This document is a summary translation of the Japanese language original version. In the event of any discrepancy, errors and/or omissions, the Japanese language version shall prevail.
Consolidated Financial Summary for the First Quarter Ended March 31, 2017 (Japanese Standard) |
May 1, 2017
Listed company name: Coca-Cola Bottlers Japan Inc. | |
(formerly Coca-Cola West Company, Limited) | Listed stock exchanges: Tokyo and Fukuoka |
Code number: 2579 | URL: https://en.ccbji.co.jp |
Delegate: Title: Representative Director & President | Name: Tamio Yoshimatsu |
Contact: Title: Leader, Finance Controller Group | Name: Masakiyo Uike Phone: +81-3-6896-1707 |
Expected date of quarterly report submission: May 12, 2017 | Expected date of the dividend payments: - |
FY 2017 1Q supplementary information: Yes | |
FY 2017 1Q financial presentation: None |
(Fractions of one million yen are rounded down)
1. Consolidated financial results for the 1st quarter 2017 (from January 1, 2017 to March 31, 2017)
(Percentages indicate changes over the same period in the prior fiscal year)
(1) Consolidated financial results
Net revenues | Operating income | Recurring income | Profit attributable to owners of parent | |||||
million yen | % | million yen | % | million yen | % | million yen | % | |
1st quarter 2017 | 99,141 | (1.4) | 2,167 | (1.9) | 1,947 | (5.9) | 942 | (1.2) |
1st quarter 2016 | 100,545 | 10.3 | 2,209 | - | 2,069 | - | 953 | - |
Note: Comprehensive income
1Q 2017: 1,101 million yen <-%> | 1Q 2016: (333 million yen) <-%> |
Earnings per share | Diluted earnings per share | |
yen | yen | |
1st quarter 2017 1st quarter 2016 | 8.63 8.73 | - - |
(2) Consolidated financial position
Total assets | Net assets | Net assets (excl. minority interests) to total assets | |
As of | million yen | million yen | % |
1st quarter 2017 | 368,841 | 259,623 | 70.3 |
Full year 2016 | 377,468 | 261,173 | 69.1 |
Reference: Net assets (excl. minority interests)
1Q 2017: 259,223 million yen | End of 2016: 260,758 million yen |
2. Dividends
Dividends per share | |||||
(Record date) | End of 1Q | End of 2Q | End of 3Q | Year-end | Annual |
Year ended | yen | yen | yen | yen | yen |
Full year 2016 Full year 2017 | - - | 22.00 | - | 24.00 | 46.00 |
Full year 2017 (forecast) | - | - | - | - |
Note: 1. | Revisions to the cash dividends forecasts most recently announced: None |
2. | End of 2Q FY 2016 dividend FY 2016 ending dividend | : an ordinary dividend of 21.00 yen,a commemorative dividend of 1.00 yen : an ordinary dividend of 23.00 yen, a commemorative dividend of 1.00 yen |
3. | We conducted the business integration with Coca-Cola East Japan Co., Ltd. through a share exchange and an absorption-type company split on April 1, 2017. Year-end dividend forecast for the fiscal year ending December 31, 2017 shall be announced separately upon determination. |
3. Forecast of consolidated financial results 2017 (from January 1, 2017 to December 31, 2017)
(Percentages indicate changes over the same period in the prior fiscal year)
Net revenues | Operating income | Recurring income | Profit attributable to owners of parent | Earnings per share | |||||
million yen | % | million yen | % | million yen | % | million yen | % | Yen | |
Full year 2017 | - | - | - | - | - | - | - | - | - |
Note: 1. | Revisions to the forecasts of consolidated financial results most recently announced: None |
2. | We conducted the business integration with Coca-Cola East Japan Co., Ltd. through a share exchange and an absorption-type company split on April 1, 2017. Full-year consolidated performance forecasts for the fiscal year ending December 31, 2017 shall be announced separately upon determination. |
Notes
(1) Changes in significant subsidiaries during the current period (changes in specified subsidiaries resulting in change in scope of consolidation) | : None |
(2) Application of special accounting for preparing the quarterly consolidated financial statement | : None |
(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements after error corrections 1) Changes in accounting policies due to revisions to accounting standards and other regulations 2) Changes other than those in 1) above 3) Changes in accounting estimates 4) Restatement of prior period financial statements after error corrections | : None : Yes : Yes : None |
(4) Number of outstanding shares (common shares) 1) Number of outstanding shares at the end of period (including treasury shares): 1Q 2017: 111,125,714 shares FY 2016: 111,125,714 shares 2) Number of treasury shares at the end of period: 1Q 2017: 1,989,678 shares FY 2016: 1,989,069 shares 3) Average number of outstanding shares at end of period (three months): 1Q 2017: 109,136,375 shares 1Q 2016: 109,138,597 shares Note: the total number of outstanding shares increased by 95,142,879 to 206,268,593 as of April 1, 2017 in connection with the integration with Coca-Cola East Japan Co., Ltd. |
* These Consolidated Financial Results are not subject to quarterly review procedures.
* Explanation regarding appropriate use of the forecast, other special instructions
Figures in the above forecast are based on information available to management at the time of announcement.
Due to number of inherent uncertainties in the forecast, actual results may differ materially from the forecast. Furthermore, please refer to [Attachment] “1. Qualitative Information on the Financial Summary for this Quarter (3) Information on the Future Outlook, Including Forecast of Consolidated Financial Results” on page 3 for matters relating to performance forecasts.
Table of contents
Page | ||
Attachment | ||
1. | Qualitative Information on the Financial Summary for this Quarter | |
(1) Details of Consolidated Financial Results | 2 | |
(2) Details of Consolidated Financial Position | 3 | |
(3) Information on the Future Outlook, Including Forecast of Consolidated Financial Results | 3 | |
2. | Quarterly Consolidated Financial Statements | |
(1) Quarterly Consolidated Balance Sheets | 4 | |
(2) Quarterly Consolidated Statements of Income and Comprehensive Income | 6 | |
Quarterly Consolidated Statements of Income | 6 | |
Quarterly Consolidated Statements of Comprehensive Income | 7 | |
(3) Notes to Quarterly Consolidated Financial Statements | 8 | |
(Notes Relating to Assumptions for the Going Concern) | 8 | |
(Notes for Case Where Shareholders’ Equity underwent Significant Changes in Value) | 8 | |
(Application of Special Accounting for Preparing the Quarterly Consolidated Financial Statement) | 8 | |
(Changes in Accounting Policies, etc.) | 8 | |
(Additional Information) | 8 | |
(Segment Information) | 9 |
1
1. Qualitative Information on the Financial Summary for this Quarter
(1) Details of Consolidated Financial Results
During the first quarter of the fiscal year under review, the Japanese economy continued to show an overall trend of modest recovery with the job market and income situation continuing to improve and the various strategic measures by the government having a positive impact.
In the soft drink industry, despite the fact that the market saw trends for soft drink companies to continue initiatives focusing on revenue, the stark situation continued as sales competition among beverage companies remained severe.
Both health food and cosmetic industries also remained under tough conditions despite the continued trend of market growth, due to factors such as intense competition owing to new players from other industries entering the market, etc.
In this operating environment, the Company will adopt the following management policies. In the soft drink business we will aim to increase sales generating profits by implementing appropriate price strategies in order further develop the sophistication of our RGM (Revenue Growth Management) initiatives and ensure fine-tuned sales activities corresponding to business conditions and the situations of our customers. In order to build a vending business model that gives us a competitive advantage, we will enhance initiatives for key issues that will lead to improvements in productivity and efficiency, and introduce IT solutions targeted at growing sales. We will also continue to make investments in order to improve job satisfaction for employees and corporate growth.
In the healthcare & skincare business, we aim to win new customers by introducing highly competitive new products and carrying out effective advertising campaigns, and we will aim to promote continued and increased purchases by existing customers through further promotion of CRM (Customer Relationship Management). We will also undertake initiatives to develop new sales channels and new business in order to break into new fields.
The Company plans to create new growth opportunities by continuing collaborative initiatives between the soft drink business and healthcare & skincare business.
Additionally, the Company and Coca-Cola East Japan Co., Ltd. underwent the business integration by means of a share exchange and absorption-type company split effective as of April 1, 2017, with the new, merged company, Coca-Cola Bottlers Japan Inc., launching as of the same date. The integration will combine the experience and know-how that the Company and Coca-Cola East Japan Co., Ltd. have cultivated over the years, and through the creation of new value aims to further grow Coca-Cola’s business and contribute to the development of the soft drink industry in Japan.
The business performance status for the first three-month period of this fiscal year is as follows.
<Net Revenues>
Consolidated net revenues of the soft drink business in the first quarter of the fiscal year under review fell 735 million yen to 91,644 million yen (down 0.8%) year on year, owing to factors such as the impact of the fall in sales volumes. Consolidated net revenues of the healthcare & skincare business in the first quarter of the fiscal year under review fell 668 million yen to 7,497 million yen (down 8.2%) year on year, owing to factors such as the impact of the fall in sales volumes. As a result, the total consolidated net revenues for all segments in the first quarter of the fiscal year under review fell 1,403 million yen to 99,141 million yen (down 1.4%) year on year.
<Operating Income>
Consolidated operating income of the soft drink business in the first quarter of the fiscal year under review fell 79 million yen to 1,320 million yen (down 5.7%) year on year, due to the impact of an increase in expenses brought about by the change in our depreciation method for fixed assets, despite our efforts to reduces costs, etc. in connection with the decrease in net revenues discussed above. Despite the aforementioned drop in net revenues, consolidated operating income in the healthcare & skincare business in the first quarter of the fiscal year under review increased by 37 million yen to 846 million yen (up 4.6%) year on year thanks to factors such as reductions in sales promotion costs. As a result, the total consolidated operating income for all segments for the first quarter of the fiscal year under review fell 42 million yen to 2,167 million yen (down 1.9%) year on year.
<Recurring Income and Quarterly Profit Attributable to Owners of Parent>
Recurring income in the first quarter of the fiscal year under review decreased by 121 million yen to 1,947 million yen (down 5.9%) year on year, owing mainly to the fall in operating income. Quarterly profit attributable to owners of parent in the first quarter of the fiscal year under review fell 11 million yen to 942 million yen (down 1.2%) year on year.
2
(2) Details of Consolidated Financial Position
Total assets at the end of the first quarter of the fiscal year under review decreased 8,627 million yen to 368,841 million yen (down 2.3%) compared to the end of the previous consolidated fiscal year, mainly due to a reduction in notes and accounts receivable – trade, as well as cash and deposits.
Liabilities decreased 7,078 million yen to 109,217 million yen (down 6.1%) from the end of the previous consolidated fiscal year. This was chiefly due to a decrease in accrued income taxes and other accounts payable.
Net assets decreased 1,549 million yen to 259,623 million yen (down 0.6%) compared to the end of the previous consolidated fiscal year as a result primarily of dividend payments.
(3) Information on the Future Outlook, Including Forecast of Consolidated Financial Results
The Company conducted the business integration with Coca-Cola East Japan Co., Ltd. through a share exchange and an absorption-type company split on April 1, 2017 with the new company, Coca-Cola Bottlers Japan Inc., launching as of the same date.
Full-year consolidated performance forecasts of Coca-Cola Bottlers Japan Inc. for the fiscal year ending December 31, 2017 are currently being developed and shall be announced promptly upon determination.
3
2. Quarterly Consolidated Financial Statements and Main Notes
(1) Quarterly Consolidated Balance Sheets
(Millions of yen) | ||||||||
As of December 31, 2016 | As of March 31, 2017 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and deposits | 63,849 | 64,563 | ||||||
Trade notes and accounts receivable | 29,649 | 27,838 | ||||||
Marketable securities | 23,112 | 19,005 | ||||||
Merchandise and finished goods | 27,279 | 26,063 | ||||||
Work in process | 652 | 703 | ||||||
Raw materials and supplies | 1,998 | 3,741 | ||||||
Other | 17,333 | 15,666 | ||||||
Allowance for doubtful accounts | (287 | ) | (243 | ) | ||||
Total current assets | 163,587 | 157,337 | ||||||
Fixed assets | ||||||||
Property, plant and equipment | ||||||||
Buildings and structures, net | 31,162 | 29,672 | ||||||
Machinery, equipment and vehicles, net | 22,688 | 21,753 | ||||||
Sales equipment, net | 39,999 | 40,825 | ||||||
Land | 62,128 | 62,077 | ||||||
Construction in progress | 5 | 7 | ||||||
Other, net | 1,829 | 1,744 | ||||||
Total property, plant and equipment | 157,815 | 156,080 | ||||||
Intangible assets | ||||||||
Goodwill | 22,668 | 22,216 | ||||||
Other | 4,889 | 4,456 | ||||||
Total intangible assets | 27,557 | 26,672 | ||||||
Investments and other assets | ||||||||
Investment securities | 20,144 | 20,169 | ||||||
Retirement benefit assets | 123 | 126 | ||||||
Other | 8,760 | 8,983 | ||||||
Allowance for doubtful accounts | (519 | ) | (529 | ) | ||||
Total investments and other assets | 28,508 | 28,750 | ||||||
Total fixed assets | 213,881 | 211,503 | ||||||
Total assets | 377,468 | 368,841 |
4
(Millions of yen) | ||||||||
As of December 31, 2016 | As of March 31, 2017 | |||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Trade notes and accounts payable | 15,990 | 18,705 | ||||||
Current portion of long-term borrowings | 17 | 17 | ||||||
Accrued income taxes | 5,717 | 843 | ||||||
Other accounts payable | 25,042 | 20,344 | ||||||
Provision for sales and promotion expenses | 308 | 328 | ||||||
Other | 8,662 | 9,077 | ||||||
Total current liabilities | 55,739 | 49,318 | ||||||
Non-current liabilities | ||||||||
Bonds payable | 50,000 | 50,000 | ||||||
Long-term borrowings | 183 | 179 | ||||||
Net defined benefit liability | 3,505 | 3,443 | ||||||
Liabilities for directors’ and corporate auditors’ retirement benefits | 191 | 110 | ||||||
Other | 6,675 | 6,165 | ||||||
Total non-current liabilities | 60,556 | 59,898 | ||||||
Total liabilities | 116,295 | 109,217 | ||||||
Equity | ||||||||
Shareholders’ equity | ||||||||
Capital stock | 15,231 | 15,231 | ||||||
Capital surplus | 109,072 | 109,072 | ||||||
Retained earnings | 137,404 | 135,726 | ||||||
Treasury stock | (4,593 | ) | (4,595 | ) | ||||
Total shareholders’ equity | 257,114 | 255,435 | ||||||
Accumulated other comprehensive income | ||||||||
Net unrealized gains(loss) on other marketable securities | 4,092 | 4,091 | ||||||
Deferred gains or losses on hedges | 77 | 52 | ||||||
Foreign currency translation adjustments | (3 | ) | 18 | |||||
Remeasurements of defined benefit plans | (522 | ) | (375 | ) | ||||
Total accumulated other comprehensive income | 3,643 | 3,787 | ||||||
Non-controlling interests | 414 | 400 | ||||||
Net assets | 261,173 | 259,623 | ||||||
Total liabilities and equity | 377,468 | 368,841 |
5
(2) Quarterly Consolidated Statements of Income and Comprehensive Income
(Quarterly Consolidated Statements of Income)
(First three-month period of a fiscal year)
(Millions of yen) | ||||||||
Three months ended March 31, 2016 | Three months ended March 31, 2017 | |||||||
Net revenues | 100,545 | 99,141 | ||||||
Cost of goods sold | 48,469 | 47,179 | ||||||
Gross profit | 52,076 | 51,962 | ||||||
Selling, general and administrative expenses | 49,866 | 49,794 | ||||||
Operating income | 2,209 | 2,167 | ||||||
Non-operating income | ||||||||
Interest income | 14 | 10 | ||||||
Dividends income | 23 | 18 | ||||||
Share of profit of investees equity-method | 14 | 40 | ||||||
Other | 106 | 135 | ||||||
Total non-operating income | 159 | 204 | ||||||
Non-operating expenses | ||||||||
Interest expense | 118 | 113 | ||||||
Loss on disposal of property plant and equipment | 93 | 134 | ||||||
Other | 88 | 176 | ||||||
Total non-operating expenses | 299 | 424 | ||||||
Recurring income | 2,069 | 1,947 | ||||||
Extraordinary income | ||||||||
Gain on sale of property plant and equipment | - | 42 | ||||||
Gain on sale of investment securities | - | 16 | ||||||
Total extraordinary income | - | 59 | ||||||
Extraordinary expenses | ||||||||
Business integration-related expenses | - | 536 | ||||||
Total extraordinary losses | - | 536 | ||||||
Income before income taxes and minority interests | 2,069 | 1,470 | ||||||
Income taxes - current | 655 | 663 | ||||||
Income taxes - deferred | 439 | (150 | ) | |||||
Total income taxes | 1,094 | 513 | ||||||
Net profit | 975 | 956 | ||||||
Net profit attributable to non-controlling interests | 21 | 14 | ||||||
Net profit attributable to owners of the company | 953 | 942 |
6
(Quarterly Consolidated Statements of Comprehensive Income)
(First three-month period of a fiscal year)
(Millions of yen) | ||||||||
Three months ended March 31, 2016 | Three months ended March 31, 2017 | |||||||
Profit | 975 | 956 | ||||||
Other comprehensive income | ||||||||
Net unrealized gains(loss) on marketable securities | (1,274 | ) | (0 | ) | ||||
Foreign currency translation adjustments | 14 | 22 | ||||||
Remeasurements of defined benefit plans, net of tax | 166 | 127 | ||||||
Share of other comprehensive income of investees equity-method | (214 | ) | (5 | ) | ||||
Total other comprehensive income | (1,308 | ) | 144 | |||||
Comprehensive income | (333 | ) | 1,101 | |||||
Comprehensive income attributable to: | ||||||||
Owners of the company | (354 | ) | 1,086 | |||||
Non-controlling interests | 21 | 14 |
7
(3) Notes to Quarterly Consolidated Financial Statements
(Notes Relating to Assumptions for the Going Concern)
Not applicable.
(Notes for Case Where Shareholders’ Equity underwent Significant Changes in Value)
Not applicable.
(Application of Special Accounting for Preparing the Quarterly Consolidated Financial Statement)
Not applicable.
(Changes in Accounting Policies)
(Changes in accounting policies that are difficult to distinguish from changes in accounting estimates, and changes in accounting estimates)
(Change in depreciation method and change in service life)
Previously, the Company and some of its consolidated subsidiaries mainly used the declining balance method to calculate depreciation of property, plant and equipment (excluding sales equipment and leased assets), but we have switched to the straight-line method from the first quarter of the fiscal year under review.
The business integration with Coca-Cola East Japan Co., Ltd. carried out as of April 1, 2017 gives us a stronger business platform, and by bringing together the know-how in the areas of sales and manufacturing that both companies have cultivated over the past years it will allow us to create an optimal production structure covering a wide geographical area. Consequently, as we expect to be able to benefit from the long-term, stable use of property, plant and equipment (excluding sales equipment and leased assets), using straight-line depreciation to distribute the expense over its service life will appropriately reflect the pattern of consumption of economic benefits for such property, plant and equipment, so we have therefore decided to change our depreciation method to the straight-line method.
The Company and some of its consolidated subsidiaries also used the opportunity provided by the change in our depreciation method to conduct a utilization study. Previously, we had set the key service life of manufacturing machinery and equipment at 10 years, but as a result of our study we have revised it to 7-20 years – a predicted economic life that more accurately reflects the reality of the situation – and have made changes extending into the future.
We also took the opportunity provided by the change in our depreciation method for property, plant and equipment to devaluate the residual value of property, plant and equipment after the elapse of its service life to a nominal value of one yen, from the first quarter of the consolidated fiscal year under review.
Compared to the previous method, the aforementioned changes have resulted in a reduction of operating income of 1,011 million yen and reduction in recurring income and income before income taxes and minority interests of 1,034 million yen for the first quarter of this consolidated fiscal year.
Please refer to “2. Quarterly Consolidated Financial Statements and Main Notes (3) Notes to Quarterly Consolidated Financial Statements (Segment Information)” for the impact on segment information.
(Additional Information)
(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
“Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26 dated March 28, 2016) is applied from the first quarter of the consolidated fiscal year under review.
8
(Segment Information)
First three-month period of previous fiscal year (January 1, 2016 – March 31, 2016)
1. Information on net revenues and profits or losses by reported segment
(Millions of yen) | |||
Soft drink business | Healthcare & skincare business | Total | |
Net revenues | |||
Net revenues-outside customers | 92,380 | 8,165 | 100,545 |
Net revenues and transfer-inter-segment | - | - | - |
Total | 92,380 | 8,165 | 100,545 |
Segment profit | 1,400 | 809 | 2,209 |
(Note) Net revenues and Segment profit are equivalent to Net revenues and Operating income in Quarterly Consolidated Statements of Income, respectively.
First three-month period of this fiscal year under review (January 1, 2017 – March 31, 2017)
1. Information on net revenues and profits or losses by reported segment
(Millions of yen) | |||
Soft drink business | Healthcare & skincare business | Total | |
Net revenues | |||
Net revenues-outside customers | 91,644 | 7,497 | 99,141 |
Net revenues and transfer-inter-segment | - | - | - |
Total | 91,644 | 7,497 | 99,141 |
Segment profit | 1,320 | 846 | 2,167 |
(Note) Net revenues and Segment profit are equivalent to Net revenues and Operating income in Quarterly Consolidated Statements of Income, respectively.
2. Matters relating to changes in the Company’s reported segment
(Change in depreciation method and change in service life)
As discussed in “2. Quarterly Consolidated Financial Statements and Main Notes (3) Notes to Quarterly Consolidated Financial Statements (Changes in Accounting Policies, etc.),” from the first quarter of the consolidated fiscal year under review the depreciation method for property, plant and equipment (excluding sales equipment and leased assets) was changed to the straight-line method. The key service life of machinery and equipment has been revised to 7-20 years, and changes have been applied into the future. Furthermore, from the first quarter of the consolidated fiscal year under review the residual value of property, plant and equipment after the elapse of its service life has been devaluated to a nominal value of one yen.
As a result of these changes, compared to the previous method, segment revenue for the first quarter of this fiscal year has reduced by 976 million yen in the soft drink business and 34 million yen in the healthcare & skincare business.
9