Announcement of the Settlement of Accounts for the year ended March 31, 1999

We have announced the settlement of accounts for the year ended on March 31, 1999 at the Stock Exchange Press Club. The details of which is as follows:-

Results of the fiscal year ended on March 31, 1999 (April 1, 1998 - March 31, 1999)

(1) Operating report

During the whole period in food industries, consumers' mind had been 'cooled down' due to the lingering dipressed economy and the costs of the imported materials had risen because of the yen's decline. The environmental condition surrounding the industries had been severe as such. To fulfill the goals of the "Fuji Group Mid-term (April 1998 to March 2000) Plan leading into the 21st Century," which was initiated in fiscal 1998, we have been actively developing new products, pursuing aggressive customer-oriented marketing, and pioneering new areas of business while also reducing operating costs. As a result of these efforts, sales grew for the fifth straight year to 95,541 million yen (up 3.3%), operating income increased to 5,084 million yen (up 26.4%), while ordinary income increased to 5,117 million yen (up 13.1%) for the fourth straight year. At the same time, extraordinary losses - including an appraisal loss of 1,094 million yen caused by a sharp drop in value of securities (especially of financial institutions) and an estimated loss of 1,190 million yen for restructuring and reorganization of Group-related businesses - combined to reduce net profit for the term by 24% to 2,219 million yen.

(2) Summary of Operation by Division

Oils and Fats division

In the first half of the fiscal year, the yen's decline and increases in the price of palm oil and other raw materials cut into profitability, but from the latter half of the year the yen's direction reversed and raw material prices began to decline, improving results for the term.
Although the overall Japanese market for oils and fats reflected decreasing consumption and intensifying competition, our "Cook Pal" deep-frying oil became increasingly popular in the restaurant and prepared-food markets for the ability to give various ingredients a crisp texture and fresh taste and flavor, resulting in solid growth in sales.
Although sales of oils and fats for making chocolate rose in Japan compared to the previous year, the downturn overseas in the economies of Russia, Southeast Asia, and other areas reduced sales below last year's levels.

Confectionery materials division

Due in part to the unusually cool summer weather, sales of chocolate for pastries, ice cream, and frozen snacks were sluggish. But partly as a result of a boom in consumer demand for "raw chocolate", sales of chocolate for confectioneries held steady.
Although market demand for Western-style confectioneries remained slow, we were able to expand the market for new desserts and pastries. "Artopia Sweet Milk", a type of sweetened margarine for Danish toast, did quite well. Sales of the "Kesse" line of vegetable oil-based cheeses, with their rich cheese taste and high functionality, also showed marked growth. As a result, overall sales of raw materials for use in confectioneries and pastries increased over the previous year.

In the first half of the fiscal year, sales of be?schamel sauce for stew and curry roux and the frozen phyllo dough produced by Woodlands Sunny Foods Pte., Ltd. of Singapore showed lower results than the previous year, due to the yen's decline. With the reversal in the yen in the latter half of the year, however, the results improved. Also, the new product "Durfairede" line of frozen pie dough products proved quite popular for their creamy and buttery flavor, and sales grew at a steady pace.

Protein division

By introducing new products for ham and sausage and by employing new concepts for the health-food market, we were able to maintain sales of soy protein materials for processed foods at the same level as the previous year.
The market launch of new products for acidic milk drinks and for the cooked rice market further boosted sales of the "Soyafibe" line of water-soluble soy polysaccharides.
In the area of soy protein food products, sales of deep-fried and steamed products grew at a steady pace. "Kotsubu-ganmo" and other products for retail sale also did well throughout the fiscal year, and products such as the new product "Kinu-ganmo Yuba-hirousu" enjoyed wide support in the group-beging through catalog market.
Looking at industrial-use products, a downturn in the food service industries and reduced demand for fish-paste products led to sluggish sales. Sales of fried bean curd and tempura products, primarily intended for the instant noodle market, also failed to reach the level of the previous year.

Future Management Direction

Regarding our future management direction, for Fuji Oil to prosper within the present dipressed economic environment, it will be necessary to strengthen our ability to compete on a global level. To prepare for the challenges to the 21st century, we intend to continue pursuing our current company policy of achieving steady growth by providing true value to customers, innovating with a spirit of creativity, and promoting individual enlightenment through self-improvement. We will also continue expanding based on the Fuji Group's corporate goal of being a "living and daily life "?@industry utilizing oils, fats, and soy protein as raw materials."
To attain the Mid-term Plan's objectives, including making all businesses and companies in the Fuji Group profitable, further strengthening our consolidated accounts, and developing new products to benefit customers, we have been working to achieve fast, low-cost, global Group-wide management.

The completion of our new operations center (corporate headquarters) has moved us further in this direction.
The Fuji Group is moving beyond Japan to meet the needs of each of the world's four major markets (China, Asia, America, and Europe). Here in Japan, the introduction of new cream production plant and a new soy protein food product production line at the Hannan has further enhanced quality and our capacity to develop new products. We are also aggressively pursuing growth overseas by establishing Fuji Oil (Zhang Jia Gang) Co., Ltd. in China as an important base of operations.

Our approach to new product development extends from basic research to the creation of entirely new markets. In April last year, we established the New Materials Research Institute with the dual objectives of developing promising business areas for the future and nurturing new ideas for existing fields.
Our continuous pursuit of quality control has been rewarded with ISO-9001 certification for all of our departments and product lines company-wide, an unprecedented accomplishment among companies listed on the first section of the Stock Exchange. In the global market, to ensure the highest possible quality from raw materials to products, Palmaju Edible Oil Sdn., Bhd. in Malaysia and P.T. Freyabadi Indotama in Indonesia followed in the footsteps of Fuji Oil (Singapore) Pte., Ltd. by acquiring ISO-9002 certification. We are also working to obtain certification under ISO-14001, the international standard for environment management systems.

To deal with the Y2K (year 2000) computer problem, our Information Systems Office and other departments are working in close coordination with customers to ensure that all Fuji Group operations, including those overseas, will continue functioning problem-free.
In the area of general corporate management, we have established a special department to deal with investor relations and are pursuing more open and transparent disclosure of corporate information. We are also revitalizing our board of directors meetings and expanding the functions of our corporate auditors.
In March 2000, the final year of the current Mid-term Plan, Fuji Oil will celebrate its 50th anniversary. To mark that event, we are making a concerted effort to ensure the profitability of the consolidated operations of the entire Fuji Group, while also sowing seeds for the future.