the company's main
inputs despite the weak yen, underpinned higher profits overall.
below.
Full-year FY03/15 earnings
Contributions to changes in earnings
Positive impacts
Increased sales
850
350
Changes in standard
Improved CoGS
258
392
Total
Negative impacts
Logistics costs
636
168
Others
319
1,850
1,123
Q3 FY03/15 results
Sales:
Operating profit:
Recurring profit:
Net income:
JPY71.0bn (+3.4% YoY)
JPY2.7bn
(+84.8%)
JPY3.5bn
(+43.9%)
JPY2.1bn
(+21.9%)
Progress toward full-year earnings forecasts were as follows:
Sales:
74.9% (74.0% during Q3 FY03/14)
Operating profit:
65.3%
(44.9%)
Recurring profit:
68.9%
(53.9%)
Net income:
64.3%
(54.1%)
All indicators exceeded marks set the previous year.
Q3 FY03/15 results
Q3 FY03/14 Q3 FY03/15
(JPYmn)
Cml.
Cml.
68,712
71,029
Sales
Operating profit
Recurring profit
Net income
1,483
2,440
1,689
2,741
3,512
2,059
YoY
FY03/15
Forecasts
+3.4%
95,000
+84.8%
+43.9%
+21.9%
4,200
5,100
3,200
Progress
74.9%
65.3%
68.9%
64.3%
maintaining and raising brand awareness, it shifted focus from price competition to increasing sales via TV
ads and other ad campaigns. Limited edition versions of various brands (Kameda No Kaki No Tane, such
as Kameda No Kaki No Tane Karasa Gobai and Kameda No Kaki No Tane Yuzu Kosho) performed well,
causing sales to rise year-on-year. Sales of brands such as Kameda No Magari Senbei and Tsumami Tane
also increased.
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2015/7/31
The company expanded its line of Happy Turn branded snacks to include seasonal limited edition versions
and a new sugar-butter flavor. It also opened two new “Happy Turn’s” concept stores to enhance branding.
Brands under development like Eda No Kodawari, Age Ichiban, and Haihaihan performed strongly on
better distribution to stores.
The company began selling nutritional supplements featuring rice-derived organic lactic acid bacteria and
Ion Balance Okayu—rice porridge endorsed by Niigata Prefecture Board of Pediatricians. Concerning low
protein rice for patients suffering from kidney ailments, Kameda Seika established an academic unit for
pathology and nutritional sciences in cooperation with other companies in Niigata. Established in April
2014, it conducts clinical and fundamental research on food and nutritional remedies at the Graduate
School of Dentistry, Niigata University.
Overseas, more interest in healthy living in the US prompted higher gluten-free product sales. In China,
the company expanded market share via Kaki No Tane sales. (See the Business section for details about
gluten-free.)
Expenses ticked up due to increased depreciation expenses resulting from higher production and
investments for rationalization, and higher logistics costs stemming from a shortage of truck drivers in line
with stricter regulations on working hours. However, improved utilization rates at factories due to higher
sales and measures to reduce CoGS, alongside stable materials costs, underpinned higher profits overall.
1H FY03/15 results
Sales:
Operating profit:
Recurring profit:
Net income:
JPY44.8bn
JPY789mn
JPY1.2bn
JPY726mn
(+3.6% YoY)
(+978.0%)
(+100.4%)
(+12.5%)
Progress toward full-year earnings forecasts:
Sales:
47.1% (46.5% during 1H FY03/14)
Operating profit:
18.8%
(2.2%)
Recurring profit:
24.4%
(13.7%)
Net income:
22.7%
(20.7%)
All indicators topped those of the previous year.
1H FY03/15 results
1H FY03/14 1H FY03/15
(JPYmn)
YoY
FY03/15
Forecasts
Progress
47.1%
43,203
44,746
+3.6%
95,000
Operating profit
73
789
+978.0%
4,200
18.8%
Recurring profit
622
1,247
+100.4%
5,100
24.4%
Net income
645
726
+12.5%
3,200
22.7%
Sales
Performance in the domestic market for rice crackers was on par with the previous year. Instead of
competing on price, the company focused on targeted marketing of key brands—Kameda No Kaki No
Tane, Happy Turn, Kameda No Magari Senbei, and Teshioya.
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In particular, limited edition versions of Kameda No Kaki No Tane, such as Kameda No Kaki No Tane
Karasa Gobai and Kameda No Kaki No Tane Yuzu Kosho, were strong, causing sales to rise year-on-year.
Sales of brands such as Kameda No Magari Senbei and Teshioya also rose.
The company expanded its line of Happy Turn snacks to include seasonal limited edition versions and a
new sugar-butter flavor. The company also opened two new “Happy Turn’s” stores to enhance branding.
Brands under development—Eda No Kodawari and Haihaihan—performed well on better distribution to
stores. The company began sales Ion Balance Okayu. Increasing focus on healthy living in the US led to
higher sales for organic and gluten-free products.
Expenses were higher due to increased energy prices, ad expenses, and depreciation. Yet improved
utilization from higher sales and measures to reduce CoGS, alongside stable material costs, underpinned
significantly higher operating profits.
below.
1H FY03/15 earnings
Contributions to changes in earnings (JPY million)
Positive impacts
Negative impacts
Increased sales
Changes in standard
Improved CoGS
624
350
258
282
Total
Higher utility fees
Logistics costs
Others
81
555
117
46
1,514
799
FY03/14 results
Sales:
Operating profit:
Recurring profit:
Net income:
JPY92.8bn
JPY3.3bn
JPY4.5bn
JPY3.1bn
(+14.2% YoY)
(-5.5%)
(+5.5%)
(+9.8%)
Progress toward full-year earnings forecasts:
Sales:
104.3%
Operating profit:
83.6%
Recurring profit:
90.6%
Net income:
104.0%
Full-year FY03/14 results
FY03/14
(JPYmn)
Cml.
FY03/15
Cml.
YoY
FY03/14
Forecasts
Progress
81,324
92,833
+14.2％
89,000
104.3%
Operating profit
3,497
3,306
4,000
83.6%
Recurring profit
4,294
4,530
-5.5%
+5.5％
5,000
90.6%
Net income
2,842
3,121
+9.8％
3,000
104.0%
Sales
Note: FY03/14 forecasts are as of May 2013.
37/49
2015/7/31
maintaining and raising brand awareness, the company shifted its focus from price competition to highly
focused sales activities. As a result, sales were significantly higher year-on-year. It particularly focused on
television commercials and sales activities for its Kameda No Kaki No Tane and Happy Turn brands.
In the Kameda No Kaki No Tane brand, sales of wasabi, ume-shiso, seasonal limited edition products, and
the mainstay original flavor, performed strongly, leading to year-on-year gains. New products such as
those with a smoother or new flavor led to an expanded product lineup for Happy Turn brand products,
causing results to be higher year-on-year as well. Kameda Seika also opened limited-time “Happy Turn’s”
concept shops in the Ecute Shinagawa and Tokyo Soramachi shopping areas, and these were popular
among consumers. The Kameda No Magari Senbei and Teshioya brands also demonstrated solid
performance. Revenues were also higher as the company opened five new “Kakitane Kitchen” stores,
which are stores that carry Kaki No Tane products, located primarily in department stores.
Ex rice crackers, the company began sales of a nutritional supplement for pets featuring rice-derived
organic lactic acid bacteria (to maintain healthy skin and fur of dogs). It also focused on new business
areas by renewing its nursing care rice porridge product line by extending its shelf life, allowing the
products to double as a form of preserved food.
Overseas, to harness demand for the rapidly expanding gluten free market in the US, the company began
to offer its Kameda Crisps—the US name for Kaki No Tane—in a gluten-free form, looking to expand its
reach into the market for healthy foods. In Thailand, sales began for KAMEDA brand rice snacks under the
name OKOME, as the company sought to expand its market share. Additional factors leading to increased
consolidated sales: consolidation of US-based Mary’s Gone Crackers, Inc. in December 2012 and Onishi
Foods Co., Ltd. in January 2013.
Expenses were higher due to increased raw material costs (such as peanuts) due to the weaker yen,
higher utilities expenses, increased sales promotion expenses resulting from intensified competition, and
amortization of goodwill associated with the consolidation of two companies. Higher sales were unable to
offset these costs, and operating profit declined year-on-year as a result. Yet recurring profit increased
year-on-year due to higher profits from investments at equity-method affiliates. Net income was also
higher due to the recording of extraordinary profits from the sale of investment securities.
below.
Full-year FY03/14 earnings
Contributions to changes in earnings (JPY million)
Positive impacts
Negative impacts
Increased sales
2,620
Lower price for raw materials
Changes in standard
513
Improved CoGS
965
Logistics costs
New subsidiary (goodwill/profit)
Others
Total
4,098
796
2,522
317
242
412
4,289
38/49
2015/7/31
Income statement
Income Statement
(JPYmn)
Sales
YoY
CoGS
Gross Profit
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
71,313
72,450
74,736
77,541
79,354
79,859
78,789
81,324
92,833
94,849
FY03/14 FY03/15
1.3%
1.6%
42,882
43,093
44,849
46,554
46,907
47,166
46,055
47,547
53,745
53,912
29,887
30,987
32,447
32,693
32,734
33,777
39,087
40,937
3.2%
3.8%
2.3%
0.6%
-1.3%
3.2%
14.2%
2.2%
28,431
29,357
YoY
3.1%
3.3%
1.8%
3.7%
4.7%
0.8%
0.1%
3.2%
15.7%
4.7%
GPM
39.9%
40.5%
40.0%
40.0%
40.9%
40.9%
41.5%
41.5%
42.1%
43.2%
25,439
26,116
35.7%
36.0%
35.5%
35.9%
36.5%
36.8%
37.3%
37.2%
38.6%
38.9%
2,993
3,240
3,339
3,128
3,481
3,330
3,365
3,497
3,306
4,032
SG&A
SG&A / Sales
Operating Profit
26,549
27,859
28,966
29,363
29,370
30,280
35,791
YoY
14.2%
8.3%
3.0%
-6.3%
11.3%
-4.3%
1.0%
3.9%
-5.5%
OPM
4.2%
4.5%
4.5%
4.0%
4.4%
4.2%
4.3%
4.3%
3.6%
350
206
283
305
647
812
906
998
Non-operating Income
Non-operating Expenses
Recurring Profit
1,346
36,905
22.0%
4.3%
1,241
210
115
115
119
107
204
212
201
122
116
3,133
3,331
3,506
3,314
4,021
3,938
4,059
4,294
4,530
5,157
YoY
17.5%
6.3%
5.3%
-5.5%
21.3%
-2.1%
3.1%
5.8%
5.5%
13.9%
RPM
4.4%
4.6%
4.7%
4.3%
5.1%
4.9%
5.2%
5.3%
4.9%
5.4%
Extraordinary Gains
133
381
349
2
-
2
310
170
522
779
Extraordinary Losses
841
361
679
382
391
431
223
333
394
716
Pre-tax Income
2,425
3,350
3,177
2,934
3,630
3,509
4,145
4,131
4,657
5,220
937
1,417
1,334
1,009
1,515
1,419
1,860
1,274
1,550
1,861
38.6%
42.3%
42.0%
34.4%
41.7%
40.5%
44.9%
30.8%
33.3%
35.7%
4
2
-26
-1
14
-22
8
15
-15
-10
1,484
1,932
1,869
1,926
2,101
2,112
2,278
2,842
3,121
3,369
YoY
5.1%
30.2%
-3.3%
3.1%
9.1%
0.5%
7.9%
24.8%
9.8%
7.9%
Net Margin
2.1%
2.7%
2.5%
2.5%
2.6%
2.6%
2.9%
3.5%
3.4%
3.6%
Tax Charges
Implied Tax Rate
Minority Interests in Income
Net Income
Consolidated sales from F03/05 onward have continued to increase (annual growth rate 3.1% through
FY03/14) due to factors such as higher sales and more subsidiaries within the scope of consolidation.
Operating profit flattened as higher prices for raw materials such as rice and peanuts alongside higher
promotional expenses to address heightened competition pressured margins from FY03/09 (annual
growth rate of -0.2% between FY03/08 and FY03/14). However, operating profit recovered as stabilizing
materials costs, alongside the company’s strategic shift to market variations on popular products and
revisions to its production structure, have buttressed growth. Results from US-based affiliate TH Foods
are providing a boost to non-operating profit due to higher demand for health-conscious foods in the US.
The above contributions from TH Foods have also caused gains in recurring profit to exceed those of
operating profit.
39/49
2015/7/31
Balance sheet
Balance Sheet
(JPYmn)
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
ASSETS
Cash and Equivalents
3,925
5,662
5,777
6,274
7,774
6,674
7,518
5,583
4,169
4,602
Accounts Receivable
Merchandise and Finished Goods
Work in Process
Raw Materials and Supplies
9,136
-
10,489
-
9,263
-
9,716
1,009
478
937
10,087
948
493
1,295
10,054
1,018
530
1,412
10,907
1,314
643
1,663
12,036
1,745
670
1,939
11,374
2,159
716
2,146
11,389
2,199
677
2,199
Inventories
2,451
2,020
2,113
2,424
2,735
2,960
3,620
4,354
5,022
5,075
Prepaid Expenses
629
768
791
770
833
776
696
719
808
813
Other Current Assets
287
226
245
194
211
590
286
330
389
332
-8
-8
-8
-9
-12
-10
-11
-12
-11
-7
16,421
19,156
18,182
19,370
21,629
21,044
23,015
23,009
21,751
22,203
Buildings
8,409
7,968
8,097
8,309
8,359
8,966
8,415
8,584
9,769
9,645
Equipment, Plants
6,963
7,298
7,307
7,389
8,097
9,576
8,968
9,016
10,524
11,004
Land
6,888
6,646
6,643
6,643
6,643
6,643
6,643
6,510
6,406
5,939
-
-
-
33
58
125
185
343
544
693
23
13
7
46
289
50
305
848
760
903
Allowance for Doubtful Accounts
Total Current Assets
Leased Assets
Construction in Progress
Other Fixed
Total Tangible Fixed Assets
Total Other Fixed Assets
Total Intangible Assets
Total Fixed Assets
Total Assets
312
337
385
379
340
291
305
440
544
530
22,595
22,262
22,438
22,799
23,785
25,652
24,822
25,741
28,546
28,714
7,105
7,268
7,111
6,841
6,836
6,709
6,643
7,817
8,077
8,521
827
758
471
537
541
682
633
8,097
8,465
8,608
30,527
46,948
30,287
49,443
30,020
48,201
30,177
49,547
31,162
52,791
33,043
54,087
32,097
55,113
41,655
64,664
45,089
66,840
45,842
68,046
4,570
4,905
4,889
5,476
5,325
5,139
5,636
6,226
4,186
3,858
-
-
-
-
-
-
-
-
2,145
2,084
2,569
2,536
2,491
2,372
2,816
2,735
2,800
3,757
4,354
2,319
588
890
535
392
1,101
562
621
630
845
624
1,233
1,306
1,306
1,234
1,248
1,092
1,077
1,052
1,151
1,248
LIABILITIES
Accounts Payable
Electronically Recorded Obligations
Short-Term Interest-Bearing Debt
Income Taxes Payable
Bonuses
Other Current Liabilities
Total Current Liabilities
Long-Term Debt
Lease Obligations
Deferred Tax Liabilities
Net Defined Benefit Liability
Other Fixed Liabilities
Total Long-Term Liabilities
Total Interest Bearing Debt
4,103
5,145
4,589
5,158
5,202
5,084
5,543
6,395
6,378
6,874
13,062
14,781
13,809
14,632
15,692
14,613
15,677
18,060
19,059
17,008
2,037
1,401
810
411
1,470
3,135
2,235
3,846
2,356
2,600
-
-
-
66
88
149
177
259
474
614
63
52
35
35
37
41
42
2,070
2,122
2,079
7,111
6,961
6,717
6,653
6,650
6,415
6,174
5,818
4,158
1,623
610
554
468
572
451
537
222
282
227
235
9,821
8,968
8,030
7,736
8,696
10,277
8,850
12,276
9,338
7,151
4,605
3,937
3,301
2,783
4,286
5,870
5,035
7,603
6,710
4,919
22,883
23,749
21,840
22,369
24,388
24,889
24,527
30,336
28,396
24,159
Issued Capital
1,946
1,946
1,946
1,946
1,946
1,946
1,946
1,946
1,946
1,946
Reserves
1,565
487
487
487
487
487
487
487
487
487
21,285
22,517
23,828
25,307
26,968
28,581
30,391
32,727
35,321
37,442
Total Liabilities
Shareholder Equity
Retained Earnings
Treasury Shares
-1,417
0
-3
-343
-923
-1,414
-1,884
-1,885
-1,887
-1,890
Shareholders' Equity
23,379
24,949
26,257
27,397
28,478
29,600
30,940
33,274
35,866
37,985
Valuation and Translation Adjustment
471
636
17
-430
-336
-633
-588
283
1,964
5,323
Minority Interest
107
108
87
211
262
231
235
771
613
579
23,957
25,694
26,362
27,178
28,403
29,198
30,586
34,329
38,443
43,887
Working Capital
7,018
7,604
6,487
6,664
7,498
7,874
8,891
10,164
10,065
10,522
Interest Bearing Debt
4,605
3,937
3,301
2,783
4,286
5,870
5,035
7,603
6,710
4,919
681
-1,725
-2,476
-3,491
-3,488
-804
-2,483
2,020
2,541
317
Total Shareholder Equity (Net Asset
Net Debt
Assets
In tandem with higher sales in existing businesses and acquisitions, total assets have increased from
JPY45.4bn in FY03/05 to JPY66.8bn in FY03/14. However, as shown in the table below, items such as
accounts receivable and accounts payable are stable. Inventory turnover is rising (from 10.1 days in
FY03/08 to 18.4 days in FY03/14), but this is due to efforts to cut down on lead times, and the figure still
remains under three weeks. As a result, total asset turnover and fixed asset turnover have remained
steady.
40/49
2015/7/31
Cash conversion cycle
Accounts Receivable Turnover
Days in Accounts Receivable
Inventory Turnover
Days in Inventory
Payables Turnover
Days in Payables
Cash Conversion Cycle (days)
FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
7.7
7.4
7.6
8.2
8.0
7.9
47.2
49.4
48.2
44.7
45.5
46.0
30.8
32.4
36.2
34.2
30.8
28.0
11.8
11.3
10.1
10.7
11.9
13.0
15.2
15.3
15.3
15.0
14.7
15.3
24.1
23.9
23.9
24.4
24.8
23.9
35.0
36.8
34.4
31.0
32.6
35.1
FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
7.5
7.1
7.9
48.6
51.5
46.0
23.9
20.4
19.8
15.2
17.9
18.4
14.6
13.7
17.8
25.0
26.6
20.5
38.8
42.8
44.0
FY03/15
Cons.
8.3
43.8
18.8
19.4
23.6
15.5
47.7
Productivity indexes
FY03/06
FY03/07
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Total Asset Turnover Ratio
1.5
1.5
1.5
1.6
1.6
1.5
1.4
1.4
1.4
1.4
Fixed Asset Turnover Ratio
2.4
2.4
2.5
2.6
2.6
2.5
2.4
2.2
2.1
2.1
Inventory Turnover (days)
11.8
11.3
10.1
10.7
11.9
13.0
15.2
17.9
18.4
19.4
47.20
49.44
48.23
44.67
45.54
46.03
48.55
51.49
46.02
43.80
Receivables Turnover (days)
FY03/14 FY03/15
Liabilities
During and prior to FY03/05, the company focused on improving its financial standing, and
interest-bearing debt declined as a result. However, interest bearing debt at the end of FY03/15 was just
JPY4.9bn, with net debt at JPY317mn, and a net debt-to-equity ratio of just 0.7%.
Net assets
A reflection of its steady financial performance from internal reserves, the company’s net assets are
increasing, from JPY23.5bn in FY03/05 to JPY38.4bn in FY03/14. The equity ratio has increased from
51.6% in FY03/05 to 63.6% in FY03/15.
Financial indicators
Net debt/ equity
Equity ratio
FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
2.9%
-6.7%
-9.4%
-12.9%
-12.4%
-2.8%
53.3%
53.6%
50.8%
51.7%
54.5%
54.4%
FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
-8.2%
6.0%
6.7%
55.1%
51.9%
56.6%
FY03/15
Cons.
0.7%
63.6%
41/49
2015/7/31
Cash flow statement
Cash Flow Statement
(JPYmn)
Operating Cash Flow (1)
Investment Cash Flow (2)
Free Cash Flow (1+2)
Financial Cash Flow
Depreciation & Amortization (A)
Capital Expenditures (B)
Working Capital Changes (C)
Simple FCF (NI + A + B - C)
FY03/06
Cons.
3,882
-2,892
990
-436
2,676
-2,908
377
875
FY03/07
Cons.
4,518
-1,790
2,728
-983
2,382
-2,185
585
1,544
FY03/08
Cons.
5,069
-3,790
1,279
-1,191
3,292
-3,543
-1,116
2,734
FY03/09
Cons.
4,445
-2,918
1,528
-1,312
2,723
-2,446
177
2,025
FY03/10
Cons.
5,573
-4,434
1,139
455
3,149
-4,352
833
65
FY03/11
Cons.
4,297
-5,984
-1,687
555
3,546
-5,956
377
-676
FY03/12
Cons.
5,803
-3,184
2,619
-1,836
3,727
-3,140
1,016
1,848
FY03/13
Cons.
5,229
-8,044
-2,815
1,482
3,708
-3,376
1,273
1,901
FY03/14
Cons.
5,937
-5,423
514
-1,628
4,341
-5,441
-99
2,119
FY03/15
Cons.
7,638
-4,723
2,915
-2,595
5,031
-5,145
457
2,797
Operating cash flow
Growth in operating cash flow remained flat from FY03/09 onward, but a strategic shift to focus on
variations of popular products and a revised production structure have yielded gains in operating profit.
Higher profits at affiliates have also contributed to growth in non-operating profit, causing operating cash
flow to remain steady after FY03/12.
Investment cash flow
Investment amounts were generally on par with depreciation expenses and amortization of goodwill, but
outflows have increased from FY03/10 onward as the company has increased capital investment to
improve its production efficiency and heightened its M&A activities.
Financial cash flow
During and prior to FY03/10, financial cash flow was focused on the reduction of interest-bearing debt.
After FY03/10, the company has taken on long-term debt to finance capital investment and takeover
initiatives.
Financial indicators
(JPYmn)
Interest-bearing debt (short and long term)
Net debt
FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
FY03/15
Cons.
4,605
3,937
3,301
2,783
4,286
5,870
5,035
7,603
6,710
4,919
681
-1,725
-2,476
-3,491
-3,488
-804
-2,483
2,020
2,541
317
42/49
2015/7/31
Other information
History
Corporate timeline
Date
Main details
August 1957
Kameda Seika Co., Ltd. founded in Nakakambara-gun of Niigata Prefecture, with the Kameda-cho Farm Processing Farming
Cooperative as the mother entity.
October 1984
Listed on the Niigata Stock Exchange.
April 1992
Merged with Kameda Arare Co., Ltd. and consolidated Niigata Yuso Co., Ltd. and Ajicul Co., Ltd. as wholly owned subsidiaries.
March 1993
Consolidated Yunos Road Niigata Co., Ltd. (currently N.A.S. Co., Ltd.) as a subsidiary.
September 1993
Integrated Illinois, US-based Sesmark Foods, Inc. (currently TH Foods, Inc.) as an affiliate.
October 1997
Spun off the information systems business as a separate entity, forming wholly owned subsidiary K System Co., Ltd.
April 1998
Spun off the engineering business as a separate entity, forming wholly owned subsidiary Ademak Co., Ltd.
March 2000
Listed on the Second Section of the Tokyo Stock Exchange in line with the merging of the Niigata and Tokyo Stock Exchanges.
January 2003
Established Qingdao Kameda Foods Co., Ltd. in Quingdao City, China.
February 2004
Consolidated Toyosu Co., Ltd.
October 2004
Consolidated Nisshin Seika Co., Ltd.
April 2005
Established Kameda Transport Co., Ltd. as a subsidiary of Niigata Yusou Co., Ltd.
July 2005
Established Tianjin Kameda Foods Co., Ltd. as a joint venture with Tingyi (Cayman Islands) Holding Corporation and integrated as
an affiliate.
April 2008
Established Kameda USA, Inc. as a wholly owned subsidiary in California, US.
February 2009
Consolidated Thailand-based SMTC Co., Ltd. (currently Thai Kameda Co., Ltd.) as a subsidiary.
September 2010
Integrated K System and Ademak via an absorption-type merger.
April 2012
Changed listing to the First Section of the Tokyo Stock Exchange.
December 2012
Transferred all ownership of affiliate Tianjin Kameda Foods.
December 2012
Consolidated California, US-based Mary’s Gone Crackers, Inc. as a subsidiary.
January 2013
Consolidated Onishi Foods Co., Ltd. as a subsidiary.
June 2013
Established Thien Ha Kameda, JSC in Vietnam and integrated as an affiliate.
Introducing mass production techniques for rice crackers ahead of rivals
Kameda Seika traces its roots back to its founding as Kamedago Nomin Kumiai Itaku Kakojo in 1946 by Eiji
Koizumi, producing and selling starch syrup. According to the company, after suffering issues with starch
syrup production, it began to manufacture rice crackers to make use of an excess inventory of rice.
Afterward, Koizumi stopped producing starch syrup and devoted all resources to the production of baked
snacks such as Kaki No Tane and mocha rice crackers, eventually establishing Kameda Seika in 1957.
Eiji Koizumi stated, “The true purpose of corporate management is to produce the best product at a low
cost, and in addition to giving back to society, the consumer must be able to enjoy these products with
peace of mind.” This way of thinking led him to be a forerunner in the introduction of mass production and
expansion across Japan in an industry where hand-crafted techniques were common.
Through research into the composition of rice, Kameda Seika internally developed a rotating dryer device
in 1960, which allowed for consistent quality and lower energy costs by maintaining a constant
temperature. In 1963, the company developed a band dryer for rice cracker dough, and ahead of its rivals,
began full-scale mass production. Its products, with consistent quality and low prices, were popular with
consumers, and became a cornerstone of growth. To continue its success, the company has incorporated
new ideas that are consistent with the times into its rice cracker products, and continues to create new
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2015/7/31
sources of value.
The current top eight mainstay products are Kaki No Tane, Happy Turn, Magari Senbei, Tsumami Tane,
Pota Pota Yaki, Teshioya, Nori Pi Pack, and Salad Usu-yaki, and many of these products have been on sale
for an extended period of time. Consumer appetite for Kaki No Tane and Happy Turn is particularly high,
and these two products account for over 30% of the company’s sales. Retail prices for regular sizes of
these mainstay products are between JPY200 and JPY300. Kaki No Tane, which includes six bags (210g)
sells for JPY278 (tax inclusive), and Happy Turn (120g) retails for JPY206 (March 2015; prices from the
company’s web store).
Facts about the popular Kameda No Kaki No Tane and Happy Turn products
Kaki no tane was born in the Chuetsu region of Niigata Prefecture in 1924. A manufacturer accidentally
stepped on a mold used for round rice crackers, and after using the warped mold to produce rice crackers,
the current shape of kaki no tane was born. The name came from a customer, who noted the similarity
between the shape of the cracker and persimmon seeds. However, actual persimmon seeds vary in shape.
Some believe that the persimmons such as the sweet Ookozu variety, found in Niigata Prefecture, were
the basis for the name.
The company has been producing kaki no tane since 1950. At the time, these crackers were typically sold
in tin cans, but Kameda Seika began sales of the bagged variety around 1960. The company first
introduced Kaki No Tane with Peanuts in 1966. According to the company, the addition of peanuts
resulted in a 100% increase in sales. In 1977, the company changed its packaging method from one large
bag to a bag containing six smaller, individual bags. Afterward, in order to prevent oxidization of the
peanuts, the company adopted the insertion of nitrogen into the bags, an industry first. Due to the smaller,
more convenient packaging, consumers were able to enjoy the fresh taste of kaki no tane in any situation,
which led to another surge in sales. Kameda Seika’s Kaki No Tane have continued to evolve, and it is
currently available in various sizes and flavors.
Happy Turn first went on sale in 1976. During the development phase, Japan was in the midst of the first
oil crisis, and the economic outlook was bleak. To wish that Happiness would reTurn to consumers, the
company coined its product Happy Turn. At the time, rice crackers were thick, and flavors were primarily
soy sauce-based. Happy Turn deviated from this notion, and was developed with the goal of creating a
western, candy-like snack. Additionally, rice crackers were primarily baked on meshes, but Happy Turn
was marketed as a stylish western-style snack that was baked on hot plates. To further emphasize its
western feel, it was flavored with powder (Happy Powder), which was also unheard of at the time.
If placed in a bag like traditional rice crackers, the Happy Powder rubs off of the Happy Turn. The powder
also sticks to hands, causing difficulty for the company when considering appropriate packaging. To
combat these issues, Kameda Seika determined it best to sell the product in an individually-wrapped
format, a first for rice cracker products. As a result, the Happy Powder remained attached to the cracker,
hands stayed clean, and it was easy to share with others, giving Happy Turn unique properties that were
not previously found in rice crackers.
According to the company, if the total yearly production of Kaki No Tane were placed on end, the line
would reach over 1.4mn km, a distance equivalent to circling the earth 36 times. The company also
produces over 1.5bn sticks of Happy Turn per year (figures as of FY03/15).
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Top management
The company views the three year period from FY03/16 as an important period in its achieving the
long-term vision of becoming a global food company. It is therefore introducing from June 18, 2015 a
chief officer system (CEO and COO) under a new management system designed to be able to better
adapt to changing times and improve management efficiency within the company.
Michiyasu Tanaka (born 1945) is CEO. After graduating from Keio University, he joined the Long-Term
Credit Bank of Japan in 1968, and his career spanned posts such as general manager of corporate
financing and general manager of overseas sales. Entered Kameda Seika in 1998, and participated in
management reforms via roles such as deputy general manager of logistics and general manager of
corporate headquarters. Appointed president in 2006, and CEO from June 2015.
Isamu Sato (born 1954) is COO. After graduating in engineering from Tokyo Denki University, he joined
Kameda Seika in 1976. After acting as president of the Haiha-Kameda Joint Venture (Vietnam), and as the
company's general affairs manager, sales head office manager, and other positions, he was appointed
vice-president in 2012. He was appointed COO in June 2015.
Corporate governance
Kameda has both a board of corporate auditors and a corporate officer system, clearly delineating the
board of directors’ supervisory and executive responsibilities, and speeding up decision making. The
board of directors is composed of seven directors, four of which are outside directors. The board of
corporate auditors is composed of four corporate auditors, two of which are outside corporate auditors.
These measures allow the company to integrate outside perspectives into its decision-making process,
and strengthen the audit functions of management.
Additionally, the company periodically holds conferences with outside advisors to strengthen its corporate
governance and compliance initiatives via incorporating outside views and advice. The audit department,
which is in charge of internal auditing, monitors compliance and adherence to internal regulation, and in
addition to reporting to the board of directors and the board of corporate auditors, proposes measures
that would yield improvement. Kameda Seika, amid a maturing domestic rice cracker market, is
aggressively pursuing expansion into new areas and overseas. The company hopes that the above
auditing functions will serves as effective checks when embarking into new business areas.
Food safety and trust is of the utmost importance for food manufacturers. To deal with this issue, the
company has in place a quality assurance committee that proposes improvements and issues
recommendations to secure product quality both at the parent and at group companies. Through these
measures, the company aims to secure and improve its corporate, brand, and shareholder value.
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2015/7/31
Major shareholders
Amount
Held
10.00%
9.02%
5.52%
4.65%
3.41%
2.66%
1.85%
1.81%
1.55%
1.45%
Top Shareholders (as of March 2015)
EIKEI Corporation
Kameda Kyoikai
Kameda Seika Co. Ltd.　(treasury shares)
THE DAISHI BANK, LTD.
Mizuho Bank, Ltd.
Kameda Seika Employee Stock Ownership Plan
HARASHIN Co., ltd.
Japan Trustee Services Bank, Ltd.
Kikkoman Corp.
DAISHI LEASE CO., LTD.
Employees
Employees
Consolidated employee count
Consolidated average temp. worker count
Parent employee count
Parent average temp. worker count
FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
2,973
2,887
2,859
2,968
2,909
2,863
648
677
718
1,191
1,240
1,232
1,969
1,942
1,925
1,887
1,857
1,814
207
210
228
296
320
327
FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
2,835
3,010
3,048
1,170
1,301
1,485
1,737
1,669
1,616
294
301
400
FY03/15
Cons.
3,043
1,623
1,592
464
Employees
Average age
Avg. tenure (years)
Average salary (JPYmn)
1,616
46.1
21.5
5.1
Dividends
Investment in growth will be a focus, while also aiming to secure EPS growth, ROE improvement, and
stable dividend increases.
The company plans for total dividends in FY03/16 to equal JPY35 per share (including midterm dividends
of JPY14 per share), a year-on-year increase of JPY4 per share.
Financial indicators and shareholder return
(JtY)
25.0%
180
20.0%
150
120
15.0%
90
10.0%
60
5.0%
30
0
FY03/11
FY03/12
EPS
FY03/13
Dividend amount
FY03/14
ROE (right axis)
FY03/15
FY03/16 (Est.)
0.0%
Dividend payout ratio (right axis)
Note: FY03/12 dividends include a JPY2 commemorative dividend
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2015/7/31
By the way
Rice crackers, or “beika” in Japanese, are a type of Japanese baked snack that uses rice as the main
ingredient. Rice crackers are broadly classified into the “arare,” “kakimochi (okaki),” and “senbei” types.
According to the company, the term beika was first used in 1929 by the Beika Production Company, which
produced arare and senbei products. Although the main ingredient is rice, whether or not the rice is
glutinous or non-glutinous serves to divide the end product into two categories. Arare and okaki are
produced with glutinous rice, while senbei are produced with non-glutinous (ordinary) rice.
Some historians believe that historically, the Japanese people have used glutinous rice as offerings to the
gods as it can be placed on altars for longer periods of time before hardening. The roots of rice crackers
could possibly lie in these hardened pieces of rice being broken and baked or cooked on an open flame.
Arare is a snack produced from glutinous rice. Documents from the Nara period (710–794 AD) refer to
“arare mochi,” a sun dried, toasted glutinous rice. Arare is also the Japanese term for graupel (soft hail, or
snow pellets), and the way that the rice grains pop, jump, and puff when toasted was said to be similar to
graupel, providing it with its name. From the Edo period onward, arare evolved into glutinous rice cut into
small pieces, dried, toasted, and flavored with sugar and soy sauce.
Kakimochi is a baked snack produced from glutinous rice. Its origins lie in New Year mochi offerings
(kagamimochi) that were traditionally split with katana blades on the eleventh day of the New Year
(kagamibiraki, also called busokubiraki in samurai households), but later split with mallets and by hand.
The process of splitting by mallet or hand is called kakiwari, and thus the kakimochi name was born. Later,
kakimochi became a product in and of itself. Kakimochi is now created by machines, and many different
varieties are available.
Senbei is a baked snack that is a type of higashi (dried Japanese snack that has low moisture content).
Generally, senbei are either ordinary senbei (split into Kanto and Kansai types) or salt senbei, which utilize
non-glutinous rice. Salt senbei are produced by crushing rice into a fine powder, steaming, pounding, and
pressing it flat, and then drying it out in varying shapes and sizes. The dried material is then flavored with
soy sauce (salt used to be added during the pounding stage) and baked. Soka Senbei is a well-known
variety of senbei.
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2015/7/31
Company profile
Company name
Head office
Kameda Seika Co., Ltd.
3-1-1 Kameda Kogyo Danchi,
Phone
Listed on
+81-25-382-2111
First Section, Tokyo Stock Exchange
Established
Exchange listing
August 1957
October 31, 1984
Website
Financial year end
http://www.kamedaseika.co.jp/en
March
IR contact
IR web
http://www.kamedaseika.co.jp/en/investor/investorIndex.html
IR email
IR phone
025-368-7210
48/49
2015/7/31
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Kameda Seika Co., Ltd. (2220)

Transcription

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