The acquisition of Blackmores was completed earlier this month, with the formerly Australian Securities Exchange-listed firm delisted on August 10.
Against the backdrop of declining and an ageing population in Japan, which would affect its core alcoholic beverage business, Kirin will set sight on growing its health science business in Japan and Asia-Pacific in the medium to the long-term.
“Recently, overseas investors have been re-evaluating Japanese listed companies, and ‘Management that increases corporate value’ has become an important theme than ever before.
“If we only consider short-term profits and EPS stability, we may only need to focus on the Food & Beverages domain, mainly alcoholic and non-alcoholic beverages. However, in these markets where Kirin operates, it is difficult to foresee significant volume growth in the future due to declining birth rates, ageing population, and changing values,” president and CEO Yoshinori Isozaki said.
In the first six months of 2023, revenue from the company’s health science domain was up from 50.8bn yen (US$349.1m) to 54.6bn yen (US$375.3m).
Of which, revenue from its flagship immune health ingredient Lactococcus lactis strain Plasma (LC-plasma) and related products was up 40 per cent.
Revenue from Kirin Oishii Immune Care, its 100ml ultra-small version of LC-plasma Foods with Function Claims, had tripled since its launch in March this year. The firm subsequently launched a 50 per cent less calorie version of the product.
Revenue from all businesses was up 5.8 per cent to 970.2bn yen (US$6.67bn). Profit attributable to shareholders, however, shrunk 42.2 per cent to 32bn yen (US$220m). This was due to the reduction in profit before tax when the firm sold its stake in a Myanmar JV with a military-linked local partner.
Isozaki said that the firm would “focus on maximising the value of Blackmores” as part of its strategies in growing its health science business.
“I have expressed that ‘the acquisition of Blackmores fits an important piece of the puzzle’ for business expansion and profitability in the Asia-Pacific region in the Health Science domain, and we are preparing for a smooth integration with Kirin immediately after the completion of the closing.
“Blackmores aims to achieve revenue of 100 billion yen and a NOP margin of 15 per cent or more, which is more than the expected return on the investment capital.”
Kirin said it was envisioning the goal to be achieved by year 2030 but would like to be able to achieve it ahead of schedule.
Last year, Blackmores’ group revenue was A$649.5m (US$422.4m), up 12.8 per cent yoy.
At the same time, the company would continue to explore further strategic investments to further its contribution to earnings-per-share in the future.
“To give an example of what we will work on together to create an integrated premium, we will first offer Kirin Group's specialty ingredients. We will provide Kirin's high value-added ingredients such as LC-Plasma to Blackmores' highly effective and reliable brand.
“We will also be actively involved in the development of product formats other than supplements,” he said.
He added that the firm would be selecting manpower from Kirin to key local position within Blackmores, as well as to work with the current management team.
In addition, Kirin’s production, logistics, R&D teams will also be working with each corresponding function in Blackmores.
The company will also be organising a Health Science Day on September 27, where Blackmores CEO Alastair Symington will be making a speech.
Moving forward, Kirin will continue to grow its immune health business related to LC-plasma. The plan is to grow LC-plasma related revenue by over 30 per cent yoy.
This will be conducted by continuing immune care awareness activities and expanding the sales of ultra-small beverages, supplements, and out-licensing.
A new product, iMUSE Immune Care Supplement 30-day supply will be launched on September 26, the firm revealed.