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Japanese farmed milk, corporate culture, investor activist

Even if Yakult Honsha in Japan knows its most famous product, a drink like probiotic yogurt with a red hat sold in many parts of the world, it is familiar to foreign investors. A company that may not exist.

The company is also an interesting study of Japanese corporate governance and the relationship between mid-sized listed companies (market capitalization of about $ 9 billion) and foreign investors. A good example: Relationship with VGI Partner, a global equity asset management company based in Australia. VGI owns about 1% of the company and accounts for about 4.5% and 6% of listed funds focused on global and Asia, respectively.

Yakult’s promise is easy to understand. Despite its existence since the 1930s, it is an increasingly trusted brand in the health-conscious market, with great room for expansion in both China and the United States.

However, it can be difficult to find a corporate governance drama that symbolizes occasional friction. Calm foreign investors And a traditional Japanese company.

VGI will vote against management candidates next month. The youngest is 58 people. If these candidates are successful, the board will have two foreign members.

Danone

It ended last year — I didn’t have anything. Other Western investors will vote against the appointment. For example, Calvert Research and Management votes against a board of directors with a majority that is not independent.

Yakult and Australian asset managers are also competing for the use of Yakult’s digital marketing. This was a natural and immediate follow-up to recent investments in US distribution, VGI said. According to VGI, the company has been slow to implement its marketing strategy. Yakult has selected three influencers to promote its products and states that the criteria for nomination to the board is a wealth of relevant knowledge and experience, regardless of age.

There are probably predictable disagreements about payments to shareholders. Yakult emphasizes that it is continuously increasing dividends, but VGI wants to bring its dividend rate closer to the top 10 Japanese food and beverage companies (about 40%).

Yakult released details of its long-term vision this week, but the forecast for consolidated sales and operating profit to increase by 145% and 184%, respectively, by 2030 was unaffected by overwhelming market reaction. Stock prices closed at just over 4% on Thursday.

What happens next would be interesting just because it doesn’t include corporate giants like

Toshiba,

Shareholders voted against the re-election of Chairman Osamu Nagayama on Friday, which was unusual for Japanese companies. Nor is there a prominent activist fund like Elliott Management involved. Cool the spine Of self-satisfying executives.

Incidents such as between Yakult and VGI are more meaningful for improving the country’s corporate governance, primarily due to active relationships with management or the ability of international activists to convince domestic investors of their case. You will need one.

Japanese success now Shareholder-focused revolution At that time, Prime Minister Shinzo Abe took the lead, and the balance is still out of order. Companies like Yakult may determine the final record of success for a project.

Write to Mike Bird Mike.Bird@wsj.com

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Japanese farmed milk, corporate culture, investor activist

Source link Japanese farmed milk, corporate culture, investor activist

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